- Recognise the sections of the chart of accounts and its key accounts
- Calculate the closing balance of an asset or a liability account
- Build a trial balance and check it
Elvin is the accountant of Xazar Kitab LLC. There were seven transactions in March, and the director asks: “How much money do we have in the bank, whom do we owe, and did the month end in profit?” To answer, the accountant collects the journal entries by account and builds a trial balance. 1C does exactly the same thing — only in seconds.
The T-account: balances and turnover
It is handy to draw an account as the letter “T”: debit on the left, credit on the right. The amount at the start of the period is the opening balance, the total of the entries on one side during the period is the turnover, and the amount at the end is the closing balance. Asset accounts normally have a debit balance; liability and equity accounts have a credit balance.
- B(open), B(close)opening and closing balance
- T(Dr), T(Cr)debit and credit turnover
For an asset account. For a liability or equity account it is the other way round: B(close) = B(open) + T(Cr) − T(Dr).
| Debit 223 “Bank” | Credit 223 “Bank” |
|---|---|
| Opening balance: 8000 | — |
| Received from a customer: 4000 | Paid to a supplier: 2000 |
| — | Cash withdrawn to the till: 500 |
| Turnover: 4000 | Turnover: 2500 |
| Closing balance: 9500 | — |
The chart of accounts in Azerbaijan
A chart of accounts is the organised list of all accounts a business uses, each with a number and a name. In Azerbaijan the chart of accounts for commercial organisations is based on the National Accounting Standards; according to 1C's description of 1С:Бухгалтерия 8 для Азербайджана, the chart in the program follows the one approved by Ministry of Finance order No. İ-38 of 18 April 2006. It has 9 sections; main (synthetic) accounts have 3-digit numbers and sub-accounts have 4 or more digits.
| Section | Name | Example accounts |
|---|---|---|
| 1 | Non-current assets | 101 Intangible assets (cost); 111 Land, buildings and equipment (cost); 112 their accumulated depreciation |
| 2 | Current assets | 201 Materials; 205 Goods; 211 Short-term trade receivables; 221 Cash on hand; 223 Bank current accounts; 241 Input VAT to be offset |
| 3 | Equity | 301 Share (charter) capital; 341 Net profit (loss) for the reporting period |
| 4 | Non-current liabilities | 401 Long-term bank loans |
| 5 | Current liabilities | 521 Tax liabilities; 522 Social insurance liabilities; 531 Short-term trade payables to suppliers; 533 Wages payable to employees; 543 Short-term advances received |
| 6 | Revenue and income | 601 Sales; 611 Other operating income |
| 7 | Expenses | 701 Cost of sales; 711 Selling expenses; 721 Administrative expenses; 731 Other operating expenses |
| 8 | Profits (losses) | 801 Overall profit (loss) |
| 9 | Profit tax | 901 Current profit tax expense |
From the journal to the trial balance
Opening balances of Xazar Kitab on 1 March: 223 Bank — 8000 ₼ (Dr), 205 Goods — 2000 ₼ (Dr), 301 Share capital — 10 000 ₼ (Cr). March transactions (without VAT, for simplicity) are recorded with the entries below.
| Debit | Credit | Amount, ₼ | Description |
|---|---|---|---|
| 205 | 531 | 3000 | Goods bought from a supplier on credit |
| 531 | 223 | 2000 | Supplier paid from the bank |
| 221 | 223 | 500 | Cash withdrawn from the bank to the till |
| 211 | 601 | 4500 | Goods sold to a customer on credit |
| 701 | 205 | 2800 | Cost of the goods sold written off |
| 223 | 211 | 4000 | Customer paid into the bank |
| 721 | 221 | 300 | Office rent paid from the till |
| Account | Opening Dr | Opening Cr | Turnover Dr | Turnover Cr | Closing Dr | Closing Cr |
|---|---|---|---|---|---|---|
| 205 | 2000 | — | 3000 | 2800 | 2200 | — |
| 211 | — | — | 4500 | 4000 | 500 | — |
| 221 | — | — | 500 | 300 | 200 | — |
| 223 | 8000 | — | 4000 | 2500 | 9500 | — |
| 301 | — | 10 000 | — | — | — | 10 000 |
| 531 | — | — | 2000 | 3000 | — | 1000 |
| 601 | — | — | — | 4500 | — | 4500 |
| 701 | — | — | 2800 | — | 2800 | — |
| 721 | — | — | 300 | — | 300 | — |
| Total | 10 000 | 10 000 | 17 100 | 17 100 | 15 500 | 15 500 |
Using the trial balance, answer the director's three questions: how much is in the bank, how much is still owed to the supplier, and what was the profit for March?
Show solutionHide solution
Owed to the supplier: the closing credit balance of 531 — 1000 ₼ (3000 received, 2000 paid).
Profit: revenue 601 − expenses (701 + 721) = 4500 − 2800 − 300 = 1400 ₼.
Check: total closing debits (15 500) equal total closing credits (15 500).
In 1C this table is the Оборотно-сальдовая ведомость report (trial balance): the program builds it automatically from the postings. You will learn how to run it and hunt for errors in later modules.
Key points
- Asset account: closing = opening + debit turnover − credit turnover; for liability and equity accounts it is reversed.
- The Azerbaijani chart has 9 sections with 3-digit main accounts (221 Cash, 223 Bank, 531 Suppliers, 601 Sales).
- In a trial balance, the debit and credit totals of opening balances, turnovers and closing balances must each agree.
- Cash and bank accounts cannot have a credit balance.
- Equal totals do not reveal missing, duplicated or misclassified transactions.
Check yourself
10 questions. Every correct answer earns XP.