General Ledger and Subsidiary Ledger

The general ledger, often called simply as the ledger, is a group of many accounts. An account is the accounting device used in summarizing the effect of transaction on each asset, liability, equity, revenue and expense. Simply, each account is a record of information about accounting transaction.Such category

Asset - such as cash, account receivable, merchandise inventory, furniture and fixture, land and building.

Liability - such as accounts payable, notes payable, bonds payable, income tax payable.

Equity - such as common stock, retained earning, treasury stock, paid in capital, revaluation surplus.

Income - such as interest income, gain on sales of asset, rental income and other income.

Expense - such as interest expense, rent expense, communication expense and transportation expense.

Open Space Media Inc 

                                                                             Chart of Accounts                                                                                   

ASSET

Account Code             Account Name                      

0001-001                  Cash in Bank
0002-001                  Account Receivable
0003-001                  Merchandise Inventory

LIABILITY

0005-002                  Accounts Payable
0006-002                   Notes Payable
0007-002                   Bonds Payable

EQUITY

0010-003                  Retained Earning
0011-003                  Treasury Stock
0012-003                  Paid in Capital

INCOME

0020-004                  Sales
0020-004                  Interest Income
0020-004                  Rental Income

EXPENSE

0030-007                  Interest Expense
0030-008                  Rent Expense
0030-009                  Communication Expense     

The common used by a particular company are usually expressed in the form called chart of accounts. A chart of accounts is a list of all the company general ledger accounts in systematic form. The accounts usually numbered or called account number to make it series and easy to identify.

in extend to general ledger most company maintain we called subsidiary ledger is the device storing the details of certain general ledger accounts are actually the main account supported the details of Subsidiary Ledger.

Partnership Liquidation Defined

The process of winding up a business normally consist of conversion of a portion or all of the asset into cash, settlement with creditors, and distribution of remaining assets to the ownership group. The conversion of asset into cash is referred to as realization; the payment of claim is referred to as liquidation. The latter is also used in a broader sense to refer to the complete winding up process.

Upon liquidation of a partnership, the accountant must be able to advise as the proper distribution of asset among individual partners. Improper distribution resulting overpayment to certain parties with corresponding loss to the other, may result in personal liability on the part of person or the one authorizing such distribution.

South West Cross Bank

Case Study: South west cross bank

South West Cross Bank is to taking a radical change in its retail operation in order to provide efficient service to its customers and to improve its current operation. But the problem is with its employees in embracing this change. The new operation process will transfer most of the works that are carried in the branch to a large processing centre and this makes Christina Kusonski, one of the retained employees, feel uneasy with the new banking service set up.  According to her sentiments, the new process requires them to be nice to the customers and she feels pressure with this, I think  she should not be pressured because being in a service provider, one must be nice and friendly to every customer that they have whether this customer is a huge depositor or not. It’s the customers that give life in a service provider kind of business .  For the employee to be confident in dealing wth their customers, the management of South West Cross Bank should  organize a training focusing on how to deal with different kind of customers.  The employees should also attend a training focusing on the various products and services beng offerred by the Bank. Being knowlegeable with the products and services of the bank, will help the employees to give a better service to their customer.  The new process will also require them to on the front desk of the bank from morning to night, maybe this is so tiring and so I think that if employees are all day facing the customers, they should be given shorter number of working hours maybe lower than eight hours for them not to be so exhausted and will still remain good looking in the eyes of the customers.

For the management, it should make sure that its employees understand the new operation and why the bank is doing this – to compete with other banks that were allowing automation in most of their bank activities. Maybe management can also adopt what the company of Silvia Lowener is doing, that is meeting its employees at the beginning of every shift to catch up with them and to hear their arguments if there are any. If regards to the complain of Christina that the new process will make them isolated with their fellow employees, the management can have team bonding every two weeks or once a month for them to mingle with each other and to strengthen their bonds to each other. And the management should listen to its employees’ suggestions to the betterment of their business.  Management should also get the feedback of their customers for them to continually improve their service.

Supplying Fast Fashion

UNITED COLOUR OF BENETTON

Almost  50 years in the world of fashion by selling bright  and sweater. It is establish by Luciano Benetton and designed by his sister across the Europe and promoted by controversial advertising. Last 2005 UCB group has now in 150 countries through out the world.

