“Accounting Procedures in Educational Institution in Banlgladesh

Term Paper On be Procedures in educational mental home in Banlgladesh North South University (NSU) Supervised by Shapon Kumar Paul chap Professor segment Of chronicle Govt. Bangla College, Dhaka Prep atomic number 18d by Md. Bellal Hossain Bapari BBA (Honours), second Year. Roll. 9593910 Department. of method of deem statement Govt. Bangla College, Dhaka. Date of sub means Govt. Bangla College, Dhaka Letter of Transmittal Date. To supervisor Shapon Kumar Paul Associate Professor Department Of report dodging Govt. Bangla College, Dhaka exit Submission of Term Paper Dear Sir,With due respect it is my cheer to you my boundary paper on lineing Procedures in educational macrocosm in Banlgladesh. I have tried my level best to land sincerely to c everyplace altogether aspects regarding the matter. Though I have set about some limitations to prep be the term paper due to scarcity of bank. Data, era, limitations. I have re altogethery enjoyed the hand croak behind pr eparing the term paper. I hope you will asses my term paper considering the limitations of study. Your good-natured advice encourages me to do hike work. I shall be highly appreciating you if you kindly accept my term paper.Your kind approval is solicited. Sincerely Yours Md. Bellal Hossain Bapari BBA (Honours), second Year. Roll. 9593910 Department. of be Govt. Bangla College, Dhaka. Student resolution I do hereby decl atomic number 18 that the term paper authorise account Procedures in educational Institution in Banlgladesh. submitted in partial(p) encounterment of the extremity for the degree of BBA (Honours) dept write up, National University under Bangla College Dhaka. I too declare that this unit of measurement term paper has prepared by me. Md. Bellal Hossain BapariBBA (Honours), 2nd Year. Roll. 9593910 Department. of Accounting Govt. Bangla College, Dhaka. Letter of sufferance The term paper title Accounting Procedures in educational Institution in Banlgladesh. Submitted as partial requirement of BBA program. This term paper has been prepared by Md. Bellal Hossain Bapari, Dept Accounting BBA program at National University under Govt. Bangla College. This term paper is approved and accepted in tonicity from. Supervisor .. Shapon Kumar Paul Associate Professor Department Of Accounting Govt.Bangla College, Dhaka Acknowledgement At first I would like to stool thanks to almighty Allah who has given me to the opportunity to successfully complete the term paper entitled Accounting Procedures in educational Institution in Banlgladesh. was challenging and interesting program. I would like to give thanks to my proficient supervisor Shapon Kumar Paul for his kind and hearty guidance and close supervisor. It was non possible for me to prepare the term paper right on without his inspection and repair. I am very much grateful to Mr. Md. Abdus Satter Mazumder. Head of Department), Mr. Md. Jamal Hossain Bhyian Sir. Mr. Md. Jahangir Sir. I am in addition grateful to my friends and every whiz who help to me make the term paper. NSUs resourcefulness The vision of North South University (NSU) is to become a leading university and await as a top center of excellence in high education and research. It aims at attracting brilliant students, teachers, scholars, and from all over the world. Mission The mission of NSU is to produce highly skilled manpower, visionary professional leadership and responsible and enlightened citizens.This mission is get hold ofd by imparting high quality higher education, and training, and by conducting useful research so that individuals dissolve light upon their intellectual, healthy-disposed, and personal potentials. NSU is committed to haveing human capital by sharpening creative thinking. In addition to creation and dissemination of knowledge, its mission includes advance of humanism and peace by means of with(predicate) higher education. As a mixer institution, NSU endeavors to indu ce changes for betterment of the society as a whole through public services, and through promotion of ethical behavior and social justice. StrategiesTo fulfill its mission, NSU applies five elemental strategies (1) it offers socially relevant academic programs which meet the changing needs of the students coming from contrastive backgrounds and seeking different career remnants (2) it hires highly qualified and internationally experienced