| ||||||||||||||
 |
||||||||||||||
|
Home > University > Business studies > FINANCIAL REPORTING - The Accounting Equation FINANCIAL REPORTING - The Accounting EquationYou can download this essay for free. All you need to do is register and submit at least one of your essays to us. Or you can purchase this essay for just $2 instantly without registering
Downloads to date:
N/A
| Words: 8399 | Submitted: 29-Mar-2011 This is what the first 3 pages of the essay look like    DescriptionPROGRAMME AREA BUSINESS AND ENTERPRISE HIGHER NATIONAL DIPLOMA/CERTIFICATE YEAR TWOPreview+PROGRAMME AREA BUSINESS AND ENTERPRISE HIGHER NATIONAL DIPLOMA/CERTIFICATE YEAR TWO FINANCIAL REPORTING Accountability (Stewardship) The Accounting Equation Sources of Funds How these funds have been spent Liabilities Self (Capital) Assets Long Term (Fixed) Bank Premises Investors Equipment Grants/Gov Funds Motor Vehicles Short Term Current Stock Creditors (people we owe many to for goods bought on credit) Debtors (people who owe us money for goods bought on credit) Transactions are recorded in a series of “Ledgers” in a variety of accounts. 4. Main Account Types:- 1. Expense A/cs Deal with daily/annual expenses /income of the business 2. Income A/cs 3. Asset A/cs Deal with longer term asset/Liabilities of the business own/owe 4. Liability A/Cs 3 Fundamental Rules of Book-keeping. Book keeping is based on a Double Entry System i.e. Every Debit entry has a corresponding Credit entry. Debit A/c that receives value Credit A/C that gives value (i.e Debit – Receiver Credit – Giver) Expenses & A/C have Debit Values (Balances) Income & Liability A/C have Credit Value. Brian started in business on 1 January 2008. The following is a list of his transactions for his first month of trading: 01.1.08 Opened a business bank account with £25, 000 obtained from private resources. 02.1.08 Paid one month’s rent of £2,000 by cheque. 03.1.08 Bought goods costing £5,000 on credit from Linda. 04.1.08 Purchased motor car form Savoy Motors for £4,000 on credit. 05.1.08 Purchased goods costing £3,000 on credit from Sydney. 10.1.08 Cash sales of £6,000. 15.1.08 More goods costing £10,000 purchased from Linda on credit. 20.1 08. Sold goods on credit to Ann for £8,000. 22.1 08 Returned £2,000 of goods to Linda. 23.1.08 Paid £6000 in cash into the bank. 24.1 08 Ann returned £1,000 of goods. 25.1.08 Withdrew £500 in cash from the bank to open a petty cash account. 26.1.08 Cheque received from Ann for £5,500; Ann also claimed a cash discount of £500. 28.1.08 Office expenses of £250 paid out of petty cash. 29.1.08 Sent a cheque to Savoy Motor for £4,000. 30.1.08 Cheques sent to Linda and Sydney for £8,000 and £2,000, respectively. Cash discounts were also claimed from Linda and Sydney of £700 and £100 respectively. 31.1. 08 Paid by cheque another month’s rent of £2,000. 31.1. 08 Brian introduced £5000 additional capital into the business by cheque. Required: Enter the above transactions in Brian’s ledger accounts for January2008, balance off the accounts and bring down the balances as at 1 February 2008. TRIAL BALANCE A trial balance is a list of the balances of all the accounts in an accounting system. An example is shown on the next page. The trial balance is set out in two columns (see next page for an example). Debit balances are listed on the left and credit balances on the right: the totals of the two columns should be the same. A trial balance lists the balance of each account in order to check the arithmetical accuracy of the accounting system. If you think about it, if the double-entry system is worked correctly, each debit entry in an account is matched by a corresponding credit entry, so ... Download this essay in full now!Just upload at one of your essays to our database and instantly download your selection! Registration takes secondsOr you can download this essay for $2 immediately without registeringComments and reviewsReviews are written by members who have downloaded the essay No comments yet. If you download the essay you can review it afterwards. |
|||||||||||||