I think United Colour of Benetton is the best quality at the best price cloths in the market although less in designed but  in terms of quality more customer attract for that. At this particular characteristic of the Benetton product, they more patronizing continuing the growth at its attitude high N level of the product in the market. One more thing to do of Benetton improved the the designed to dominate the market. 

H & M

Established in Sweden in 1947, its sells cloths and cosmetics in over 1000 stores in 20 countries around the world. The business concept of H & M was “ Fashion and Quality at the best price”.H & M has 40,000 employee and revenues of SEK 60,000 million in Germany followed by Sweden and UK.

I think for the H & M more fashionable than Benetton product. The H & M more in fashion and quality at the best price.The characteristic of H & M product is at the middle level in the market. Things for the H & M is more ensuring the best price, improving efficient distribution system and be conscious at every stage of this.

ZARA

The first  store Zara opened was by accident in 1975 when Amancio Ortega Gaona, a woman pajama manufacturer , was left with a large cancelled order . The shop opened was intended only as an outlet for cancelled order. Now inditex, the holding group that includes the Zara Brand over 1,300 store in 39 countries with annual sales of over 3 billion pound. The Zara accounts for over 75 percent of  the group total retail sales and still based in north-west Spain.

I think Zara has three product line for woman, men and children that can dominate the market.Thing for Zara improved quick respond to fluctuating customer demands in fashion trends. Because item move so quickly through zara store, customer feel the pressure to buy an item for fear that it may not longer here next time.

Thesis Format Review

Review of Thesis

For every thesis, there are certain rules, guidelines and format to be followed in order to be successful. Certain steps are strictly implemented to vividly manifest the result shown by the samples or data. Correctness of the result greatly depends on how the blueprint has been structured and to what extent the guidelines are followed. Behavior of the respondents may also be affected, so proper format must be implemented.

 Here is the thesis review format outline of some student in Jose Rizal University who is completed their thesis requirement. The title is “Factors Affecting the Reading Interest of the Fourth Year High School Student of Dominican College”. Their Thesis format is start with Title Page which is short (length is 10-12 words); reflective of the content, problem, and the main variables to be studied; free of value judgment; should be written in inverted pyramid boldface, and capital letters. Also include below author’s Name, Month and Year of Completion, and Institutional Affiliation. Approval Sheet this is a letter type at below name with signature of panel of examiners that be mean the requirements is accepted. Acknowledgement is a letter type also like greeting or recognition of someone with connection with the research. Dedication is an inspirational address to someone as a part of research. Biographical Sketch is about to the author personal information. Abstract is a brief, comprehensive   summary   of    the   contents of the manuscript or Synthesis of the study which includes the objectives, methodology, highlights of the results, conclusions, and recommendations. Table of Content a list of divisions (chapter or articles) and the pages on which they start. Bibliography - should be alphabetically arranged all the references cited in the text must be included in this section. Examples: Harris, A.B “Science of Behavior” New York: McGraw Hill, Book Co. 1990. Appendix it is a supporting materials for research include instructions to participants; original scales or questionnaires, and raw data; statistical calculations; and instrument used. Examples: Philip C. Colin Successful Writing at Work, Hough Mifflin 2007.After all this be done I though they have a picture of Respondents and its location.

For the format in writing it’s start with capital letter 4 spaces from the title of the page to write the sub title and 2 spaces to start the discussion. Example:

CHAPTER I

INTRODUCTION (title of the page)
(4 spaces)

Background of the Study (sub-title of the page)

(2 spaces)

            The demand for medicines….  (Discussion)

(3 spaces)

Statement of the Problem

(2 spaces)

            The government has been exerting its efforts …

(3 spaces)

Objectives of the Study

    (2 spaces)

            The study generally aimed to …

(3 spaces)

Case Study: Enchanted Kingdom

Enchanted Kingdom

Enchanted Kingdom is a theme park in the philippines. It is located in Santa Rosa City, Laguna, about 29 kilometers from manila. It is has a land area of 17 Hectares (14 Acres). The park is managed and operated by Enchanted Kingdom Inc. Formerly name Amtrust Leisure Corporation. Enchanted Kingdom is a member of  International Association of Amusement Park and Attractions. It was opened on July 28 1995 suprisingly with huge of customer.

