《新财务英语教程》-Chapter 4

Chapter4

BasisofLedgerAccountTopicsCovered4.1WhatAreLedgerAccounts? 4.2LedgerAccountsforCashTransactions 4.3LedgerAccountsforCreditTransactions 4.4BalancingaLedgerAccount 4.5QuickSummaryofThisChapter 4.1WhatAreLedgerAccounts?LedgeraccountsorTaccountsareaccountssummarisingeachbusinesstransaction.TheseaccountshaveaTshape.4.2LedgerAccountsforCashTransactionsGobacktothepreviousJohnsonexample.Thefirsttransaction:Johnsonstarteduparestaurantasasoletraderbusinessbypaying$30,000intoabusinessbankaccount.Theaccountingtreatment:DrCash $30,000CrCapital $30,000TheledgerorTaccountforthistransaction:Step1:Thenameoftheaccount.Step2:WritetheDebitorDrontheleft-handsideoftheaccountwithCreditorCrontheright-handside.Step3:Readthedebitsideofthetransactionfirst,andthenrecordthedebitsideofthetransactiononthecorrespondingaccount.Writethemonetaryvaluefirst,andthenwritethecreditsideonthesameaccount.Step4:Readthecreditsideofthetransaction,thenrecordthecreditsideofthetransactiononthecorrespondingaccount.Recordthemonetaryvaluefirst,thenwritethedebitsideonthesameaccount.4.2.1ACompleteLedgerAccount1.Thetitleoftheaccountisanamethatrepresentsthenatureofthetransaction.2.Thedatecolumnrecordsthedateofthetransaction.3.Thedetailscolumnrecordsthetitleoftheotheraccountthatholdsthesecondpartofthedualeffect4.Thefoliocolumnrecordsareferencetothesourceofinformation.Thiscolumnisnotalwaysincludedwithinaledgeraccount.5.Theamountcolumnsummarisesthemonetaryvalueofthetransaction.4.2.2StepstoPrepareaLedgerAccountStep1:Accountname.Step2:Debitontheleft-handsideandcreditontheright-handside.Step3:Readthedebitside,withmonetaryvalue,andthenthecreditsideofthetransactioninthesameaccount.Step4:Readthecreditside,withmonetaryvalue,andthenthedebitsideofthetransactioninthesameaccount.Thesecondtransaction:Johnsonpurchasedavanfordeliveriesbywritingachequefor$3,000.

Theaccountingtreatment:

DrVan$3,000

CrCash$3,000Step1:Step2:Step3:Step4:AsummaryofTaccountsfortransaction2:CashaccountDr

Cr

$

$Capital30,000Van3,000VanaccountDr

Cr

$

$Cash3,000Van3,000Thethirdtransaction:Johnsonusedachequefor$1,000topurchasegoodsforresale.Theaccountingtreatment:DrPurchases $1,000CrCash $1,000PurchasesaccountDr

Cr

$

Cash1,000

Thefourthtransaction:Johnsonpaidtherentalfeeincashfor$800.Theaccountingtreatment:DrRents $800CrCash $800RentsaccountDr

Cr

$

Cash800,00

Thefifthtransaction:Johnsonsoldgoodsforcashof$2,000.Theaccountingtreatment:DrCash $2,000CrSalesrevenue $2,000SalesrevenueaccountDr

Cr

$

Cash2,000CashaccountDr

Cr

$

$Capital30,000Van3,000Sales2,000Purchases1,000

Rent800,00Thesixthtransaction:Johnsontook$200cashforhispersonalexpenses.Theaccountingtreatment:DrDrawings $200CrCash $200DrawingsaccountDr

Cr

$

Cash200

CashaccountDr

Cr

$

$Capital30,000Van3,000Sales2,000Purchases1,000

Rental800

Drawings2004.3LedgerAccountsforCreditTransactionsTransaction1:Johnsonpurchasedgoodsoncreditfor$5,000.Theaccountingtreatment:DrPurchases $5,000CrTradepayables $5,000TheledgerorTaccountforthistransaction:TradePayablesaccountDr

Cr

$

Purchases5,000PurchasesaccountDr

Cr

$

Payable5,000

PurchasesaccountDr

Cr

$

Cash1,000

Payable5,000

PayablesaccountDr

Cr

$

Purchases5,000Transaction2:Johnsonsoldgoodsfor$6,000tocustomersoncredit.Theaccountingtreatment:DrTradereceivables $6,000CrSalesrevenue $6,000TradereceivablesaccountDr

Cr

$

Sales6,000

SalesrevenueaccountDr

Cr

$

Cash2,000

Receivable6,000Transaction3:Johnsonhassettled$1,000liabilityowedtoacreditsupplier.Theaccountingtreatment:DrTradepayables $1,000CrCash $1,000PayableaccountDr

Cr

$

$Cash1,000Purchases5,000Transaction4:Johnsonreceived$5,000cashfromacreditcustomer.Theaccountingtreatment:DrCash $5,000CrTradereceivables $5,000CashaccountDr

Cr

$

$Capital30,000Van3,000Sales2,000Purchases1,000Receivable5,000Rental800

Drawings200

Payable1,000TradereceivablesaccountDr

Cr

$

$Sales6,000Cash5,000Transaction5:Johnsonreturnedgoodscosting$200tothecreditsupplier.Theaccountingtreatment:DrTradepayables $200CrPurchases $200TradepayableaccountDr

Cr

$

$Cash1,000Purchases5,000Purchases200

PurchasesaccountDr

Cr

$

$Cash1,000TradePayables200Payable5,000

Transaction6:Johnsonreceivedgoodsreturnedbyacreditcustomer.Thetransactionvalueis$100.Theaccountingtreatment:DrSalesrevenue $100CrTradereceivables $100TradereceivablesaccountDr

Cr

$

$Sales6,000Cash5,000

Sales100SalesrevenueaccountDr

Cr

$

$Tradereceivables100Cash5,000

Sales1004.4BalancingaLedgerAccountStepstobalancealedgerorTaccount:Step1:EnterthetotaldebitandcreditsidesintheTaccount.Step2:Decidewhichsideishigherandchoosethehigher.Step3:Forthesidethatdoesnotadduptothistotal,thedifferenceiscalledbalancecarrieddown/forward,or‘balc/d’or‘balc/f’.Step4:Thebalancebroughtdown(‘balb/d’)willappearontheoppositesidebelowthetotals.4.4.1BalancingLedgerAccountsforElementsintheStatementofFinancialPositionFromthepreviousexampleJohnson.Step1:Step2:CapitalaccountDr

Cr

$

Bank30,000

Total=30,000CapitalaccountDr

Cr

$

$

Bank30,000Total=30,000Total=30,000Step3:

Usetheabbreviationforbalancecarriedforwardas‘balc/f’orbalancecarrieddownas‘balc/d’:

CapitalaccountDr

Cr

$

$Balancecarriedforward30,000Bank30,000Total=30,000Total=30,000CapitalaccountDr

Cr

$

$balc/d30,000Bank30,000Total=30,000Total=30,000CapitalaccountDr

Cr

$

$balc/f30,000Bank30,000Total=30,000Total=30,000orStep4:CapitalaccountDr

Cr

$

$balc/f30,000Bank30,000Total=30,000Total=30,000

balb/f30,000orCapitalaccountDr

Cr

$

$balc/f30,000Bank30,000

30,000

30,000

balb/f30,0004.4.2BalancingLedgerAccountsforElementsintheStatementofProfitorLossthefollowingexample:SalesrevenueaccountDr

Cr

$

$Receivable$100Bank$2,000

Receivable$6,000Step1:Enterthedebitandcreditsid