AY Honors/Accounting/Answer Key 2
Complete a high school or college course in accounting or the following requirements:
Completing a course is the best way to really learn accounting. The requirements below represent some of the main skills you will learn in an accounting course.
If you insist on self study, get a good accounting textbook to read and work out problems in.
1. Show transactions necessary for acquisition or deposit of assets, and acquisition and disposal of liability. Show transactions necessary to close income and expense accounts at year end.
2. Be able to correctly classify balance sheet items with short term asset, long term asset, contra asset, short term liability, long term liability, and equity.
3. Be able to write an income statement from a trial balance.
4. Be able to reconcile bank balance to book balance in checking accounts, including deposit in transit, service charge, returned NSF, interest on account, and checks in transit.
Bank reconciliation is the process of matching and comparing figures from accounting records against those presented on a bank statement. Less any items which have no relation to the bank statement, the balance of the accounting ledger should reconcile (match) to the balance of the bank statement.
It allows individuals to compare their personal bank account records to the bank's records of the individual's account balance in order to uncover any possible discrepancies.
History
When ledgers were written manually, regular checks were important to ensure they remained in balance. It was important to have a reliable source against which to check the accounts ledger.
The statement of account from a bank would have been hand written by a clerk and checked carefully by the bank manager. The statement can be taken as a reliable source, as banks' primary business is to ensure their ledgers correctly tracked the flow of funds. Hence the bank balance at the end of a given period could be obtained from bank and matched to a bank ledger kept by a company's accountant.