Enchanted Kingdom complete variety of amazing park zone, First is the Victoria park which you can see the grand carousel, victoria scrap book souvenir, parkside sweet & Culnary delight and grand era gifts.Second is the Portabello park, the largest attraction in Enchanted Kingdom you can found here the excitement of 4D Film Threater, Fying Fiesta-Wave Swinger, Rio Grande Rapids, the river rafting ride, shake rattle and roll wich is the hunted attraction and last is the xtreme Paintball.Here also at Portabello Park you can buy food, drinks and souvenir.Third is the Boulderville is a zone in enchated kingdom that treats for the kids, and these zone has prehistoric theme with dinosaurs as main characters and the most exciting attaraction here is the boulderville express – Train Ride, Bumbling Boulders – The Teacups, and the stone eggs the kiddie ferris wheel. Forth is the Midway Boardwalk is colorful and carefree zone inspired by coney island known as “american playground” that can enjoy the performance of mime artist, jugglers and clowns.The main attraction here is the Anchors away called Pirate Ship Ride, the Dodgem called Bumper Cars, The roller skater called mini roller coaster, Steeplechase arcade – Arcade Game, Up Up and Away called Balloon Ride, Wheel of Faith called the ferris wheel and the last Ekstreme Tower Ride called the Drop Tower. Fifth is the Brooklyn place is the a threater and shopping zone designed year 1940, Here you can enjoy  the following attraction the Broadway and brooklyn shows, Funhouse Express, parade at the cobblestone street and last the simulator ride.Sixth is the Spaceport zone ispired by sci-fi films and Nasa space program that have 11 story high space shuttle can take you upside down turn six times.The main attraction here is kart racing, all terrain vehicle and the most exciting Vekoma Boomerang roller coaster.Seventh is the Jungel Outpost that offers you jungle adventure. It was designed after the amazon jungle. A tranquil swan lake, Safari shootout, jungle log jam, and amazon hoop shot are among the adventure that you’ll enjoy there.The Last exciting to be adventure here in enchanted kingdom is the EK BIKI waterworld is a first world class inflatable water park in the philippines.It has variety of six giant inflatable swimming pool with slides games and ride that families can enjoy in a safe hygienic water enviroment. After long day Enjoying the magic fun here in enchanted kingdom were not done because at the night they have a shower of beautiful fireworks and that is only at Enchanted Kingdom.

We can say we have fun at enchanted kingdom. But i think we more enjoy the fun at enchanted kingdom by enhance their services to the customer by ensuring all customer comfortable at their expected line waiting to ride. Also i wanted for the crowded customer of enchanted Kingdom. I think they must be need to expand the land area of enchated kingdom to accommodate a huge customer  and for that all customer can comportable enjoy thier leisure time for that service they comeback again not once but more than twice with relatives and friends.  

Case Study: Penang Mutiara

BACKGROUD OF THE STUDY

Mutiara Beach Resort Penang heralds a new standard for Asian resort hotels. Located on a prime beachfront at Teluk Bahang, otherwise known as the 'glowing bay', it nestles in 7.3 hectares (18 acres) of landscaped tropical greenery. All 438 of its spacious rooms enjoy sea and garden views. Here in this paradise of comfort and luxury, it has been claimed that nothing is unusual.

The name Mutiara means 'pearl' and is also a term of endearment in the Malay language.  A perfect description for an extraordinary resort with a lively Malaysian personality.

Penang Mutiara is one the luxurious hotels in South-East Asia. Owned by Pernas-OUE of Malaysia and managed by Singapore Mandarin International Hotels.Penang Mutiara wants to give to its customer the quality of service. And it also wants to give everything what its guests’ wants and needs.

Penang Mutiara’s objectives are to give fast response to every customer request (SPEED), to keep its promise to be of service to their guests (DEPENDABILITY), and to be flexible to every guest request.  The hotel believes that it is the impeccable customer service they are giving to their guests which gives them competitive advantage.

The hotel is very careful never to compromise the quality of its service in order to cut costs. Good service means that guest s return again and again. The more guests, the higher utilization of rooms and restaurants, so in the end, it’s the quality of our service which keeps the hotel’s volume high and costs low.

STATEMENT OF THE PROBLEM

How to improve the operations and sustain the competitiveness of   Penang Mutiara as a leading hotel in Southeast Asia.

