What Is The Difference Between The General Ledger and The Trial Balance?

There are four Parts to think about here:

Chart of Accounts
General Ledger
Trial Balance
Financial Statements

The Chart of Accounts is exactly what it says. It is simply a list of all the names
of the accounts found in the General Ledger whether there is an account balance
or not.

The General Ledger consists of all the accounts including some that may have a
zero balance. As said earlier, all transactions are summarized into these
accounts. A detail listing of every entry is recorded in the General Ledger.

The Trial Balance consists of a list of each General Ledger account that has a
final balance in it. The purpose of the report is to make sure that the debit
numbers equal the credit numbers. In the olden days, the Trial Balance was
used to verify the balances before preparing the financial statements. In today’s
world, this report is basically redundant in that the computer immediately
indicates whether the General Ledger is out of balance. Simply running a
financial statement and reviewing the account balances from there is often
sufficient, eliminating the need for the Trial Balance.

The Financial Statements of course, are a listing of all the final balances in the
General Ledger, but reformatted into financial statement form giving summary
totals and net profit or loss information.

Sample Of A Profit And Loss Statement

First of all i will tell you The Purpose of a P&L Statement.

A Profit and Loss (P&L) statement
measures a company’s sales and
expenses during a specified period of
time. The function of a P&L statement is
to total all sources of revenue and
subtract all expenses related to the
revenue. It shows a company’s financial
progress during the time period being examined.

The P&L statement contains uniform categories of sales and expenses. The
categories include net sales, cost of goods sold, gross margin, selling and
administrative expenses (or operating expense) and net profit. These are
categories that you will use when constructing a P&L statement.

Since it is a rendering of sales and expenses, the P&L statement will give you a
feel for the flow of cash into (and out of) your business. The P&L statement is
also known as the income statement andthe earnings statement.This Business
Builder will explain, through a step-by-step process and the use of a worksheet,
how to create a P&L statement. Accounting terms will be defined as they are
introduced, and a glossary is included for your reference. This Business Builder
will define and explain the data needed to put together a P&L statement, but
before you start, it might be helpful to consider the following questions:

• Does your inventory method allow you to calculate or reasonably estimate the quantity and cost

of goods sold during a specific time period?

• Do you have records of general and administrative expenses?

• Can you separate selling-related expenses from other expenses?

Why Prepare a P&L Statement?

There are two reasons to prepare a P&L statement. One reason is
the P&L statement answers the question, “Am I making any money?”
It is a valuable tool to monitor operations.

A regularly prepared P&L statement either quarterly or monthly
for new businesses will give owners timely and important information
regarding revenues and expenses and tell them whether adjustments
might be necessary to recoup losses or decrease expenses. The P&L
statement also allows outsiders to evaluate your ability to manage
and use your company’s resources.

The second reason to prepare a P&L statement is because it is required
by the IRS. It is the record of a business’ operation that is used to assess
taxes on profits earned. It is the only financial statement required by the IRS.

Below is the Example of the profit and loss statement (click the image to enlarge)

Analysing Performance Of The Balance Sheet

The balance sheet for your business gives you a 'snapshot'
view of what the business is worth, its assets and liabilities, at
one particular moment in time. Usually this is at the end of the
financial year and allows you to compare the situation of the
business from one year to the next but you can also draw up
quarterly or even monthly balance sheets. The balance sheet
should be produced once your trading profit and loss account
has been drawn up.

The Balance Sheet

A balance sheet shows:

-The financial situation of the
organisation at a particular time

-The change from one period
(usually a year) to the next

-How much money is in the business

-The balance of assets Vs liabilities
and fixed assets Vs liquid assets

A balance sheet is concerned with 3 things:

Assets

Liabilities

Capital

What Can The Balance Sheet Tell You?

A balance sheet can tell you how much the business or organisation is worth. For
community-based organisations it also can tell you how much the community has
increased the assets under its control and therefore how powerful or healthy it is.
This can only ever be a ’general’ figure, showing the underlying value of the funds
in the organisation at that particular time. No-one can safely predict the future. But
compared with previous years it is a simple measure of performance.

