accounting test for course 1. part a

Test T 1-A

The Journal

The General Ledger

The Trial

45 min

SMALL BANK

Test your knowledgeD

The 22 simple tests for true Beginners

2. Look at the correction

1. Test your knowledge

Following the C1 Course,we recommend these 22 basic tests on the 3 Basic Accounting Documents .They are built on simplified Business Transactions each made up of one Dual Business Acts (DBA)to be recorded by one Dual Booking Entry (DBE), each DBE made up of 2 Single Booking Items (SBI).

1. Take a close look at each Business Transaction which triggers a Dual DBA.2. To record a Dual DBA Act, Identify the 2 SBIs making up a DBE Entry .3. Identify the SBIs positions inside the GL represented by the “SBI-poster”. 4. Fill the GL (General Ledger) with each SBI: Post each SBI in the correct T Acc. & correct side.5. Fill the Journal * with the related DBE ( 2 SBIs) just posted in the GL/SBI-poster.6. Close the GL at the end of a period by adding all SBIs & compute the related Spreads.7. Draw the Trial Balance by reporting all Totals & Spread Balances on Trial Bal format (Yellow).

*: In real life,you will fill first the Journal on your PC and your PC will fill the GL as per the Journal instructions.



Presentation of the T1-A Test

The T1 Test is made up of 2 Business Cases ( 1 & 2) with a growing number of T. Accounts inside the General Ledger (GL):

Business Scenario for T1-A: Case 1

Case 1 relates to a Small Bank , just starting its business with 3 Accounts then with 5 Accounts inside its GL.

You will be shown a number of Business Transactions (BT) and you will be asked to post the related Booking Entries inside the GL.

After the GL, you will fill the Journal and you will draw the Trial Balance.



T1-A: Case no1: Small-Bank

This new bank has only one Supplier (Depositor ) and only one Client (Borrower).

Deposits received are kept inside its Safe.

It has received one Deposit and will make one Loan.

Small-Bank will be charged interest on the Deposit from Depositor and will charge interest on the Loan made to Borrower.

To get started, the next 2 slides give a reminder on how to post SBIs * into the T. Accounts.

*SBI stands for “Single Booking Item” as defined in course C1.


Reminder on how to fill a T Account

Each T. Account is shown as a “T Clip” to represent 2 columns of $ amounts posted inside accounting books, along with a description for each SB (Single Booking Item).

Each SBI records a $ change of a legal position (Asset or Debt) from the company ‘s point of view. $ Amounts are posted either on the left column or on the right column.

Each Acc. carries a Name & Number. The Number tells the Class, SubClass, the Group,the Sub-Group etc.

The full number is the only way to properly identify an Account inside a GL.

There are 8 classes of T. Accounts numbered from Class 1 to Class 8.

We often use short “T.Acc.” formula instead of the full “T.Account”.

SBI no x Short Description & $

SBI no y Short Description & $

SBI no z Short Description & $

Totals of the 2 columns (L&R)

$

$

$

$

$$

or

Account Name

$ $

or

or

Account Name

Each page is split into a $ zone on the right side holding 2 columns of $ amounts.Each $ amount is associated with 1 description line inside a text Zone on left side.

RIGHTLEFT

&


Reminder on how to fill a T Account

We only show here the 2 columns of $ amounts,plus the totals of the 2 columns & the spread balance (difference between the 2 totals).

On the SBI-poster, we do not show the description line which is always shown inside the GL Books and is associated with each SBI within a T Acc..

The yellow triple arrow indicates the spread balance computation. ($600 - $200 = $400).Assuming this T Acc. represents the Cash T Acc., then the 500 SBI indicates $500 placed in the Safe followed by $200 taken from the Safe,followed (at a different moment) by $ 100 added to the Safe.

The total $ placed inside the safe is $600 and the total $ taken out of the safe is $200.

The difference is $400 still inside Safe. We use a green small triangle on left side to indicate a left spread balance(a debit balance).

$500

$200

$100

Account Name

$600 $200

$400

Nber

LEFT RIGHT


List of Questions 1 to 12 on Test T1-A

12 Questions on Case n1 (Small Bank) after Course C1

Question 1.The 3 T Accounts on SBI-poster

Question 2. on a New $2,000 Deposit

Question 3 on DBE-1 in the Journal.

