The important part of any business or organisation is the money that comes in and the money that goes out. To manage these transactions, a business adopts to a procedure called Accounting. Accounting determines the health and efficiency of business.

Accounting

The Accounting is the art of recording(General Entries), classifying(General Ledger), analyzing, summarizing(Trial Balance) and reporting(Audit Report) of a financial transactions of a business. 

Accounting can be cash basis or accrual basis.

Cash basis:

In cash basis, acknowledgement and recording of transactions takes place, when physically cash moves between involved parties.

Example: When Adam purchases goods from North Pole on credit in September, but actual payment was made in December. The transaction actually recorded in December, because the actual payment was made in December.

Accrual basis:

In accrual basis, the transaction is recorded, when commitment to pay amount is done. In the above same example, the transaction would be recorded at September because Adam is liable to pay from September itself.

General Entries

General Entries is the first step in the accounting cycle. It is an entry to the journal. Journal is a record that keeps accounting transactions in chronological order. Each general entry include a debit effect and credit effect. 

Syntax:

General Ledger

The General ledger account is the format of the recording of transactions relating to each category in each account. General ledger is the account containing debit and credit side columns.

Types of Accounting

Major Accounting Heads

 

Basic Transactions

1. Started business with cash 100,000.

Elements effected by this transaction are,

i. Cash(asset) - brought into the business(cash increases by 100,000)

ii. Capital(personal) - It represents business and liability of it is increased by 100,000   

                

2. Bought furniture for 25000.

Elements effected:

i. Cash(asset) - Going out, so it is credited.

ii. Furniture(asset) - Coming in, so it is debited.

3. Bought goods for cash 25000 from M/s Roxy brothers.

Elements effected:

i. Cash(asset) - Going out, so it is credited.

ii. Goods(asset) - Coming in, so debited.

*Vendor/seller name is irrelevant in cash transaction.

4. Bought goods from Mr. Shyam on credit for 10000.

Elements effected:
i. Goods(asset) - Coming in, so it is debited.
ii. Mr. Shyam(liability) - Giver, so credited.

5. Sold goods for cash 20,000 for Mr. Peter.

Elements effected:

i. Cash(asset) - Coming in, so debited because of increase in value of cash.
ii. Sales/Goods(asset) - Going out, so credited because of decrease in stock.

*Buyer name is irrelevant in cash sales transaction.

6. Sold goods on credit to M/s Bharath & Co., for 10,000.

Elements effected:

i. M/s Bharath & Co(asset) - Indicates debtor as asset, so it is debited.
ii. Sales/Goods(asset) - Going out, so credited (decrease).

7. Paid Cash into bank 60,000.

Elements effected:
i. Cash (asset) - Going out, so credited.
ii. Bank (asset) - Liable to pay to us(Debtor), so debited.

8. Paid cash to Mr. Shyam Rao 5000.

Elements effected:
i. Cash(asset) - Going out, so credited.
ii. Mr. Shyam Rao(liability) - Liability reduces by 5000, so debited.

9. Goods purchased from supplier.

a. When goods in transit.

Elements effected:
i. Goods- in-Transit(asset) - Coming in, so debited.
ii. Account Payable(liability) - Liability to pay amount increases, so credited.

b. When goods Received.

Elements effected:
i. Goods- in-Transit(asset) - Transferred to Inventory account, so credited.
ii. Inventory(asset) - Value of inventory increases so debited.

The resource is anything that is used to satisfy human needs. A resource is anything in materials, energy, services, staff, knowledge or other assets.

Details of a Resource


The resource for a stone industry can be an asset, any machinery, any employee, land and building.

1) Resource Name: The name of the resource for identification.

2) Sequence Order: The order in which the resource can  be displayed.

3) Resource Type: The type of resource which it belongs to i.e., people, Installation, Delivery etc,.

4) No of A Frames: 'A' frame is a material through which slabs can be fitted and stored into. During delivery slabs are transferred by A frames.

5) Color: If the resource is some machinery, then what is the color of it is to be selected.

6) Parent Location: To which location of a company the resource belongs to.

