810 - Principles of Accounts
- 1 Introduction
- 2 Balance Sheet
- 3 Effects of Transaction on Balance Sheet
- 4 The Ledger
- 5 Cash Books
- 6 The Journal
- 7 Trial Balance
- 8 Source of Records
- 9 Trading and Profit and Loss Accounts
- 10 Other Subsidiary Books
- 11 Final Accounts
- 12 General and Special Ledgers
- 13 Treatment of Errors
- 14 Year End Adjustment
- 15 Non-Profit-Making Organizations
- 16 Partnership Accounts
(a) Definition of accounting and book-keeping
(b) Purpose of accounting
(c) Uses of accounting
(d) Common terms used in accounting
(e) Basic accounting concepts
Definition of balance sheet and introduction of accounting terminology. Methods of laying out a balance sheet: horizontal layout in both British and American system, vertical layout. Arrangement in the balance sheet, order of liquidity and order of permanency. Accounting equation. Balance sheet as a financial statement. Aims and purpose of accounting using simple and personal and business balance sheet.
Effects of Transaction on Balance Sheet
(a) Purchase of an asset for cash. Purchase of an asset on credit. Payment of liabilities in cash and payment by incurring a new liability; sales of an asset.
(b) Change in capital through investments and withdrawals.
(c) Define the concept of double entry system.
(d) Buying and selling goods; income and expense transactions; concept of gross and net profit or loss.
Definition and the use of ledger as a main book of accounts. Types of accounts in the ledger; double entry transactions in the ledger. Principles of adding and subtracting from assets and liabilities. Introduction of debit and credit rules relating to entries in the ledger accounts. Balancing of accounts. Reasons and methods of producing periodic balance. Introduction of the three column ledger checking accuracy.
(a) The two column cash book, recording of transaction sin the cash books and contra entries.
(b) The three column cash book
(c) The bank statements and the preparation of bank reconciliation statements.
Definition, functions, recording of transaction sin the journal and posting to the ledger.
Definition, purpose, formats, errors disclosed by a trial balance; errors the trial balance will not disclose.
Source of Records
The basic business documents used as a source for subsequent entry in the subsidiary books. Invoices, vouchers, credit notes, debit notes, statements, cash-sale receipts, bank paying-in slips (books).
Trading and Profit and Loss Accounts
(a) Trading Account: Purpose of accounts and treatment of stock.
(b) Profit and Loss Accounts: Purpose, distinction between gross and net profit or loss. The concept of revenue and expenditure. The distinction between capital receipts and revenue receipts, capital expenditure and revenue expenditure.
Other Subsidiary Books
The use of the petty cash book and the imprest system. Trade and cash discount. The use of the journal: the sales journal, purchase journal, purchase retursn and sales returns journals, posting subsidiary books of original entry to the ledger.
Concepts of trading or financial period; need for stock-taking in assessing profit; extension of trial balance columns; worksheet (10 column) relationship between worksheet profit and loss statement and balance sheet.
General and Special Ledgers
(a) Alternative methods of providing prime records and posting to ledger accounts.
(b) Classification of ledger accounts and use of separate ledgers.
(c) Use of suspense account in the correction of errors.
(d) Use of control accounts for both sectional and self-balancing ledgers.
Treatment of Errors
(a) The use of suspense accounts.
(b) Control accounts and self balancing ledgers.
Year End Adjustment
(a) End of year adjustments made through ledger accounts and their representation in the balance sheet.
(b) Provision for depreciation.
(c) Diminishing balance method.
(d) Payments in advance and accrued expenses.
(e) Provision for discount allowed and discount received.
(f) The 10 column worksheet, relationship between worksheet profit and loss statement and balance sheet.
(a) The concept of receipts, payment, income and expenditure related to these organizations.
(b) Revenue and capital expenditure
(c) Preparation of receipts and payment accounts.
(d) Treatment of outstanding payments and subscriptions of receipts in advance in the income and expenditure account and in the balance sheet.
(e) Accumulated fund.
(a) Elementary treatment of partnership account including partners' capital and current account, drawings and appropriation profits.
(b) The balance sheet of partnership.