Question 4. on a New $1,000 Loan

Question 5 on DBE-2 in the Journal

Question 6. on a New $300 Repayment

Question 8 on Annual Interest Costs

Question 9 on Annual Interest Revenues

Question 10 on 5 DBEs in the Journal

Question 11 on closing the GL after 12 mos

Given their importance,these 12 questions have been defined to be easily answered by beginners.

Question 7 on closing the GL after 1 Day

Question 12 on Drawing the Trial Balance

Question 1 - The 3 T Accounts SBI-poster used as General Ledger (GL)

Presentation:You find here the table as shown in C 1 with the 3 Books now replaced by 3 T. Accounts.

As per the SBI-poster rule, each T. Acc. lays on a specific zone of the table, to record the legal relationship between Small-Bank & the “outside” world as measured in $ amounts, day after day. Outside: The Depositor,the Borrower,the Safe.

Question 1: Define the Acc. Numbers & Names on each of the 3 T Acc. as shown GL/SBI-poster on slide.Correction to Q 1 is on next slide.

Borrower

Hint: For simplification purpose, each T Account will carry only its class number & its subclass number: The Safe Account will carry the 1. 1 Acc.. Number.The Borrower Account will carry the 1. 2 Acc. Number. The Depositor Account will carry the 2 .1 Acc Number.

Correction 1 - The 3 T Accounts SBI-poster used as GL

The SBI-poster is similar to a table with 3 books.

B.1. Safe T Acc. is on the lower middle part & carries the 1. 1 Number.(Class 1 & SubClass 1.1).

B.2. Borrower T Acc. (ie a client) is on the left side of the table & carries the 1. 2 Number.

B.3. Depositor T Acc. (ie a Supplier) is on right side of table with the 2.1 Number. We start with only 3 T Acc. inside the GL and we shall reach 7 T.Acc. at the end of T 1.

Borrower2.11.2

1.1 Safe

DepositorBorrower

B.1

B.2 B.3

Hint: Each Acc. tends to be either Left or Right leaning:. Left leaning Accounts are filled on their left side & emptied on their Right side.Usages Accounts: eg:Asset Acc. (Class no 1).

Right leaning Accounts are filled on Right side & emptied on left side: Sources Accounts: Debt ( 2) & Shareholders (3)

.

Left Right

Question 2 - A new $2,000 deposit SBI-poster used as GL

Business Transaction no 1 :The banker received a $2,000 depositfrom a depositor & place it in his Safe.

Question 2 :Post the 2 SBIs which make up the related Double Booking Entry DBE-1 to record the Double Business Act (BA 1 & 2).See next slide for more explanations & reminder.More background info on next slide.

Hint:

The Deposit is a Business Transaction. It includes a Double Business Act (DBA) which triggers 2 changes of legal position from the bank’s point of view as follows with the outside world:

A- Its legal link(ownership) with Safe/Vault B- Its legal link (Debt) with Depositor.See on next slide for more explanations.

Borrower

1.1 Safe

DepositorBorrower 2.11.2

Question 2 - A new $2,000 deposit Course Reminder & Explanations

To define the Dual Booking Entry-1 (DBE-1), you need to understand the precise nature of the related Dual Business Act 1 (DBA-1).

When a depositor brings $2,000, two Business Acts (BA1 and BA2) happen at once:BA-1.: Banknotes are placed in the Safe,hence they are now owned by the bank. It is a New $2,000 Asset.

BA-2: The bank now owes $2,000 to the depositor since a $2,000 receipt was signed by the banker. The bank has a New Debt which matches its New Asset.

BA-2 (New Debt) is the change of legal position (COLP) opposite & consecutive to the New Ownership/New Asset (BA-1): BA-2 is the New $2,000 Debt due to depositor to be recorded with 1 SBI of $2,000 on one side of the T. Acc. for depositor.Such side should be the opposite side of the side chosen for the Safe.

Therefore, BA-1 represents another change of legal position: The new ownership of the $2,000 in banknotes. It will be also recorded with 1 Single booking Item (SBI) of $2,000 on one side of the 2 sides shown on the T Account allocated to the Safe.(You need to define which side,the Left or the Right on each T. Account.)Correction to Q 2 on next slide.

