Debits and Credits vs.

Account Types Account Assets Liabilities Income Expenses Type Debit Increases Decreases Decreases Increases Credit Decreases Increases Increases Decreases

What is the meaning of reconciliation in Accounting area? Reconiciliation stands for sorting out the differences between two given Account statements. Service Tax is levied by Central Government on professionals & service providers which is deducted & deposited by their clients/ customers while making payment to them. TDS stands for Tax Deducted at Source. After end of year, assessment of tax is done & total tax payable is calculated. Out of this tax payable the Tax which has already been deducted while receiving payments from employer/clients (TDS) is adjusted & amount remaining is either paid or claimed for refund. in Nutshell, its tax paid in advance on your behalf by your associates. VAT (Value Added Tax) stands for imposing tax only on value increased during process of manufacturing or sales. Generally the end seller gets credit equivalent to amount of tax which has been already paid by others.

three golden rule of A/c Personal A/c- Debit the receiver. Credit the giver. Real A/c - Debit what comes in. Credit what goes out. Nominal a/c - Debit all incomes and gains. Credit all Expenses and losses. General Journal Entries The journal is the point of entry of business transactions into the accounting system. It is a chronological record of the transactions, showing an explanation of each transaction, the accounts affected, whether those accounts are increased or decreased, and by what amount. A general journal entry takes the following form: Date

Name of account being debited

Amount

Name of account being credited

Amount

Optional: short description of transaction Consider the following example that illustrates the basic concept of general journal entries. Mike Peddler opens a bicycle repair shop. He leases shop space, purchases an initial inventory of bike parts, and begins operations. Here are the general journal entries for the first month: Date

Account Names & Explanation

Debit

Credit 9/1

Cash

7500

Capital

7500

Owner contributes $7500 in cash to capitalize the business.

9/8

Bike Parts

2500

Accounts Payable

2500

Purchased $2500 in bike parts on account, payable in 30 days.

9/15

Expenses

1000

Cash

1000

Paid first month's shop rent of $1000.

9/17

Cash

400

Accounts Receivable

700

Revenue

1100

Repaired bikes for $1100; collected $400

cash; billed customers for the balance.

9/18

Expenses

275

Bike Parts

275

$275 in bike parts were used.

9/25

Cash

425

Accounts Receivable

425

Collected $425 from customer accounts.

9/28

Accounts Payable

500

Cash

500

Paid $500 to suppliers for parts purchased earlier in the month.

Most of the above transactions are entered as simple journal entries each debiting one account and crediting another. The entry for 9/17 is a compound journal entry, composed of two lines for the debit and one line for the credit. The transaction could have been entered as two separate simple journal entries, but the compound form is more efficient. In this example, there are no account numbers. In practice, account numbers or codes may be included in the journal entries to allow each account to be positively identified with no confusion between similar accounts. The journal entry is the first entry of a transaction in the accounting system. Before the entry is made, the following decisions must be made: which accounts are affected by the transaction, and which account will be debited and which will be credited. Once entered in the journal, the transactions may be posted to the appropriate T-accounts of the general ledger. Unlike the journal entry, the posting to the general ledger is a purely mechanical process - the account and debit/credit decisions already have been made.