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OBJECTIVES:

1. Describe and explain the accounting cycle.

2. List source documents and Journals.

3. Label parts of a ledger/T-account.

4. Distinguish between types of business organizations.

The accounting system

The accounting cycle

the accounting

cycle

so what are source documents?

Source documents

Source documents are documents where original information is found.

Examples:

Invoice

Credit note

Debit note

Bank paying-in slips

Cheque/cheque counterfoil

receipt

Petty cash voucher

Correspondence

Books of original entry (7): Journals/Day Books

  • Sales Day Book/Sales Journal
  • Purchases Day Book/Purchases Journal
  • Returns Outwards Day Book/Purchases Returns Journal
  • Returns Inwards Day Book/Sales Returns Journal
  • Cash Book
  • The Journal
  • Petty Cash Book

Journals/Day

books

These are books in which the transaction is first entered.

Intro. to the double entry system: Ledgers/t-accounts

Ledgers/T-accounts

In this class we will use T-Accounts as it is easier and time saving when you need to draw over 10!

Trial Balance

A list of account titles and their balances in the ledgers on a specific date, shown in debit and credit columns.

Trial Balance

financial statements

Financial

statements

Financial statements are extracted from the Trial Balance.

1. Income statement/Trading and Profit and Loss account - financial report that shows an entity’s financial results over a specific period of time.

*Shows a net loss or net Profit.*

2. Balance Sheet/ Statement of financial position - A statement showing assets, liabilities and capital of a business.

TYPES OF BUSINESS ORGANIZATIONS

TYPES OF business ORGANIZATIONS

sole trader

Sole Trader

Where one person or a single family operates a firm.

partnership

partnership

A firm in which two or more people are working together as owners with a view to making profits.

Limited companies

Private Limited Company - It must have at least one shareholder and one director who is the sole shareholder. The shareholders have limited liability, that is, their liability is limited to the amount that they have agreed to invest.

Public Limited Company - Legal entity with limited shareholder liability, but, unlike a private company, it can ask the public to subscribe for its shares.

limited companies

Non-trading organizations

A form of business owned by a group of people called members. The common interest or aim of the members is to fulfill the needs of members rather than making a profit.

Non-trading

organizations

Cooperatives society

A business entity formed to further the economic welfare of its members by providing them with goods and services.

Cooperatives

society

QUESTIONS?

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