Book-Keeping

Book-Keeping

Made Simple

1st Edition - July 6, 1987

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  • Author: G. M. Whitehead
  • eBook ISBN: 9781483105802

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Description

Book-Keeping Made Simple, Revised Edition covers all the basic principles of elementary book-keeping. The book describes the requirements and process of starting a business, including ledger accounts, classifying the assets, the balance sheet, buying assets, and transactions involving liabilities. The text also discusses the double-entry systems; subsidiary books and original documents; the reduction of work-on day book entries; and the three-column cash books. The journal proper, the Imprest system, the trial balance and its limitations, and the bank reconciliation statements are also considered. The book further tackles analytical or columnar day books; the principle and layout of the cash book; the adjustments in final accounts; and partnership accounts. The text also discusses departmental-, manufacturing-, and control accounts and accounts of limited companies; the amalgamation of businesses; the purchase of a business; and the bills for exchange. Students of book-keeping will find the book invaluable.

Table of Contents


  • Foreword

    1 Starting a Business - A Capital Idea

    1.1 Starting a Business

    1.2 Business Transactions

    1.3 Keeping a Record of Transactions - The Ledger Accounts

    1.4 The First Transaction - The Contribution of the Assets by the Proprietor

    1.5 Classifying the Assets - Current and Fixed

    1.6 Opening the Ledger

    1.7 The Balance Sheet - and an Oddity of History

    1.8 Buying Assets for Use in the Business

    1.9 Transactions Involving Liabilities

    1.10 Classification of Liabilities - Current Liabilities, Long-Term Liabilities, and Capital

    1.11 Buying Assets on Credit and Borrowing Money

    1.12 A Page to Test You on Capital, Assets, and Liabilities

    1.13 Answers to Exercises in Book-Keeping Made Simple

    1.14 Opening Balance Sheets

    1.15 Exercises Set 1.1 - Opening Balance Sheets

    2 The Ledger - The Main Book of Account

    2.1 Introduction

    2.2 Use of the Accounts

    2.3 The Three Types of Account

    2.4 How to Keep a Ledger Account

    2.5 Personal Accounts - Debtors

    2.6 Exercises Set 2.1 - Simple Debtors' Accounts

    2.7 Personal Accounts - Creditors

    2.8 Exercises Set 2.2 - Simple Creditors' Accounts

    2.9 Real Accounts - Accounts That Record Assets

    2.10 Folio Numbers

    2.11 The Busiest Real Accounts - The Cash Account and the Bank Account

    2.12 Double Entry Book-Keeping

    2.13 Folio Numbers and Double Entry Book-Keeping

    2.14 Exercises Set 2.3 - Simple Cash Accounts

    2.15 The Bank Account

    2.16 Exercises Set 2.4-Simple Bank Accounts

    2.17 Nominal Accounts - Accounts That Record Losses and Profits

    2.18 'Continuous Balance'Ledger Accounts

    2.19 Exercises Set 2.5-Continuous Balance Accounts

    2.20 A Page to Test You on the Ledger

    3 How Double Entry Book-Keeping Works

    3.1 The Double Entry System

    3.2 The Original Documents (1)

    3.3 The Books of Original Entry (2)

    3.4 Posting the Day Books to the Ledger (3)

    3.5 The Trial Balance (4)

    3.6 Final Accounts - The Trading Account (5a)

    3.7 Final Accounts - The Profit and Loss Account (5b)

    3.8 The Balance Sheet (5c)

    3.9 Computerization of Book-Keeping

    4 Subsidiary Books and Original Documents

    4.1 Introduction

    4.2 The Pattern of Business in an Established Trading Firm

