Ems acc

• Cycle


  Something that has a starting point, then some things happen, and it ends at the starting point again and repeats itself
• Transactions


  1. Money exchanges hands between the business and another party

  2. Record the date of the transaction

  3. Record the parties involved in the transaction

  4. Record the amount of money involved

  5. Record the reason for the transaction
• Source document


  • Proof that the transaction took place and from where the transaction will be recorded
  • Completed in duplicate, the business keeps the duplicate and gives the original to the customer
  • Used to record transactions in the subsidiary books
• Source documents for cash transactions

  • Receipt
• Journals


  • Books of first entry where record is kept of all transactions that took place
  • Two main journals: Cash Receipts Journal (CRJ) and Cash Payments Journal (CPJ)
• Cash Receipts Journal (CRJ)

  Records all cash received by the business, including notes, coins, EFT, credit card and debit card payments
• Cash Payments Journal (CPJ)

  Records all amounts paid out each month by the business, made by EFT
• General Ledger

  • A list of all the accounts that the business has
  • Accounts look similar to a capital T, with a heading at the top and a debit side and credit side
  • Posting to the General Ledger is done through a double-entry system, where every debit entry has a matching credit entry
• Accounting Equation

  Assets = Equity + Liabilities
• Sections of the General Ledger

  • Balance Sheet Accounts Section (Assets, Equity, Liabilities)
  • Nominal Accounts Section (Income and Expense accounts)
  • Final Accounts Section (Trading, Profit and Loss Accounts)
• Trial Balance

  • A statement that lists all the balances on all the accounts in the double entry system
  • Has a debit and credit side, with all accounts with a debit balance on the debit side and all accounts with a credit balance on the credit side
  • If both sides are equal, the Trial Balance 'balances', if not, errors have occurred