Bank reconciliation

                             BANK RECONCILIATION
Definition
                Bank reconciliation is process that explains the difference between balance shown in the the bank statement and balance shown in the cash book of the business or orgnization.
   
  Differences in bank statement and cash book may occur due to following reasons.

                                                  BANK STATEMENT
1.Add Deposit in transit
2.Less cheques issued but not yet presented in bank
3.Add or less bank errors that may occur due to writing the amounts.

                                                  CASH BOOK
1.Less services charges debiteb by bank
2Less.NSF cheques and fees
3.Less printing charges
4.Add Intrest cratided by bank
5.Add note reciveable directly deposit in bank acount
6.Add or less Errors that may occur during writig the amount in cash book.

INVENTRIES

Inventory
                 Inventries are the products that are purchase or produce for sale purpose.It also include the raw matrial that is purchase for production purpose.
Scope of inventry
                            IAS2 apply only on the products that are purchase for sale purpose and raw matrial for production purpose.
               sometime other section of IAS2 are apply i.e IAS11,IAS39,IAS41 etc.
Cost of inventories
                                All costs that are paid to take the goods into the godown i.e rent , labour, tax etc.Losses are not include into the inventory cost i.e abnormal loss, loss of inventory,forgien exchange difference etc.
Inventory system
                            There are two inventory systems that are used to record inventories.
1.priodic inventory system
2.perpatual inventory system
1.Periodic inventory system
                                               In periodic system when we purchase goods than debited the purchase account.
2.perpatual inventory system
                                               in perpatual system we debiteb the inventory account.
                                     Mathods to record inventories
 There are three mathods to record inventories
1.FIFO MATHOD
2.LIFO MATHOD
3.AVERAGE MATHOD

Closing entries

Closing entries
                         At the end of the accounting period we make the adjusting entries and than we make the adjusting trial balance.Than we close the accounts after adjusting trial balance at the end of the accounting period.we close the all revenue and all expense account in a temperary account name as income summary account.we also close dividend account in retain earning account.And at the end we close the income summary account into retain earning account.we can explain these closing entries with the help of simple entries.

1.Closing entry of revenue.
                                            We know that revenue has always credit balance so we close the revenue account by making the revenue account debit and income summary account credit.

                        Revenue account
                                                 Income summary account

2.Closing entry of expense.
                                           We know that all the expenses that are made by a business during the accounting period have debit balance so we close the expense account by making them credit and income summary account as debit.

                             Income summary account
                                                                expense account

3.closing entry of income summary.
                                                        We close the income summary account into the retain earning.If the income summary has debit balance than it is make credit and close into retain earning and it has credit balance than it make debit and close into retain earning.

                             Retain earning
                                                 income summary account

                              income summary account
                                                           Retain earning

4.Closing dividend account.
                                           we know that dividend is not our expense and it is also not revenue it is countra entry and it has debit balance so we close this by making this credit and close into retain earning.
                         
                                  Retain earning
                                                        Dividend account