    4.3 Documents for Sales and Purchases - The Invoice

    4.4 Cash Discounts, Settlement Discounts and Trade Discounts

    4.5 The Debit Note - A Document Very Like an Invoice

    4.6 Value Added Tax and Invoices

    4.7 The Purchases Day Book

    4.8 Posting the Purchases Day Book to the Ledger

    4.9 Exercises Set 4.1 - The Purchases Day Book

    4.10 Invoices for Services - The Expenses Journal or Expenses Day Book

    4.11 The Sales Day Book

    4.12 Posting the Sales Day Book into the Ledger

    4.13 How to 'Carry Forward' from One Page to the Next

    4.14 Exercises Set 4.2 - The Sales Day Book

    4.15 Documents for Returns - The Credit Note

    4.16 The Purchases Returns Book

    4.17 Posting the Purchases Returns Book into the Ledger

    4.18 Exercises Set 4.3 - The Purchases Returns Book

    4.19 The Sales Returns Book

    4.20 Posting the Sales Returns Book into the Ledger

    4.21 Exercises Set 4.4 - The Sales Returns Book

    4.22 Recapitulation

    4.23 A Page to Test You on the Journals

    4.24 A Page to Test You on Invoices and Debit Notes

    4.25 A Page to Test You on Credit Notes

    5 Reducing the Work on Day Book Entries

    5.1 Saving Work on the Day Books

    5.2 Using the Documents Themselves as Day Books

    5.3 Slip Systems of Book-Keeping

    5.4 Simultaneous Records

    5.5 How Book-Keeping Records are Computerized

    5.6 Exercises Set 5.1 - Saving Work on the Day Books

    6 The Three-Column Cash Book

    6.1 Introduction

    6.2 Cashiers, Bound Books, and Fidelity Bonds

    6.3 Why Have a Three-Column Cash Book?

    6.4 Original Documents for the Three-Column Cash Book

    6.5 Explanation of the Three-Column Cash Book - Including Contra Entries

    6.6 VAT and the Three-Column Cash Book

    6.7 Posting the Three-Column Cash Book to the Ledger

    6.8 Why Do the Discount Figures, When They are Posted, Not Cross Over to the Other Side?

    6.9 Bank Overdrafts

    6.10 Exercises Set 6.1 - The Three-Column Cash Book

    6.11 A Page to Test You on the Three-Column Cash Book

    6.12 A Page to Test You on Statements and Receipts

    6.13 A Page to Test You on Discounts

    7 The Journal Proper

    7.1 Introduction

    7.2 Journal Proper Paper

    7.3 Journal Entries No. 1 - The Opening Journal Entry

    7.4 Exercises Set 7.1 - Opening Journal Entries

    7.5 Journal Entries No. 2 - Closing Entries

    7.6 Journal Entries No. 3 - Purchases of Assets

    7.7 Exercises Set 7.2 - Purchases of Assets

    7.8 Journal Entries No. 4 - Depreciation of Assets

    7.9 Exercises Set 7.3 - Depreciation of Assets

    7.10 Journal Entries No. 5 - The Sale of Worn-out Assets

    7.11 Exercises Set 7.4 - The Sale of Worn-Out Assets

    7.12 Journal Entries No. 6 - Simple Bad Debts

    7.13 Exercises Set 7.5 - Simple Bad Debts

    7.14 Journal Entries No. 7 - The Correction of Errors

    7.15 Exercises Set 7.6 - The Correction of Errors

    7.16 Journal Entries No. 8 - Dishonored Checks

    7.17 Exercises Set 7.7 - Dishonored Checks

    7.18 Journal Entries No. 9 - Bank Loans, Interest, and Charges

    7.19 Exercises Set 7.8 - Bank Loans, Interest, and Charges

    7.20 VAT in Cash Takings

    7.21 Exercises Set 7.9 - Exercises on VAT in Cash Takings

    8 The Columnar Petty Cash Book - Imprest System

    8.1 Introduction

    8.2 The Imprest System

    8.3 Original Documents - The Petty Cash Voucher

    8.4 The Columnar Petty Cash Book

    8.5 A Page to Test You on the Petty Cash Book

    8.6 Exercises Set 8.1 - The Petty Cash Book

    9 Book-Keeping to the Trial Balance

