>> January 19, 2011
1st Tip : Learn Basics of Journal Entries
It is my own opinion that without learning of basics of journal entries, you can not pass a very simple transaction. In basics, you must learn three types of accounts, one is personal account, second is real account and third is nominal account
All types of account will goes to in these main three accounts. Now, you have to understand that every transaction has two part and two sides will affected with this transaction. One account will be debit and other will be credit. For example, you have provided provision of bad debt as 10% on your total debtor of Rs. 10000. Now, you duty is to pass this transaction. How will you do this. It is so simple.
First we are seeing, there is no receiver or giver in this transaction, there is also, nothing is coming or going from business and third we are also seeing, there is nothing expense or income in this case. It is just reservation for future.
You it surely affect one side of provision of bad debt account means we have to show closing balance of provision for bad debt account as Rs. 1000 and on this basis, we can calculate the journal entry of transferring net loss of business due to bad debt and new provision. After this we pass the journal entry
Profit and loss account Dr. XXXX
Provision for bad debt account Cr. XXXX
2st Tip : To read more and more journal entries examples.
Reading more and more journal entries will make you perfect in accounting and journal entries. Like reading anything, reading of journal entries should be part of your daily learning. Today, I read the word eloquence, it means fluent, forcible, elegant or persuasive speaking. If I will not read more and more words, how can I perfect in it? Same thing will apply on journal entries also. So, read my some of journal entries example at here.
3rd Tip : Learn Difficult Journal Entries
It is easy to pass simple business transaction, but it is difficult to pass the journal entries of some of difficult business transactions. If you don't know how to pass difficult journal entries, read Prof. Augustins's tips at here.
4th Tip : Try to Know "Why Journal Entries are Important in Accounting?
This is a very popular statement in accounting industry. Every one is talking about journal entry, but what exactly journal entry is and why journal entry is king. Truly speaking for me journal entry is nothing but every thing. Did you succeed to pass it….!
Yes, Journal is everything in accounting. Journal entry is very important in accounting, because in accounting the only way to start to record raw financial data. Only after crossing this step, raw data converts in useful accounting information.
5th Tip : Get a Lesson from Rectification of Error
When a professional CA finds error and rectifies it, you must get a lesson from this. It will prove your skill of passing journal entries.
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