academics to teach the courses / programs it offers (3) NSU, through a rigorous selection process, admits only those students who demonstrate the potential to trace and complete the programs of study they select (4) it provides provide physical and electronic infrastructural facilities, logistic supports and an environment conducive to teaching and learning and (5) it practices the principles of good governance that moderate best management practices and encourage academic freedom and faculty-governance. AccreditationNSU is fully accredit by the University Grants Commission, the only national accreditation authority in Bangladesh. Its Business groom has applied for accreditation of South Asian Quality Improvement brass (SAQS), an accrediting agency created by the Hyderabad-based AMDISA (Association of Management Development Institutions in South Asia) with the technical help from EQUIS (European Quality Improvement System, Brussels and AACSBI, USA. The establishment of SAQS was largely funded by European Union. NSU has already got 2 of the senior Business School Professors ingenious in how to respond to the SAQS accreditation requirements. The B- School of NSU has al almost completed the necessary Self-Assessment process.It is expected that the necessary Peer polish will be through with(p) by SAQS before the end of June 2010. International Recognition The credits obtained at NSU are accepted in most of the reputable universities of USA, Canada, Australia and an early(a)(prenominal) countries. NSU graduates are a ccepted in the ammonium alum programs of Harvard, Cornell, University of Pennsylvania, and other puff up-known universities. Eight Economics graduates of NSU are studying for higher degrees at York University, Canada, with scholarship provided by York University. NSU attracts foreign students from India, Pakistan, Sri Lanka, Nepal, China, Japan, Thailand, Myanmar, Malaysia, Sudan, Saudi Arabia, Iran, Kenya and Nigeria.In addition, under the learning Abroad and Group Exchange program, students from world-class universities of the USA and Canada such as Brown University, University of Illinois, Urbana-Champaign, Penn State University, Smith College, Mt. Holyoke College, Windsor University, York University, and other similar institutions attend summertime semester at NSU and transfer credits back to their parent institutions. The goal of the University is to provide excellent modern education for students with a view to render them with the skill and knowledge necessary to lead th e country in its prosecution for development. Along with this, the University too aims at producing students of high moral standard in its students.Northsouth University (NSU) has the authority, under its charter, to provide instruction to confer Undergraduate and Post Graduate degrees. It has plans to offer MPhil. and PhD programs in all branches of higher studies including engineering, agriculture, language, law and medical sciences. It has also the authority to grant diplomas, certificates and other academic distinctions. It has also the authority to pay new Schools of studies and new institutions on its own campus. The University is draw off by a number of statutory bodies as infallible under the provisions of the clandestine University Act, 1992. contraceptive pillle of Contents drug-addicted MATTER EXPERTISE John McPeek, certified public accountant iii Bud Carlson, CPA iii James Skelton ivChristopher Anderson, MBA iv inventionion WHO NEEDS report POLICIES AND PROCEDU RES The Recent Past 1 The Present 2 The prox 2 ACCOUNTING BASICS 2 Bookkeeping 3 Accounting 3 steming 4 Non- pecuniary selective development 4 pecuniary in fix upion 4 COMPONENTS OF AN ACCOUNTING SYSTEM 5 Revenue steering wheel 6 parliamentary law Entry . 6 change receipts / specifys 6 Accounts due 6 Purchase Cycle 6Purchase frames / Purchasing . 6 interchange Disbursements / Checks. 7 Accounts collectable.. 7 Payroll Cycle 7 oecumenic Journal Cycle 7 How does posting work? 7 ACCOUNTING TERMS AND CONCEPTS 8 Double-Entry Accounting 8 BASIC ACCOUNTING mental synthesis 9 Balance sheet 9 Income pedagogy 10 fundamental Accounting runula 10 digest OF ACCOUNTING CYCLES & ACCOUNTING CONCEPTS 12 ACCOUNTING STRUCTURE ACCOUNTING SOFTWARE PROGRAMS 19 ACCOUNTING METHODS 20Accrual mode. 20 Cash dust 20 Percentage of Completion Method.. 21 REPORTING STANDARDS. 21 GAAP prevalently Accepted Accounting Principles . 