    9.1 Introduction

    9.2 What is Involved in Book-Keeping to the Trial Balance?

    9.3 Tidying up the Ledger Accounts and Extracting a Trial Balance

    9.4 How to Keep a Sole Trader's Books for One Month and Check for Accuracy

    9.5 What to Do if a Trial Balance Does Not Agree

    9.6 A Specimen Exercise to the Trial Balance

    9.7 Exercises Set 9.1 - Book-Keeping to the Trial Balance

    10 Limitations of the Trial Balance: Suspense Accounts and the Correction of Errors

    10.1 Introduction

    10.2 Errors That the Trial Balance Does Not Disclose

    10.3 Suspense Accounts and the Correction of Errors

    10.4 A Page to Test You on the Trial Balance

    10.5 Exercises Set 10.1. Trial Balances and Suspense Accounts

    11 Bank Reconciliation Statements

    11.1 Introduction - The Meaning of Reconciliation

    11.2 Why Do the Cash Book Figure and the Bank's Figure Disagree?

    11.3 How to Draw up a Bank Reconciliation Statement

    11.4 Exercises Set 11.1-Bank Reconciliation Statements

    12 Analytical or Columnar Day Books

    12.1 Introduction

    12.2 Columnar Sales and Purchases Rulings

    12.3 Posting the Totals of an Analysis Book

    12.4 Computerized Analysis of Retail Trade

    12.5 Exercises Set 12.1 - Analysis Day Books

    13 The Bank Cash Book

    13.1 Introduction

    13.2 The Principle of the Bank Cash Book

    13.3 Layout of the Bank Cash Book

    13.4 The Cash Book as a Book of Original Entry

    13.5 Exercises Set 13.1 - The Bank Cash Book

    14 More about Depreciation

    14.1 A 'True and Fair View' of the Assets

    14.2 The Equal Installment, or Straight Line, Method

    14.3 The Diminishing Balance Method

    14.4 The Revaluation Method

    14.5 Providing for the Replacement of an Asset

    14.6 Leases - A Special Case of the Straight-Line Method

    14.7 Exercises Set 14.1 - Depreciation

    15 The Wages Book and Wages Systems

    15.1 Introduction

    15.2 Wages Calculations

    15.3 Exercises Set 15.1 - Simple Wages Calculations

    15.4 The Traditional Wages Book

    15.5 Exercises Set 15.2 - Simple Wages Books

    15.6 The Kalamazoo Wages System

    15.7 Exercises Set 15.3 - The Kalamazoo Wages System

    15.8 Wages and the Bank Giro Credit System

    16 Book-Keeping to 'Final Accounts' - Part One: The Trial Balance

    16.1 Introduction - What are Final Accounts?

    16.2 A Closer Look at the Trial Balance

    16.3 Causes of Confusion in the Trial Balance

    16.4 Exercises Set 16.1 - The Trial Balance

    17 Book-Keeping to 'Final Accounts' - Part Two: The Trading Account

    17.1 The Profit on a Simple Transaction

    17.2 Final Accounts and Closing Journal Entries

    17.3 The True Sales Figure

    17.4 The True Purchases Figure

    17.5 Finding the Cost of the Sales

    17.6 Some Definitions Connected with the Trading Account

    17.7 Exercises Set 17.1 - Trading Accounts

    18 Book-Keeping to 'Final Accounts' - Part Three: The Profit and Loss Account

    18.1 A Revised Trial Balance

    18.2 Finding the Net Profit - Stage I: Transferring the Losses

    18.3 Finding the Net Profit - Stage II: Transferring the Profits

    18.4 Closing the Profit and Loss Account and the Drawings Account

    18.5 A Trading and Profit and Loss Account

    18.6 Exercises Set 18.1 - Profit and Loss Accounts

    19 Book-Keeping to 'Final Accounts' - Part Four: The Balance Sheet

    19.1 The Residue of the Trial Balance

    19.2 History Makes a Mess of Things - The Balance Sheet Reversed

    19.3 The Order of Permanence and the Order of Liquidity

    19.4 For Which Type of Business is Each Method Suitable?