OBJECTIVES

1.     To be able to identify new operation strategies for Penang Mutiara to continuously give its guests the quality hotel service.

2.     To be able to identify areas in operations wherein improvements can be done.

3.     To be able to describe how quality, speed, dependability, flexibility and cost impact on the hotel’s external customers and its benefits internally.

ASSUMPTIONS OF THE STUDY

1.     Implement and develop long term strategies to be able to compete with the other premier hotel.

2.   Develop the internal strategies to ensure the  quality of service and low costs of operations

3.     Build a long term relationship to its new and old customers.

AREAS OF CONSIDERATION

1.     Training and development of staff

2.     Planning & Staffing

3.     Marketing & Service innovations

4.     Operations and management improvement

5.     Welfare and motivation to employees

ANALYSIS

Strengths                                                                       

1.     Luxury hotel (top-of-the-market-hotel)

2.     High-quality service

3.     Multi-skilled employees

4.     Very relaxing atmosphere

5.     High utilization of rooms

6.     Stylish and top class facilities

7.     Experienced management

Weaknesses           

1.    Small number of employees

2.    High-cost (especially on food and beverages)

3.    Lack of long term plans

4.    Weak marketing strategy

Opportunities

1.    Service Innovation s( use of internet)

2.    Maximum  utilization of resources

3.    Partnership with other firms such as airlines

                                                                                           

Threats 
               1.        Emergence of new hotels 
              2. Tourism  related issues 
             3. High expectations of customer 
             4. Globalization of markets 
             5.    Social responsibility

ANALYSIS ON HOW SPEED, DEPENDABILITY, FLEXIBILITY AND QUALITY AFFECT THE SERVICE TO CUSTOMERS AND ITS INTERNAL BENEFITS

Speed

Speed means do thing fast. Speed means fast response to requirements of external customers or new conditions, speedy decision making and speedy movement of materials and information inside the operation. It’s benefit are:

1.   Speed reduces inventories - reducing i inventories mean increasing the utilization of rooms and restaurant, that fast cleaning and preparing the available rooms and dinner tables for external customers adds revenue for organization, and improving the efficient of working.

2.   Speed adds flexibility - fast response adds the capability for operations to the flexibility dealing with urgent things.

3. Speed adds dependability - fast delivering for the latest information among other department of operations, such as the newest customer entrance information, available room information, adds the dependability for each internal operation’s coordination and communication.

Dependability

Dependability means do things on time. Dependability means well management and coordination with each operation ensuring other process. are reliable, such as delivering right material or information on time, correct foreseeing and planning the facilities, reorder and workforce. It leads to more effective operation. It effectively arranging the facilities, information, material, workforce, money and time to ensure all of them can be available at any time, saves the time to wait or to look for the other substitutes. Dependability arrangement reduces the chance of repeating input resources or some resources leaving unused increasing the cost of maintain or store fee, or labor cost.

Flexibility

Flexibility means change what you do. It means according different requirements or things to fast handle with, making change or decisions , flexibility arranging and coordinating operations’ work.

1.      Flexibility saves resources - can prevent unnecessarily repeating planning, spending, and using resources such as time, money, workforce, to follow the traditional ways to do things done.

2.      Flexibility increase speed of response - being able to give fast service for customers depends on the operation being flexible. Flexible operations speedily transfer extra skilled staff and equipment to the urgent conditions and emergencies will provide the service with other customer’s needs.

Quality

Quality means ‘doing things right’. For Mutiara, quality means consistently producing impeccable services, using top-class and durable materials to create the right impression and environment, and anticipating and preventing all potential problems in advance. It is benefit to make life easier inside the operation.

1. Good quality leads to stable and efficient processes that less mistake, easy for coordination for matching the standard of processes, dependable and advance equipments and tools to use adds dependability for internal customer.

2.   It reduces cost for Mutiara due to it is fewer the chance to make mistakes. Redoing or correcting mistakes, or to reducing confusion or irritation for each people; second, it also reduces the labor cost. Dispelling some serious troubles or problem always needs more staff or more time to do it, thus, it results in the labor cost added, such as part-time salary, overtime compensation. The more minimizing mistakes, the more minimize the excess labor costs to pay for doing excess works; third, less mistake and using top-class and durable materials also result in saving expenditures such as maintaining fee, cost of materials resulted by mistakes, transporting fees, and other excess expenditures.

