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Accounting is the process by which it identifies, measures, records and communicates economic information about an organization or company, so that managers can assess the situation of the institution. Bookkeeping refers to the preparation of accounting records, so that is where the maximum data adjusted accounting principles used to assess the situation and to obtain relevant financial information of an entity. THE DOUBLE ENTRY What is double entry? The posting of accounting events are made based on the method of double entry tells us that "every accounting event affects at least two accounts." Accounting events are reflected in the company in the form of seats. TO DEBIT: is to make entries on the debit side DEBIT: is a notation in the right side of an accounting double entry TO CREDIT: is to make entries on the credit side CREDIT: is a notation in the left side of an accounting double entry. ACCOUNT: is the way by which record company operations is the right side of an accounting double entry is the left side of an accounting double entry is when the sum of the debit side is greater than the credit side. represent the assets and rights of a company DEBTS: represent the debts and obligations of a company PATRIMONY: is the subtraction between assets and debts DOUBLE ENTRY PRINCIPLE What is the double entry system? The double-entry Double entry means, the system is to simultaneously record two opposing parties (cause and effect) that appear at least in any accounting event. The system is based on the following principles: - In any accounting event there is always a debtor or debtors for the amount of the transaction and a creditor or creditors of the same amount. - In any operation is countable asset or debtor received and creditor that it delivers. - In fact all accounts, the sum of value due to one or more elements of capital must be equal to the sum of value paid to others. - At any time the sum must be equal to the sum of credit. In the system of double the profit or loss can be found in two different ways: a. Result is equal to assets minus liabilities. b. Result is equal to revenue less expenses. - This brings us to the fundamental equation of the system, asset liability plus equity equals (ASSETS = LIABILITIES + EQUITY) also active plus passive equals more revenue (ACTIVE + EXPENSES = A PASSIVE INCOME). WHAT ARE THE FINANCIAL SEATS? One seat is just how to represent an accounting event. Continuing the previous example in which Mr. Cifuentes has paid $ 50,000 to $ 100,000 he owed us. At the time of
collecting money, we should reflect that fact through a seat. Look closely at the structure of a seat: DATE 25-10-2010DESPCRIPTION DOUBLE ENTRY No X CASH AND CASH EQUIVALENTS ACCOUNTS RECEIVABLE PAY OF OUR CUSTOMER DEBIT $ 50,000 $ 50,000 CREDIT