👑 RECORDING CHANGES IN FINANCIAL POSITION👑

ALL ABOUT ACCOUNTING : 38th BLOG

💎💎ACCOUNTING💎💎

★ Accounting exercise and practices :

Lesson : 3 [Part : 1]

Hi friends 🙏

Today's discuss recording changes in financial position.....

So let's discuss ....

♤ RECORDING CHANGES IN FINANCIAL POSITION :

The recording of Changes in Financial Position is often referred to as the Cash Flow statement. It provides information about the operating, financing, and investing activities of the company and the effects of those activities on the cash position of the company.

♤ FINANCIAL POSITION IN ACCOUNTING :

The statement of financial position, often called the balance sheet, is a financial statement that reports the assets, liabilities, and equity of a company on a given date. In other words, it lists the resources, obligations, and ownership details of a company on a specific day.

* Indicates, with a check mark ☑️ how the following would be recorded :

Description of transactions	Debit	Credit
An increase 📈 in cash	☑️
A decrease 📉 in receivable amount from debtor		☑️
A decrease 📉 in cash		☑️
A decrease 📉 in payable amount to debtors	☑️

‼️ Difference between cash and accrual based accounting ‼️

* Cash accounting : cash accounting records transactions only when the revenue has been received or the expenses incurred.

Accrual accounting : Accrual accounting records the revenue when the transaction takes place before the cash has been received.

✳️ Double entry accounting :

Double entry accounting based on the concept that every transaction affects and is recorded in at least two accounts on an organization's books. Therefore each transaction requires entry's in two or more places. Each transaction effects either assets, liabilities & equity.

The accounting equation states that ASSETS = LIABILITIES + EQUITY. For every account affected by a transaction there is an equal affect on other accounts Which keeps the accounting equation balance. Therefore, an increase in an organization's assets must be offset by either a decrease in another asset, or an increase in liabilities or equity.

🔅Importance of vouchers :

Vouchers are prepared in order to create a paper trail for each transaction. This paper 📄trail enables an organization to have adequate internal control over it's record keeping.

♤ Bank account statement 📑 reconciliation with accounting records :

The bank account statement should be reconciled with accounting record's as it is important to ensure that all cash transactions are properly recorded, Including bank charges, in order to determine the financial position of the organization. In addition, the number of cash🤑 transactions is large in most organization's or businesses and there for the chance of Fraud being commited regarding cash are higher is compare to other assets.