7) Daily Capacity: The daily tolerance of a resource. 

8) UOM: The units in which capacity of resource is measured.

9) Event Type: The type of job the resource is responsible for. If the resource is an employee, the type of work that employee is responsible i.e., plumbing or cutting etc,.

10) Event Category: The category of work the employee is allocated that is fabrication or delivery etc,.

11) Default Task: The default work that an employee is assigned for.

12) Manufacturer: The manufacturer of a resource like machinery and some items used as a resource like truck, vehicle etc,.

13) Serial Number: The serial number is a identification number assigned sequentially or incrementally for an item. It may be character string without only letters.

14) Purchase Date: Purchase date of a resource.

15) Warranty Expiry Date: The date of expiry of a warranty for a particular resource.

16) Warranty Number: The warranty number for certain product.

17) Resource Manager: The manager for look after the resource.

If the resource is an employee, then the employee is provided with login details to view information required.

The employee is a person working in any of department of a company under jurisdiction of company.

Details of a Employee


1. Basic Info

The employee details include,

1) Name of the employee.

2) Employee code.

3) Parent location: The location of company to which he is an employee for.

4) Department: The department of company to which employee belongs to.


2. Contact Information

The contact information include 

1) Primary phone and secondary phone

2) Mobile number details for calling 

3) Fax number to send some documents 

4) Total address of an employee.

5) Apartment number or Unit number

6) Email address for mailing and 

7) Website information to know about the supplier.


3. User Group and Login Information

The user group is the group employee belongs to, that may be administrator, manager, sales person, production manager etc,.

The user also provided with login information if needed, username, password, handheld password etc,.

Handheld Password: The employee is provided with mobile password used to access his module information.


3. Additional Information

1) Whether employee have access to all locations of the company.

2) Whether employee is a sales person to all sale transaction.

3) Whether the employee is paid any commission to.

4) Whether the employee is a project manager.

5) Whether employee is a truck driver.

6) Whether employee is to be allowed to print and export of any lists and reports.

7) Whether the employee is a restricted user i.e., allow access from the list of secure IP addresses only.

A company can have its business in many locations. Each location may be for different purposes or same but if a business want to spread its working with a new location, then here is the following information to be considered.

Details of a Location

1. Basic Info

A location basically contains 

1. Location Code: Location code is for representation purpose and it can be given as starting letters of location name.

Ex: Hyd (Hyderabad)

2. SO: Sorting order of a location is an order based on which it can be displayed.

3. Short Name: Short name can be easy name of location for easy identification of location.

4. Location Type: The location type is based on working of the organisation in that location i.e., distribution, manufacturing unit, quarry, factory, showroom, fabrication shop etc,.

5. Zone: The zone of location can be south or north or east or west.

6. Route: The route location may be the location through which the location can be reached.

2. Contact Information

The contact information include 

1) Primary phone and secondary phone are main official numbers to contact.

2) Mobile number details for calling. 

3) Fax number to send some documents. 

4) Email address for mailing and 

5) Website information to know about the company.

3. Billing Address and Shipping Address

Billing address is to make payments and receipts generally for accounts related activities.

Shipping address is for storing goods as warehouse for business.

Generally address formats differ from each of the country.

Transaction Defaults

Default Sales Person: The person who is taking care of sales in this location.

Default Price Level: The default price level to be followed for stock at the branch.

Default Payment Terms:  Conditions of payment agreed between the buyer and seller for goods sold or services rendered.

Default Sales Tax: Sales tax is indirect tax and is charged at the point of purchase or exchange of certain taxable goods.

Types

Default Generic Customer: Default generic customer is the customer for that location that may be supplier or manufacturer or distributor based on location type.

Default Currency: The default currency information used for transactions.

Additional Information

Whether this location is a profit center or warehouse location pr factory is to be noted.

Average Unit Freight: The freight rate is the price at which certain cargo is delivered from one point to another. The freight depends on the form of cargo, weight of cargo, distance to be transferred and mode of transport.

Average Unit Overhead cost Markup %: The average profit % to be added for each unit after all overhead cost.