Being an accountancy student means, you have a lot of new concepts in store for you. From journal entries and ledger posting to preparation of final accounts, everything will be new for you in the starting years. But there is no room for worries. As tough as it may sound, once your foundation is strong, nothing can shake you.
Understanding a journal entry
A journal entry, also called as the book of original entry, is the first place where all transactions related to business are recorded. It contains a detailed and date-wise description of all transactions stating the debit and credit specifically.
What is an opening journal entry?
As the name suggests, an opening entry is an entry passed at the beginning of an accounting year to record opening balances of various accounts. It shows the balances of assets, liabilities, and capital as on the first day of accounting year. As all assets have a debit balance, they will be debited in the opening entry. All liabilities together with capital will be credited.
Assets account (opening balance) Dr
Liabilities account (opening balance) Cr
Capital account Cr
If value of assets is more than value of liabilities, the excess will be depicted as capital. On the other hand, if liabilities exceed assets, the difference will be debited as goodwill in the opening journal entry. Get this concept clear for correct opening journal entry homework answers.
Going concern concept as the basis
At the end of every accounting year, business concerns need to close their books of account and prepare final accounts. But the business does not stop there. So the account balances of that year will be carried forward to the next accounting year as opening balances. Hence going concern concept is the basis for opening entries.
Sources of data for opening entries
The data for passing opening entries has to be obtained from previous yearâ€™s accounts. Every item which had a closing balance in previous year will appear as opening balance in next yearâ€™s journal.
Many students go wrong in opening journal entry homework answers as they fail to recognize the items of assets and liabilities which are to be included. Check the balance sheet of previous year and find out every asset and liability having a closing balance. Assets will have debit balance and liabilities will have a credit balance at the start of year.
Benefits of passing opening entry
Benefits of an opening entry are many.
- It helps companies to know where they stand at the beginning of accounting year.
- It helps the transition from accounts of one year to that of next year.
- It acts as basis of accounting for a year.
- Opening entries help to connect previous yearâ€™s accounts to current yearâ€™s accounts.
Without a proper recording of all opening balances, calculation of current yearâ€™s values becomes impossible.
Points to solve opening journal entry homework answers correctly
As students who have stepped out into the vast world of accounting, knowledge of journal entries is basic for you. If you need to go ahead in accountancy studies with confidence, make your basics thorough.
- Double entry:
In accountancy, every transaction is recorded on the basis of double entry principles. This means that for every item of debit, there has to be an equal amount of credit in some other account. Always keep an eye on this. When you debit an amount make sure that a credit is also created.
- Three golden rules:
There are three golden rules which every accountancy student is expected to be well-versed in. Understand and memorize these rules. Without knowing them, you canâ€™t go forward.
- Rules of composite:
An opening journal entry will always be a compound entry having more than one debit or credit. In a compound entry, the total of all debits and all credits have to be equal. If not, your answer is wrong. Students mostly forget to check this while doing opening journal entry homework answers.
- Finding capital:
In a question for opening journal entry, you will be typically given a long list of assets and liabilities. I have found students complaining that they could not do the sum as capital was not given. It is very simple.Â Capital= Total of assets- total of liabilities.
- Liabilities more than assets:
Typically, value of assets will be more than sum total of liabilities.But if you find the total of liabilities more than assets, then what? No need to panic. Simply calculate the deficient amount and put it as goodwill. This will show as a debit balance in opening entry.
How to become a master of journal entries?
Becoming an expert in journal entries will help you in further accountancy studies. Sometimes, you may feel that accounting is not your cup of tea. It is normal for students to feel so in the initial stages of learning.
- Thorough book study:
Your study books should become your best companions. There is no learning better than your prescribed textbooks. Do not just parrot your lessons. Understand them and see how to apply theories in practical manner.
- Practise to perfection:
There is no short cut to hard work. For every type of accounting problem, you need lots of practice so as to become comfortable with every type of question that might be asked in exams.
- Regular homework:
Be diligent about completing home assignments in time. Understand that their purpose is not to trouble you, but to make experts out of every student. Devote time for assignments.
- Take online help:
Many students search on the internet for accounting homework like opening journal entry homework answers. It is an accepted fact that these sites are helpful to students in many ways. They provide assistance in completing homework in time.
Apart from this, many sites have expert assistance also, whereby students can get their queries solved by experts. In todayâ€™s tech-savvy world, if you do not take this help, you might lag behind. So to be at par with your peers, take online help from a reliable website.
Success in the area of accounting studies comes to the meritorious students. If you are really steadfast in your approach to studies, there is not impossible for you.