Monday 24 2014
An account: a page specially designed to record the changes in each individual
item affecting the financial position.
A ledger: a group or file of accounts (i.e. many forms are: papers, cue cards,
binders, electronic files o
Feb 27th 2014
Have trial balance every week or every month if were doing a manual system
Keeping things in balance
Periodically, it is necessary to check the accuracy of the ledger
To ensure that everything is in balance we can take off a
UNIT 2: Chapter 3
Chapter 3: Analyzing Changes in Financial Position
Feb 18th 2014
Events occur daily that cause the financial position of a business change. Each
of these events is called a business transaction.
ALWAYS HAVE TO LOOK
Chapter 1: Financial Accounting Fundamentals
Slide 1: What is accounting?
The system of recording and summarizing business and financial
transactions and analysing, verifying and reporting the results; also: the
principles and procedures of ac
1. Who uses the income statement?
Owners and managers
Shows if the business is making profit
Used for setting goals and policy
When compared to previous years, it provides a trendhighlighting
potential problems (increasing wage cost).
March 17th 2014
The Expanded Ledger: Revenue, Expense, and Drawing The Owners Equity
1. Expanding the Ledger
Owners investment in the company to expand the business, paying back
money that he or she borrows money, the business isnt doing well
Listed in order of when they are normally paid . . .
Accounts payable First Liability
o List of suppliers who the company purchased goods or services from but
will pay at the later date.
o They are amounts owed to creditors
o Due within 30 da
Accounts Balance and Terminology
1) Calculating the Balance of an Account
o Account Balance: gives the dollar value of an account and shows whether it is a
debit or credit value.
o Remember if DEBIT INCREASES then the CREDIT DECREASES (for assets)
Feb 26th 2014
Debit and Credit Theory
Debit on the left; Credit on the right (REMEMBER THE SONG) this is for all
The debit and credit theory
Debit increases assets credits decrease assets
Debit decreases liability (when we pay
The Balance Sheet
1. Balance sheet is the measure of your financial position:
One of the most important uses of accounting data is to show the financial
position of a person, a business or an organization
Composed of what we own and o
DEBIT AND CREDIT SUMMARY CHART
24th March 2014
Equity relationship and the balance sheet
Net income = Revenue Expenses
Equity formula: Beginning capital + Net Income Drawings = Ending Capital.
Equity formula for a loss: Beginning Capital Net Loss Drawings