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Accounting

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59 views11 pages

Accounting

Uploaded by

Cynthia Korir
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© © All Rights Reserved
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Office Fixtures account 15 Fixtures $800 KABABIL UNIVERSITY SCHOOL OF BUSSINESS AND ECONOMICS DEPARTMENT OF ECONOMICS FINANCE AND ACCOUNTING COURSE OUTLINE, Course code: : Course Title: INTRODUCTION TO FINANCIAL ACCOUNTING CIFA.K,CCP,K.CS,K) J geturers Tubman Bosley Walaba 0720945019 (CPA Mobile Tel:+254 720945019 Class Rep, David 0741-517-660 Email: valaba@kibu.ac ke, boswalaba@gmail.com BROAD OBJECTIVE |. “To provide the students with the knowledge of important coneepis and accounting standards ncossary in Preparation and interpretation of financial statemen's 2. Develop learners understanding of Financial accounting and apply accounting tools in processing and reporting of financial information EXPECTED LEARNING OUTCOMES 1, Describe the nature, scope and purposes of financial accounting ‘Acquite skills in cost of product/service computation and analysis Ho woneeptualize the accounting equation within the broad double erty concept 1 statements for both internal and external users uster the preparation of financial COURSE OUTLINE INTRODUCTION a. TOPIC O1 rination, Nature and purpose of Accounting tives of Accounting Users of accounting information Branches and systems of accounting Roles of accounting 6, limitation of accounting ‘TOPIC. TWO :ACCOUNTING CONCEPTS 1. Definitions and scope of accounting conventions and concepts 2, ‘Phe accounting equation and ,Business Transaction 3. The double entry book keeping 1s of Transactions on the Balance Sheet Office Fixtures account 15 Fixtures $800 TOPIC THREE: SOURCE DOCUMENTS AND BOOKS OF ORIGINAL ENTRY 1. Definitions and scope of source documents 2. Definition and scope of books of original entry 3. Feature of Journal and illustrations 4. Uses of general journals TOPIC FOUR: PETTY CASH AND IMPREST SYSTEM 1. Definition and scope of petty cash and imprest system Illustrations TOPIC FIVE CASH BOOK, 1. Posting of cash book, balancing off of accounts, and extraction of trial balance 2. Bank reconciliation TOPIC SIX: | ACCOUNTING ERRORS 1. Definition and scope of accounting errors 2. Correction of errors TOPIC SEVEN FINANCIAL STATEMENTS 1, Preparation of Financial Statements and Year-end Adjustments 2. Making Adjustments Accurately by way of journalizing ) Mode of Delivery; Lectures, Discussion, and group presentations Examination (week 11612) 10% CATS/Assignments( Week 6&8) 30% TOTAL 100% REFERENCE MATERIALS Frank Woods Business Accounting 1 Sixth Edition Checked & Verified by: COD,EFA Approved By; DEAN,SOBE FINANCIAL ACCOUNTING Introduction Accounts involves book keeping and Accounting a. Bookkeeping- is the art of recording and summarizing transactions in the books of accounts Vransactions- A business activity involving money. There are two types of business transactions }. Cash transactions — where money is paid immediately on the spot, either hard cash, "digitally such as M-PESAor through Electronic Funds transfer as happens in public and private entities. a Credit transactions — where money is paid at a later date or where payment is postponed or differed. oo _ b. Accounting is the art of recording, summarizing and analyzing in a significant manner and in terms of money, transactions and integrating the results thereof. Classifications of accounts Accounts are classified into two major groups: Personal Accounts ~are accounts of debtors and creditors either as a group or as individuals. They «ure accounts in the names of people and businesses |. Impersonal accounts — are accounts that aren’t personal and are further divided into two: 2. Real accounts — which are accounts of properties e.g land or building accounts Nominal accounts ~ are accounts that regard expenses and other means. They deal with generated revenues and expenses generating it-These accounts are used in the preparation of trading, profit and loss accounts or the income and expenditures statement. E.g Sales account ae rental ve purchases a/e salaries a/c. Ledger This isa book in which accounts are kept. Itis a book in which double entry recording is completed Ledger Accounts iccounts has two sides, the Debit side (Dr) and the Credit (Cr) side Dr. Account name ( Waiguru A/C Cr Debit side Credit side Office Fixtures account 1S. Fixtures $800 DOUBLE ENTRY CONCEPT The concept states that for every debit entry there is a corresponding Credit entry and vice versa.Dehit is entry is made when a transaction is recorded on the debit side of the ledger account and a credit entry is made when a transaction is recorded on the credit side of a ledger account. Accounting entries a. Any cash received (Dr Cash a/c) Any cash paid (Cr Cash a/c) Any cash deposited into the Bank or any cheque received (Dr Bank A/c) Any cash withdrawn from the bank or any cheque paid (Cr Bank a/c) Any asset received/acquired (Dr Assets a/c) Wustration be & a & Bought furniture by