(15)-THE TRIAL BALANCE

The Trial Balance At the end of the accounting period, a balance is struck on each accounting in turn. This means that all the debits on the account are totaled and so are all the credits. If the total debits exceed the total credits there is said to be a debit balance on the account if the credits...

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(14)-THE SALES LEDGER AND PURCHASE LEDGER

The Sales Ledger and Purchase Ledger The accounts in the general ledger relate to types of income, expense, asset, liability excreta rather than to the person whom the money is paid or from whom it received. They are called impersonal accounts. There is also a need personal account most commonly for debtors and creditors. These are contained in the sales ledger and purchase ledger.Personal accounts...

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(13)-DOUBLE ENTRY BOOKKEEPING

Double Entry Bookkeeping Double entry bookkeeping is the method by which a business records financial transactions. An account is maintained for every supplier, customer, asset, liability, income and expenses. Every transaction is recorded twice so that for every debit there is an equal, corresponding credit.Double entry bookkeeping is the method used to transfer totals from our books of prime entry...

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(12)-LEDGER ACCOUNTS

Ledger AccountsIt is common sense that a business should keep a record of the transactions that is makes, the assets it acquires and liabilities are incurs. When the time comes to prepare a profit and loss account and a balance sheet, the relevant information can be taken from those records.The records...

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(11)-SOURCE DOCUMENTS AND THE BOOKS OF PRIME ENTRY

Source Documents and the Books of Prime Entry Source Documents Whenever a business transaction take place, involving sales or purchases, receiving or paying money, or owing or being owed money, it is usual for the transaction to be recorded on a document. These documents are the source of all information recorded by a business.Examples –Sales order – A customer writes out an order or signs an order...

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(10)-THE ACCOUNTING PROCESS

The Accounting Process Most organizations exist to provide products and services in the ultimate hope of making a surplus or profit for their owners, which they do by receiving payment in money for goods and services provided. The role of accounting system is to record these monetary effects and create information about them. In our previous two posts you understand the basic principles underlying...

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(9)-FINANCIAL STATEMENTS - THE TRADING PROFIT AND LOSS ACCOUNT

The Trading Profit and Loss AccountThe trading profit and loss account is a statement showing in detail how the profit or loss of a period has been made.The two parts of the statement may be examined in more detail The trading account – This shows the gross profit for the period. Gross profit is the...

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(8)-FINANCIAL STATEMENTS - THE BALANCE SHEET

Financial Statements – The Balance SheetBalance sheet is a statement of the liabilities, capital and assets of a business at a given moment in time. A balance sheet is prepared to show the liabilities, capital and assets as at the end of the accounting period to which the financial accounts relate....

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(7)-THE ACCOUNTING EQUATION

The Accounting Equation The rule that the assets of a business will at all times Equal its liabilities. This is also known as the balance sheet equation.Assets = Capital + LiabilitiesCapitalIn accounting capital is an investment of money with the intention of earning a return. A business proprietor invests capital with the intention of earning profit. As long as that money is invested, accountants...

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(6)-ASSETS,LIABILITIES AND THE BUSINESS ENTITY

Assets, liabilities and The Business EntityAssetsAsset is something valuable which a business owns or has the use of.Examples of assets are; office building, factories, Lorries, plant and machinery, computer equipment, computer equipment, cash, goods held in store awaiting sale to customers.LiabilitiesA...

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(5)-EXPENDITURE AND INCOME

Expenditure and IncomeExpenditure and income can be categorized as shone below,Capital ExpenditureCapital expenditure is expenditure which results in the acquisition of fixed asset, or an important in their earning capacity.Capital expenditure is not charged as an expense in the profit and loss account, although a depreciation charge will usually be made to write off the capital expenditure gradually...

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(4)-THE REGULATORY SYSTEM OF ACCOUNTING

The Regulatory System of AccountingThe following factors can be identified as regulatory framework of accounting,Company law.Limited companies are required by law to prepare and publish accounts annually. Accounting concepts and individual judgment.Financial statements are prepared on the basis of a number of accounting principles, many figures in financial statements are derived from the application...

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(3)-SCOPE OF ACCOUNTING

Scope of Accounting Management Accounting and Cost AccountingManagement or cost accounting is a management information system which analysis data to provide information as a basis for managerial action. The concern of a management accountant is to present accounting information in the form most helpful...

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(2)-THE PURPOSE OF ACCOUNTING.

The Purpose of AccountingAccounting is a way of recording, analyzing, and summarizing transactions of a business. The transactions are recorded in “books of prime entry” The transactions are than analyzed and posted to the ledger Finally the transactions are summarized in the financial statements The...

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(1)-FINANCIAL ACCOUNTING.

Accounting is the way of recording, analysing and summarising transactions of a business.We covered in this site every part of the financial accountancy.Introduction to accounting.Basic principals.Bookkeeping and principles.Ledger control accounts.Bank reconciliation.Financial statements.Incomplete records.Partnership accounts.Accounting for limited companies.Cash flow statements.Consolidated accounts.Stay...

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