FAR110 Financial Accounting Cycle.pdf
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accounting cycle,Business, Proprietor,Capital, Drawings, Purchase, Purchases returns,Sales,Sales returns,Trade discount,Cash discount,Commission,Expense,Debtor (Account Receivable),Creditor,Assets,Liabilities,Stock (Inventory),Equity,Types of equity,Definition of Accounting,Types of equity,Financial Accounting,Cost Accounting,Management Accounting,Functions of Accounting
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It is a rebate or allowance from the scheduled price granted by the seller to the buyer.
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FAR110 Financial Accounting Cycle.pdf
- 1. TOPIC 2 PART 1 ACCOUNTING CYCLE FAR110 - FINANCIAL ACCOUNTING 1
- 2. Far110-hh 2 Learning Outcomes •Understand the accounting cycle from source documents to the preparation of financial statements
- 3. Far110-hh 3 Accounting Cycle 1. Source Docume nts 2. Journa ls 3. Ledger s 4. Trial Balanc e 5. Adjustm ents 6. Adjust ed Trial Balanc e 7. Financial Statements
- 4. Far110-hh 4 ACCOUNTING CYCLE • The accounting cycle refers to the specific tasks in completing the accounting process • The length of accounting cycle can be monthly, quarterly, semi- annually or yearly.
- 5. Far110-hh 5 SOURCE DOCUMENTS • All business transactions must be identified and analysed from source documents. • Source documents are very important as they provide: - information for recording transactions - evidence of transactions for auditing purposes
- 6. Far110-hh 6 Examples – source documents • Invoice This document is prepared when goods are sold or purchased on credit. The purpose is to inform buyer of the amount to pay for goods and services supplied. The buyer will refer this document as purchase invoice. The seller will refer this document as sales invoice. • Cash Memo/Cash Bill Cash memo/cash bill is prepared when goods are sold or purchased for cash.
- 7. Far110-hh 7 Examples – source documents • Payment Voucher It is an evidence of payment to a named party. • Receipt Receipt is issued to the customer after receiving cash or cheque from customers as a proof of receiving payment. • Pay in Slip/ Deposit Slip/Bank-in slips This is a form available from the bank for depositing cash or cheque in a bank account. • Cheque Counterfoil A record of amount paid by cheque.
- 8. Far110-hh 8 Journals • These are the first books where the business transactions are recorded. • Also known as the books of original entry, prime entry books. • Types of journals: • General Journal • Sales Journal (to record sales on credit) • Purchases Journal (to record purchases on credit) • Sales Return Journal (Return Inward Journal) [to record goods return by credit customers] • Purchases Return Journal (Return Outward Journal) [to record goods return to credit supplier] • Cash Receipts Journal (to record all receipts; cash and cheques) • Cash Payments Journal (to record all payments; cash and cheques)
- 9. Far110-hh 9 Ledgers • A book that contains various accounts. • Information in journals is transferred to ledgers. [This process is called ‘posting’]
- 10. Far110-hh 10 Trial Balance • A trial balance is a list of all ledger accounts with balances at a particular date.
- 11. Far110-hh 11 Adjustments, Adjusted Trial Balance • Accounting adjustments are made at the end of the accounting period • Adjusted Trial Balance is prepared after adjustments to accounts were made.
- 12. Far110-hh 12 Financial Statements • Consists of: • Statement of profit or loss [show the expenses, revenues, profit or loss] • Statement of financial position [show the assets, liabilities and equity at a particular date]
- 13. Thank You! End of Part 1- Accounting Cycle