Accounting AQA A LEVEL - ACCN1: Unit 1
- Introduction to Financial Accounting
What are the reasons for keeping accounting records?>>> To quantify items such as sales,
expenses and profit.
- To present accounts in a meaningful way.
- To measure success in the business
- To provide information to owner of the business and to stakeholders.
Source Documents
What is an Invoice? A request for payment
What is a Till Roll? Evidence of Cash Sales
What is a Paying In Slip? Paying Cash into the Bank
What is a Receipt? Paying a business expense with cash
What is a Credit Note? A Refund Source Document
What is a Cheque counterfoil? Paying an expense via cheque
What is a Bank Statement? Paid Business Expense such as Rent via Direct Debit or Standing
Order.
Give an example of an internal stakeholder and their interest in the business. Owner of the
Business:
- Check for liquidity or profitability of the business.
- Is there enough money to withdraw cash
Employees:
- Want to know likelihood of being paid.
- Job Security.
Give an example of an External Stakeholder and their interest in the business. Trade
Receivables/Customers:
- Want to know liquidity and profitability.
- Want to know if they will receive their order.
Trade Payables:
- Want to know profitability and liquidity.
- Will it continue to provide suppliers.
The Bank:
- Want to know liquidity and profitability.
- See financial statements to support loan applications.
The Government:
- Need to verify records for Taxation Purposes
Why is it important to adjust Trial Balance Figures for Accruals and Prepayments when
preparing Financial Statements? Income Statement:
- To ensure accurate/correct profit calculation
, - Withdraw too much from the business.
- Correct Treatment of prepayments reduce expenses.
- Correct Treatment of Accruals increase expenses.
- For Taxation.
Balance Sheet:
- To ensure correct net current asset calculation
- For stakeholders to make valid judgement.
- Valid decision making.
- To ensure true and fair view of accounts.
What is Capital? Capital is the amount of money invested in the business by the owner.
Double Entry
Capital Introduced Debit Bank
Credit Capital
Purchase of a Non-Current Asset Debit Non-Current Asset
Credit Bank
Payment of Expense Debit Expense
Credit Bank
Receipt of Income Debit Bank
Credit Income
What is Drawings? When the owner takes money from the business for personal use.
Owner's Drawings Debit Drawings
Credit Bank
Loan Received Debit Bank
Credit Loan
Loan Repayment Debit Loan
Credit Bank
Sale (disposal of Non-Current Asset) Debit Bank
Credit Non Current Asset
Withdrawal of Cash from Bank for Use in the Business Debit Cash
Credit Bank
Payment of Cash into Bank Debit Bank
Credit Cash
Credit Purchases Debit Purchases
Credit Trade Payables
Payment to Trade Payables Debit Trade Payable's
Credit Bank Account
Credit Sale Debit Trade Receivable
Credit Sales Account
Payment Received from Trade Receivable Debit Bank
Credit Trade Receivable
Purchase of Non Current Asset on Credit Debit Non Current Asset
Credit Trade Payable's
Payment made to Trade Payables Debit Trade Payable
Credit Bank/Cash
Purchase Returns Debit Trade Payables
- Introduction to Financial Accounting
What are the reasons for keeping accounting records?>>> To quantify items such as sales,
expenses and profit.
- To present accounts in a meaningful way.
- To measure success in the business
- To provide information to owner of the business and to stakeholders.
Source Documents
What is an Invoice? A request for payment
What is a Till Roll? Evidence of Cash Sales
What is a Paying In Slip? Paying Cash into the Bank
What is a Receipt? Paying a business expense with cash
What is a Credit Note? A Refund Source Document
What is a Cheque counterfoil? Paying an expense via cheque
What is a Bank Statement? Paid Business Expense such as Rent via Direct Debit or Standing
Order.
Give an example of an internal stakeholder and their interest in the business. Owner of the
Business:
- Check for liquidity or profitability of the business.
- Is there enough money to withdraw cash
Employees:
- Want to know likelihood of being paid.
- Job Security.
Give an example of an External Stakeholder and their interest in the business. Trade
Receivables/Customers:
- Want to know liquidity and profitability.
- Want to know if they will receive their order.
Trade Payables:
- Want to know profitability and liquidity.
- Will it continue to provide suppliers.
The Bank:
- Want to know liquidity and profitability.
- See financial statements to support loan applications.
The Government:
- Need to verify records for Taxation Purposes
Why is it important to adjust Trial Balance Figures for Accruals and Prepayments when
preparing Financial Statements? Income Statement:
- To ensure accurate/correct profit calculation
, - Withdraw too much from the business.
- Correct Treatment of prepayments reduce expenses.
- Correct Treatment of Accruals increase expenses.
- For Taxation.
Balance Sheet:
- To ensure correct net current asset calculation
- For stakeholders to make valid judgement.
- Valid decision making.
- To ensure true and fair view of accounts.
What is Capital? Capital is the amount of money invested in the business by the owner.
Double Entry
Capital Introduced Debit Bank
Credit Capital
Purchase of a Non-Current Asset Debit Non-Current Asset
Credit Bank
Payment of Expense Debit Expense
Credit Bank
Receipt of Income Debit Bank
Credit Income
What is Drawings? When the owner takes money from the business for personal use.
Owner's Drawings Debit Drawings
Credit Bank
Loan Received Debit Bank
Credit Loan
Loan Repayment Debit Loan
Credit Bank
Sale (disposal of Non-Current Asset) Debit Bank
Credit Non Current Asset
Withdrawal of Cash from Bank for Use in the Business Debit Cash
Credit Bank
Payment of Cash into Bank Debit Bank
Credit Cash
Credit Purchases Debit Purchases
Credit Trade Payables
Payment to Trade Payables Debit Trade Payable's
Credit Bank Account
Credit Sale Debit Trade Receivable
Credit Sales Account
Payment Received from Trade Receivable Debit Bank
Credit Trade Receivable
Purchase of Non Current Asset on Credit Debit Non Current Asset
Credit Trade Payable's
Payment made to Trade Payables Debit Trade Payable
Credit Bank/Cash
Purchase Returns Debit Trade Payables
