1.

LCCI Level I (Book-keeping )

Course Outline

 The Accounting Equation and The Statement of Financial Position

 The Double Entry System for Assets, Liabilities and Capital
 The Double Entry System for Inventory
 The Nature of Profit or Loss
 The trial Balance
 Trading Profit & Loss Account and Balance Sheet
 Books Of Original Entry and Ledgers
 Cash Book
 Sales Day Book & Sales Ledger
 Purchases Day Books & Purchases Ledger
 Returns Day Books
 The Journal
 The Analytical Petty Cash Book and The Imprest System
 Capital Expenditure and Revenue Expenditure
 Bad Debt and Allowance for Doubtful Debt
 Depreciation of Fixed Assets
 Final Accounts including Adjustments
 Bank Reconciliation Statements
 LCCI Level II (Book-Keepint & Account)
 Manunfacturing Account
 Company Account
 Partnership Account (1)
 Appropration of Profit & Loss
 Non Trading – Organization
 Single Entry (or) Incomplete Records
 Departmental Account
 Depreciation and Disposal of Fixed Assets
 Stock, Stock Valuation and Stock Losses
 Partnership Account (2)
 Amalgamation of Business
 Partnership Account (3)
 Goodwill and Revaluation Account
 Partnership Account (4)
 Dissolution of Partnership
 Total Accounts (Control Account)
 Accounting Ratio

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သသသသသသသသသသသသသ - Sat,Sun (7:00-9:00) AM

Mon,Fri (5:00-7:00) AM

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3.1.LCCI Level III (Accounting)

 Depreciation of fixed assets

 Partnership accounts
 Chash-flow statement
 Group accounts
 Accounting ratios
 Journals and errors
 Incomplete records and non-trading organization
 Stock vatuation
 Miscellaneous

2.LCCI Level III ( Management Accounting)

 Investment Appraisal
 Stand Costing
 Budget
 Break-Even, Absorption, Decision Making
 Overhead, Activity Based Costing
 Transfer Princing, Performance Exaluation
 Process & Joint Costing

3.LCCI Level III (Cost Accounting)

 Standard Costing
 Absorption Marginal & Break-even point
 Budget
 Decision Making
 Process & Joint Costing
 Overhead, Activity Based Costing
 Material
 Ledger Control
 LCCI Level III (Business Statistics)
 Time Series
 Regression , Rank and Correlation
 Significance tests and confidence intervals (n<30)
 Significance tests and confidence intervals (n>30)
 Measures of location
 Chi-Square tests
 Normal Distribution
 Quality Control
 Index Numbers
 Probability

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5.LCCI Level III (Advanced Business Calculation) (ABC)

 Index Number
 Depreciation of Business assets
 Bankruptcy
 Investment appraisal
 Profitability & Liquidity
 Business Ownership
 Stock exchange
 Interest

Introduction to the Accounting Equation

From the large, multi-national corporation down to the corner beauty salon, every business transaction will have
an effect on a company's financial position. The financial position of a company is measured by the following
items:

1. Assets (what it owns)

2. Liabilities (what it owes to others)
3. Owner's Equity (the difference between assets and liabilities)

The accounting equation (or basic accounting equation) offers us a simple way to understand how these three
amounts relate to each other. The accounting equation for a sole proprietorship is:

The accounting equation for a corporation is:

Assets are a company's resources—things the company owns. Examples of assets include cash, accounts
receivable, inventory, prepaid insurance, investments, land, buildings, equipment, and goodwill. From the
accounting equation, we see that the amount of assets must equal the combined amount of liabilities plus
owner's (or stockholders') equity.

Liabilities are a company's obligations—amounts the company owes. Examples of liabilities include notes or
loans payable, accounts payable, salaries and wages payable, interest payable, and income taxes payable (if the
company is a regular corporation). Liabilities can be viewed in two ways:

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(1) as claims by creditors against the company's assets, and
(2) a source—along with owner or stockholder equity—of the company's assets.