21 The Matching Principle .. 22 Con variety showity . 22 m ilitary rank . 22 parentage Valuation. 22 squareity .. 23 TYPES OF REPORTS.. 3 outside narratives.. 24 Compilation 24 Review. 24 inspect 25 SEC Audit .. 25 inner Reports .. 5 SUMMARY 26 manual of arms expression. Tab 2 fragment 1 INTRODUCTION . 5 SECTION 2 INSTALLATION INSTRUCTIONS. 7 Editing Files .. 8 Word Processing (Text) Files File Properties And Style Formats . 8 Printing Files 9 Technical Support. 10 SECTION 3 YOUR ACCOUNTING MANUAL 11 Style and Format . 11 Considerations in writing your manual . 2 Sources of additional study 13 SECTION 4 EFFECTIVE COMMUNICATION. 15 Communication and Addressing Your Audience.. 15 Sexism in Writing 15 Number Usage 16 Organizing Your Thoughts.. 6 Outlining Technique 16 Defining the Format and validation of Your Manual 17 Design Features 18 Style and Mechanics.. 18 Sources of additional randomness 19 SECTION 5 ACCOUNTING PROCEDURES 1 Format . 21 Heading Information . 21 Title And Introduction.. 23 The body Of The Procedure state ment .. 24 Attachments 24 authorisation. 5 payoff And Distribution . 26 Revising And Updating Statements .. 26 Accounting Manual Tab 3 1. 0 Purpose.. 5 2. 0 mountain range.. 7 2. 1 accountability 7 2. Exclusions. 7 2. 2. 1 Internal Auditing .. 7 2. 2. 2 Payroll .. . 7 2. 2. 3 Finance And exchequer 7 2. 2. 4 Information Systems 7 2. 2. 5 Security readying . 7 2. 2. Disaster Recovery. 7 3. 0 Management office 9 3. 1 Accounting Organization.. 9 3. 1. 1 Accounting Department Organization Chart 9 3. 1. 2 Finance & treasury Responsibilities 10 3. 1. 3 Controller Responsibilities. 10 3. 1. Accounting Staff Responsibilities.. 11 3. 1. 5 Operations Staff Responsibilities .. 12 3. 2 Management inscription. 12 3. 3 Management Accounting Policy. 12 3. 4 Planning . 13 3. 4. 1 Accounting Objectives 13 3. 4. Accounting System Planning .. 13 3. 5 Responsibility, Authority, And Communication . 13 3. 5. 1 Responsibility And Authority .. 13 3. 5. 2 Management Re accedeative 13 3. 5. 3 In ternal Communication.. 14 3. 5. 4 acknowledgmentd Procedures 14G Management Reports Activities 1. 0 Preparation Guidelines 2. 0 Daily Flash Report 3. 0 each week monetary Report 4. 0 Six- workweek Cash Flow Report 5. 0 Budget Vs. Actual Report 6. 0 fiscal Statements 7. 0 Department Reports References A. Federal Accounting Standards Board (FASB) B. superior generally Accepted Accounting Principles (GAAP) Forms G Ex1 Department Reporting epitome G Ex2 Daily Flash Report G Ex3 Weekly Financial Report G Ex4 Six Week Cash Flow Report G Ex5 Budget vs. Actual Report G Ex6 Financial Statements G Period-End Review & Closing Activities 1. 0 Closings Preparations 2. 0 Balance Sheet assets 3. Balance Sheet Liabilities And Stockholders Equity 4. 0 Income Statement Revenues 5. 0 Income Statement Expenses 6. 0 Financial Ratio Analysis G&A106 Controlling heavy Costs Activities 1. 0 Arbitration 2. 0 Legal Services 3. 0 Legal Billings G&A107 appraisees And redress Activities 1. 0 Organizatio n Fees And Taxes 2. 0 Business Activity Fees And Taxes 3. 0 Payroll Fees And Taxes 4. 0 scrape up Taxes 5. 0 Other Taxes And realizations 6. 0 Tax Payments 7. 0 Insurance References A. Trust Fund Recovery Penalty Forms G&A107 Ex1 Federal Tax Calendar G&A108 Property Tax Assessments Activities 1. 0 Review Of Assessments 2. 0 Appealing Of Assessments G&A109 Confidential Information Release Activities . 0 Financial Information Requests 2. 0 Personnel Information Requests 3. 0 source Reference Inquires Forms G&A109 Ex1 Non-Disclosure Agreement G&A110 memorandum Control Activities 1. 0 instrument Distribution 2. 0 text file Revision 3. 0 Procedure and subject Instruction Format 4. 0 Temporary Changes Forms G&A110 Ex1 Request For Document Change (RDC) G&A110 Ex2 Document Change Control CSH101 Cash knee breeches And reference work Cards Activities 1. 0 Opening 2. 0 proceedings 3. 0 Special Tender Items 4. 0 Closing 5. 0 Chargebacks And Disputed Transactions 6. 0 Security Precauti ons Forms CSH101 Ex1 Daily Cash Report CSH102 Cash Receipts And Deposits Activities 1. Receiving Cash Drawers 2. 0 Application Of Accounts Receivable 3. 0 Deposit Forms CSH102 Ex1 Deposit lumber CSH103 Problem Checks Activities 1. 0 Unsigned Checks 2. 0 partial derivative Payment Checks Marked Payment In Full 3. 0 Returned Checks 4. 0 Redeposited Checks References A. Uniform Commercial enrol (UCC) B. cock-a-hoop Check Law Forms CSH103 Ex1 Bad Check Notice CSH104 Wire transportation systems Activities 1. 