Bookkeeping and Accounting

• The balance sheet is prepared at the end of an accounting period.
• Revenue refers to the inflow of assets, or other economic benefits, from ordinary activities and is recognized when earned, not when received.
• Expenses refer to outflows of resources used up during the process of generating revenue.
• Bookkeeping involves keeping a record of all the financial transactions of a business and is undertaken by a bookkeeper or a data entry operator.
• Accounting is the process of using bookkeeping entries to prepare the financial statements of a business. It is undertaken by the accountant.
• The purpose of accounting is to help stakeholders make important and better business decisions by providing them with financial information.
• Balance Sheet - Provides a snapshot of a company's financial position at a particular point in time.
• Accounting is performed periodically rather than daily.
• The double entry system being used in recording transactions follows the dual aspect concept.
• Dual Aspect Concept states that every transaction has two aspects, which are debits and credits.
• Double Entry System ensures accuracy and completeness of records.
• A ledger is a book of accounts that records all the transactions of a business.
• A ledger account contains records of business transactions.
• A cash transaction is a transaction that occurs when money is received or paid in cash immediately.
• A bank transaction is a transaction that occurs when money is received or paid by cheque or when a transaction passes through the bank.
• A credit transaction is a transaction that is settled at a later date and not at the time that it took place.
• Capital or owner's equity refers to the value of resources put into the firm by the owner.
• Assets are resources that are owned by and owed to the business.
• Liabilities are debts owed by the business to other parties.
• Drawings refer to resources withdrawn by the owner from the business for his own use.
• Drawings is represented by a decrease in capital.
• Sales returns or return inwards are the sales of goods or services that are returned to the supplier by a customer.
• Purchases Returns or return outwards refer to goods purchased by the business and returned to the supplier.
• The credit supplier of goods is referred to as trade payables. It is classified as a liability.
• The credit customer of a business is referred to as trade receivable. It is classified as an asset.
• An accounting period is the time period over which the financial statements are prepared.
• Inventory refers to the goods remained unsold at the end of the reporting/accounting period.
• Import refers to goods which are purchased by a country or business entity from another country. What is customs duty?

  The duty or tax which is imposed on such purchasing of goods is known as import duty or customs duty.
• Air freight charges are part of the cost of good purchased for resale and are costs incurred to transport the goods by aircraft.
• Carriage inwards refers to the transportation costs associated with the purchase of goods. It is an expense incurred to bring the goods purchased to the business premises.
• Carriage outwards is an expense incurred to deliver goods sold to customers' desired location.