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DEPARTMENT OF MANAGEMENTCOURSE CODE:DBM 114COURSE TITLE:FUNDAMENTALS OF ACCOUNTING IMANUAL PREPARED BY:Mr. MBURU PETERCell phone No.:0723135375Email address:[email protected]
iCOURSE CONTENTDBM 114: FUNDAMENTALS OF ACCOUNTING IPurpose: -The major aim of this course is to develop the learners understanding of theprinciples of book-keeping and accounts and the ability to maintain books of accounts andpreparation of financial statements.Course objectives:-By the end of the course unit the student should be able to;Compile accounting dataPrepare financial statementsInterpret accounting informationUse accounting information in decision makingCourse structureIntroduction to accountingpurpose of accounting, basic principles; concepts andconvention underlying accounting reports, accounting equation, accounting terminology,users of financial statements and their information needs.Double entry: - booking keeping and books of original entry.Distinction between and treatment of capital revenue and expenditure accountsTypes of ledgers and their usesPetty cash book: - Analysis petty cash book; imprest system.Re conciliation of bank and cash balancesTypes of errors and their correctionControl ledger accountsProvisionsPreparation of final accounts:- preparation of the trading, profits and loss accounts;balance sheet.ReferenceHonrgren and sundem, G L,Introduction to Financial Accounting,(6thEdition), New York;Prentice Hall.Larson, K M. and Pyre, D,Fundamentals of Accounting Principles, (12thEdition), prentice HallWood, Frank,Business Accounting(17thEdition), International Thompson
iiContentsCOURSE CONTENT....................................................................................................................................iINTRODUCTION TO ACCOUNTING (WEEK 1).....................................................................................11.0 What is accounting?............................................................................................................................11.1 The objectives of accounting..............................................................................................................21.2 Basic principles...................................................................................................................................21.3 Users of financial statements and their information needs.................................................................51.4 Characteristics of useful information..................................................................................................71.5 Chapter review questions....................................................................................................................8THE ACCOUNTING EQUATION AND FINANCIAL STATEMENTS (WEEK 2).................................92.1 The accounting equation.........................................................................................................................92.1.1 Component of accounting equations..........................................................................................102.2 Financial statements..........................................................................................................................112.2.1 Income statement.......................................................................................................................112.2.2 Balance sheets............................................................................................................................122.2.2.1 Classification of balance sheet items......................................................................................122.2.2.2 Current assets and current liabilities.......................................................................................142.2.2.3 Noncurrent assets and noncurrent liabilities...........................................................................152.2.3 Form of the balance sheet..............................................................................................................172.3 Chapter review questions..................................................................................................................21RECORDING OF BUSINESS TRANSACTIONS (WEEK 3)..................................................................223.0 Introduction.......................................................................................................................................223.1 The t-account....................................................................................................................................223.2 Debits and credits..............................................................................................................................233.3.1 Recording changes in assets, liabilities and owner’s equity......................................................233.3.2 Recording changes in revenues and expenses................................................................................253.3.3 Recording withdrawals by the owner.............................................................................................253.3.4 Determining the balance of an account..........................................................................................263.4 Rules of debit and credit summarized...............................................................................................273.5 Chapter review questions..................................................................................................................32SOURCE DOCUMENTS AND BOOKS OF ORIGINAL ENTRY (WEEK 4).........................................334.1 Source documents.............................................................................................................................33
iii4.2 Books of original entry.....................................................................................................................354.2.1 Format of books of original entry..............................................................................................354.4 Ledger...............................................................................................................................................364.4.1 Major kinds of ledger.................................................................................................................374.4.2Classification of accounts...........................................................................................................384.3 Chapter review questions..................................................................................................................42CONTROL ACCOUNTS(WEEK 5)..........................................................................................................435.1 The benefits of accounting controls..................................................................................................435.2 Principles of control accounts...........................................................................................................445.3 Information for control accounts.......................................................................................................

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