    19.5 Book-Keeping to Final Accounts

    19.6 Exercises Set 19.1 - Simple Final Accounts

    20 Capital and Revenue Expenditure and Receipts

    20.1 Introduction

    20.2 Capital and Revenue Expenditure Defined

    20.3 Capital and Revenue Receipts

    20.4 The Revenue Account

    20.5 The Importance of Distinguishing between the Two Types of Expenditure and Receipts

    20.6 The Rules with Capital and Revenue Items

    20.7 The Capitalization of Revenue Expenditure

    20.8 Revenue Expenses That Show up as Reduced Stock

    20.9 Exercises Set 20.1 - Capital and Revenue Expenditure

    21 The Valuation of Stock

    21.1 Introduction - The Importance of Correct Stock Valuation

    21.2 The Basis of Stock Valuation

    21.3 Stock Records

    21.4 Stock-Taking at the End of the Financial Year

    21.5 A Stock Valuation Question

    21.6 Delays in Stock-Taking

    21.7 Burglaries, Floods and Fires

    21.8 Exercises Set 2 1.1 - Stock Valuation

    22 Adjustments in Final Accounts

    22.1 Introduction - Why are Adjustments Necessary?

    22.2 Payments in Advance by the Firm

    22.3 Payments in Advance to the Firm

    22.4 Exercises Set 22.1 - Payments in Advance

    22.5 Accrued Expenses Owed by the Firm

    22.6 Accrued Receipts Due to the Firm

    22.7 Exercises Set 22.2 - Accrued Expenses and Accrued Receipts

    22.8 Exercises Set 22.3 - Final Accounts Exercises with Payments in Advance and Accrued Expenses

    22.9 Bad Debts

    22.10 Provision for Bad Debts

    22.11 What Happens to Provision for Bad Debts in the Next Year?

    22.12 Exercises Set 22.4 - Bad Debts and Provision for Bad Debts

    22.13 Provisions for Discounts

    22.14 Depreciation of Assets

    22.15 Goodwill, and Depreciation of Goodwill

    22.16 Exercises Set 22.5 - Final Accounts with All Types of Adjustment

    23 Partnership Accounts

    23.1 Introduction - Why Take a Partner?

    23.2 The Partnership Act of 1890

    23.3 The Partnership Deed

    23.4 The Capital of the Partnership

    23.5 The Final Accounts of a Partnership Business

    23.6 The Appropriation Account of a Partnership

    23.7 Exercises Set 23.1 - The Appropriation Account

    23.8 The Current Accounts of the Partners

    23.9 Exercises Set 23.2 - Current Accounts of Partners

    23.10 The Balance Sheet of a Partnership

    23.11 Exercises Set 23.3 - The Final Accounts of Partnerships

    24 The Accounts of Clubs and Non-Profit-Making Organizations

    24.1 Non-Profit-Making Organizations

    24.2 The Cash Book of a Club

    24.3 The Receipts and Payments Account

    24.4 Exercises Set 24.1 - Receipts and Payments Accounts

    24.5 Limitations of the Receipts and Payments Account

    24.6 The Accumulated Fund of a Club

    24.7 Trading Accounts of Clubs

    24.8 The Income and Expenditure Account

    24.9 Exercises Set 24.2 - Club Final Accounts

    25 The Increased Net-Worth Method of Finding Profits: Single Entry or Incomplete Records

    25.1 Introduction

    25.2 Profit as an Increase in Net Worth

    25.3 Calculating the Profits by the Increased Net-Worth Method

    25.4 Adjustments with the Increased Net-Worth Method

    25.5 Exercises Set 25.1 - Finding Profits by the Increased Net-Worth Method

    25.6 Unsatisfactory aspects of the Increased Net-Worth Method

    25.7 Producing a Full Set of Final Accounts from Incomplete Records

    25.8 Exercises Set 25.2 - Producing a Full Set of Final Accounts from Incomplete Records

    26 Departmental Accounts

    26.1 Introduction

    26.2 Departmental Accounts - The Basic Figures

