Computerized Accounting System VS Manual Accounting System

Differences Between Computerized Accounting System And Manual Accounting System

Computerized System:

1. Starts with the account balances in the ledger at the beginning of the period.

2. Analyzes and classifies business transactions by type. Access appropriate menus for data entry.

3. Computer automatically posts transactions as a batch or when entered on-line.

4. The unadjusted balance are available immediately after each posting.

5. The trial balance, if needed, can be accessed as a report.

6. Enters and posts adjusting entries. Print the financial statements. Runs automatic closing procedure after backing up the period’s accounting records.

7. The next period’s opening balance are created automatically as a result of closing.

Manual System:

1. Starts with the account balances in the ledger at the beginning of the period.

2. Analyses and journalise transactions as they occur.

3. Posts journal entries to the ledger accounts.

4. Computes the unadjusted balance in each account at the end of the period.

5. Trial balance is processing step leading to the statements.

6. Prepares the financial statements. Journalizes and posts the adjusting entries. Journalizes and posts the closing entries.

7. Prepare the post-closing trial balance. This trial balance steps 1 for the next period.

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Taxation: Basis Period Of Assessment, Capital Allowance And Loss Relief

The following topics will be discussed in this series, those topics are: -

         a. Basis period of assessment

         b. Capital allowance

         c. Loss relief.

Assessable Profit

The accounting profit arrived at in the trading, profit & loss account is not usually the same as “tax profit”. This is because in ascertaining the accounting profit some expenses which are not allowed for tax purposes may have been reported and some income included in the accounting profit are tax-free.

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Taxation: Capital Allowance And Loss Relief

To read the previous article on basis period of assessment, please click here

CAPITAL ALLOWANCE

Definition

Capital allowance are a form of relief granted to any company which has incurred qualifying capital expenditure during a basis period in respect of fixed assets in use at the end of the basis period, for the purpose of a trade or business. Capital allowance is granted in lieu of depreciation. Capital allowance covers initial allowance, annual allowance, balancing allowance, balancing charges and investment allowance.

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Accounting Treatment Of Consignment

Valuation Of Unsold Stock In Accounting For Consignment Of Goods 

Introduction

The stock lying in the hands of consignee at the end of accounting year is valued at cost or market price whichever is less. The cost of unsold stock or closing stock should be valued at cost to the consignor plus proportionate non-recurring expenses incurred by the consignor and consignee.

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Introduction To Consignment Account

INTRODUCTION

Maximization of profit is the main objective of each and every business. For the fulfillment of this objective, the firm has to increase the sale of goods. For this purpose, the firm has to push its sales by all possible means. The sales can be increased by opening different branches within the territory or abroad. Opening a branch is a costlier affair. Instead of it, the business house may appoint some agents in various areas. The agent sells the goods on behalf of the sender of goods against commission.

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Accounting Treatment For Partner's Salary And Commission, Partners' Interest On Capitals And Partners' Drawing Accounts

Accounting Treatment For Partner's Salary And Commission

 

 

 

 

 

 Introduction

We all know that no partner can entertain any salary or commission unless it is provided by the partnership deed. The salary or commission to a partner could be allowed to her/him if she/he does the most of the work of the firm according to the agreement among the partners. The salaries or commission is paid to the partners for the sake of sacrificing their time and labor to the firm as an emolument.

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Partnership Businesss And Partnership Agreement

PARTNERSHIP BUSINESS

Introduction

The traditional form of business organization is sole proprietary system. Because of weakness in this form (i.e one man talent, capacity, knowledge, skill, qualification, experience and the like), the partnership form of business organization commences in the world of business. In case of sole proprietorship, single person is absolutely responsible for all affairs of the business but there is joint responsibility when talking about partnership form of business organization.

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Cost Volume Profit (C.V.P) Analysis

COST VOLUME PROFIT ANALYSIS 

Introduction

Cost Volume Profit (C.V.P) analysis is the analysis of the relationship between cost and volume of activities and the effect of the relationship on profit. Managers can use the concept of cost-volume-profit analysis to forecast volume of activity at which the firm will break-even or attain target profits. CVP analysis is therefore, a useful tool that helps managers, business owners and entrepreneurs to determine the profit potential of a new firm or the impact on profit due to changes in selling price, cost or level of activities of current business.