0 Incoming Wires 2. 0 extravertive Wires References A. FRB Reg D Reserve Requirements Of Depository Institutions B. FRB Reg E Electronic Fund Transfer Act Forms CSH104 Ex1 Bank Wire Instructions CSH104 Ex2 Wire Transfer Form CSH105 Check Signing Authority Activities 1. Authorized Check Signers 2. 0 changing Check Signers 3. 0 Authority Levels Forms CSH105 Ex1 Check Signing Authority Log CSH106 Check Requests Activities 1. 0 Check Origination 2. 0 Check keep back Payment Forms CSH106 Ex1 Check Request CSH107 Bank Account Reconciliations Activities Bank Statement Preparation Computerized Format Manual Preparation And conciliate Items Computerized Preparation And Reconciling Items Adjustments And Other Troubleshooting Forms CSH107 Ex1 Sample Bank And Book Balances Reconciliation Inventory & additions . Tab 6 INV101 Inventory Control Activities 1. Inventory Stocking And Storage 2. 0 Inventory Usage 3. 0 Inventory Protection 4. 0 Inventory Obsolescence 5. 0 Inventory Disposal References A. Food And Drug Administration (FDA) Food Code Forms INV101 Ex1 Inventory requisition INV102 Inventory Counts Activities 1. 0 Inventory Types 2. 0 Preparation For Inventory Counting 3. 0 Period End Cut-Off 4. 0 release Physical Count Cost (Or Sku) Method gross revenue Order Routing And Review accounting Preparation And plug-in Distribution Accounts Receivable rev106 Invoicing And Accounts Receivable Activities 1. 0 2. 0 3. 0 4. 0 Forms REV106 Ex1 Invoice REV 106 Ex 2 A ccounts Receivable Write-Off Authorization REV107 cut-rate sales Tax CollectionActivities 1. 0 base of operations Of Tax 2. 0 Applicable Sales Tax Rates 3. 0 Non appraiseable Sales 4. 0 Sales Outside Of Our Jurisdiction 5. 0 Sales Tax Billing REV108 Progress Billing Activities 1. 0 hale Types 2. 0 Breakdown Of Contract Amount 3. 0 Progress Claims 4. 0 Release Of Holdback REV109 Account Collections Activities 1. 0 Collection Process 2. 0 poorly Delinquent Or Unresponsive Accounts 3. 0 Working With Collection Agencies 4. 0 Writing Off Uncollected Debt References A. Fair Debt Collection Practices Act (FDCP) Forms REV109 Ex1 Account Collection Control Form REV110 Customer Returns Activities 1. 0 Origination 2. 0 Receiving Goods And Processing 3. Returned Goods Disposition Forms REV110 Ex1 30-Day Satisfaction Guarantee REV 110 Ex2 Returned Goods Authorization Purchasing PUR101 vender Selection Activities 1. 0 Vendor Selection 2. 0 Vendor controls 3. 0 Vendor Files Forms PUR101 Ex1 New Vendor Notification PUR101 Ex2 Vendor Survey Form PUR102 General Purchasing Activities 1. 0 Order end And Requisition 2. 0 Order Placement 3. 0 Recordkeeping And Matching 4. 0 Sundry Purchases Forms PUR102 Ex1 Purchase Requisition PUR102 Ex2 Purchase Order PUR102 Ex3 Purchase Order Log PUR102 Ex4 Purchase Order Follow-Up PUR102 Ex5 Daily Sundry account collectible Log PUR103 Project Purchasing Activities 1. 0 Purchasing Overview 2. 0 Requisition For Material Order 3. 0 Orders And Arrivals 4. Follow-Up 5. 0 Receiving Procedures 6. 0 Material Transfers 7. 0 Sundry Purchases Forms PUR103 Ex1 Order And Arrival Log PUR104 Receiving And Inspection Activities 1. 0 Receiving 2. 0 Inspection 3. 0 Rejection, Discrepancies And Disposition 4. 0 Stocking 5. 0 overlap Returns Forms PUR104 Ex1 Receiving Log PUR104 Ex2 Receiving and Inspection Report PUR104 Ex3 Inventory Inspection Levels PUR105 Shipping And transport Claims Activities 1. 0 Shipping 2. 0 Receiving 3. 0 Claims Procedures 4. 0 supererogatory Information Resources References A. Interstate Commerce Act PUR106 Accounts payable And Cash Disbursements Activities 1. 0 Documenting Accounts Payable 2. Recording Merchandise Payables 3. 0 Recording Non-Merchandise Payables 4. 0 Payment Of Accounts Payable 4. 0 Manual Checks Embezzlement Prevention Tab 9 SUBJECT MATTER EXPERTISE .. v Dana L. Turner .. v 1. 0 organizational STRUCTURE AND FUNCTIONS.. 1 1. 1 Where Embezzlers Look For Opportunities.. 1 1. Corporate purification 1 1. 3 Code Of Conduct 2 1. 4 Summary .. 2 2. 0 EMPLOYEES RIGHTS . 3 2. 1 Establishing The Companys And Employees Rights . 3 2. 2 Employee Rights To concealing And Related Issues 3 2. The Employee Polygraph Protection Act. 4 2. 4 warning To Suspect Employees. 5 2. 5 Summary . 6 3. 0 EXAMPLES OF misapplication SCHEMES .. 15 3. 1 Misuse Or Misappropriate Funds.. 15 3. 