ALTERNATIVE COURSES OF ACTION

1. Expand its business in other areas to acquire more market shares against other high-class and strong competitors in the whole Asia region, or even in the world.
2. Through concession and alliance with other business such as tour companies, ocean & safari theme park, movie companies, golf or car club, complete set of hotel industry which is gathering tour, amusement, business and relaxation together.
3. Upgrade technology such as wireless internet, website, including introduction of hotel services, traffic map, resource and promotion information, booking on line and e-payments
4. Develop marketing strategies to widen up market share, such as offering difference holiday traveling packages, discounts and loyalty cards.
5. Continues improvement internally by developing Total Quality Management (TQM), Kaizen, and 5S system and ISO standards.
6. Monitor customer’s feedback by developing centralized customer relation office which conducts satisfaction survey.
7. Offer continual training for staff to improve the standard quality of services, English and Foreign language speaking, handling these new automatic  system and internet using.

8.   Adding the advertisement through TV, internet, high-income reader journal or fashion magazines and newspaper.

CONCLUSION AND RECOMMENDATION

To conclude, even though Penang Mutiara managed to maintain its competitiveness with their current strategy, however it is not sufficient to remain competitiveness due to volatile market demand. Moreover, with the emergence of the global tourism, hospitality industry and globalization with competition from all over the hotel industry, the need to augment existing and new strategies need to be address speedily.

In order to compete for business and to keep abreast with stiff competition in the hotel industry. The hotel’s management should strengthen their marketing and operation strategies as a tool in increasing market share, prioritizing in developing website and upgrade the hotel facilities. Performance measurement by monitoring feedback and implement quality management. Also adopt proactive approach to enhance and maintain consistency in quality and level of services by conducting staff retrain and upgrading of skills. Reviewing new service standards, conduct regular focus group studies to predict future customer requirements, minimize and eliminate high employee turnover by taking good care of staff welfare, and exercise job rotation of staff to promote innovation and creativity in the job.

 . 

Case Study: Design House Partnership

Questions:

1.      Why is operations management important in CDS?

Being a service provider company CDS should ensure that business is operating efficiently in terms of using a little resources as needed (cost savings) and effective in terms of meeting customer requirements. To be able to achieve this objective, the company should have an operations manager which will be in charged of the day –to-day operations of the company. Operations management is an area of management concerned with overseeing the operations of the company and meeting customer requirements at a lower cost.

Operations management is important so that the company knows where it is going, what are its goals, and objectives.

2.      What would you recommend to the company if you were asked to advice on improving its operations?

To improve its operations, the company should be able to address the challenges they have identified namely:

A.       The relationship between the design department and the other department in the company.

In order to meet the customer requirements at a reasonable time people inside the company, especially those departments that need to work together, should have harmonious relationship. This is important so that work will flow smoothly, delay due to miscommunication will be minimized or eradicated, and people will be motivated to work because of good working relationship with each co-employee.  Moreover, if there is good working relationship, then ideas could flow freely which will be beneficial to the company.

Relationship of each employee with one another is very important to every organization.  No matter how good the operations management of the company is, if the employees do not have good working relationship, then the company will not be able to improve its operations.  Team building helps build good working relationship among employees.

      B.      Sales Forecasting

The company should devise a way in order to improve sales forecasting the following week so that manufacturing and distributions operations will not be disrupted tremendously.

Recording Partners Investment

Investment by partners may be made in the form of cash or others asset as provided in the partnership contract. When assets other than cash are invested, it is necessary for the partners to agree upon the value such assets. The assets record in accordance with the agreement, and the capital accounts are credited for the amount of the respective investment.

The importance of proper valuation of asset invested by partners cannot be overemphasized. The values originally assigned to asset are credit to to the partners investing the assets and become measurement of his assets; subsequent sales of these assets at amount other than book value result in profits and loss item that are divided in the profits and loss ratio. If equity is to be achieved; then, assets invested by partners should be reported at their fair market value; only increases or decreases in the value of such assets taking place during the term of partnership will be allocated among the partners. 

Jose Rizal Qoutes

Rizal on his aged..

"Kabataan ang pag-asa ng bayan"

 After Rizal die, modern filipino change to:

"Kabataan ang Bayan!