DBA-1

BA-2BA-1

DBE-1

SBI-2SBI-1

COLP-2COLP-1

New DebtNew Asset

New Asset New Debt

Correction 2 - The 3 T Accounts SBI-poster used as GL for Deposit

SBI-1: New Asset:

As shown on colored picture, the first SBI of $2,000 goes on left side of the T. Acc. used to record the history of all Cash movements inside the Safe T Account.

SBI-2: New Debt:

The second SBI of $2,000 goes onthe right side of the T Account used to record the history of all legal Acts happening with the depositor.

Then, you fill the Journal to reflect the defined path of these 2 SBIs of $2,000 each inside the GL.

1.1 Safe

2,000

New Asset

2,000

SBI-1

New Debt

SBI-2

DBE-1


Question 3 - DBE-1 in the Journal SBI-poster used as GL for Deposit

Question 3:

You are asked to fill the Journal with DBE-1 as shown on the SBI poster:You must insert a short description of SBI-1,then insert the 2,000 SBI on the correct column inside the direction double column.Correction on Q 3 is on next slide.

1.1 Safe

2,000

New Asset

2,000

SBI-1

New Debt

SBI-2

DBE-1

Correction 3 - DBE-1 in the Journal SBI-poster used as GL for Deposit

1.1 Safe

2,000

New Asset

2,000

SBI-1

New Debt

SBI-2

DBE-1

We have inserted a short description of SBI-1, with the destination Acc. Nber (1.1) of Safe Acc..We have inserted the 2,000 SBI on the left column to tell that the SBI will be posted on left side of its destination account,ie the 1. 1 Acc. We give the opposite instruction for SBI-2 going to the right of the 2 .1 T.Account.

2,000New Cash in 1.1 Account

New Debt in 2.1 Account 2,000


Question 4 - a New $1,000 Loan SBI-poster used as GL for Deposit

Business Transaction 2:Bank makes a $1,000 loan to Borrower by taking $1,000 from safe.

Question 4 :

Post inside GL the related DBE-2 (SBI-1 & SBI-2),to record DBA-2 (New Loan & Cash Out).Correction on Q4 is on next slide.

Hint

Consider first the disbursement of $1,000 from the cash box then consider the related new claim of $1,000 on the borrower.

.Deal is a Double Booking Act (DBA)made of 2 Changes of legal positions. DBA is recorded by 1 DBE, itself made up of 2 SBIs. Each SBI records one single change of legal position in a T Acc.

Borrower2.11.2

1.1 Safe

DepositorBorrower

2,000

2,000

Correction 4 - A New $1,000 Loan SBI-poster used as GL for Deposit

SBI-3: The first SBI of DBE 2 goes on right side of the T Account for the Safe (SBI-3) to record the fact that $1,000 has been extracted from the Safe.

SBI-4: Second SBI of DBE 2 goes on left side of the T Acc. for the Borrower (SBI-4) to record the fact that the banker holds a claim of $1,000 on this Borrower.

Then you may fill the Journal of DBEs to record the path of the 2 SBIs to record DBA 2 through DBE 2 (SBI-3. & SBI-4.)

Borrower2.11.2

1.1 Safe

DepositorBorrower

1,000

New Asset

1,000

SBI-4

Asset Out

SBI-3

2,000

2,000

DBE-2

Question 5 - DBE-2 in the Journal SBI-poster used as GL for Deposit

You are asked to fill the Journal as per the 2 SBIs belonging to DBE-2 shown on the SBI poster.To do so,you have 2 options: Either do it on this screen or on a sheet of paper (printed or self made).

Mentally,you may fill 2 correct boxes on screen..Manually,you may fill 2 correct boxes on paper.Correction on Q 5 is on next slide.

New Cash in 1.1 T. Account

New Debt in 2.1 T. Account

2,000

Borrower2.11.2

1.1 Safe

DepositorBorrower

1,000

New Asset

1,000

SBI-4

Asset Out

SBI-3

2,000

2,000

DBE-2



2,000

2,000

Correction 5 on DBE-2 in the Journal

To fill the Journal with DBE-2, you follow your own entries in GL. Inside DBE-2, each SBI will carry a specific rank (1 before the other:SBI-3 & SBI-4).The allocation rules will be shown on Level 2.There is a logic; 1 SBI triggers the opposite SBI.However,a specific rank will have no impact on the DBE as a whole & booking entry will still be valid.

Borrower2.11.2

1.1 Safe

DepositorBorrower

1,000

New Asset

1,000

SBI-4

Asset Out

SBI-3

2,000

2,000

DBE-2



1,000

1,000

New Loan Asset in 1.2 T.Acc.

