ACCOUNTING FOR DECISION MAKERS – LECTURES 11 & 12

ACCOUNTING FOR DECISION MAKERS – LECTURES 11 & 12

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
ACCOUNTING FOR DECISION MAKERS – LECTURES 11 & 12 THE ACCOUNTING RECORDING SYSTEM – TRANSACTIONS ANALYSIS AND BASIC BOOKKEEPING Overview of week 6 lectures: Components of the accounting recording process Steps to the accounting recording process Preparation of basic financial statements Illustrated via fabulous Folios Pty Ltd example So far The financial position of an entity represented in the balance sheet. o Three components the balance sheet reflects on: Assets, liabilities, equity (capital and retained earnings). Financial performance (profits) reflected in changes/movements in the balance sheet over time (via retained earnings). o Income/revenues and expenses based on movements in the balance sheet elements that alter assets and liabilities (except when transacting with owners). o Change in the assets is due to our profit, such as cash increasing the equity of the owners, which is a form of revenue, or the selling of stock, which decreases stock thus decreasing equity. o We determine the movement in bookkeeping through debt and credits. o Change in net assets is due to profit.
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
o The bookkeeping process uses this to keep record of everything, but uses a different process and language. How does the accounting system capture and report on these financial effects? Transactions analysis – We record our transactions on a day to day basis in a journal. As each financial transaction occurs, we record the effect in the journal. We also summarise all the journal entries in the ledger, which is a record of our current total Bookkeeping system based on: o Recording transactions in journals o Summarising effects in ledgers (which is the running total of each element) o Preparation of financial statements Transactions analysis Identify occurrence of transactions – Differ from personal transactions and events. Identify the components of the transaction: o Which accounting elements are affected by the transaction (may have to look at the Framework to determine this)? o Must be at least two components but could be more, such as cash being generated by capital by the owners. Thus we are to identify what is in the transaction.
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern