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Firstly, you must know the sturcture and basic concept of accounting, for example: double entry bookkeeping, journals and ledger accounts and trial balance. These concepts are the basic of perparing and analysing financial statements. And you’d better master the important following:

1. balance sheet
2. income statement
3. cash flow statement
4. the difference between balance sheet and income statement
5. balance sheet accounts
6. income statement accounts
7. the formula, format and template of cash flow statements: indirect and direct methods
8. balance sheet analysis
9. income statement analysis
10. cash flow analysis.

For that the balance sheet shows the financial situation of a company at a point in time (the balance sheet date). Income statement reflects the operational results of the company over a period of time. And cash flow statement reflects the cash inflow and outflow within a certain period. You should note the cash shortfall, because many companies go bankrupt is just because of cash break, but not how much debt the company has. So you must always be attention to cash flow, including: operating cash flow, financing cash flow and investing cash flow.

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Non current assets are the assets held by an enterprise for more than on accounting period for use in the production or supply of goods or services, for tental to others, or for administrative purposes. It has investment properties. The current assets are trading. The liquidity of Non current assets is smaller than the current assets.

Non current assets and be sub-divided into tangible assets (plant, buildings, motor vehicles, etc.) and intangible assets (goodwill, patents, tradements, etc.) The current assets include: inventories, trade receivables, cash and cash equivalents and other current assets.

The useful life of non current assets is generally above two years, but the useful life of current assets is generally under one year. But sometimes, the current assets is within two years, the useful life of some non current assets is within two years. The price of non current is more bigger than the current assets generally.

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Summary of stages of accounting
Transactions –> Journals –> ledger accounts –> Financial statements

Books of original entry are the books where transactions are recorded for the first time. These are journals. Journals act as an initial store of information before the summarising and storing of that information in ledger accounts.

For example, if a business has a sale of $500 today at 9 september, according to the sales invoice, the books of original entry should be:

Each account has its “T” account. For example, the entries of general journal ledger


The double entry books of account are called the general ledger.(“T” account) This photo template shows the general journal and the general ledger account. At the specific date, the “Dr” and “Cr” show the general journals. It means “adding” or “reducing”. The “Cash” and “Revenue” tell us what’s the name of the general ledger account. We can summarise the related information under them.
In accounting, dividing the ledger is necessary, the most biggest advantage is that you can analyse all the aspects of your business, and you can see it clearly where the problem is, do what to correct it in your company and make your business operating more better. Because the general journal and the changing of the amount of general ledger accounts show all specific information. But there is an only disadvantage, that is splitting the ledger means more control is required to ensure all data is correctly recorded.

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The accruals concept is that income and expenses should be matched together and dealt with in the income statement for the period to which they relate, regardless of the period in which the cash was actually received or paid. All accounting record is based on the accruals.

The accrual principle show all of the expenses incolved in making the sales for a period should be matched with the sales income and dealt with in the period in which the sales themselves are accounted for.

For example:

In the accounting period, a sale is made and the invoice is sent to the customer, but the company hasn’t received the cash. This is done by setting up an account receivable in the balance sheet for the amount of cash that is due from the sale.

Dr accounts receivable
Cr sales revenue

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As known, in everyday life we often record the transaction as: the income of everyday, how much is the cost and calculate the profit. For example, if you’v made an income of $500 today, the cost is $300, you’ll calculate that you earn $200($500-200=$300). But this is not rigorous, especially when you’re operating a big business. Because you don’t know how the cost is created, where the cost is spent, and how to control the cost to add your profit maximumly.

Using the bookkeeping principles, you can see the secret in your business anywhere. You’ll know do what and in where that can reduce the cost, improve the income. Because every transactions is recorded through double entry bookkeeping, and the all adjustment is shown in the financial statements by accounting records.

How do the accountants record the transactions in bookkeeping?

Transactions–>Journals–>Ledger accounts–>Financial statements

Journals record the transactions everyday, it’s an initial information of the business transactions. Here, the professional accountants record all the transactions with double entry bookkeeping. You must know when a transaction ocurred, there’ll be ocurred an invoice. When a business sells goods or services to a customers it sends a sales invoice the customer. The sales invoice record lots of detailed information about the transaction, e.g:

1. name and address of seller and purchaser
2. date of sale
3. reference to order
4. description of goods
5. amount due
6. terms of payment.

For example, if a business has a sale of $500 today, according the sales invoice, the accounting record should be:

$

Dr cash 500

Cr revenue 500

The accounting records record where the cash come from. It means that the business made a revenue of $500, so the cash added $500. Here, “cash” “revenue” are the names of ledger accounts. Cash is an item of asset in balance sheet, revenue is an item of income statement. In the items of asset in balance sheet, “Dr”(Debit) means adding. In the income statement, “Cr”(Credit) means adding too.

So it’s a balance. The revenue added $500, the cash added $500. Each aspect is recorded in the relevant ledger account. Each account has two sides: the debit side and the credit side.

Ledger account

Debit side(Dr) Credit side(Cr)

The debit is on the left hand side, the credit is on the right side. For some ledger accounts, the debit side means adding, the credit side means decreasing. For other ledger accounts, the debit side means decreasing, the credit side means adding. It sounds so strange. But it’s very easy to understand.

In balance sheet, there is an accounting equation:

Assets = Liabilities + Proprietor’s capital.

In the left items of the equation, “Dr” means adding, “Cr” means decreasing. In the right items of the equation, “Dr” means decreasing, “Cr” means adding.

For example, a business has borrowed a loan of $5000. It means the business add $5000 in its cash item, and made a loan of $5000. The accounting record is:

$

Dr cash 5000

Cr loan 5000

The account “loan” is an item of liabilities. So the two sides of the accounting equation are in balance.

In income statement, there is an other accounting equation:

Revenue – Cost = Profit

You can see it as: Revenue = Cost + Profit.

Here, in the left items of the equation, “Dr” means adding, “Cr” means decreasing. In the right items of the equation, “Dr” means decreasing, “Cr” means adding.

So, there’re two accounting equations:

1. Assets = Liabilities + Proprietor’s capital.
2. Revenue = Cost + Profit.

In the left items of the equations, “Dr” means adding. In the right items of the equations, “Cr” means adding.

These are bookkeeping principles. It records all the transtions in the business through double entry, every transtions recorded in the invoice, the transtions are shown in the journals by accounting record. The journals is the basic of calculating the ledger accounts. According to the ledger accounts, we can prepare the financial statements.

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A current liability is a liability which is payable within 12 months of the balance sheet date.

A non-current liability is any other liability.

If a liablity is due for payment after 12 months and one day, it’s shown as a non-current liability.

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A prepaid expense is an item of expense that has been paid during the current accounting period but relates to the next accounting period.
For example:

Michel Scofield pays insurance on the factory he rents with cash and this is paid in advance. His payments during 20×1 for this insurance were as follows:
(the prepaid expenses)                              $
1 January (for three months to 31 March 20×8)     800
28 March (for six months to 30 September 20×8)  1,800
2 October (for six months to 31 Match 20×9)     1,800

The insurance expense for the year to 31 December 20X8 can be calculated as follows:

(the calculate of prepaid expenses)                 $
1 January to 31 March 20×1                        800
1 April to 30 September 20×1                    1,800
1 October to 31 December 20×1 (3/6*1,800)         900
3,500

The remaining $900 that was paid on 2 October,which is not to be charged to the income statement for the year to 31 December 20X8, is a prepaid expense. Note that at 1 January there is an opening debit balance on the account of $1,000. This is the three months insurance from 1 January 20×9 to 31 Match 20×9 that had been paid for on 2 October 20×8.

