Accounting Revision

Introduction to Accounting
Accounting Equation: Assets=Liabilities+Equity
Bookkeeping: Detailed recording of all financial transactions of a business.
Accounting: Uses bookkeeping records to prepare financial statements at regular intervals.
Balance Sheet: Statement of the financial position of a business on a certain date.Double Entry Bookkeeping-Part A
Layout of a ledger account:
Account Name
Example of a Bank Account: For the Capital & Fixtures and Equipment Accounts, write the opposite title. For example, in the Bank Account, you have written ‘Capital’ on the debit side so you have to write ‘Bank’ on the credit side of the Capital Account. The same goes for the Fixtures and Equipment Account.Opening Balance is written as “Balance b/d” whereas the closing balance is written as “Balance c/d”.Purchases
(a) Goods purchased for cash or cheque
When goods are purchased, the Purchases Account is debited. The double entry will be credit in either the Cash Account or Bank Account depending whether the amount is paid in cash or cheque.
(b) Goods purchased on credit
Purchases Account will be debited as usual. The credit entry will be made in the account of the supplier of goods. When payment is made to the supplier, the bank or cash account will be credited and the account of the supplier (creditors) will be debited.
(a) Goods sold for cash or cheque
Sales Account is credited and the Bank or Cash Account will be debited.
(b) Goods sold on credit
Sales Account will be credited. The debit entry will be made in the account of the customer (debtors).
Purchases Returns – Returns Outwards
Sales Returns – Returns Inwards
Carriage Inwards-Cost of purchasing goods to be delivered to the business premises.
Carriage Outwards-Selling expense when a business pays for goods to be delivered to the customer’s premises….