ACCG1000 Lecture Summary Week 3 1 .pdf - ACCG1000 Lecture...

ACCG1000 Lecture Summary Week 3
8th of March 2022
Financial accounting for business: Double Entry Accounting
ALOIE- Elements of the financial statement
A = Assets
L = liabilities
O = Owners equity
I = income
E = Expenses
The accounting cycle (Accounting Process
1. Analyse transactions
2. Journalise transactions
3. Post to ledger accounts
4. Prepare trial balance
5. Prepare financial statements
Review the transactions entered into by the business
● To do this we need to access source documents that entail the nature of the transaction
● Source documents are where the nature of a transaction originates
● Source documents may include a sales invoice, bank statements
● (Bank statements are especially useful as companies pay invoices through EFT’s)
Accounting translations and events
● A transaction is an external exchange of something of value between two or more entities-
(purchase of office equipments from an outside supplier or sale of goods and services)

● Accounting transactions and events are those occurrences which must be recorded/recognised
because they have an effect on the assets, liabilities or equity items of a business
● Evidence of transaction comes in the form of a source document-
(Purchase order, EFT on bank statement, cash register tape, sales invoice)
● Not all transactions and events are recorded- hiring of a new employee (no financial implication
on the business)
Definition of Assets (what the business owns or controls)
An asset is a present economic resource controlled by the entity as a result of past events. An economic
resource is a right that has the potential to produce economic benefits.