Class of Stock and Terms

A corporation may issue two classes of stock, one is Common Stock, second is the Preferred Stock. When a single class of stock is issued, the stock is called common stock.

Commonn Stock are the ordinary stock of a corporation that entitles the owner to a pro rata share of the dividends without having priority or preference over any others stockholders or class of stockholders. A corporation may issue more than one class of stock. They may be identified as class A, class B and class F. in Philippines setting class A stock may be owned by filipino citizen only, while class B stock maybe owned both foreign and filipino.  

Preferred Stock are stock that are given certain preferences over common stock. These preferences may be: 

1. Preferred as to dividends

2. Preferred as to assets in case of liquidation

Term of Capital Stock

1. Authorized capital stock is a total amount or the numbers of share that a corporation is authorized by law to sell or to issue as state in the article of incorporation. This may be increase or decrease by making amendments to the articles of the incorporation.

2. Unissued Capital Stock is the amount of capital stock that remain unissued.

3. Subscribed Capital Stock  is the amount of shares contracted to be purchased and paid by subcribers.

4. Outstanding Capital Stock is the amount of shares issued and in the hands of stockholders.

5. Treasury Stock is the corporation own stock that has been issued and reacquired by the corporation but not calcelled.

6. Capital Stock Issued is the total amount of shares that is put into circulation or issued by a corporation. This consist of outstanding and treasury stock.

Contituents of a Corporation

The following are the constituents of the corporation.

1. Incorporators  are the members or stockholders or both mentioned in the articles of incorporation as originally forming and composing the corporation.

2. Corporators are those who compose the corporation, whether they be stockholders or members. The terms includes incorporators, stockholders, or members. All incorporators are corporators in as much they are stockholders or member of a corporation. But a corporators is not necessarily incorporators. Although they maybe a stockholders or members  of the corporation, They may not be the one of those who formed and form the corporation. 

3. Stockholders are corporators of a corporation who own at least one share of the corporation capital stock.

4. Members are corporators of a corporation, which has no capital stock.

Merchandise Inventory

The inventory of a merchandising entity consist of goods purchased for resale. For a grocery store, inventory would be made up of meats, vegetables, canned goods, soft drinks and others items. For a lumber hardware it would be plywood, paints, nails, iron sheets, cements, tools, and other items. Merchandising entities purchased their inventories from manufacturers, wholesalers, and other suppliers.

The merchandise inventory at the beginning of the accounting period is called beginning inventory. Conversely, the merchandise inventory at the accounting period is called ending inventory. Beginning and ending inventories are used in calculating cost of good sold in the income statement. The ending inventory shown in the income statement will be the the merchandise inventory to be reported in  the balance sheet. Effectively, the ending inventory of the current period will be the beginning inventory of the next period.

Game plan Marketing Solution Inc

Partial Income Statement

For the Year ended Dec 31, 2011

Cost of Good Sold

Merchandise inventory beginning Jan. 01 2011                                          528,000.00

Add:

Purchased                                                                    790,000.00

Transportation In                                                            80,000.00             870,000.00

Goods Available for sale                                                                      1,398,000.00 

Less: Ending Inventory Dec. 31 2011                                                        990,000.00

Cost of Good Sold                                                                                   408,000.00

Accounting Process Cycle

The accounting process cycle refers to a series of sequential steps or procedures performed to accomplish  the accounting process. The steps in the cycle and their aims follow:

                                      Step 1   Identification of events to be Recorded
                                                    This is to gathered information about transaction or events
                                                    generally through  the source of document.

This is during the           Step 2   Transaction are Recorded in the Journal
accounting period                         This is to record the economic impact of transactions on the firm in a
                                                     journal, which is a form that facilitates transfer to the accounts.    

                                   
  -----------------------       Step 3    Journal Entries are Posted to the Ledger
                                                     This is to transfer the information from the journal to the ledger for
                                                     classification.


                                      Step 4   Preparation of Trial Balance
                                                    This is to provide a listing to verify the equality of debit and
                                                    credits in the ledger.


                                      Step 5   Preparation of the Worksheet include Adjusting entries
                                                    This is to aid in the preparation of financial statement.


                                      Step 6   Preparation of Financial Statement
                                                    This is to provide useful information to decision makers.
This is at the
end of accounting          Step 7   Adjusting Journal Entries are Journalized and Posted
period                                           This is to record the accruals, expiration of deferrals, estimation and other
                                                     transaction from the worksheet.


