Summary IGCSE A* Accounting Theory

IGCSE
Accounting Theory




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, USES OF…

Accounting Records
➔ Provide information about assets & liabilities
➔ Provide details about amounts owed by TR & amounts owing to TP
➔ Provide details of payments & receipts
➔ Provide information to prepare financial statements
➔ Prevent any transactions from being overlooked


Measuring Profit & Loss
➔ Provide information for comparing with other businesses / previous
accounting periods
➔ Assist in decision making & future planning
➔ Assist in monitoring the progress of a business


Statement of Financial Position
➔ Know the financial position of the business at regular intervals


Trial Balance
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➔ Check the arithmetical accuracy of the books
➔ Useful in preparing financial statements


Books of Prime Entry
➔ Prevent the accounts in the General Ledger from being overcrowded
➔ Useful for preparing Control Accounts
➔ Assist in collating & summarising accounting information
➔ Quicker way to record transactions
➔ Fewer errors
➔ Groups together similar transactions in one book in date order


Petty Cash Book
➔ Reduce the number of entries in Cash Book
➔ Reduce workload of chief cashier
➔ Work can be delegated to junior staff