Welcome to my presentation on the accounting journals in economics in India and its application in a double entry bookkeeping just a quick introduction to me I am IAT qualified and completed levels two three and four I’ve been working in finance now since 2016 and fulfill my passion for teaching in supporting others through these videos my aim is to help students understand the key concepts of the AAT course so I have created my own materials to show you the way that I learned as these materials are my own I must state I’m not endorsed by AAT simply a former student wanting to help others with their accountancy studies I hope these are beneficial to you I wish you good luck and success okay so we’re going to start then just by looking at what exactly a economics journals in India is so it’s a book of prime entry so just like you have your sales but sales day book and your purchase day book they’re your books of prime entry and the journals in economics in India is a book of prime entry for non regular accounting transactions so what’s the process well the process behind this is that the economics journals in India will record the transaction before entering into the double entry bookkeeping system so this means like when you have your purchase invoice coming from a supplier you record it in your book of prime entry and then it gets entered into the system it’s the exact same thing except these are the things that are non regular so it’s going to be your sort of emails and letters that you might receive for in for adjustments it’s going to be irrecoverable debts it’s gonna be payroll entries anything like that that there isn’t there isn’t normally an actual document for as such but this is about recording the transaction before entering it into the double-entry bookkeeping system so we can hear it see here that we’re going to have the non regular transaction at the top there and as I say this could be a financial document or it be something like payroll you’ve got the journals in economics in India that you create which is your book of prime entry and then the double entry bookkeeping happens after you’ve done the economics journals in India which gives you your debit and credit entry so why do we need them then well it kind of acts a little bit like a notebook so the book of prime entry the journals in economics in India book of prime entry acts like a notebook so it makes a note of things that you might forget about or you might not know remembering you know a few months time why you’ve put transactions through so it’s a little bit like a notebook it reduces the risk of errors and fraud so in a lot of companies journals in economics in India will have to be approved by managers before they’re actually entered so this means that they’re not only going to be checked for accuracy but it also means that the risk of fraud going through so they’re for fraudulent transactions being put into the accounting system more likely to be picked up because they’re being checked by a manager and lastly it’s also a form of audit trail so for all those sort of irregular transactions that need to go through ones where we haven’t got invoices anything like that it acts as our audit trail so you can always follow it back so once the journals in economics in India in and posted you can then follow it back to the book of prime entry which will then give you the more detail on the entry so all the key elements then of a economics journals in India generally speaking layouts can vary between companies so it depends on on the company and what their process is and what if your journals in economics in India might look ever so slightly different not not vastly but just the the columns and things that you need to use might look slightly different but in general there a sort of standard and it should usually include the following things so you need to know what date you’re going to be posting it the descriptions and details a reference or nominal so that could be a code that you need to post it to it could be staff initials it could be project related anything like that that might be of a reference for that particular journals in economics in India that would be useful and then obviously you’ll have your your debit and credit values as well and of course our journals in economics in India must always balance to zero so our debits must always equal our credits which is you know one of the key things of double entry bookkeeping so as an example then here. I just want to quickly show you what it might look like so so this business here has had some bank charges in July so we’ve got our date here in the month that we’re going to be posting the bank charges we’ve got the accounts that it’s going to be affecting the reference here is just that it’s in the cash book for the bank and it’s in a general ledger for and the charges so this is going to the charges account and then you’ve got your debit and your credit so the bank charges 15 pounds so it’s left the bank account and it will go into the expense account for charges so that’s your basic one so moving on to what journals in economics in India might be used for journals in economics in India are regularly used for opening entries in the business so when you’re starting a business the opening entries are needed to show the starting assets and liabilities okay so when a business starts you’re always gonna have your starting assets and liability so these are going to be your opening entries so just to go through an example of this then you are a trainee accountant at practice and you’ve received the following information about the assets and liabilities of a new business first of August draw up the economics journals in India required