ACCT101 Essential Accounting Concepts:
Bookkeeping, Financial Statements, Trial Balance,
Reconciliation, Depreciation, Ratios, Equity,
Partnerships
debit note - This is a document sent by the buyer to request a reduction in the invoice
received
Not entered in accounting records
Reasons for preparing a bank reconciliation statement - Identify unpresented cheque
Identify amounts not credited
To correct cash book
Why might you want to know cost of production? - to set prices
to compare the cost of manufacturing with the cost of buying the goods in
Accounting - Accounting uses the bookkeeping records to
prepare financial statements at regular intervals.
Book keeping - A process of detailed recording of all the
financial transactions of a business.
Statement of financial position - shows the assets and liabilities of a business on a certain
date
Assets - represent anything owned or owed to by the business
Use of financial statements - compare progress with previous years or other businesses
helps owner monitor business
helpsn plan for the future
Profit equals - total revenue - total expenses
Accounting Equation - Assets = Liabilities + Owner's Equity
Accounting rule for a personal a/c - debit the receiver, credit the giver Accounting
rule for a nominal accounts - debit all expenses credit all incomes (sales a/c, purchase
a/c)
Accounting rule for an impersonal accounting - debit what comes in credit what comes out
(vehicle a/c, cash a/c)
Trial balance - is a statement of ledger balances on a
, particular date
statement of account - a document issued by the sellers of goods on credit to summarise the
transactions for the month
Never entered in the accounting records
purpose of a statement of account - to remind buyers of any due amount
to make sure both parties have the same amounts due
A trial balance will not balance if - An error of addition within the TB
An error of addition in the ledger A/C s
Double entry figures differ
Only single entry made instead of a double entry
Both entries made in the same side of the ledger
How are accounts recorded in the trial balance - If the debit side of an A/C has greater value
than the credit side, then the difference is recorded as a debit balance
If the credit side of an A/C has greater value than the debit side, then the difference is
recorded as a credit balance
Why is the cash book a book of prime entry and a ledger - it follows the rule of double entry
and is the first place where transactions are recorded
Contra entry - withdrawal of cash/deposition of cash
Why could a cheque be dishonored - No signature, Amount In words & in numbers
don't match or there is an insufficient balance in the debtor's A/C
receipt - a written acknowledgment of money received and acts as a proof of
payment
cheque - a written order to pay a stated sum of money to the person or business named on the
order
How to show that a cheque has been dishonored - the reverse entry of that has to be made
when the cheque was deposited & the debtor or payee will have to be informed that the
amount is unpaid.
credit note - a source document issued by a seller of goods on credit to notify a reduction in
an invoice previously issued
invoice - a document issued by the supplier of goods showing details, quanties and value of
goods supplied
Trade discount - a reduction in the price of goods: the rate often increases according to
quantities of goods purchased
Bookkeeping, Financial Statements, Trial Balance,
Reconciliation, Depreciation, Ratios, Equity,
Partnerships
debit note - This is a document sent by the buyer to request a reduction in the invoice
received
Not entered in accounting records
Reasons for preparing a bank reconciliation statement - Identify unpresented cheque
Identify amounts not credited
To correct cash book
Why might you want to know cost of production? - to set prices
to compare the cost of manufacturing with the cost of buying the goods in
Accounting - Accounting uses the bookkeeping records to
prepare financial statements at regular intervals.
Book keeping - A process of detailed recording of all the
financial transactions of a business.
Statement of financial position - shows the assets and liabilities of a business on a certain
date
Assets - represent anything owned or owed to by the business
Use of financial statements - compare progress with previous years or other businesses
helps owner monitor business
helpsn plan for the future
Profit equals - total revenue - total expenses
Accounting Equation - Assets = Liabilities + Owner's Equity
Accounting rule for a personal a/c - debit the receiver, credit the giver Accounting
rule for a nominal accounts - debit all expenses credit all incomes (sales a/c, purchase
a/c)
Accounting rule for an impersonal accounting - debit what comes in credit what comes out
(vehicle a/c, cash a/c)
Trial balance - is a statement of ledger balances on a
, particular date
statement of account - a document issued by the sellers of goods on credit to summarise the
transactions for the month
Never entered in the accounting records
purpose of a statement of account - to remind buyers of any due amount
to make sure both parties have the same amounts due
A trial balance will not balance if - An error of addition within the TB
An error of addition in the ledger A/C s
Double entry figures differ
Only single entry made instead of a double entry
Both entries made in the same side of the ledger
How are accounts recorded in the trial balance - If the debit side of an A/C has greater value
than the credit side, then the difference is recorded as a debit balance
If the credit side of an A/C has greater value than the debit side, then the difference is
recorded as a credit balance
Why is the cash book a book of prime entry and a ledger - it follows the rule of double entry
and is the first place where transactions are recorded
Contra entry - withdrawal of cash/deposition of cash
Why could a cheque be dishonored - No signature, Amount In words & in numbers
don't match or there is an insufficient balance in the debtor's A/C
receipt - a written acknowledgment of money received and acts as a proof of
payment
cheque - a written order to pay a stated sum of money to the person or business named on the
order
How to show that a cheque has been dishonored - the reverse entry of that has to be made
when the cheque was deposited & the debtor or payee will have to be informed that the
amount is unpaid.
credit note - a source document issued by a seller of goods on credit to notify a reduction in
an invoice previously issued
invoice - a document issued by the supplier of goods showing details, quanties and value of
goods supplied
Trade discount - a reduction in the price of goods: the rate often increases according to
quantities of goods purchased
