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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.
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
These are books in which the transaction is first entered.
In this class we will use T-Accounts as it is easier and time saving when you need to draw over 10!
A list of account titles and their balances in the ledgers on a specific date, shown in debit and credit columns.
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.
Where one person or a single family operates a firm.
A firm in which two or more people are working together as owners with a view to making profits.
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.
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.
A business entity formed to further the economic welfare of its members by providing them with goods and services.