to enter these into the double-entry system so here then you can see we’ve been given the different amounts that need to be entered as opening entries for this new business so I’m going to bring up a little table which I’ve just set out so that we can then talk through it so this is the table that we’re going to see it follows the same format as the journals in economics in India entry that we saw previously so now we can go through and we can fill it in so just to start then let’s look then we’ve got cash in Bank here we’ve got inventory we’ve got supplier accounts computers and capital so already here you can see that I’ve populated the accounts just to save a bit of time on the video here so we’re going to have our bank account we’re gonna have an inventory account we can have our purchases or control account or computer account and then our capital account now before we get started here it’s worth to sign that the capital account here is a little bit like a balancing account because all you’ve always got to have your accounting formula balancing so to do that you quite often have to have a balancing figure and in this instance you can create the capital account by using that so your accounting formula of capital equals assets minus liabilities so you’re going to have your capital equals assets minus liabilities and that’s how you’re going to get to your capital account okay. I’m going to focus on them on drawing up the account rather than the actual equations to get there just so that you’ve got the the process of how to draw up a economics journals in India entry so let’s start then with our cash in bank so our cash in bank there is going to be our debit balance so we’re going to put 1,000 pound there bit there our inventory we’ve got an inventory of 5000 so that’s going to be an asset as well to us that’s going to be our debit balance now our supplier accounts our supplier accounts as money that we owe to suppliers so that’s going to be a liability account so that’s going to be our Purchase Ledger control account so you’re going to have your 1200 balance there you computers computers who usually fix the set so therefore they’re going to be an asset account so that’s going to be a 2000 debit balance there and then your capital account is your balance in figure of 6800 so you can see that if you if you then add this all up you’ve then got 8000 here and 8000 here so both your debits and your credits equal each other okay so all of your journals in economics in India must equal each other and therefore balance off to zero okay so another entry that may go in then through journals in economics in India that you might have to process it will be your payroll so it’s a step by step approach to record the wages that have been paid National Insurance Contributions PA ye-es and other contributions such as you know trade union membership fees etc so we’ll walk through an example and now just to say in this video I’m just going through the basics of putting the journals in economics in India together there will be another video that will show how the payroll is actually worked out so how the the figures that we get to in the journals in economics in India are actually put together so this is just identifying what will be a debit and a credit but I’ll actually go through the steps to calculating when you’re given these figures that you can see on screen at the moment I will in the other video I will go through to show you actually how we calculate those journals in economics in India so you’re a trainee accountant at practice and you’ve received September’s payroll information to enter into the system so you need to create the economics journals in India to do this so you’re given here a whole set of numbers for the different elements of payroll we’re going to move on to the next slide and we’re going to pop them in the correct parts of the journals in economics in India so bringing up the information then that we were given on the previous slide and also a table which we’re going to talk through it as well before we put the figures together so we’ve got all of our figures here as to what was involved in the payroll for September and for each payroll economics journals in India will have a wages control account and expense account we’re going to have a bank. HMRC and an employee pension now as I said previously there is going to be a more detailed video focusing solely on what figures go into creating these journals in economics in India but just for the purposes of drawer enough per journals in economics in India I’m just going to pop the figures in in in the way that it needs to go in to balance it off to be able to post it so our wages expense account then so that’s going to be what is the actual cost to the business for September’s payroll and that actual cost to the business is going to be seventeen thousand eight hundred and fifty pounds and the other side to that is going to be our wages control account okay so that’s effectively our liability and that’s our expense account okay so again with your double-entry always look at your types of accounts and I have got other videos on double-entry and types of accounts as well and make you understand the difference between debits and credits and what accounts and why they’re applied so now you’ve got this sitting in your wages control account you’ve got your 17850 sitting in your wages control account by the rest of these journals in economics in India we then need to balance that off to zero okay so that’s holding it as our liability and now we’re going to pop it all in the correct pots effectively so the net wages then will the net wages is actually what is paid to the employee so that’s what goes into their