مقالات arrow Explaining General accounting (part 1 )

Explaining General accounting (part 1 )

Explaining General accounting (part 1 )
تم النشر بواسطة Accflex 25 July 2019

In this series we will identify the importance of general accounting and its functional form with detailed explanation of   all the functions and entries accomplished  by general accounting department .

General accounting is the basis in any company for preparing the concluding accounts and presenting  the real financial status . Accounting programs , records and accounting methods differ in data input from a company to another . However they all share the same target which is concluding accounts and representing the actual financial status .

Generally speaking General accounting is number 1 in any financial administration and especially for large companies for many reasons :

1 – General accounting is  the theoretical and practical guide for the company .

2 – Any establishment should have accounting programs as the accountant records daily activities of the establishment divided into expenses and revenues as each activity requires records of a certain system to show the result of these procedures .

3 – General accounting is the mirror on which cost accountant works .

4 – Basic costs of any company depend on the adjustments accomplished by general accountings and the accuracy of the costs depends completely on the data provided by general accounting department .

5 – General accounting is the basis of concluding accounts preparation .

6 – General accounting  presents monthly entries for all activities during the month through which the budget is created .

Prices of accounting programs in Egypt and The Middle East :

The most important records in General accounting department :

First ; revenues of commercial activity or any other revenues :

Revenues are so important so the company uses accounting program and records to show the current activity revenues or any other revenues . 

There are revenues records that show :

1 – Cash  Sales  revenues : their accounting is recorded as follows :

Ps    Business       A                                      (PS  Private sector) 

To    sales  production  A

On payment the accounting entry is as the following :

  The bank  A

To      PS business A

2- The remaining  credit sales in the accounting entry :

As for credit sales, accounting entry is different :

   from       Clients    A

to     PS  business    A

On payment the accounting entry is 

From      bank  A

To      PS  business    A

All activities are recorded in clients record until the end of the year when the balance of each of them is calculated .

In he case of sales returns the accounting entry is :

From sales returns   A

TO    clients A 

Note :

Sales returns are on the debtor in trading and operating .

Clients’  accounts are  divided and copied  into two sides :

From :                                                       to

To sales production  A                         to bank         A

FROM   sales returns    A   

+ closing balance 

Important information:

Some companies don’t depend on selling their products but they buy some goods for the purpose of selling and the accounting entry will be :

From           PS A

to  Goods for sale    A 

ON payment :

From    bank A

To   PS  business   A

For credit sales 

From    Clients    A

To     Goods for sale  A 

ON payment 

From             bank    A 

TO                 CLIENT  A

Revenues may not be restricted to products or goods for sale but they can include some other kinds of revenues such as 

1- Weighing  to the others

Some companies have a big truck scale that is used to weigh for others for some money and the accounting entry is as follows :

From     Treasury   A 

 To  Sold services (truck scale )    A

2-Sell their production remnants

There are number of companies that tend to sell their production remnants   and the accounting entry is 

From        treasury    A 

To           Various (  remnants   )  revenues   A

3- Equipment rent for others :

The accounting entry is :

From      treasury   A

To     Various ( Equipment rent   )  revenues   A

4- Allowed discount in companies :

Allowed discount is decided in some  companies and the accounting entry is :

From     allowed discount    A

 TO     CLIENTS     A

In this way it is a deduction of clients’ debts and the allowed discount is opposed to the received discount .

A legal note :    In presenting their revenues , companies mustn’t show the operating and trade account but they only have to present the gains , loss balances and the budget in general .

In the next part we will explain expenses and revenues which is considered the most important in general accounting .

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