Cash Out of 1.1 T. Account

2,000

2,000

SBI-poster used as GL-New Loan

DBE-1

Question 6 on a New $ 300 Repayment

Business Transaction no3At the end of the day, borrower repays $300 To the bank & placed back in safe..

Question 6:

Post DBE-3 (with 2 SBIs) which will record DBA3 related to this Business Transaction.Correction of Q 6 is on next slide.

Borrower2.11.2

1.1 Safe

DepositorBorrower

1,000

1,000

2,000

2,000

Hint

DBE-3 & the change of legal position.

We have 2 Business Acts: BA-1: The $300 amount is now owned by the bank.(Safe)

.BA-2: Borrower has reduced his debt by $300 & Bank must update its Account . DBA3 should be recorded by 2 new SBIs: (SBI-5 & SBI-6). One SBI will record the New $ amount in safe. One SBI will reduce amount of claim on Borrower.

SBI-poster used as GL

Correction 6 on a New $ 300 Repayment

SBI-5: The first SBI goes on left of the T Acc. recording the history of all legal variations (ownership)on the cash box.We record a New Asset coming into the Safe owned by the Bank;

SBI-6: The second SBI goes on right side of the T Acc. which records the history of all legal variations having taken place with borrower. Here we record the $300 repayment made by the borrower by updating the related T Acc. with a $300 SBI on the right side.

Then you can easily fill the Journal of DBEs with DBE3,

which is made up of SBI-5 & SBI-6.

Borrower2.11.2

1.1 Safe

DepositorBorrower

1,000

New Asset

1,000

SBI-5

Asset Out

SBI-6

2,000

2,000

DBE-3

300

300


Question 7.a on closing the GL after 1 Day

Question 7 is split into 2 sub questions:7a & 7b.At the end of Day 1, Small bank wishes to know its global legal position with the outside world.

Namely,the Depositor,the Borrower & its Safe as recorded on its 3 T Accounts.

Question 7.a:

You are asked to close each Acc. by computingthe total of all left SBIs & all right SBIs for each T Acc..

Then, you are asked to compute the spread balance for each T Acc. & to indicate sign (left-right).Correction of Q 7.a is on next slide.

Borrower2.11.2

1.1 Safe

DepositorBorrower

1,000

1,000

2,000

2,000

Hint: You may consider this test as outrageously simple, but it is a required step before more complex cases.


300

300

SBI-1

SBI-5

SBI-6SBI-4

SBI-3

SBI-2

Correction 7. a on closing the GL after 1 Day

Computing each total is quite simple as shown here.At the end of the day ,we have a total 2,000 Debt due to Depositor. On the Asset side,we have 1,300 in the Safe & we hold a net 700 claim on the Borrower.We can check the perfect equality between all Debt (2,000) and all Assets (1,300 & 700= 2,000)at the end of day 1.

We have inserted a triangle (green or red) to indicate the spread sign for each account.

On next slide,we show the comparison between a GL in the SBI-poster format & the CPA Format.

Borrower2.11.2

1.1 Safe

DepositorBorrower

1,000

1,000

2,000

2,000

Hint:

Closing a GL at the end of a given day or month is a simple process. When closing a GL at year end, it is usually associated with a number of so called adjusting entries, sometimes quite complex entries to finetune the legal position in $.(See level 2 ).


300

300

1,300

2,000300 0

700

1,000

1,0002,300

2,000

Comment 7. a : Comparing GL in CPA Format & in SBI-poster Format

Borrower2.11.2

1.1 Safe

DepositorBorrower

1,000

1,000

2,000

2,000

300

300

1,300

2,000300 0

700

1,000

1,0002,300

2,000

CPAs * will use a standard B&W vertical format

just listing short SBI

description & $ Amounts

SBI-poster Format

* CPA: Certified Public Accountant

Question 7.b : Drawing the Trial balance after 1 Day

You are asked to draw the Trial Balance from the GL by filling boxes with $ amounts.Correction on next slide. Borrower

2.11.2

1.1 Safe

DepositorBorrower

1,000

1,000

2,000

2,000


300

300

1,300

2,000300 0

700

1,000

1,0002,300

2,000

Total SBIs of the Left

Left SBAL

Total SBIs of the Right

Correction 7.b: Drawing the Trial Balance after 1 Day

Hereunder,Trial balance filled with $ Amounts. Next slide shows the comparison with standard CPA Format.

