Account groups are useful to list multiple accounts as sub-accounts of a bigger account andthus consolidate reports such as the Trial Balance. By default, groups are handled automaticallybased on the code of the group. For example, a new account 131200 is going to be part of the group131000.
In accounting, confusion sometimes arises when working between accounts payable vs accounts receivable. The two types of accounts are very similar in the way they are recorded, but it is important to differentiate between accounts payable vs accounts receivable because one of them is an asset account and the other is a liability account. Mixing the two up can result in a lack of balance in your accounting equation, which carries over into your basic financial statements.
Ohada Chart Of Accounts Pdf 15
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Accounts payable is a current liability account that keeps track of money that you owe to any third party. The third parties can be banks, companies, or even someone who you borrowed money from. One common example of accounts payable are purchases made for goods or services from other companies. Depending on the terms for repayment, the amounts are typically due immediately or within a short period of time.
On June 1, 2017, Corporate Finance Institute purchased $1,000 worth of computer equipment on account from LED Company. It means our asset account, computer equipment, increased and our liability account, accounts payable, also increased by $1,000. Below is what it would look like in a journal entry:
On June 2, 2017, Corporate Finance Institute sold $300 worth of office supplies on account to Price Company. In the transaction, our accounts receivables increased by $300 and our office supplies account decreased by $300. This is what it would look like in a journal entry:
Another important note to make is that sometimes companies will attach discounts to their account receivable accounts to incentivize the borrower to pay back the amount earlier. The discounts benefit both parties because the borrower receives their discount while the company receives their cash repayment sooner, as companies require cash for their operating activities.
Notice that we have an account called sales discounts and allowances. This account is a contra account that goes against sales revenue on the income statement. Another example of a contra account is allowance for doubtful accounts, which you can learn about in our bad debt expense article.
We hope that this gave you a pretty good idea of the differences between accounts payable vs accounts receivable. Hopefully, it also gave you some insight into some of the many things that we can do with these accounts such as discounts. If you are interested in learning more, be sure to check out these related CFI articles:
In accordance with the instructions of the Conference of Heads of State and Government, the updated UAAFR and SYSCOHADA will be the only accounting reference in all OHADA Member States and will enter into force on January 1st, 2018 for personal accounts, and on January 1st, 2019 for consolidated accounts, combined accounts and financial statements prepared in accordance with IFRS.
In the following month, ABC's controller decides to show a higher level of precision at the expense account level, and instead elects to apportion the $25,000 of depreciation among different expense accounts, so that each class of asset has a separate depreciation charge. The entry is: 2ff7e9595c
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