Page 86 - Book-keeping for Secondary Schools Student’s Book Form One

Book-Keeping for Secondary Schools

impersonal (real and nominal) accounts. in the preparation of financial statements
The preparation of ledgers enables the originate from ledgers. Therefore, balances
book-keeper to classify accounts easily extracted from the ledgers make the
according to their nature. preparation of financial statements possible.

Information extracted from a balanced Classification of accounts
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ledger can be used for statistical purposes
Balances extracted from ledger accounts This is the process of grouping accounts
can be used as inputs for further analysis with similar nature and characteristics.
and projections concerning the firm. These The posting of entries from both general
balances can also be used for statistical and special journals involves opening
purposes as inputs by researchers who are different ledger accounts. Different types
researching on business enterprises or the of ledger accounts influence the way such

industry where the enterprise is operating. accounts affect the financial statements.
It is, therefore, important at this stage to
They are used to keep financial records discuss the types of accounts. There are two
permanently main types of accounts, namely personal
Financial transactions posted on ledger accounts and impersonal accounts.
accounts are permanent and cannot be
altered. This enables the owner and any (a) Personal accounts
others who may have access to the ledgers These types of accounts record transactions
such as auditors and government authorities relating to persons. There are two types of
to make a reference of any transaction persons; a natural person and an artificial
recorded in the ledger accounts. Government person. A natural person is a person who
authorities, for example, may need to review was born biologically. Examples of natural
the financial records of the enterprise when persons are Juma, Asha, and Anna. On the
investigating a particular transaction relating other hand, an artificial person is the one

to illegal business.
formed under the law and empowered to
They are used in the preparation of a perform activities (including business) in
trial balance their own name, within the powers given
A ledger balance forms the basis for the to them by the law. Examples of artificial
preparation of a trial balance. In simple persons are: Tanzania Institute of Education
terms, there is no trial balance if there are
no general ledger accounts. and Kijiko Sports Club. The law treats an
artificial person in the same manner as a
They provide information that is used natural person. Therefore, such entries are
as inputs when preparing the financial recorded under the category of accounts
statements known as personal accounts.
Financial information that is used as inputs

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Student’s Book Form One

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