Chapter 1

Introduction to Accounting

Financial statements Income statement Wants to know Profi

Profit and loss

Statement of fiancial positions Wants to know how

Balance sheet

Assests represent anything owed by or owing to the business.

Liablilites represent anything owed by the business

Capital is the total resoruces provided by the owner and represents what the business owes the owne

Example
Mg Mya invest car to the buisness…..

Business in the future if it is ceased, the buiness has to reutrn to the owner

Mg mya he has no money to improve the business so he borrow $1000 from the bank.

Accounting equation

Assests= Capital + Liabilites

(owner's equity)

Assests
1.Non-Current Assests (Fixed Assests) ------The business will use more than one year
Land and building
Premises
Fixtures and fittings
Motor Vehicles
Equipment

2.Current Assests ----------------The buiness will receive within one year.

Closing inventory (Left over stock)
Trade Receiveables/ Debtors/ Credit customers
Other receiveables Chapter 11
Cash
Bank

Liablities
Non-current Liabilities (Repayable more than one year)
Bank Loan Produce
Sale
Current Liabilites ( Payable within one year) 31.12.2021Closing
Trade paybles/ Creditors/ Credit suppliers Stock
Other payables Chapter 11
Bank overdraft 1.1.2022 Opening
Stock

Walkthrough 1.1 Pg 5
Assests = Capital +
1 Jan 20-7 Bank 20000 = 20,000

2 Jan 20-7 premises 15000 = 20,000

Bank 5000

3 Jan 20-7 Inventory 3000 = 20000 +

premises 15000
Bank 5000

4 Jan 20-7 Inventory 2000 = 20000 +

Premises 15000
Bank 5000
Trade receiveable 1000
Examstyle questions
Question 2 Pg 8
a) $
Premises 180 000
Invenotry 23420
Trade receiveables 21710
Office fixtures and fitting 32600
Cash at bank 2550
Motor Vehicles 15900
Value of Assests

b)
Trade payables 26180
Loan from bank 80000
Value of liabilites 106180

Question 5
Effect on assests $ Effect on liabilites $
a motor vehicles Increase No effect
Bank Decrease

b. Inventory Increase credit suppliers increase

c. Bank Increase No effect

credit customers Decrease

d. Invenotry Decrease No effect

credit customers Increase

e. Cash Decrease loan Decrease

Question 6
Workings
Statement of financial position
Bank 3000 (-) Decrease Assests
Trade payables 3000(-) Decrease Machinery (19000+7000)
Motor Vehicles
Cash 500 (+) Increase Inventory
Trade receiveables 500(-) Decrease Trade receivables
Bank (10100-3000+8000-7
Bank 8000(+) Increase Cash
Loan-Lenders limited (+) Increase

Machine 7000(+) Increase

Bank 7000(-) Decrease
Assests= Capital + L

Revision guide
Question 1

Ans D

Question 2

Assests - Land and building, premises etc….

Question 3

Effect on assests $ Effect on liabilites $

b Bank Increase Loan Increase Increase

c Property Increase Loan Increase Increase

d Inventory Decrease
cash Increase
Question 4
Meera Traders
Statement of financial position at 1 June 20-9
Assests $
Property 160000
Equipement 12500
Invenotry (3300+140) 3440
Trade receiveables (2800-125) 2675
Bank (6200-2000+125) 4325
Cash (450-90) 360
183300

Capital and liabilites

Owner's equity 128380

Liabilites
Bank loan (50000-2000) 48000
Trade Payables (6870-90+140) 6920
183300

Question 5

Total Value of Assest 176025

Total Value of Liabilites 10630

Assest = Capital + Liabliites

Capital 165395
 1-Jan-19

1-May-19

1-Nov-20
Wants to know Profit or loss Chapter 8

Wants to know how much assests, Liabilites and capital Chapter 9

ness owes the owner.

Closing inventory
1.1.2021 ------------------31.12.2021
1000 Iphones
800 Iphones
200 Iphones

200

Liabilites Goods/ Inventory

it the goods a business has avaiable for resale.

Trade Payables
represent the amount the business owes to the
Trade payables 3000 credit suppliers of goods.

Trade receiveables
represent the amount owed to the business by
Trade payabels 3000 its credit customers.
 Bharwani Traders
f financial position as at 1 November 20-4
$ Liabilites $
(19000+7000) 26000 Capital 35000
6000 Loan- Lenders limited 8000
4900 Trade payables (8000-3000) 5000
(3000-500) 2500
10100-3000+8000-7000) 8100
500

48000 48000

Assests= Capital + Liabilities

31-Dec-19

30-Apr-20

31-Oct-21
Chapter 2
Double entry book-keeping - Part A

Assets Debit

Liabilites Credit

Capital Credit

Increase or Decrease in Assests, Liabilites and Capital

Increase Decrease
Assests Dr Cr

Liabilites Cr Dr

Capital Cr Dr

Account name
Debit
Date Details $ Date Details

Walkthrough 2.1
Workings
20-7
1-Jan Dr Bank $80,000
 Cr Capital $80,000

2-Jan Dr Fixutres and equipement $30000

Cr Bank $30000

Bank Account
Debit
Date Details $ Date Details
20-7 20-7
1-Jan Capital 80000 2-Jan Fixtures
and equipment

