TOPIC 4 & 5 JUN 2020.pdf - DTM5013\/DTM40123 PRINCIPLES OF ACCOUNTING FOR TOURISM HOSPITALITY\/HRIA TOPIC 4 LEDGER TRIAL BALANCE LEARNING OUTCOMES At

TOPIC 4 & 5 JUN 2020.pdf - DTM5013/DTM40123 PRINCIPLES OF...

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DTM5013/DTM40123 PRINCIPLES OF ACCOUNTING FOR TOURISM & HOSPITALITY/HRIA Page 1 of 24 TOPIC 4 LEDGER & TRIAL BALANCE 4.O DOUBLE ENTRY CONCEPT 4.1.1 Understand the Double Entry Concept Double entry accounting is a record keeping system under which every transaction is recorded at least two accounts. It also known as ACCOUNTING EQUATION . There is no limit on the number of accounts that may be used in a transaction, but the minimum is two accounts. The sum of all debits of the transaction must be equaled to the sum of credit of transactions Debit entries will not necessary means an increase in the value of an account, and the credit will not necessary means a decrease value of account. 4.1.2 Illustrate the transaction using T Account The normal balance according to the type of accounts is shown in Table below. ACCOUNT TYPES NORMAL BALANCE DEBIT CREDIT Assets Expenses Drawings Liabilities Owner’s equity Revenue At the end of this chapter, students should be able to: Demonstrate mastery of knowledge and understanding of a ledger Demonstrate mastery of knowledge and understanding of Trial Balance LEARNING OUTCOMES
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DTM5013/DTM40123 PRINCIPLES OF ACCOUNTING FOR TOURISM & HOSPITALITY/HRIA Page 2 of 24 ASSETS = LIABILITIES + EQUITY Debit Credit Debit Credit Debit Credit + - - + - + The effect of double entry on the balance of ledger account. EFFECT ON VALUE OF BALANCE ACCOUNTS TYPE Assets Expenses OE (Drawing) = Liabilities OE (Capital) Revenues DEBIT (DT) CREDIT (CT) THE ACCOUNTING EQUATION The Accounting Equation and Lists of its Component ACCOUNTING EQUATION
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DTM5013/DTM40123 PRINCIPLES OF ACCOUNTING FOR TOURISM & HOSPITALITY/HRIA Page 3 of 24
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DTM5013/DTM40123 PRINCIPLES OF ACCOUNTING FOR TOURISM & HOSPITALITY/HRIA Page 4 of 24 The nature of Assets, Liabilities, Owner’s Equity, Revenue and Expenses ASSETS o Assets are valuable resources that are owned by a firm to help operate business o Divided into 2 main categories Non-Current Assets (NCA) Current Assets (CA) o Assets accounts have a DEBIT balance o Characteristic of non-current assets and current assets ASSETS CHARACTERISTICS EXAMPLE Non-Current Assets a. Asset life is longer than one accounting period b. Can be used repeatedly c. Fixed value Premise Land Plant & machineries Office equipment Motor vehicle Fixtures and fittings Furniture Current Assets Assets that are easily converted into cash. Value is not fixed. Cash Bank Debtors Inventories Prepaid expenses Accrued revenue LIABILITIES o Debts owed by a business entity to external parties o Divided into: Long term liabilities (NCL) Current liabilities (CL) o Liabilities accounts have a CREDIT balance o Characteristic of non-current liabilities and current liabilities LIABILITIES CHARACTERISTICS EXAMPLE Non-Current Liabilities Debt that must be paid off after one accounting period Bank Loan Debentures Mortgage Current Liabilities Debt that must be paid off within one accounting period Creditors Bank Overdraft Accrued expenses Unearned/Prepaid revenues
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