Week 3 Lecture Notes (6 slides)

Week 3 Lecture Notes (6 slides) - THE UNIVERSITY OF NEW...

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THE UNIVERSITY OF NEW SOUTH WALES Australian School of Business School of Accounting ACCT 1501: Accounting and Financial Management 1A Week 3 The Double Entry System Student Handout Lecturer: Dr. Youngdeok Lim School of Accounting UNSW QUAD 3069 Ph: 9385 6081 [email protected] Blackboard: http://elearning.unsw.edu.au .
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WEEK 3: The Double Entry System 1. Introduction Last week we discussed the importance of the balance sheet and income statement to managers. It is therefore critical that every manager understand the impact of transactions on these financial reports. This week covers those skills by extending transaction analysis, which considers the impact of specific transactions on the accounting equation. The double entry system involving debits and credits, which forms the basis of modern accounting, is then addressed. Learning objectives At the end of this topic you should be able to: Carry out transaction analysis and determine the impact of transactions on elements of balance sheets and income statements Describe how debits and credits work in the double entry accounting system. Understand debits and credits in the context of transaction analysis Required reading Trotman & Gibbins Chapter 3 2. Tutorial Questions – Week 4 Students should attempt these questions before the tutorial. Preparation Questions : DQ 3.3, 3.4 P3.1*, P3.25, P3.30 Tutorial Questions : DQ 3.5, 3.7 P3.4, P3.15, P3.18
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1 Accounting and Financial Management 1A Week 3, Session 2, 2011 The Double Entry System Dr. Youngdeok Lim Quad 3069 Today’s lecture objectives: Carry out transaction analysis and determine the impact of transactions on elements of balance sheets and income statements Hot: Describe how debits and credits work in the double entry accounting system . Understand debits and credits in the context of transaction analysis Revisit balance sheet and income statement A t-1 L t-1 SE t-1 A t L t SE t Beginning period (t-1) Ending Period (t) Incorporated into B/S R E R – E = Profit for the period A t-1 = L t-1 + SE t-1 A t = L t + SE t Capture of income Woolworths B/S (Consolidated) Current Assets $5,199 M Current Liabilities $7,153 M As at 30 June 2010 Noncurrent Assets $13,288 M Noncurrent Liabilities $3,516 M Total Liabilities $10,669 M Equities $7,817 M Total Assets $17,084 M Total Liabilities and Equities $17,084 M Woolworths I/S (consolidated) Revenue $51,784.8 M 2010 For the year ended on 30/6/2010 (52 weeks) Expense ($49,746.8 M) Net profit $2,038.0 M Transactions Transactions are events that affect the operations or finances of an organisation. Analyze each transaction from the perspective of a company! Accounting systems record transactions.
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2 Business Model Purchase Sale Investors (e.g. banks, shareholders) Financing Company (e.g. Woolworths) Customers (e.g. You) Suppliers (e.g. farmers) Payment (Cash/ Accounts Payable ) Payment (Cash/ Accounts Receivable ) Property Plant and equipment, financial securities etc Investing Transaction analysis Transaction analysis involves an examination of each business transaction with the aim of understanding its effect on the accounting equation.
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Week 3 Lecture Notes (6 slides) - THE UNIVERSITY OF NEW...

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