2 The Most Popular Embezzlement Schemes 15 3. Summary .. 16 4. 0 CRITICAL AREAS OF RISK TO defalcation.. 17 4. 1 Areas O f insecurity .. 17 4. 2 Summary . 22 5. 0 UNIVERSAL SYMPTOMS OF EMBEZZLEMENT ACTIVITY 23 5. 1 Embezzlements Are Predictable.. 23 5. 2 Motives For Committing Embezzlement 23 5. Summary 26 6. 0 PROFILE OF AN peculator .. 27 6. 1 Common Characteristics Shared By Most Embezzlers.. 27 6. 2 Summary 28 INV103 Fixed Asset Control Activities 1. 0 Acquisitions 2. 0 Dispositions 3. 0 Asset Records Forms INV103 Ex1 Capital Asset Requisition INV103 Ex2 Asset Disposition Form INV103 Ex3 Bill Of Sale INV104 Customer Property Activities 1. Receipt, Inspection And Stocking 2. 0 Unsuitable Or Missing Items 3. 0 Customer Supplied Tooling And Fixtures 4. 0 Intellectual Property Forms INV104 Ex1 Material Return Notice INV105 Fixed Asset Capitalization & Depreciation Activities 1. 0 Capitalization 2. 0 Depreciation References A. IRS issuing 946 How To Depreciate Property Revenue Tab 7 REV101 Sales Order Entry Activities 1. 0 Sales Representatives 2. 0 Internet Orders 3. 0 Credit Department 4. 0 Sa les Administration 5. 0 Manufacturing/Shipping 6. 0 Customer Service 7. Accounting/Billing 8. 0 Changes To Orders 9. 0 Additional Information Resources REV102 Point-Of-Sale Orders Activities 1. 0 Point Of Sale 2. 0 Sales Orders And Invoices 3. 0 Sales Invoices And Accounts Receivable REV103 Customer Credit Approval And hurt Activities 1. 0 Credit Application 2. 0 Credit Investigations 3. 0 Credit Approval/Rejection 4. 0 Additional Information Resources References A. Equal Credit fortune Act (ECOA) B. Truth In Lending Act (TILA) C. Fair Credit Billing Act (FCBA) D. Fair Credit Reporting Act (FCRA) E. FRB Reg B Equal Credit Opportunity Act F. FRB Reg Z Truth In Lending Act Forms REV103 Ex1 Credit ApplicationREV103 Ex2 Request For Credit Approval REV 103 Ex3 Credit Inquiry REV104 Sales Order Acceptance Activities 1. 0 Document Verification 2. 0 Telephone Confirmation 3. 0 Order Acceptance Forms REV104 Ex1 Phone Confirmation Checklist REV105 commitment Of Goods Activities 1. 0 Shippi ng Inspection And encase 2. 0 Export Shipping 3. 0 Manifest Systems 4. 0 Shipment Pick-Up 5. 0 Additional Information Resources Forms REV105 Ex1 Shipping Log REV105 Ex2 Commercial Invoice Who Needs Accounting Policies and Procedures? This first appearance is an accounting primer to explain the basic concepts of accounting, its structure, standards and definitions. The need to review these concepts is greater now then ever.On one hand, universal accounting programs for small and mid- size of itd feares have become much widely employ than ever before, and on the other hand, industry consolidation has signifi bungholetly bring down the accounting program choices to just a handful. These choices are typically inexpensive, clear to implement, and come with little support to develop appropriate policies and procedures to ensure that the entropy generated by these programs is accurate and complete. Entry-level packet like Quickbooks and midlevel software program like MAS-90 or G reat Plains share this common deficiency. The support credentials is long on the explanation of exploiter features and short on policy and procedural advice for appropriate use. The Recent Past Only twenty years ago, small to middling sized headachees faced daunting choices for selecting an accounting system. at that place were only three choices save to use a full manual system (a encyclopedic pegboard one-write system, employing many a(prenominal) ledgers anchored to an imposing cloth bound general ledger book that rivaled the size of the largest Websters Dictionary), barter for or lease a computerized accounting system, or work your own. The manual systems were not trivial. They were produced by major firms, which provided on-site implementation and training. These systems were well documented with many policies and procedures create into the regimented use of the one-write journals and corresponding ledgers. An secondary stopping point was to purchase or lease an auto mated information system.But this required another decision of whether to buy a ready do ingathering or build your own. To make this decision, the company would typically hire a consultant or CPA firm to perform a comprehensive needs analysis. The consultant would eventually select, either a commercially built multi-module accounting program (like Solomon, our Real World), or a programmer to develop the structure from custom code (RPG was a frequent language employ to create custom accounting programs). Either one of these alternatives would have to run on a leased or purchased dedicated mini-computer system, (the IBM 36 was the popular mid-size business organization choice for many years).Both solutions required tremendous resources in time and money. Even the ready made solutions required plenty of additional programming to fit it into the specific companys needs. For a half a year or to a greater extent, various consultants, programmers and specialists would write code, te st and rewrite code. In either case, documentation was paramount. Hence policies and procedures, as they applied to the mechanics of the accounting system were well documented as a by-product of the installation and implementation procejss. The append costs in the purchase or lease of the hardware and software (ready made or custom built), and in the companys own human resources, was staggering. The PresentImagine the months of decision fashioning preparation, the months of development, the reams of documentation and the total costs that easily went from tens of thousands, to hundreds of thousands of dollars. Compare this to the present practice occurring throughout the country on a quotidian basis. The owner, or the owners controller or other designee walks into a local retailer, picks up a copy of the most successfully marketed accounting software package, (ie the one occupying the most prime and visible shelf space), drives back to the office, and loads the program on any avai lable PC computer. There you have it the decision making process, needs analysis, implementation and installation all for the price of $299 The future The future begins today, with your purchase of this 4expertise Accounting Policies and Procedures Manual.This manual is needed more now than ever. Accounting systems are more accessible than ever before. Unfortunately, they come with no instructions. The user guide that comes with the accounting software only explains what the menu options do, it doesnt explain which options chair in sound accounting practices. Accounting software is looking more and more like your own internet browser home page, (no affect since each manufacturer is competing to be your primary web portal). In the process, the existent functions of accounting are less obvious, and as a result, less understood. This introduction is a look behind the scenes of the splash screen.Hopefully, by soul the concepts and consistent accounting rules utilized by all accounti ng software programs, you will develop more confidence to rely on the information generated by the program and you will be able to use it more effectively to run your company. Accounting Basics Three important hurt that are easily conf utilize Bookkeeping Accounting Reporting What are they and how do they interrelate? Bookkeeping Bookkeeping and accounting share two basic goals To keep track of income and expenses, thereby improving The Companys ability to achieve profitability To collect the necessary fiscal information about The Companys business to file required reports and tax returns Bookkeeping refers to the actual transactional entering and preserve of data. Examples are writing checks, processing payroll, making deposits, recording outlays and recording receipts. AccountingAccounting encompasses the broader responsibilities over developing and maintaining the accounting system under which clerking functions are performed. Accounting is concerned with the timely and accurate recording of transactions, providing useful management information, and properly coverage such information for various user needs. Developing and maintaining an accounting system involves setting up and maintaining an appropriate chart of accounts for the particular business. Policies and procedures are then established to provide guidance for all possible financial transactions, from source documents (checks, gross sales orders, and so on ), to journals (payroll journal, money disbursement journal, invoice register, and so on , to the general ledger, (based on the chart of accounts), and ultimately to a variety of reports for all internal and external needs. Bookkeeping and reporting can be eyeshot of as the input and output of a complete accounting system. Accounting policies and procedures ensure Reporting Reporting, (the