financial accounting-foundation - lesson 2

8/12/2019 Financial Accounting-Foundation - Lesson 2

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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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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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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

financial accounting-foundation - lesson 2

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