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SS 2 Book Keeping (1st Term)

book keeping

STOCK VALUATION

Methods of stocks valuation are devices which aim to deal with some of the problems. W shall consider some of those commonly adopted. (I)      FIRST-IN-FIRST OUT (FIFO) METHOD This method assumes as the name indicates that items of stock were sold during the year in the order in which they were originally bought. Goods that were bought first (FIRST-IN) were those that were sold first, or issued first for production (FIRST-OUT). It follows then that items of closing stock will be made up of those bought most recently. Example: A firm had a stock of 100 items at the beginning of an accounting year. The items were valued at N2.00 each purchases during the year were as follows. N January 200 units at N3 each                                600 June      300 units at N4 each                             1,200 Dec.      100 units at N5 each                                500 300                                                                2,300 500 units were sold during… Read More »STOCK VALUATION

book keeping

THE THREE – COLUMN CASH BOOK

This is similar to the two column cash book except that the discount column is added to both the debit side and the credit side. The debit side, it will be recalled, records receipts while the credit side records payments. The purpose of the discount column in the debit side is, therefore, to record discounts which are allowed to customers when the business receives cash from them. Similarly, the discount column on the credit side is for discounts which the business receives from its suppliers when payments are made to them.   Example The cash book of S. Essien is maintained with cash bank and discount columns. During the month of March, 19×9, the following transactions took place. March 1. Cash balances in hand N100, and at bank N1,220. March 2. Paid J. Okonedo by cheque N105 in full settlement of his account for N110. March 5. Cash purchases N48,… Read More »THE THREE – COLUMN CASH BOOK

book keeping

CLASSIFICATION OF LEDGER ACCOUNTS

There are two main classes of ledger accounts. These are Personal Accounts Impersonal Account. Impersonal Accounts are sub-divided into two, namely real account and nominal account. (1)     Personal Accounts: These are accounts in which transactions with persons and other businesses and organizations are recorded. Debtors and creditors’ accounts are typical examples. If the balances are due for settlement within a year, they represent current assets and current liabilities respectively. Note: The capital account is a special kind of personal account. It is an account in which the value of the proprietor’s investment in the business is recorded. It is therefore the proprietor’s or owner’s personal account. (2)     Impersonal Accounts: These are accounts which record transactions of either “real or nominal” nature. Impersonal accounts are therefore usually divided into “real” and nominal accounts. (i)      Real Account: These record transactions relating to property and material objects. Examples of such accounts include; Land… Read More »CLASSIFICATION OF LEDGER ACCOUNTS

book keeping

CLASSES OF LEDGER

THE LEDGER This is the principal book in which accounts are kept. These accounts are usually referred to as ledger accounts. They are so called because each occupies a specific page a number of pages or a section of a page in the ledger. Note: A balance Sheet, on the other hand is not a ledger account. But a statement of assets and liabilities at a point in time compiled from the list of balances taken from the ledger. To make references to account easy, the ledger pages are usually numbered consecutively, each page is called a ‘folio’ and the number on it a ‘folio number’ The following is a specimen of a simple ledger. Date Particular Folio Amount Date Particular Folio Amount   Features of the Ledger Folio Column: This column indicates the folio (or page) in which the other half of the double entry has been recorded. Date… Read More »CLASSES OF LEDGER

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