Recently due to unforeseen circumstances I've been informed that I will be taking over as the company book keeper for a while. I've no experience doing this apart from the little I did in high school a ten years ago. I've watched a few videos to swat up on the basics again and this has led me to this question.
1. Paid $5000 for rent
I assumed it was; credit the asset (bank acc) and debit expense (rent acc)..
But in the video they credit the asset (bank acc) and debit capital
I've looked at it a little more and think I get it now. In the video he divided his spread sheet into Assets (bank,supplies etc) , Liabilities (a/p, loan) and Capital. He did not use any expense or revenue separation rather "Capital" was for both, so in the example he didn't have a an expense account debit, does that sound likely/right?
I think he was doing it that way to simplify it, or else I should choose my study videos more carefully.
So I had a look at the accounts, software etc. this morning and I've already run into problems/ questions.
Firstly, I'm in the M.E so I'm using Al-Ameen software, but i don't think that matters. I backed up the previous version so I could have a hack it with the hope of figuring it out., for simplicity lets call them version 1 (original) and version 2 (test). I was involved in recording the job costings on spread sheets but my boss told me the software has a job costing capability. It does have a job costing feature and i tried to use it.
Ok, this may sound confusing, but try to bear with me if you've read this far, cheers!
I made a test journal entry, where i debited materials 1000 and credited bank acc 1000 and attached a Job number= gen journal ^1000 compared to version 1
When I checked the balance sheet and profit+loss it had increased by 1000 compared to version, since I debited+ credited shouldn't it have remained the same?
While writing this I checked again and it's changed, the P+L is now the same for both versions, is this right?
Also, now the job cost number acc was debited 1000 and its balance has increased. Are these job cost numbers completely independent from everything else, will tagging them in journal entries have any effect on trial balance, balance sheet, P+L acc? Or any other things I should be considering? Do i need to do account reconciliation? not really %100 sure what that is..lol
Anyway, as I outlined earlier, I'm a little out of my depth here and I would really appreciate any guidance I can get here. I am finding it really interesting though and I realise these
are very helpful skills to have.
I must have been seeing things earlier, I looked again and the P+L and Balance sheet did not change, they are still showing an increase in profit of 1000 which I can't make any sense of it, any one have any idea?