Owner's equity or stockholders' equity is the amount left over after liabilities are deducted from assets:

Assets - Liabilities = Owner's (or Stockholders') Equity.

Owner's or stockholders' equity also reports the amounts invested into the company by the owners plus the
cumulative net income of the company that has not been withdrawn or distributed to the owners.

If a company keeps accurate records, the accounting equation will always be "in balance," meaning the left side
should always equal the right side. The balance is maintained because every business transaction affects at least
two of a company's accounts. For example, when a company borrows money from a bank, the company's assets
will increase and its liabilities will increase by the same amount. When a company purchases inventory for
cash, one asset will increase and one asset will decrease. Because there are two or more accounts affected by
every transaction, the accounting system is referred to as double-entry accounting.

A company keeps track of all of its transactions by recording them in accounts in the company's general ledger.
Each account in the general ledger is designated as to its type: asset, liability, owner's equity, revenue, expense,
gain, or loss account.

We created a visual tutorial to demonstrate how a variety of transactions will affect the accounting equation and
the financial statements. It is available in AccountingCoach PRO along with test questions that pertain to the
accounting equation.

Balance Sheet and Income Statement

The balance sheet is also known as the statement of financial position and it reflects the accounting equation.
The balance sheet reports a company's assets, liabilities, and owner's (or stockholders') equity at a specific point
in time. Like the accounting equation, it shows that a company's total amount of assets equals the total amount
of liabilities plus owner's (or stockholders') equity.

The income statement is the financial statement that reports a company's revenues and expenses and the
resulting net income. While the balance sheet is concerned with one point in time, the income statement covers
a time interval or period of time. The income statement will explain part of the change in the owner's or
stockholders' equity during the time interval between two balance sheets.

Examples
In our examples in the following pages of this topic, we show how a given transaction affects the accounting
equation. We also show how the same transaction affects specific accounts by providing the journal entry that is
used to record the transaction in the company's general ledger.

Our examples will show the effect of each transaction on the balance sheet and income statement. Our examples
also assume that the accrual basis of accounting is being followed.

Parts 2 - 6 illustrate transactions involving a sole proprietorship.

Parts 7 - 10 illustrate almost identical transactions as they would take place in a corporation.
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What is the double entry system?
The double entry system of accounting or bookkeeping means that every business transaction will involve two
accounts (or more). For example, when a company borrows money from its bank, the company's Cash account
will increase and its liability account Loans Payable will increase. If a company pays $200 for an advertisement,
its Cash account will decrease and its account Advertising Expense will increase.

Double entry also allows for the accounting equation (assets = liabilities + owner's equity) to always be in
balance. In our example involving Advertising Expense, the accounting equation remained in balance because
expenses cause owner's equity to decrease. In that example, the asset Cash decreased and the owner's capital
account within owner's equity also decreased.

A third aspect of double entry is that the amounts entered into the general ledger accounts as debits must be
equal to the amounts entered as credits.

What is double-entry bookkeeping?

Double-entry bookkeeping refers to the 500-year-old system in which each financial transaction of a company
is recorded with an entry into at least two of its general ledger accounts.

For example, if a company borrows $10,000 from its bank, the company's asset account Cash is increased with
a debit entry of $10,000 and the company's liability account Loans Payable is increased with a credit entry of
$10,000. If the company repays $3,000 the company will decrease the amount in its Cash account with a credit
entry of $3,000 and will reduce the balance in its Loan Payable account with a debit entry of $3,000.

When the company pays its monthly rent of $2,000, a credit entry of $2,000 will be made in its Cash account
and a $2,000 debit entry will be made in its Rent Expense account. If a company collects $500 from a customer
who had previously purchased goods on credit, the company will make a debit entry of $500 in its Cash account
and will make a credit entry of $500 in its asset account Accounts Receivable.

Double-entry bookkeeping requires that the debit amounts must always equal the credit amounts. Today's
sophisticated bookkeeping software will have the double-entry requirements written into its code. This will
prevent many of the errors that occurred in the past when bookkeeping was done manually.

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