Borrower2.11.2

1.1 Safe

DepositorBorrower

1,000

1,000

2,000

2,000


300

300

1,300

2,000300 0

700

1,000

1,0002,300

2,000

Comment 7. b: Drawing Trial balance after 1 Day

Trial Balance as per our “Color” code in C 1 Course

Trial Balance in CPA B&W Format

In real life,you will consult the Trial Balance in a B & W vertical format with 4 $ columns.

We show the equality sign for your guidance.In real life, such equality rule is obvious.

Comment 7. b: Comparison between GL & Trial Balance in Standard CPA Format

GL shows all SBI lines plus the SBI Totals for each T Acc. Trial Balance only shows SBI Totals & related Spreads.

Both documents have been produced as of the end of day 1.



Case no1: Small-Bank

Part 2 with 5 T. Accounts. We have just covered Part 1 of Case no 1 with only 3 T. Accounts (Depositor, Safe, Borrower).

We know that Small-Bank will be subject to Interest costs from Depositor and will get Interest Revenues from its Borrower.

For this reason,we need to open 2 new T Accounts which will record Interest Costs & Interest Revenues.

Hence the GL will grow from 3 T. Acc. up to 5 T. Accounts.

Course reminder on Balance Sheet & Income Statement T Accounts

1.1 Bank

We have now 2 Zones within the GL-SBI-poster: The Lower Zone (dark blue)& the Upper Zone (light blue).

T.Acc. placed within the Lower dark blue Zone are the so called “Balance Sheet Accounts.”

T. Acc. placed within the Upper light blue Zone are the so called “Income Statement Accounts.”

Cost Accounts on Left corner will be colored in Green. Revenues Acc. on Right corner will be colored in Red.. (more on Level 2).The position of each T. Acc. will tell the correct T. Acc. & the correct side for all new SBI posting in relation with another SBI.

The centerfold double yellow arrow reminds you of the relative positions of SBIs between the 2 color zones.

We have added the SubClass Numbers for each T. Acc..The numerical order is as follows:1.1. Bank. 1.2. Client. 2.1.Supplier.4.1.Revenues. 5.1. Costs.There is no Class 3 Account yet (See T1-B) and no Class 6,7,8 Accounts (See test T2 in Level 2)

Client Supplier

Costs Revenues 4.1

2.11.2

5.1


1.1 Safe

Small Bank has signed 2 agreements: One Deposit Agreement with depositor. One Loan Agreement with borrower .

Business Transaction on Interest Costs:Bank is charged by depositor a 10% interest.

Question 8:

At the end of 12 months Small-Bank needs to keep its Books updated on its $ legal position with the depositor.Post the DBE booking entry regardless of the actual payment to such Depositor(cash paid out from the safe).

You are asked to post the 2 related SBIs on Interest Costs.

You need to compute in $ the total interest amount due to the Depositor at the end of these 12 months. Correction of Q 8 is on Next Slide.

Borrower Depositor

Inter.Costs Inter.Rev. 4.1

2.11.2

5.1

2,000

2,000

1,000

300

300

1,000


Correction 8 on annual $200 Interest Costs

1.1 Safe

Business Transaction on Interest Costs:

Bank will be charged a 10% interest. We compute the interest cost over 12 months at the rate of 10% applied to $2,000 deposit.

Computation: 10% of $2,000= $200.

The rule says that costs must be posted on the left side of the related “cost account”,here Interest Cost Acc. (N 5.1)

More explanations on this item in level 2. SBI-7 will go on left side of Interest Cost Acc. Its counterpart will be SBI-8 representing the new Debt due to the depositor,regardless of the day such interest will be paid out to such depositor.

The 2 SBIs (7 & 8) will make up DBE-4 in the Journal.

Borrower Depositor


2.11.2

5.1

2,000

2,000

1,000

300

300

1,000

200

200

SBI-7

SBI-8

DBE-4



1.1 Safe

Business Transaction on Interest Revenues:Bank will charge the Borrower at the end of a 12 months period an interest of 25%.

Question 9:

We have just finished a period of 12 months. Small-Bank needs to keep its Books updated on its $ legal position with the Borrower.