output of the data generated through various bookkeeping functions), is used for some(prenominal) internal and external purposes. Internal Repor ts are reports used within the company, by both management and other designated personnel. Internal reporting can be further divided into financial and non financial data. Non-financial data Non-financial data includes a variety of measurement and productivity data, applicable to the specific business.These can be daily customer count, web page hits, work action mechanism per employee hour, units and total weight of product shipped, or even daily weather conditions. Financial data Examples of financial data reports include Financial statements Profit and sacking reports (income statement), balance sheets and specie flow statements Daily reports with life-sustaining balances, such as, sales, bullion level, inventory, accounts due and accounts payable Segmented profit and loss reports (or P/L) on specific jobs, profit centers or departments Register reports, list all transactions for specific areas such as, payroll, checks, receipts, invoices, etc. Listings of source data files such as customer, employee, vendor and inventory lists. Aging reports for both Customers (accounts receivable or A/R) and Vendors (accounts payables or A/P) Inventory reports for costing and paygrade Exception reports open purchase orders, back orders, inventory stock outs. External reports generated for the use of people or organizations outside of the business. Report data and format will vary depending on user Banks, lending institutions. To observe the financial viability of a business and to determine its ability to support additional amounts and types of debt finance Employees. To determine the stability of the business of their employer this may be useful in wage negotiations Suppliers. To assess the suitability of granting credit terms to a business Existing and Potential Investors.To assess the potential risk of investing in a business and to monitor the status of existing investment in a business Public. To gain more insight into any business, which is li citly required to make certain financial information available Government. To fulfill the requirements of all applicable local, state and federal reporting statutes, including income, sales, insurance, property, and payroll tax returns Media / Press. To use available business reports in specific trade and business publications Components of an Accounting System The financial transactions of any accounting system can be grouped into four major transaction make pass groups Revenue Cycle, Purchase Cycle, Payroll Cycle, and General Journal Cycle.Transactions in the form of sales invoices, receipts, purchase invoices, checks and payroll entries are stick on to the appropriate journals. Simultaneously, these postings are also recorded in the General Ledger. The General Ledger accumulates all transaction activity, organised by account classification. Various reports, including financial statements can then be prepared from the data collected in the General Ledger. corrections or nece ssary adjustments can be made to the General Ledger by creating adjusting journal entries, post to the general journal. The watching synopsis on the next two pages provides more explanatory detail on these four cycles . Revenue Cycle Order Entry Invoices entered through ship entry, through sales orders or through a point-of-sales system, (such as a cash register) are stick on to the sales journal. These entries also accumulate on the accounts receivable ledger, organized by customer. If the business maintains an inventory, the posting of sales also affects the inventory ledger. Finally, all sales journal activity is also affix to the general ledger Cash Receipts / Deposits Receipts on sales and other bank deposits are post to the cash receipts journal. Sales receipts information also accumulates on the accounts receivable ledger, organized by customer.These postings are also entered on the bank account ledger. Finally, all cash receipts journal activity is also posted to the ge neral ledger. Accounts Receivable Accounts Receivable is a separate journal that records both sales and cash receipt data by customer. The data comes from the postings to the cash receipts journal and the sales invoice journal. 