VAT, PURCHASES
AND SALES, IAS 1 +
IAS2
ACCN 1010/1006
STUDY NOTES
FIRST YEAR FINANCIAL
ACCOUNTING
, The accounting equation:
Transaction:
• Economic events which have an impact on the financial position of the entity
• They are characterized:
o External
• Usually between 2 or more parties
o Internal
• Between the business and itself
Business is funded from 2 sources:
• Owners funds (investors) = owners equity
• Borrowed funds (Lenders) = liabilities
Funds used to buy assets
Owners’ funds and borrowed funds represent claims on assets
, Elements of financial statements:
Equity:
• OE is affected by 4 types of transactions: (THESE ARE THE 4 ELEMENTS OF OE)
o Investment of Capital by owners(contributions)
o Earning of income
o Incurred of expenses
o Distribution of funds to owners
, THESE INCLUDE HOW TO APPROACH ALL FUTURE QUESTIONS TILL IS1
STEPS:
• ALWAYS SHOW THE NAME OF THE REPORTING ENTITY
• NAME OF THE STATEMENT
• PERIOD IT IS COVERING
• CURRENCY AND ANY FORM OF ROUNDING
• CORRECT FORMAT
The accounting process:
NB THAT EVERY ENTRY HAS A CONTRA (DOUBLE ENTRY PRINCIPLE)
AND SALES, IAS 1 +
IAS2
ACCN 1010/1006
STUDY NOTES
FIRST YEAR FINANCIAL
ACCOUNTING
, The accounting equation:
Transaction:
• Economic events which have an impact on the financial position of the entity
• They are characterized:
o External
• Usually between 2 or more parties
o Internal
• Between the business and itself
Business is funded from 2 sources:
• Owners funds (investors) = owners equity
• Borrowed funds (Lenders) = liabilities
Funds used to buy assets
Owners’ funds and borrowed funds represent claims on assets
, Elements of financial statements:
Equity:
• OE is affected by 4 types of transactions: (THESE ARE THE 4 ELEMENTS OF OE)
o Investment of Capital by owners(contributions)
o Earning of income
o Incurred of expenses
o Distribution of funds to owners
, THESE INCLUDE HOW TO APPROACH ALL FUTURE QUESTIONS TILL IS1
STEPS:
• ALWAYS SHOW THE NAME OF THE REPORTING ENTITY
• NAME OF THE STATEMENT
• PERIOD IT IS COVERING
• CURRENCY AND ANY FORM OF ROUNDING
• CORRECT FORMAT
The accounting process:
NB THAT EVERY ENTRY HAS A CONTRA (DOUBLE ENTRY PRINCIPLE)