We want to post the related DBE booking entry regardless of the actual payment by such Borrower(cash paid In the safe) linked to this agreement.

You are asked to post the 2 related SBIs on Interest Rev.

You need to compute in $ the total interest amount due by the Borrower at the end of these 12 months. Correction of Q 9 is on Next Slide.

Borrower Depositor


2.11.2

5.1

2,000

2,000

1,000

300

300

1,000

200

200


Correction 9 on annual Interest Revenues

1.1 Safe

Bank will be charged by the Depositor an interest of 10%.We compute the Interest Revenues incurred over the 12 months at the rate of 25% on $1,000 Loan.Computation: 25% of $1,000 makes $250 over 12 months.

The rule says that Revenues must be posted on the Right side of the related “Revenues Account”, here defined as “Interest Rev. Acc. (Nber 4 . 1)”. More on this item inside level 2 .Hence,SBI-9 will go on Right of Interest Revenues. Acc. SBI-10 tracks a new Asset: A new claim on the Borrower,regardless of the moment such interest will be paid by the Borrower. The 2 SBIs are making up DBE-5 in the Journal recording the DBA-5. Business Act.

The allocation of the 9 & 10 number to one or another SBI as you see it fit, has no impact on the DBE.In Level 2, we provide the basic clues for such allocations.

Borrower Depositor


2.11.2

5.1

2,000

2,000

1,000

300

300

1,000

250

250

SBI-10

SBI-9

DBA-5

200

200



We have inserted 3 colors,Orange for the Journal,Green & Red for the 2 “direction columns”.

We listed vertically the 5 DBEs used to record the 5 DBAs Acts which happened over last 12 months.

Question 10:

Fill the Journal holding 5 DBEs over the last 12 months.In reality,a Journal is filled every day with 100’s of DBEs.

You may move to the next slide to see the SBI-poster format on one half & the Journal on the other half.To take the test, either you draw the Journal on paper,or you print the PDF. Filling a Journal may seem a silly exercise, but it is a mandatory step,since this is the only way to fill a GL with your software.We inserted more background info on the Next 2 Slides.

Journal in 3 colors

Hint for Q 10 on 5 DBEs in the Journal

To help you,we have listed hereunder the 5 Dual Business Acts over the last 12 months:

DBA-1: The New $2,000 Deposit.DBA-2: The New $1,000 LoanDBA-3: The New $300 RepaymentDBA-4: The related $200 Interest CostsDBA-5: The related $250 Interest Revenues.

Each DBA triggers 2 Changes of legal positions from Small bank point of view with the outside: Depositor,Safe,Borrower. Each Change of legal position will be recorded by one SBI Item posted inside the GL.

In this simplified case each DBE holds just 2 SBIs.On next slide we show the SBI-poster side by sidewith the empty Journal to be filled. with SBIs.The SBI-poster shows each SBI with its number (1 to 10).You should have a printed empty Journal on your table and then fill the empty boxes with a pen.

Journal in 3 colors

Hint for Q 10 on 5 DBEs in the Journal

You need to fill the SBI definitions and the related $ amounts as shown on SBI-poster.Correction of Q 10 is on next 2 slides.

SBI-1

SBI-3

SBI-9SBI-7

SBI-6

SBI-4

SBI-8SBI-10

SBI-2

SBI-5

Correction 10 on 5 DBEs in Journal

Filling this Journal is simple since you have to copy all SBIs by numerical order SBI-1 to SBI-10.

In the real world,you will proceed on the Journal & start from all Business Transactions, subjectedto your own legal analysis.

You will identify the related Double Business Act.

DBA will be recorded by a DBE Entry made up of 2 SBIs or more. To properly define a given DBA,you may use The pendulum visual as shown hereunder.

Cash in Safe-1.1

Debt to Depo-2.1

Interest-Cost-5.1

Cash out-Safe-1.1

Loan-Borrower-1.2

Update-Borrow-1.2

Cash in Safe-1.1

Debt-Depositor-2.1

Interest-Reve.4.1

Claim-Borrower-1.2

2,000

2,000

3,7503,750

1,000

1,000

300

300

200

200

250

250

1 2New Asset

New Debt

SBI-1 SBI-2

Correction 10 on 5 DBEs in Journal

Normally, the Journal is filled before the GL instead of after the GL as we are doing now. We are doing so simply to make SBI allocation easier for beginners who use the T Acc positions inside the SBI-poster.