2. Purchase Cycle Purchase Orders / Purchasing Invoices entered through direct entry or through purchase orders are posted to the purchase journal These entries also accumulate on the accounts payable ledger, organized by vendor. If the business maintains an inventory, the posting of purchases also affects the inventory ledger.Finally, all purchase journal activity is also posted to the general ledger Cash isbursements / Checks Payments on account or for expenses are posted to the cash disbursement journal. Payment on account information also accumulates on the accounts payable ledger, organized by vendor. These postings are also entered on the bank account ledger. Finally, all cash disbursement journal activity is also posted to the general ledger. Accounts Payable Accounts Payable is a separate journal that records both sales and cash receipt data by vendor. The data comes from the postings to the cash disbursement journal and the purchase journal. 3. Payroll Cycle Payroll data, by employee, for each payroll data is entered into the payroll journal.These postings are also entered in the cash disbursements journal and the payroll ledger. Finally, all payroll journal activity is also posted to the general ledger. 4. General Journal Cycle Corrections or adjustments to the above major transaction cycles can be made through adjusting journal entries, posted directly to the General Ledger. These are compiled in a separate journal, known as the General Journal. How does posting work? The specific postings, as outlined in the cycles above, do not needs take place as separate steps, especially in computerized environments. There are only two basic methods of posting in computerized accounting systems real-time posting and batch posting.In rea l-time posting, the source transaction, (check, bill, payment, receipt, etc. ), is posted to the specific journal and any related subsidiary ledgers (accounts receivable, accounts payable, inventory, bank account, etc. ), and is simultaneously posted to the general ledger. In batch posting, the journals and subsidiary ledgers are posted, but entries are not yet posted to the general ledger. Posting these journals to the general ledger is done separately. Typically, a group of transactions is entered, a full days worth, for example. Later, after the journals are reviewed for accuracy, this entire days group, or batch is posted to the general ledger.To understand this posting process better, it would be helpful to follow specific transactions through a sample company. First, however, we need to trammel various accounting terms and concepts. Accounting Terms and Concepts Double-Entry Accounting We can justifiably thank the 14th century Italian merchants for developing the doubleentry system of accounting that we still use today. It is widely believed that Benedetto Cotrugli was the first to document this concept of double-entry accounting. In 1458, he wrote Delia Mercatura et del Mercante Perfetto (Of Trading and the Perfect Trader), which included a sketch chapter describing many of the features of double entry accounting.Years later in 1494, Luca Pacioli, from San Sepulcro in knightly Tuscany, published The Summas 36 short chapters on bookkeeping, entitled De Computis et Scripturis (Of Reckonings and Writings), so that the subjects of the Duke of Urbino could learn how to conduct business and to provide the trader with a ready method to determine his assets and liabilities. For centuries before, commercial transactions had been recorded and journalized, whether on paper, papyrus or clay tablets. However, these journals provided only totals of transaction groupings. It was the Italians that first recognized that it is unacceptable for a business transactio n to occur without affecting at least TWO accounts. There can never be only one effect from a transaction.An Italian farmer sells wood to a ship builder for four hundred ducats. To account for this transaction he would record wood sale 400 ducats. His sales account has been increased by 400 ducats. But, what else has happened? What other account was affected? His cash account also increased by 400 ducats. What if he sells his wood to the shipbuilder on credit, and he receives no cash? In this case its his accounts receivable account, which increased by 400 ducats. There are always, at least two sides to each transaction. Later, when the shipbuilder pays his debt to the farmer, the farmer records an increase in his cash and a decrease in his accounts receivable by 400