bank account as their monthly salary so that’s going to be their net pay so we’re then going to debit our wages control account the net pay figure and credit the bank because it’s coming out of the bank and pay in our staff we then have to take into account what our liability is to HMRC so again we’re gonna debit the amount the total amount that’s due to HMRC which in this case is going to be six thousand three hundred and we’re going to credit the HMRC account because that’s our liability that’s what we’re saying at some point we’re going to pay them and then likewise our pension we’re gonna take fifteen hundred into the control account debit that into the control account and then it enters our pension liability account because that’s what we’re gonna have to pay going forwards so then you can see that if you were then to add up your debits and your credits it will come to zero and your wages control account here your 17850 is debited 1005 zero for your net wages it’s also debited six three hundred for your HMRC account and then fifteen hundred for your pensions and those three there is the same as seventeen eight fifty so when you look at your wages control account which I’ll go through in a separate video and those to balance off and that’s how you produce the economics journals in India for your payroll monthly okay so the other time you’re likely to be using journals in economics in India then is to record irrecoverable debts so when a business is going to be unable to recover debts from a customer these need to be entered into the accounting system to write them off and to adjust the sales that your account okay so this is like an adjustment going through because customers gone bankrupt you’re not going to get any money from them so you need to have that you’ve got remove it from your sales at your account it will be written off into a bad debt or an irrecoverable debts account and we need to do that via preparing a journals in economics in India so just to walk through it then an example of this would be a year an Accounts Assistant VAT registered business and have been advised that customer RT forty five has gone bankrupt and is now unable to pay their two thousand six hundred and forty pounds balance prepare the economics journals in India required to enter this into the accounts as at the 31st of October so again I’m going to bring up a little table now I’ve already created and and we’re going to walk through it like we have done before so so the first of October is our date here’s our description of what what the journals in economics in India is all about a case of the balance of customer our t45 account write-off due to them going bankrupt and then we’re going to have three accounts here that are going to be affected so the key and this bit of information that we’re given is that we’re told that we are an assistant an Accounts assistant and that registered business so that means when we raised our sales invoice to this customer we would have charged that and therefore we would have paid it over to HMRC so therefore we’re going to have to then claim that back back ok so we’re going to have an e recoverable debts accounts that’s going to be our expense account we’re going to have a VAT control account and then our Southside your control account so let’s look through how we’re going to enter this so the first thing we need to do is work out what the net value will be so depending on how you like to work out your VAT you can do it sort of fractions or decimals entirely up to you my preference is a decimal way so I would do two thousand six hundred and forty pounds divided by one point two and that gives you a net value of two hundred and twenty pounds and therefore your VAT amount is going to be two thousand two hundred multiplied by zero point two and you’ll get a four hundred and forty pound net bag fat value so now we know what these are your irrecoverable debt sense your irrecoverable debt is only going to be the net amount that goes through because that’s actually what you’ve lost to in the business okay so you’re going to debit that as your expense account your net amount now your fat control account now usually when you put sales invoices on you will credit the back control account because it’s a liability you’re going to owe it to HMRC so now because we’re going to reclaim it back that means we can debit that account to take it off what we owe them and then our sales ledger control account holds all of the money that that customer owes us so we’re gonna then credit that in total and that balance off the journals in economics in India don’t forget as well you will have your own subsidiary account for our our t45 and you’ll also need to credit that as well because that doesn’t form part of the double-entry bookkeeping but you will need to remember to do that part of it as well okay so just some final thoughts then and a recap on what we’ve been through so journals in economics in India are use to enter non regular transactions into the double-entry system they’re useful to create audit trails and reduce error and fraud and they also act like a little bit like a notebook as well okay so it helps you remember why the transactions were put in in the first place they’re commonly used for your payroll entries and your irrecoverable debts and remember they must always balance so I hope the videos just given you a brief overview of what a economics journals in India is of why we use them with a couple of examples as I said regarding the payroll I am going to do a separate video on that and to work out what goes into the figures that we used earlier and that just leaves me to say good luck in your studies and I hope it all goes well for you.