At 2 October 20×8,
$
Dr prepaid expenses(factory insurance)   1,800
Cr cash                                  1,800

At 31 December 20X8,
$
Dr operating expenses                      900
Cr prepaid expenses(factory insurance)     900

The operating expenses ($900) is shown as an item of expense in the income statement at 31 December 20×1. And there is an opening balance ($900) in the account of prepaid expenses, this is an item of asset that be shown in the balance sheet at 1 January 20×9.

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An accrued expense is an item of expense that has been incurred during the accounting period but has not yet been paid for.

In order to ensure that the full expenses of the period have been included in the income statement, the accountant must ensure that the expense accounts include not only those items that have been paid for during the period but any outstanding amounts due for expenses.

For example:
Michel Scofield’s business has an accounting year end of 31 Decemeber 20X8. He rents factory space at a rental cost of $5,000 per quarter payable in arrears. During the year to 31 December 20X8 his cash payments of rent have been as follows:
(the accrued expenses)                                                     $
31 March (for quarter to 31 March 20X8)               5,000
29 June (for quarter to 30 June 20X8)                    5,000
2 October (for quarter to 30 September 20X8)      5,000

The final payment due on 31 December 20X8 for the quarter to that date was not paid until 4 January 20X9.

So an accrued expense has been incurred during the accounting period. The accrued expenses are shown as a item of liabilities in the balance sheet. It’s an incurred expense but not paid for.

At 31 December 20X8,

$
Dr operating expenses                                                    5,000
Cr accrued expenses(the factory space rent )         5,000

Here, there is an amount of $5,000 shown in the crdit of accrued expenses, it’s an item of liabilities shown in the balance sheet.

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We discuss all kinds of accounting questions, professional accounting theory and practice, including: finance, balance sheet, income statement and cash flow. And we recommend the good books and tools that can help you master accounting and finance more quickly. What our purpose is to help people know and learn accounting more easilier, understand and apply it deeply. For example, to be a CPA, making applying an accounting manager job with good salary becoming reality; help the bosses to manage their enterprises more efficiency and evade tax reasonablely.

Sincerely, we hope the articles can give you some help.

Thanks!

Online Free Accounting Team

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As known, applying an accounting manager job with good salary is not a easy project for most accountants, because of the hot competition. Many fresh graduates and the accountants whose work experience are within serveral years face big problems in the applying. The questions maybe: the poor work experience, less cases of operation, education or the excellent competitor. Face these headache questions, we should calm down and analyse yourself.

Firstly, you should imporve imporve yourself and become an excellent competitor. The qualification certificate is the basic. And the most important is that You must master the accounting skillfully, such as: the preparation of monthly reporting packages, reconciliations, payroll, A/P, A/R, and multiple P&Ls.

Secondly, collect and accumulate the practical work experience. Try to practise yourself more in your life as much as possible. Collecting it in a paper or book of yours. Read and revise it. Remember it in your heart! Maybe it sounds like you’re in an examination, but the process of applying an good accounting manager job is more difficult than an examination in the school.

Thirdly, if possibly, joining the CPA exam and pass it. You’ll gain the winning chips.

Here’re serveral advice for you to apply an accounting manager job:

1. find a fitable company you want.
   Think about the position and analyse the company, if possibly, look the web of the company and analyse you whether or not do this job.
2. Accurate applying.
   You wording should be cautious in your applying information. Except your curriculum vitae, you can describe your working experience easily. It can prove you’re experienced. If your experience is refer to the industry of the company, congratuations! You have won a score.
3. The electronic version of your qualification certificate.
   Except that, you can add the web address of the certificate. Improve you’re honest.
4. if possibly, you can publish your operation advice about the company you’re applying.
   Remember, you’re not a single accounter, but a member of the company. You must be care for the operation of your company and help the colleagues if it’s needed. Here, please, you should be more cautious. And you advice should be constructive. So, before that you shoud better analyse the operation of the company more carefully.
5. Don’t apply too more companies at one time.
   I think, you can choose 2-3 companies that you consider it’s fitable. Too more means the scattered attention.

Good luck for you!