I have exams in accounts and need help!!?

Question

on the basic t accounts , which side they go on and which one close off and which go to the p&l account, I still cant get my head around these, has anyone any tips or know any websites to help? Many thanks!!

Answer 1

there is no website which can help u have to read ur basic which will help u to remember which entry will go where

Answer 2

I assume you know the different accounts....what are assets, liabilities, capital and retained earnings, income and expenses.

Which ones close off.....income and expenses accounts close off, these are what you call P and L (Profit and Loss )Accounts. If your income exceeds your expenses, meaning you have a profit, the profit becomes part of your retained earnings.

Assets, liabilities, capital and retained earnings are not closed off at the end of the year. Their balances are carried over to the next financial year, those will be your beginning balances. While P and L accounts will have zero beginning balances. That is why your Profit and Loss statement has a heading 'For the Year ended......' because the amounts are only for that year.....while a Balance Sheet where your Assets, Liabilities, Capital and Retained Earnings are presented is headed 'As of a Particular Date'.

On T accts....

For assets, the beginning balance is posted on the left hand side of the T acct,  also anything that increases the value of an asset goes on the left, ....example, for cash...receipt of cash. And the reverse is true, anything that reduces the value of an asset is posted on the right hand side of the T acct. example, paying cash for something.

For Liabilities, Capital and Retained Earnings, the beginning balances go to the right hand side of the T acct. Anything that increases the value goes to the right and anything that reduces the value goes to the left of the T.

Expenses follow the same rule as assets except that there is no beginning balance.

Income follows the same rule as Liabilities, capital and RE except that there is no beginning balance.

Example/ you get paid 500$ for your services . This increases your cash and increases your income...so 500$ gets posted to the left of the Cash T acct and also on the right side of the Income T acct.

Remember your postings (left and right should always be balanced)

Hope this is easy enough to follow. Good luck!