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Bad Debts And Provision For Doubtful Debts

BAD DEBTS AND PROVISION FOR DOUBTFUL DEBTS

 

Bad debts

The amount of the debtors which cannot be recovered is known as bad debt. At the end the accounting year, the amount of bad debt is shown as an expense in the profit & loss account and deducted from the debtors. The double entry for recording the bad debt is:

                                Debit             Bad debt account

                                Credit            Debtors account

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Company Accounts

COMPANY ACCOUNTS

Introduction

Company account is a fiinancial information that a company is required to produce at the end of every year, including details of its profits or losses.
 
The capital of a limited company is divided into shares. A person can become the   member of a company if he buys a share, then he is known as the shareholder. If the shareholder has paid in full for the shares he has taken, his liability is limited to the nominal value of those shares only. When the company loses its assets, it cannot ask the shareholders to pay anything out of their private property in respect of the company’s losses. If the shareholder has paid partly only for the shares, he can be forced to pay the balance owing on the shares.

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Manufacturing Accounts

INTRODUCTION TO MANUFACTURING ACCOUNTS

Manufacturing of goods is the transformation of raw materials into finished goods. A manufacturing organization will acquire raw materials, engage labour and other inputs necessary to change the raw materials into finished goods. Manufacturing accounts are prepared to ascertain the cost of goods manufactured during the financial year. It is an extension of the grading account.

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Concept Of Single Entry System And Incomplete Records

SINGLE ENTRY AND INCOMPLETE RECORDS 

Introduction

Single entry system is an incomplete way of recording financial transactions. This system does not record two aspects (debit and credit) or accounts of all the financial transactions. Also, this system has no established or fixed set of rules in recording the financial transactions of the business.

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Hire Purchase Accounting, How It Differs From Installments system And Its Accounting Entries

Hire Purchase Accounting

Introduction

Buying and selling of goods as for the system of hire purchase is different from the cash sales and credit sales. As for cash sales, the buyer pays a sum to the seller and the ownership is immediately passed along with the goods while as for credit sale, the payment is made in future. In the two cases the ownership of goods pass on the buyer.

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Taxation Part 3

If you missed the first two parts, you can read them here by clicking Part 1 and Part 2.

TYPES OF TAX
There are two major types of tax. These are direct tax and indirect tax.

DIRECT TAX
Direct tax as the simply implies refers to the type of tax imposed directly on income of individuals or organizations by the government or its agencies. Such income would include wages, salaries, profits, rents and interests. The burden of direct tax is borne by the payers. The tax payers are usually aware of the payment of such tax.

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Taxation part 2

If you missed part 1, read it here

PROBLEMS ASSOCIATED WITH TAX COLLECTION
Some of the difficulties encountered by tax collectors include in Nigeria:

1. Failure to fulfill civic responsibilities: Many people do not fulfill their civic responsibilities of paying tax as at when due.

2. Failure to declare real income: Many workers and corporate bodies, especially those in private firms, do not declare their real incomes.

3. Failure to meet people's expectation: Many people have the believe that the money they pay as tax should be used only for provision of social amenities. They will resist payment of tax if these anticipated amenities are not provided.

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Taxation part 1

Introduction

Taxation may be defined as the act or method of imposing a compulsory levy by the government or its agency on individuals and firms or on goods and services.

Tax, on the other hand, is defined as a compulsory levy imposed by the government or its agency on individuals and firms or goods and services.

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Company Amalgamation and Revaluation Method

TERMINOLOGIES ASSOCIATED WITH INFLATION
1. Inflationary gap: Inflationary gap refers to an economic situation in which the total demand in the economy exceeds the total supply of goods and services available to satisfy demand. Inflationary gap is calculated as the difference between the total amount of money available for spending and the total money value of goods and services available to meet the demand. The greater the inflationary gap, the greater the rate of inflation in the company and vice versa.

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Land As A Factor Of Production

INTRODUCTION

Factors of production refers to agents, resources or components that are combined together to produce goods and services. We have only four factors of production which are:

1. Land
2. Labor
3. capital
4. Entrepreneur

 LAND
Land can be defined in economics as a free gift of nature.

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Divisions of Subsidiary Books

This is the continuation of the the previous post. To read the Part, click here

The Subsidiary books are divided into six, which are sales day book, purchases day book, sales return, purchases return, general journal and cash book.

1. SALES DAY BOOK
It is a book of original entry in which credit sales are entered or recorded before posting to the ledgers. In the sales day book, cash transactions should and must not be recorded.

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Subsidiary Books And Source Documents

INTRODUCTION
There are two books of accounts, namely:
1. Principal books.
2. Subsidiary books.

Let it be noted that the two books are very necessary in the recording of financial transactions. All transactions must must pass through the books of accounts.
The subsidiary books are explained below while you are to click here for the the principal books.

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