List Of Online Accounting Related Resources

Accounting Terminology Guide

http://www.nysscpa.org/prof_library/guide.htm

American Accounting Association

http://aaahq.org/

American Institute of Certified Public Accountants

www.aicpa.org/

FASB: Financial Accounting Standards Board

www.fasb.org/

International Accounting Standards Board

www.iasb.org/

Internal Revenue Service

http://www.irs.gov/

National Association of Black Accountants, Inc.

http://www.nabainc.org/

U. S. Government Accountability Office

www.gao.gov/

U. S. Tax Code Online

http://www.fourmilab.ch/ustax/ustax.html

VentureLine

www.ventureline.com/

Cash And Accrual Accounting

Today we are talking about Cash And Accrual Accounting in detail, let's first we talk about some basics of Accrual Accounting.

Accrual Accounting Basics:

This is the method by which revenues are recorded when earned, and
expenses are recorded when they are incurred, as opposed to a cash-basis
method of accounting that measures revenue when cash is received and
expenses when they are paid. The accrual method must be used for financial
statements to be considered prepared according to Generally Accepted
Accounting Principles (GAAP).

Accrual vs. Cash Basis Accounting

When working with basic small business financial statements, the
accrual concept is easy to understand. However, in more complex
business environments accrual accounting can become as exacting and
tedious in its application as nuclear physics.Fortunately, we are going
to be discussing the former, not the latter.

You have read the definition of accrual vs. cash (above) so let’s use
one of the most common examples of accrual accounting found in small
businesses, i.e., Accounts Receivable and Accounts Payable. First, you
must be familiar with how debits and credits work.

Which one is better?.... It is not a question of better, it is a question
of accuracy. If you include all accrual transactions on your books, the reader
will have a more complete understanding of what is going on in your business
than if only Cash transactions are recorded. Think about it with our examples.
The Accrual transactions would show more Assets, more Liabilities and more
Revenue than the strictly Cash transactions. This reflects all the activity
going on instead of just a portion. This is why the Financial Accounting
Standards Board (FASB) requires that financial statements that are prepared
using Generally Accepted Accounting Principles (GAAP) use the Accrual
method of accounting.

Chartered Accountant Syllabus

Today i am talking about the Chartered Accountant Syllabus in India.If you are looking for information about Chartered Accountant Syllabus on the web then this article will help you a lot.

Group I – Paper 1: Advanced Accounting
(One paper – Three hours – 100 Marks)

Contents:-


1. Conceptual Framework for Preparation and Presentation of Financial
Statements

2. Accounting Standards

3. Company Accounts

4. Financial Statements of Banking, Insurance
and Electricity Companies

5. Average Due Date, Account Current, Self-
Balancing Ledgers

6. Financial Statements of Not-for-Profit
Organisations

7. Accounts from Incomplete Records

8. Accounting for Special Transactions

Paper 2: Auditing and Assurance
(One Paper – Three hours – 100 Marks)

1. Auditing Concepts

2. Auditing and Assurance Standards

3. Auditing engagement

4. Documentation

5. Audit evidence

6. Internal Control

8. Audit Sampling

9. Analytical review procedures

10. Audit of payments

11. Audit of receipts

12. Audit of Purchases

13. Audit of Sales

14. Audit of suppliers’ ledger and the debtors’
ledger

15. Audit of impersonal ledger

16. Audit of assets and liabilities

17. Company Audit

18. Audit Report


Paper 3: Law, Ethics and Communication
(One paper – Three hours – 100 Marks)

1.Business Laws

2.Company Law

3.Business Ethics

4.Ethics in Accounting and Finance

5.Business Communications

Paper 4: Cost Accounting and
Financial Management
(One paper – Three hours – 100 Marks)

Part I: Cost Accounting

Part II: Financial Management

Paper 5: Taxation
(One paper – Three hours – 100 Marks)

Part I: Income-tax

Part II: Service tax and VAT


Paper 6: Information Technology and
Strategic Management
(One paper – Three hours – 100 Marks)