cheque. © DrAsseta/e + CrBanka/e 3) Bought motor lorry by Cash Paid a creditor T. Lake by cheque ©) Repaid lagons by cheque Sold motor lorry for cash Bought office stationery on credit from jameni itd A debtor A.Hills pays us by Cash A debtor j. Gross pays us by cheque Proprietor puts a further amount into business by cheque MAKING ENTRIES IN LEDGER ACCOUNTS Dr_Cash accounts Cr 1 cash $ 5000 2 $100 2 cash $800 15 Fixtures $60 j.jones $1000 Dr Motor van account Cr 2 $1200 Dr Super motors account Cr Young a/¢ 5 Fixtures 400 Bank account 25 $800 1Capital $ 50000 2 $100 Office Furniture account 30 $300 ASSET OF STOCK the asset bought for resale at a profit. It increases when goods are bought. These are called Stoc purchases and their accour ing entries are; Dr. Purchases A/C Cr. Cash A/C oR Dr. Purchase’s a/c Cr. Supplies a/c Stocks will also increase when goods are returned by customers. these are called sales returns or returns inwards. Their accounts entries are: Dr. Returns inwards a/c Cr. Customers a/c Office Fixtures account 15 Fixtures $800 Reasons for returns of stock a) Goods are damaged b) Goods not of right specifications c) Goods are faulty 4) Goods are not of right quality Stock will decrease when goods are sold. These are called sales and their account entries are; Dr. Cash a/e Cr.Salesa/c notes Only for Cash sales Dr. Customers a/¢ Cr. Sales a/c Note Credit Sales ‘Stock will also increase when goods are returned back to the suppliers. These are called purchases returns or returns inwards account. Account entries are; Or. Suppliers a/c Cr. Returns inwards a/c EXERCISE 3.2. a) Goods bought from t Morgan b) Goods retumed to us by J. Thomas ¢). Machinery returned to L. Johns Itd d) Goods bought for Cash e) Vans bought for credit from P. Davis f) Goods returned by us T. Prince 8) D. Picton paid us his account by cheque h) Goods bought by cheque i) We paid B. Henry by cheque j) Goods sold on credit to J. Mullings Required: show the relevant accounting entries for the above transactions. Or. T. MORGAN AC A) Dr Purchases a/c Cr. Suppliers a/¢ B) Or. Returns inwards a/c | Cr. Customers a/c Cr. Returns outwards a/c C) Or. Suppliers a/c g) Dr. Customers a/c Cr. Returns outward a/c Cr. Sales a/c D) Dr. Cash ac h) Or. Purchases a/c e) Dr Purchases a/c Cr. Suppliers a/c f} Dr. suppliers a/c Office Fixtures account 15 Fixtures $800 Sales a/c Cr. Supplies a/c BALANCING OFF TRIAL BALANCE Balancing off is done to determine a) An account has a debit balance b) An account has a credit balance ¢) An account has no balance PROCEDURE IN BALANCING OFF a) Get the sum on the Debit side if any b) Get the sum on the credit side ifany c) Get the difference and add the difference to the side with the smallest balance as balance carried down 4) Bring down the difference to the side with the greatest total as balance brought down Ulustration Capital 200,000 Purchases 150,000 Sales 300,000 Rent 5,000 Salaries 130,000 0000 Balance c/d 215,000 500,000 500,000 Balance b/d 215,000 en the b i it sic brought vowanee b/d is on the debit side, the account has a debit balance and when the balance edistin n is on the credit side, the account has a credit balance and when the two sides are , account has no balance and it will not be shown in the trial balance. wi THE TRIAL BALANCE L of the trial balance 1) Used to test the accuracy of double entry recording. b) Used in the preparation of final accounts, Office Fixtures eat etures $800 : | EXECISE 3,3 JULY 1999 \ Description Debit Credit (Dn (oo 1 bank 76,500 | capital : 100,000 _| T. john 4.000 Cash 4.700 purchases 48,100 E. Jones 10,700 5. Charles 36,000 Sales 7,900 ¢. moody 1,400 H. Morgan 1,900 Returns outwards 1,400 Fastac supplies Itd 6,000 1 Office Furniture 16,000 I | |_ Manchester Motors 26,000 Motor van 26,000 Grand Total 166,000 166,000 Capital account Balance c/d 100,000 1 july 1999 100,000 b/d 100,000 T. John ac Balance c/d 2rd july 1999 4,000 Balance b/d 4000 Cash a/c T. John (2rd July 1999) 4,000 6 1999 Bank 2,500 4" July 1999 2,000 31% July 1999 Furniture 1000 10" july 1999 2,200 Balance ¢/d 4,700 Balance b/d 4,700 ee | Office Fixtures account 4S Fixtures § g00 Purchases 3 July 1999 8,400 3july 1999 36 o99 ah july 1999 3,700 balance c/d 48,100 Balance 48,100 EJones a/c 15" July1989 1,400 3 July 1999 8,400 Balance c/d 10,700 11" July 1999 3,700 12,100 balance b/d 10700 S. Charles _a/¢ Balance c/d 36,000 3" July 1999 36,000 36,000 36,000 Balance 36,000 SALES A/C 4 July 1999 2,000 8 July1999 1,800 Balance c/d 7900 10" july 1999 2,200 14" july 1989 4,900 7,900 Balance b/d 7,900 €_ moopy A/C 8" July 1999 1,800 12% July 1999 400 Balance ¢/d 1,400 Balance 1,400 H. MORGAN A/C 4" July 1999 1,900 1,900 Balance b/d 1,900 Returns outwards a/c 15t" july 1999 E. Jones 1,400 Balance ¢/d 1,400 balance 1,900 Balance b/d 1,400 account $200 Office Fintures 205° 5 Fixtures 7 . iture 6,000 Balance ¢/d 6,000 18" july 1999 officer furniture 6! $000 6,000 Balance 0/4 6,000 Office furniture a/¢ 18" july 1999 6,000 balance ¢/4 16,000 31" july 1999 10,000 16,000 Balance b/d 16,000 Manchester motors a/c Balance

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