Chart of Accounts:

An account is a device which contains a systematic record of increase or decrease in an item during a particular period, for example for as  Transport company  is concerned, each account is recognized by a unique account number, title and nature. Chart of accounts contains details of each account. On basis of this chart, system identifies the accounts and their nature and automatically posts into respective account.

Accounting Cycle:

When a transaction occurs, it is recorded in various books and statements. The order of recording these transactions is called as “Accounting Cycle”. As the various records are completed one after about in a proper specified sequence, every step of recording is called a phase of accounting cycle. The various phases of accounting cycle are shown is the following diagram.

       

  • Journal:
    • When any transaction takes place, it is recorded in a book called as journal, at the time of its occurrence. It is also called day book. Our system includes journal, ledger, trial balance, profit and loss statements and balance sheet.
  • Ledger
    • From journal, transaction is posted to another book, called as ledger. In this book, the entries are classified under various heads of accounts. The ledger is balanced at frequent intervals. The recording of transaction into ledger is called second phase of accounting cycle. System recognizes the proper account using chart of account and concerned journal and auto posts into the respective ledger.
  • Trial Balance
    • The balance taken from ledger is written into a two columns statement called trial balance. The trial balance is prepared to prove the accuracy of the record.
  • Work Sheet 
    • After adjusting entries the work sheet is prepared to incorporate and assemble the balance from trial balance and adjustments. The statement where this word is done is called work sheet.
  • Financial Statements
    • This implies the preparation of income statement and balance sheet at the end of every accounting period to know the net earning and financial position of the business. The financial statements are usually prepared from work sheet.
  • Balance Sheet

The system automatically generates the balance sheet from posted transactions

Get Free Email Updates!

Signup now and receive an email once I publish new content.

I will never give away, trade or sell your email address. You can unsubscribe at any time.