financial accounting-foundation - lesson 2
TRANSCRIPT
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TOPIC: INTRODUCTIONACCOUNTSAND
ACCOUNTANTS
Subject: Accounting
Date:16/1/2012
Group: College Students
Time: Afternoon/Evening
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AIM
By the end of the session you will develop an
understanding and appreciation of the basic
principles of Double-Entry Book-Keeping
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OBJECTIVES
The principles of double entry book-keeping Debits and credits in double entry book-keeping
Double entry for credit sales and credit purchases
General principles of debits and credits
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OTHERUSEFULINFORMATION
Basic/Key Skills Outcomes
Relates only to the Financial Accounting Skills
curriculum
Health & Safety Fire exit on through the door and left through
the main doors down the stairs
Please do not leave chairs in the walk way it
may obstruct movement in case a fire
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DIFFERENTIATEDLEARNING
Identify specific needs:(e.g. for s low er learners
in th is sess ion)
Repeat more than once
Point in session5 MaterialsAdditional Explanation
Extension Work: (e.g. for fasterlearners)Give two task
Point in session5 MaterialsExtra Materials for read
and extra reference
source
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CODEOFCONDUCT
During this lesson, the only rules we all need to
observe are based around Respectfor each other,
no matter what their social background, culture, sex
or difficulties are. This will manifest its-self in
allowing everyone to speak and be heard, not usingany stereotypical remarks about any social group
etc. Think before you speak! Respect everyones
point of view-except if it is liable to cause offence.
Use of inappropriate language and speaking inyour own language in the classroom is not
acceptable. Thank you for your consideration
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MAINLESSON
Introduction
Questions:
What is the basic principles of double entry book-keeping
Debit Credit
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NOTETHEFOLLOWINGPOINTSABOUTTHE
LAYOUTOFTHISACCOUNT
The name of the account
The account is divided into two sides
Left is Debit or Dr
Right is Credit or Cr. The Date and Details of the transaction
Folio is for referencing
Description of each entry is the name of the
other account involved.
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DEBITANDCREDITINDOUBLEENTRYBOOK-
KEEPING
Every transaction involves one debit entry and one
credit entry
Debit entries are on the left of the appropriate
account and credit entries are on the right
Correct=right (credit = right hand side) and UK
drivers, drive on the left.
Work out which entry is the debit and which entry is
the credit.
There are two approaches: Conceptual Approach
and Practical Approach
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DOUBLE-ENTRYBOOK-KEEPING(CONTINUE)
Money received is recorded on the left hand side,
and money paid out is recorded on the right hand
side.
Identify on which side of the bank account, debit
(money in) or credit (money out)
Record the other entry item on the other side of the
appropriate account
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DOUBLEENTRYFORCREDITSALESAND
CREDITPURCHASES
Note: Purchases and Sales on credit are the mostcommon.
Credit Sale: Debit Debtors account, Credit sales
account
Credit Purchases: Credit creditors ( Suppliers)account, Debit purchases account
Sales Account
20-1
10 Sep Arco E. 5000
Arco Engineering
20-1
10 Sep Sales 5000
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DOUBLEENTRYFORCREDITSALESAND
CREDITPURCHASES(CONT)
Dr. Bank Account Cr.
20-1
10 Oct Arco E. 5000
Dr. Arco Engineering Cr.
20-1 20-1
10 Sep Sales 5000 10 Oct Bank 5000
Sidbury Traders 2500 from NewLands
Debit Purchases Account
Credit Newland Supplies account
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DOUBLEENTRYFORCREDITSALESAND
CREDITPURCHASES(CONT)
Dr. Purchases Account Cr.
20-1
12 Sep Newland S. 2,500
Dr. Newland Supplies Cr.
20-1 20-1
12 Oct Bank 2,500 12 Sep Purchases 2,500
Dr. Bank Account Cr.
20-1 20-1
12 Oct Newland S. 2,500
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DOUBLEENTRYBOOK-KEEPING(CONTIN)
Balancing Off Accounts
Balancing of each account allows for total debtors
and creditors to be known
Returns In and Returns Out
Returns In-unwanted or faulty goods returned to thebusinessDebit Note used by sender and Credit
note receiver
Debit returns in account
Credit the debtors account Returns Out: are goods returned by the business,
normally with a debit note.
Debit creditors
Credit returns out account
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WHENDOWEDEBITORCREDIT?
Debits Credit
Money received (cash and bank) Money paid out (Cash and Bank)
Purchases Sales
Fixed Assets Acquired Liabilities incurred
Expenses Income
Drawings Capital
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NOTEEXAMPLES
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CONCLUSION
The principles of double entry book-keeping
Debits and credits in double entry book-keeping
Double entry for credit sales and credit purchases
General principles of debits and credits