Accounting basics

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Library of Resources Accounting Basics


Accounting is used to record transactions for tax purposes, to compare business performance from year to year, and to provide information to Directors and Shareholders.

Transactions can be recorded manually or using a computer.

Manual Accounting

When transactions are recorded manually each source document is recorded in a journal and then posted to a ledger.

Source documents

These are invoices, cheques, credit notes, receipts, purchase orders, statements, bank statements etc which are entered into a Journal.


There are seven journals: -

Cash Receipts Journal – Cash dockets, receipts issued, direct credits, cheques.

Sales Journal – Invoices issued

Sales Returns Journal – Credit notes issued

General Journal – Memos, contracts

Purchases Journal – Invoices received

Purchases Returns Journal – Credit notes received

Cash Payments Journal – Cheque summary, receipts received, direct debits


General: Are the main accounting record of a business which uses double-entry bookkeeping. It will usually include accounts for such items as current assets, fixed assets, liabilities, revenue and expense items, gains and losses. Each General Ledger is divided in two sections. The left hand side lists debit transactions and the right hand side lists credit transactions. This gives a 'T' shape to each individual general ledger account. By Hugo Davidson

Accounts Receivable

Accounts Payable

Final Accounts

Trial Balance

Profit and Loss Statement

Balance Sheet