Here, we use the SubClass T. Account Number. (starting by the class number), due to shortage of room on this clip.

Normally,you should use the full correct Account number,a key information, for your PC, similar to a full email address.

The Journal is the preparation document required to fill the GL with SBIs.It is also a reference document for the future if you need to trace back a given SBI which was posted somewherein the GL and requires verification at a later stage.

Cash in Safe-1.1

Debt to Depo-2.1

Interest-Cost-5.1

Cash out-Safe-1.1

Loan-Borrower-1.2

Update-Borrow-1.2

Cash in Safe-1.1

Debt-Depositor-2.1

Interest-Reve.4.1

Claim-Borrower-1.2

2,000

2,000

3,7503,750

1,000

1,000

300

300

200

200

250

250

Question 11 on Closing the GL at the end of 12 Months

1.1 Safe

We now find ourselves at the end of first 12 months.Small-Bank wishes to know its global accounting/legal position with others (clients & suppliers) as well the $ value of all funds in its safe at the end of 12 months.

Question 11:

You are asked to define the global $ position.The position is easily computed ,since we only have to compute the 2 totals for each T. Account then compute the difference & write down the spread inside the small dotted rectangle.Spread balance is either a Left or Right Spread.

When you only have one SBI inside a given column of a given T account, you should still insert a nil answer to clarify the $ position.In real life, closing a GL leads to the drawing of the Trial Balance as shown on next slides.Next slide shows the correction of Q 11.

Borrower Depositor


2.11.2

5.1

2,000

2,000

1,000

300

300

1,000

250

250200

200

200

Correction 11 on Closing the GL at the end of 12 Months

1.1 Safe

In this case, closing of the GL is very simple, since we have a limited number of SBIs. We recommend that you always fill the totals, even with a zero when no SBIs are shown on a given side of a T Acc. This will clarify your test. The nature of each spread balance is shown either by a Green/Left or Red/Right triangle.

If you work on a more complex GL,such as on level 2 which will include up to 30 T Accounts and some 90 different SBIs, you will need to proceed in a very methodical way to avoid manual miscalculations.

Once at this stage of 30 T Accounts, you will showa very reasonable level in accounting and it will help you in preparing for official exams.Next Slides handle the last question of the T1-A Test (12/12).

Borrower Depositor

Inter.Costs Inter.Rev.

4.1

2.1

1.2

5.1

2,000

2,000

1,000

300

300

1,000

250

250

200

200

0

250

2,200

1,000

2,200

200

200

1,250 0

950

0

2,300

1,300

300

250

Question 12 on Drawing the Trial Balance at the end of 12 Months

1.1 Safe

Borrower Depositor


2.11.2

5.1

2,000

2,000

1,000

300

300

1,000

250

250200

200

0 250

2,200

1,000

2,200

200

200

1,250 0

950

0

2,300

1,300

300

250

Starting from the filled SBI-poster,you are asked to report all totals into the Trial Balance

Correction 12 on Drawing the Trial Balance at the end of 12 Months

1.1 Safe

Borrower Depositor


2.11.2

5.1

2,000

2,000

1,000

300

300

1,000

250

250200

200

0 250

2,200

1,000

2,200

200

200

1,250 0

950

0

2,300

1,300

300

250

We have filled all boxes inside Trial Bal with $ amounts from GL/SBI-poster.

Reminder of the 12 Questions,no 1 to 12 on Test T1-A

Question 1.The 3 T Accounts on SBI-poster

Question 2. on a New $2,000 Deposit

Question 3 on DBE-1 in the Journal.

Question 4. on a New $1,000 Loan

Question 5 on DBE-2 in the Journal

Question 6. on a New $300 Repayment




Question 11 on closing the GL after 12 mos

We suggest you to review again mentally this list to check your understanding & remembering of the 12 corrected questions. You should recognize the meaning of each color as used in the course. & test.

Question 7 on closing the GL after 1 Day

Question 12 on Drawing the Trial Balance

Once you have passed the 12 tests above, then you should take the tests on Case no 2 (New Company) with 10 Questions.



End of T1-A: Case no1: Small-Bank

Congratulations ! You have now completed the 12 tests of Test T1-A.

You are now invited to move to next file to take the 10 tests inside Test T1-B for Case no 2 on New Company with 7 T Accounts inside the GL.