WHAT IS ACCOUNTING?
-Accounting collects info which is then processed.
-This involves the:
4. reporting; and
5. analysis of the financial information
-Accounting information is expressed in terms of money.
-The flow of information, commences with transaction which must be entered on to the source document.
-->Examples of source documents, include:
4. butts; and
5. bank deposit books
-The source documents are then entered into journals (these books are called "books of original entry".
-From the journals, entries are made to the ledger accounts.
-The ledgers are called "books of secondary entry."
HINT QUESTION FOR EXAM:
What is the document source for entry journals?
-The trial balance is extracted and financial reports are prepared.
-Accounting has the following objectives:
1. To monitor the profitability
2. To monitor the agency's assets & liabilities
3. To produce reliable financial reports for internal and external users
4. To meet statutory requirements.
-The accounting equation refers to the impact of assets and liabilities on the owner's equity of the business.
-The equation is:
ASSETS= LIABILITIES+OWNER'S EQUITY
A = L-OE's
L = A-OE's
P = R - E
NP = R - E - GST
The Balance sheet becomes:
Balance Sheet as at 1 August 2008
Credit $ Debit $
Cash at Bank
Plant & Machinery
Land & Buildings
Long Term Loan
Mortgage on Land
WHAT BOOK-KEEPING RECORDS IS OBLIGED TO MAINTAIN & HOW OFTEN ARE THESE UPDATED?
-There are a range of records that an agency is obliged to maintain and there is a...