Capital
Debit
Date Details $ Date Details
20-7
1-Jan Bank

Fixtures and equipment

Debit
Date Details $ Date Details
20-7
2-Jan Bank 30000
Walkthrough 2.2 Page 13
Workings

20-7
1-Jan Dr bank 80000
Cr Capital 80000

2-Jan Dr F&E 30000

Cr Bank 30000

3-Jan Dr Bank 10000

Cr AB loan 10000

5-Jan Dr Motor Vehicle 9000

Cr Bank 9000

6-Jan Dr Bank 5000

Cr Mallika 5000
Financial statements SOFP

I/S Sale Sold goods

Purchase -------Bought goods
Expenses
Other income

Expenese---------------Day to day running of the buisiness items

Motor expenses
Wages
Salaries
Electricity
Rent and rates
Sundry expenses
Loan interet
Telephone expense
insurance
Other Income
rent received
commission received
Discount received

Sale Cr Double entry for increase or decrease in exp

Purhcase Dr Increase
Expense Dr Expense Dr
Other income Cr Income Cr

Walkthrough 2.3

20-7
1-Jan Dr Bank 80000
Cr Capital 80000

1-Jan Dr Rent 400

Cr Bank 400

2-Jan Dr Fixtures and e 30000

Cr Bank 30000

3-Jan Dr inusrance 250

Cr Bank 250

3-Jan Dr Bank 10000

Cr AB loans 10000

5-Jan Dr Motor Vehicle 9000

Cr Bank 9000
 5-Jan Dr Motor Expense 50
Cr Bank 50

6-Jan Dr Bank 5000

Cr Mallika 5000

7-Jan Dr Bank 95
Cr Rent received 95

When the owner took goods from the business for his/her own use. What are the double entries?
Dr Drawing
Cr Purchase

When the owner took non-current from the business for his/her own use. What are the double entries
Dr Drawing
Cr Non-current assests

When the owner withdraw money with cash/bank from the business for his/her own use. What are th
Dr Drawing
Cr Cash/Bank

Dr Drawing
Cr Non-current assest/purchase/ Cash/ Bank

Balancing ledger accounts A Jay's Ledger

95095 Bank Account 39700
Date Details $ Date Details $
20-7 20-7
1-Jan Capital 80000 1-Jan Rent payable 400
3-Jan AB loan 10000 2-Jan F&E 30000
6-Jan Mallika loan 5000 3-Jan Insurance 250
7-Jan Rent receivable 95 5-Jan M.V 9000
M.E 50
 31-Jan Balance c/d 55395

95095 95095
1-Feb Balance b/d 55395

Double entry records for sales, purchases and returns

Purhcase
when the buiness purchase/bought goods for cash or cheque, what are the double entreis?
Dr Puchase
Cr Cash/ Bank

When the business purchase/bought goods on credit, what are the double entries?
Dr Purchase
Cr Trade payables

Walkthrough 2.5

20-7
9-Jan Dr purhcases 650
Cr Kolkata & Co 650

10-Jan Dr puchase 150

Cr Bank 150

13-Jan Dr Kolkata & Co 650

Cr Bank 650

Sale
When the buiness sold goods for cash or cheque, what are the double entries?
Dr Cash / Bank
Cr Sale

When the buiness sold goods on credit, what are the double entries?
Dr Trade receiveables
Cr Sale

Walkthrough 2.6
20-7
16-Jan Dr Cash 175
Cr sale 175

17-Jan Dr Prena 770

Cr Sale 770

20-Jan Dr Bank 500

Cr Prena 500

Prena account
Date Details $ Date Details $
20-7 20-7
17-Jan Sales 770 20-Jan bank 500
31-Jan Balance c/d 270

770 770
1-Feb Balance b/d 270
Credit
$
 Credit
$

30000
nd equipment

Credit
$

80000

Credit
$
 Bank
Date Details $ Date Details $
20-7 20-7
1-Jan Capital 80000 2-Jan F & E 30000
3-Jan AB Loan 10000 5-Jan Motor 9000
6-Jan Mallika 5000 Vehicle

Capital
Date Details $ Date Details $
20-7
1-Jan Bank 80000

Fixtures and Equipment

Date Details $ Date Details $
20-7
2-Jan Bank 30000
 AB loans
Date Details $ Date Details $
20-7
3-Jan Bank 10000

Motor vehicles
Date Details $ Date Details $
20-7
5-Jan Bank 9000

Millika
Date Details $ Date Details $
20-7
6-Jan Bank 5000
se or decrease in expenses and income
Decrease
Cr
Dr
 double entries?

re the double entries?

own use. What are the double entries?

e entreis?