topic three n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Topic three PowerPoint Presentation
Download Presentation
Topic three

Loading in 2 Seconds...

play fullscreen
1 / 24

Topic three - PowerPoint PPT Presentation


  • 152 Views
  • Uploaded on

Topic three. Measuring and recording transactions. Learning outcomes. In this lesson you will learn Differences between subsidiary and general ledger How to post transactions to the T Accounts How to balance off T Accounts Transferring balances to the trial balance

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Topic three' - janet


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
topic three

Topic three

Measuring and recording transactions

learning outcomes
Learning outcomes
  • In this lesson you will learn
  • Differences between subsidiary and general ledger
  • How to post transactions to the T Accounts
  • How to balance off T Accounts
  • Transferring balances to the trial balance
  • Preparation of financial statements from the trial balance

Measuring and recording transactions

recapitulation
Recapitulation
  • Let us remind ourselves some of the important lessons we have learnt.
  • What is the accounting equation?
  • How do we record increase in
    • Assets
    • Liabilities
    • Capital
    • Income
    • Expenses

Measuring and recording transactions

recapitulation1
Recapitulation

Measuring and recording transactions

recapitulation2
Recapitulation
  • The table above forms the basic foundation of accounting
  • The double entry concept is also critical;
    • A transaction will always have both a debit and a credit entry.
    • Total debit amount(s) from a transaction should be equal to the total credit amount(s)

Measuring and recording transactions

general ledger and subsidiary ledger
General ledger and subsidiary ledger
  • Subsidiary ledgers contain account listings say for customers or suppliers
  • General ledger is a control total of amounts in the subsidiary accounts
  • In the case of customers’ accounts, the subsidiary ledger will contain details of each customer
  • General ledger will show total amounts due from all customers

Measuring and recording transactions

subsidiary accounts example
Subsidiary accounts example

Measuring and recording transactions

general ledger
General ledger

Measuring and recording transactions

general account
General account
  • The amount of $1,750 in the general ledger is simply a sum total of the figures in the three customers accounts.
  • Note that the transactions in customer account are posted according to the date of transaction
  • General ledger provides a summary of transactions for a period, in this case for the month of July 2011

Measuring and recording transactions

posting to the t accounts
Posting to the T-Accounts
  • Do you recall the lessons learnt in topic two about posting transactions to the ledger accounts
  • Refer to the recap in the beginning of the topic on how to record changes in various accounts
  • The notes provide a summary of some of the most common types of transactions and how to post them

Measuring and recording transactions

posting to t accounts
Posting to T-Accounts
  • Common transactions
  • Credit sales

Dr Accounts receivables

Cr Sales

  • Cash sales

Dr Cash

Cr Sales

  • Credit purchases

Dr Stocks/inventories

Cr Accounts payable

Measuring and recording transactions

posting to t accounts1
Posting to T Accounts
  • Cash purchases

Dr Stocks/inventories

Cr Cash

  • Cash payment for expenses

Dr Expenses

Cr Cash

  • See the next slide for a class exercise

Measuring and recording transactions

posting to t accounts2
Posting to T Accounts
  • Based on the guidance provided above, determine how to post the following
    • Payment for credit purchases
    • Receipt from credit customers
    • Sales discounts
    • Purchase discounts
    • Sales returns
    • Purchase returns
    • Cash payment for expenses
    • Accrued expenses
    • Purchase and disposal of property, plant and equipment
    • Capital contribution by owners
    • Borrowings

Measuring and recording transactions

prepare a trial balance
Prepare a trial balance
  • In Topic 5 we learnt that after transactions have been recorded in the T Accounts, they should be balanced off
  • Balances in each of the account should then be transferred to the trial balance
  • In case balances are not properly transferred, errors will occur
  • As we shall learn in Topic 5, such errors might cause the trial balance not to balance and should be identified

Measuring and recording transactions

prepare trial balance
Prepare trial balance
  • Other errors committed at this stage will not cause the trial balance not to balance
  • Need for one to be keen when transferring balances from ledger accounts
  • To help us learn more about this process, we look at a detailed illustration

Measuring and recording transactions

illustration
Illustration
  • Mr. Isaac Hassan is a retailer of motor parts in an establishment named Ouru Super Stores located in the heart of a busy town. At 1 Jan 2010 the opening balances for the business were as tabulated below.

Measuring and recording transactions

slide18

Additional information

Opening balances for accounts payables and receivables were as per the table below;

Measuring and recording transactions

for the 3 months to end of march 2011 the following transactions were recorded
For the 3 Months to end of March 2011, the following transactions were recorded.

Measuring and recording transactions

additional information
Additional information
  • VAT unless otherwise stated is charged at a rate of 17.5%.

Required:-

    • Post the above transactions in the respective ledger balances
    • Prepare a trial balance as at 31 March 2011
    • Prepare final accounts.

Measuring and recording transactions

suggested solution
Suggested solution
  • To be worked out in class

Measuring and recording transactions

conclusion
Conclusion
  • The illustration provides an extensive coverage of the accounting cycle
  • Students should rework on the same and where challenges are faced seek help in the next lesson
  • See our course text for similar exercises

Measuring and recording transactions

slide24

Questions

Topic two: measuring and recording transactions