                                      Step 8   Closing Journal Entries are Journalized and Posted
                                                    This is to close temporary accounts and transfer net income to owner
                                                    equity.

----------------------           Step 9    Preparation of a Post-Closing Trial Balance
                                                     This is to check the qualify of debits and credits after the closing entries. 

This is the                      Step 10   Reversing Journal Entries are Journalized and Posted
start of the                                    This is to simplify the recording of certain regular transaction in the next
next period                                    accounting period.

This cycle is repeated each accounting period. The first three steps in the accounting process are accomplish during the period. The fourth up to nine steps generally occurs at the end of he period. The last step is optional and occurs at the beginning of the next accounting period.

 
                                                   

Deferrals and Accruals

Deferral is the postponement of the recognition of "an expense already paid but not yet incurred," or of "a revenue already collected but not yet earned". This adjustment deals with an amount already recorded in a balance sheet account; the entry, in affect, decrease the balance sheet account and increase the income statement account.Deferrals would be needed in two cases:

1. Allocating assets to expense to reflect expenses incurred during the accounting period. (e.g prepaid insurance, supplies and depreciation).

2. Allocating revenues received in advance to revenue to reflect revenues earned during  the accounting period.(e.g subscription)

Accrual is the recognition of "an expense already incurred but unpaid" or revenue earned but not collected". This adjustment deals with an amount unrecorded in any account; the entry, in effect, increase both a balance sheet and  an income statement  account. Accruals would be required to cases:

1. Accruing expenses to reflect expenses incurred during the accounting period that are unpaid and unrecorded.
2. Accruing revenue  to reflect revenue earned during the accounting period that are uncollected and unrecorded.

Comparison of Income between Service and Merchandise Company

Service companies perform service for fee. In ascertaining net income, a basic income statement is all that is need. Net income is measured as the difference between revenues from services and expense. In contrast, merchandising companies earn income by buying and selling goods. These entities use the same basic accounting methods as service companies, but the process of buying and selling merchandise required some additional accounts and concepts. This process result in a more complex. To provide a better measurement of performance, the income of merchandising business is presented with additional line items:

                     Service Company                                               Merchandising Company

                      Income Statement                                                        Income Statement

                          Revenues                                                                      Net Sales

                                                                                                                 minus

                                                                                                      Cost of Good Sold

                             minus                                                                          equals

                                                                                                    Gross Margin from Sales                 

                                                                                                                 minus

                         Expenses                                                                Operating Expenses

                           equals                                                                           equals

                       Net Income                                                                    Net Income

This is the difference of components between service company and merchandising company.
 

Operating Cycle of a Merchandising Business

The merchandising entity purchases inventory , sells the inventory and uses the cash to purchase more inventory- and cycle continues. For Cash Sales, the cycle is from cash to inventory and back to cash. For sales on account, the cycle is from cash to inventory to accounts receivable and back to cash. In any industry, manager strives shorten the cycle. The faster sale of inventory and the collection of cash, the higher the profits. The following illustration the operating of a merchandising company.

  

     Sales on Account                                                                                                 Cash Sales

































Sales on Account                                             

How Effects the Accounting Transaction

It will be beneficial in the long term to be able to understand a classification approach that emphasizes the effect of accounting events rather than the recording procedures involved. This approach is quite pioneering. although business entity engage in numerous transaction, all transaction can be classified in to one of four types, namely:

1. Source of Asset (SA) An asset account increase and a corresponding claims (liabilities or owners equity)  account increase . Example: 1. Purchase of supplies on account. 2. Sold goods on cash on delivery basis.

2. Exchange of Asset (EA) One asset account increase and others asset account decrease. Example: Acquired for cash.

3. Use of Assets (AU) An asset accounts decrease and a corresponding claims (liabilities or equity) accounts  decrease . Example: 1. Settled accounts payable; 2. Paid salaries of employees.

4. Exchange of Claims (EC) One claims  (liabilities or owners equity) accounts increase and another claims (liabilities or owners equity) account decrease. Example: Received utilities bill but did not pay.

Every accountable events has a dual but self balance effect on the accounting equation. recognizing these events will not in any manner affect the quality  of basic accounting model.