introduction to book-keeping and accounting. what is book-keeping? recording business transactions...
TRANSCRIPT
Introduction to Book-keeping and Accounting
What is Book-Keeping?
Recording business transactions in financial terms
What is Accounting?
• Accounting is concerned with the use of financial information from within the book-keeping system
• The books of account provide information relating to:
• What the business owns
• What the business owes
• The income and expenditure of the business
• This information is summarised and reported in the form of financial statements which consist of the Profit and Loss Account and the Balance Sheet
• Why do you think this information is important and who do you think may require this information?
The work of the Book-keeper
• Preparing business documents to be issued by the business and recording any transactions relating to these documents in the books of account
• Checking business documents received by the business and recording any transactions relating to these documents in the books of account
• Making and recording payments
• Checking and recording receipts
• Preparing monies for banking
• Checking the accuracy of transactions processed
• The book-keeper needs to recognise that their work is often confidential
• Business information should only be disclosed to others with the permission of the appropriate line manager, or proprietor/director of the business
The Book-Keeping System
Information is gathered from a number of Source Documents
Invoices
Credit notes
Cheques Received
Cheques Issued
The Book-Keeping System
Information is gathered on Primary Accounting Records
Day Books
Journal
Cash Book
Petty Cash Book
The Book-Keeping System
Information is recorded using Double Entry Book-Keeping
Sales Ledger
Purchases Ledger
General (Nominal) Ledger
The Book-Keeping System
A summary of all the accounts is compiled on a Trial Balance
This is a mathematical check that the double entries have been recorded accurately
The Book-Keeping System
Information from the Trial Balance is analysed to prepare the Final Accounts
Profit and Loss Account
Balance Sheet
The Book-Keeping System
Source Documents
Primary Accounting Records
Double Entry Book-keeping
Final Accounts
Trial Balance
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The Accounting Equation
Assets - Liabilities = CapitalWhat a business owns
What a business owes
Money introduced by the owners
The vast majority of a business’s transactions will affect the assets and liabilities of that business.
Activity
• In your groups think about the following scenario….
• You would like to start up a pizza home delivery business
• Think about what you would need? Money to start the business? Where from? Would customers need receipts? What bills would you need to pay?
• You have ten minutes to come up with as many ideas as you can think of