    26.3 A Set of Departmental Final Accounts

    26.4 Exercises Set 26.1 - Departmental Accounts

    27 Manufacturing Accounts

    27.1 Introduction

    27.2 The Vocabulary of Manufacturing Accounts

    27.3 The Preparation of Manufacturing Accounts

    27.4 Taking Manufacturing Profit into Account

    27.5 Break-Even Analysis

    27.6 Exercises Set 27.1 - Manufacturing Accounts

    28 The Accounts of Limited Companies

    28.1 Introduction - What is a Limited Company?

    28.2 Special Features of Company Accounts

    28.3 The Appropriation Account of a Limited Company

    28.4 The Balance Sheet of a Limited Company

    28.5 Exercises Set 28.1 - Limited Company Accounts

    29 The Interpretation of Final Accounts: Statistical Control Figures

    29.1 Introduction - Controlling a Business

    29.2 The Gross Profit Percentage

    29.3 Gross Profit Percentage on Cost

    29.4 Absolute and Relative Changes

    29.5 Exercises Set 29.1 - Gross Profit Percentage

    29.6 The Net Profit Percentage

    29.7 Exercises Set 29.2 - Gross and Net Profit Percentages

    29.8 Turnover and Rate of Turnover, or Rate of Stock Turnover

    29.9 Exercises Set 29.3 - Rate of Stock Turnover

    29.10 Terminology Used in the Interpretation of the Balance Sheet

    29.11 Appraising a Balance Sheet

    29.12 Cashflow

    29.13 Exercises Set 29.4-Balance Sheet Interpretation, and General Questions on the Interpretation of Final Accounts

    30 Control Accounts

    30.1 Introduction

    30.2 The Sub-Division of the Ledger

    30.3 Control Accounts - The Basic Idea

    30.4 Where Do We Get the Total Figures Tor the Control Accounts?

    30.5 A Simple Control Account

    30.6 The Accountant Who is Wrong

    30.7 Exercises Set 30.1 - Simple Control Accounts

    30.8 Contra Entries in Control Accounts

    30.9 Exercises Set 30.2 - More Difficult Control Accounts

    31 The Amalgamation of Businesses

    31.1 Introduction

    31.2 Drawing up the Statements of Affairs on Amalgamation

    31.3 Amalgamating the Two Businesses

    31.4 Exercises Set 31.1 - Amalgamations

    32 The Purchase of a Business

    32.1 Introduction

    32.2 The Purchase Price and the Goodwill Figure

    32.3 Opening the Accounts of the New Business

    32.4 Exercises Set 32.1 - Purchase of a Business

    33 Accounting for Bills of Exchange

    33.1 What is a Bill of Exchange?

    33.2 The Use of Bills of Exchange

    33.3 Recording Bills of Exchange 1 - Recording Bills Payable

    33.4 Recording Bills of Exchange 2 - Recording Bills Receivable

    33.5 More about Bills Receivable

    33.6 Dishonored Bills

    33.7 Exercises Set 33.1 - Accounting for Bills of Exchange

    34 The Concepts and Principles of Accounting

    34.1 The Philosophy of Accounting

    34.2 The Concept of Business Entity

    34.3 The 'Going Concern' Concept

    34.4 The Duality Concept

    34.5 Substance and Materiality

    34.6 The Objectivity Concept

    34.7 The Consistency Concept

    34.8 The Prudence Concept in Accounting

    34.9 The Accruals Concept

    34.10 The Stable-Money Concept

    34.11 The Distinction between Capital and Revenue Expenditure

    34.12 Exercises Set 34.1 - The Concepts and Principles of Accounting

    34.13 Conclusion about Double-Entry Book-Keeping

    Answer Section

    Index




Product details

  • No. of pages: 558
  • Language: English
  • Copyright: © Made Simple 1987
  • Published: July 6, 1987
  • Imprint: Made Simple
  • eBook ISBN: 9781483105802

About the Author

G. M. Whitehead

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