Financial basic concepts Dynamics AX Training.Agenda. Introduction.First Transaction Accounting equationPurchase Vehicle for Cash Debit CreditPurchasing Pizza Ingredients VoucherSelling Pizza Profit Loss accountsChart of Accounts.Financial Statements Balance Sheet, Income Statement, and Cash Flow Statement.Accounting Cycle.Summary. In this training lesson, we will study what accounting is, what its main principles are, its terminology, and how accounting is used in a company.The accountingcoach.Accounting. Lets assume that Taras goes into the pizza business namely, cooking and selling pizza.The name of the new company is The Tastiest.Taras will start his business by putting some of his personal savings into it.In effect, he is buying shares of The Tastiests common stock.This is the first initial transaction the company receives cash but at the same time the company has a debt.Try to illustrate this transaction.Imagine a circle which represents the whole company, its left side is the Assets and its right side is the Liabilities.Assets are the things that the company owns and are sometimes referred to as the resources of the company.Liabilities are obligations of the company they are amounts owed to others.What the company owes the outsiders call Liabilities and what it owes the owner calls Owners Equity.So, the right side is Liabilities and Owners Equity the type of Liabilities.At the beginning the circle looks like a dot, because the company doesnt have any Assets and Liabilities.When Taras invests some of his personal money, the following occurs the company gets cash which is the Assets, but the company owes the money to Taras.Lets assume that Taras invests 1.The circle will look as follows Company balances after investment.The circle demonstrates the basic accounting equation Assets Liabilities Owners Equity.Robin-AXR3-pic-1.jpg' alt='Cost Accounting Microsoft Dynamics Ax 2009 Questions' title='Cost Accounting Microsoft Dynamics Ax 2009 Questions' />The accounting equation should always be in balance.It guarantees that the money cannot appear from anywhere.Gmail is email thats intuitive, efficient, and useful.GB of storage, less spam, and mobile access.Different Types of ERP Software.Types of ERP SAP R3, SAP B1, LN BaaN, Microsoft Dynamics AX, Microsoft Dynamics NAV, JD Edwards, Oracle Financials, PeopleSoft.In our case the company cash Assets was given by the owner Liabilities.The field of accountingboth the older manual systems and the todays basic accounting softwareis based on the 5.Double entry is a simple yet powerful concept each and every one of a companys transactions will result in an amount recorded into at least two of the accounts in the accounting system.In our case, the first transaction records the amount to the Cash and Owes the owner accounts.Owe the owner 1. Cash.The transaction could be recorded in the following manner Cash Owe the owner.The dual form of transaction is caused by natural law.Nothing is lost in the universe, it is only changed.You can transfer an apple from one hand to another and you can also observe it separately for the 1st hand minus one apple, for the 2nd hand plus one apple.The accounting equation is in balance 1.Cash 0 Liabilities 1.Owners Equity. The Company decides to purchase a used delivery car which costs 1.In this case, the new account which is called Vehicles or Delivery equipment is required.Vehicles is an Asset account.The list of all company accounts is named the Chart of Accounts.The chart of accounts is a listing of the account names that a company has identified and made available for recording financial transactions.A company has the flexibility to tailor its chart of accounts to best suit its needs, including adding accounts as needed.This transaction records the amount to the Cash and Vehicles accounts.Cash 1 2. Vehicles.The transaction could be recorded in the following manner Cash Vehicles1 2.According to the Double entry procedure, one amount is used for the two accounts.Because the amount cannot be taken from anywhere.In our case it is 1 2.But in this case, the accounting equation is not in balance 1.Cash 1 2. 00 Cash 1 2.Vehicles 0 Liabilities 1.Owners Equity. It is logical that Cash is decreased, but according to the double entry procedure, it is impossible to create the following transactions Cash Vehicles 1 2.How was this problem solved by the middle ages accountants They decided to divide all accounts into two parts.In one part, they recorded all amounts that increased the account amount, in the other part, they recorded all amounts that decreased the account amount.They called these parts as Debit and Credit.For example, if the Cash increases, the amount is recorded into the Debit part, if the Cash decreases, the amount is recorded into the Credit part.The total Cash amount is calculated in the following manner Debit Credit.In our case, the accounts will have the following view after the two transactions Cash.Owe the owner. Vehicles.Debit. Credit. Debit.Credit. Debit. Credit1.First transaction1 2.Second transaction.Note that if the amount is debited in one account, the same amount should be credited in another account, because the money cannot be taken from anywhere.So one account is Debited and the other account is Credited, and vice versa.It is impossible that in one transaction both accounts are Credited or Debited.When we sum all Debit amounts from all accounts and sum all Credit amount, they will be the same, i.Debit Credit. Lets check the accounting equation.In the accounting equation, the total account amount is used without debit or credit parts.Total Cash amount is 1.Debit 1 2. 00 Credit 8 8.Total Owe the owner amount is 0 Debit 1.Credit 1. 0 0. Total Vehicles amount is 1 2.Debit 0 Credit 1 2.Cash 1 2. 00 Vehicles 0 Liabilities 1.Owners Equity. Something is wrong again, the amount is correct but the sign is different.We have made one mistake, because we assumed that the Debit part contained the amount that increased the total account amount, the following formula was used Debit Credit.But, for the Liabilities and Owners Equity accounts it is not true.Look at the first transaction, both accounts are increasedThe Owe the owner account was increased by 1.Credit part. So, the total Owe the owner amount should be calculated in the following manner 1.Credit 0 Debit 1.Remember the total account amount for Liabilities and Owners Equity accounts is calculated in the following manner Credit Debit.Remember that any Debited account is good for a company, and any Credited account is bad for a company.For example, when the Cash account is debited it is good because the companys cash is increased.When the Cash account is credited it is bad because the companys cash is decreased.When the Owes the owner account is credited, it is bad because the companys debt to the owner is increased.Note that in both cases the amount is entered in the Credit part, the cash is decreased, but the debt is increased and in both cases it is bad for the company.Look at our circle after the second transaction.The circle has almost not changed.The money was moved from one asset account to another.Note that all accounts contain the total amount.For the asset accounts the total amount is Debit Credit, for the Liabilities and Owners Equity accounts, it is Credit Debit.Company balances after purchase.To prepare pizzas, the Company decides to purchase, for example, the following ingredients 5.Taras contacts the supermarket administrator and agrees to pay for these ingredients within 3.When he brings all the ingredients to the company store, he decides to record a purchase transaction.First of all he creates the Cheese, Pizza bases, Salami, and Olives accounts to record the amounts spent for these ingredients and the Super Market account to record the liabilities for the Super Market vendor.The purchase operation has the following transactions Super Market.Cheese. Pizza basis.Salami. Olives. Debit. Windows 7 Loader 32 Bit 64 Bit All Editions Of The Little Brown . Credit. Debit. Credit.Debit. Credit. Debit.Credit. Debit. Credit5.The Super Market total amount is increased.Since Super Market belongs to the Liabilities accounts, the amount is recorded in the Credit part Account amount Credit Debit.The other explanation since the liabilities are increased, it is bad for the company, so the amount is recorded to the Credit part.The Cheese and other ingredients accounts are also increased.Since they belong to the Assets accounts, the amount is recorded to the Debit part Account amount Debit Credit.
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