Accounting

1. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 14th Edition, © Pearson Education Limited 2018
Slide 2.1
Chapter 2:
Recording transactions
Frank Wood’s
Business Accounting 1

2. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 14th Edition, © Pearson Education Limited 2018
Slide 2.2
Learning objectives
After finishing this chapter, you should be
able to:
 Explain what accounts and elements of
transactions are
 Present and explain the principles of
double entry bookkeeping
 Record the elements of a transaction

3. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 14th Edition, © Pearson Education Limited 2018
Slide 2.3
The double entry system
 Every transaction affects two items.
 These effects need to be shown in the
accounting books.
 This is double entry bookkeeping.

4. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 14th Edition, © Pearson Education Limited 2018
Slide 2.4
A double entry account

5. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 14th Edition, © Pearson Education Limited 2018
Slide 2.5
How recording in an account
affects items

6. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 14th Edition, © Pearson Education Limited 2018
Slide 2.6
Double Entry Rules:
Assets - Liabilities - Capital
Transactions Debit Credit
1 Asset
2 Liabilities
3 Capital

7. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 14th Edition, © Pearson Education Limited 2018
Slide 2.7
Activity
The owner starts the business with
£10,000 in cash on 1 August 2012.

8. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 14th Edition, © Pearson Education Limited 2018
Slide 2.8
Activity (Continued)
A van is bought for £4,500 in cash on 2
August 2012.

9. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 14th Edition, © Pearson Education Limited 2018
Slide 2.9
Activity (Continued)

10. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 14th Edition, © Pearson Education Limited 2018
Slide 2.10
Activity (Continued)
Fixtures (e.g. shelves) are bought on
credit from Shop Fitters for £1,250 on 3
August 2012.

11. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 14th Edition, © Pearson Education Limited 2018
Slide 2.11
Activity (Continued)
Paid the amount owing to Shop Fitters in
cash on 17 August 2012.

12. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 14th Edition, © Pearson Education Limited 2018
Slide 2.12
Activity (Continued)
Combining all four of these transactions,
the accounts now contain:

13. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 14th Edition, © Pearson Education Limited 2018
Slide 2.13
Activity

14. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 14th Edition, © Pearson Education Limited 2018
Slide 2.14
Activity (Continued)

15. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 14th Edition, © Pearson Education Limited 2018
Slide 2.15
Activity (Continued)

16. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 14th Edition, © Pearson Education Limited 2018
Slide 2.16
Activity (Continued)