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Lecture Accounting and financial system - Lecture 3-4: Accounting process

Lecture Accounting and financial system - Lecture 3-4: Accounting process. The main contents of the chapter consist of the following: The accounting equation, source documentation, books of prime entry, ledger accounting, extraction of trial balance, control procedure. | ACCOUNTING & FINANCIAL SYSTEMS MCPC 606 LECTURERS: DR. JOHN MACCARTHY & DR. DOLI-WURA ZAKARIA 1 1 LECTURE 3 & 4 2 Lecture 3-4: Accounting Process Overview: The Accounting Equation Source Documentation Books of Prime Entry Ledger Accounting Extraction of Trial Balance Control Procedure 3 Accounting equation has two sides to the equation. One aspect is Assets of the business and other is capital provided to the finance the business. Resources of the business = Resources supplied by the owners of the business Capital = Assets The equation is fundamental in accounting and all entries must be entry doubly and one debit and other credit. When other supply assets other owners to the business. It is called liabilities because the business has to settle in the future. 4 Accounting Equation Accounting Equation (cont.) Assets = Liabilities + Capital A = L + C This can be rearranged as: Capital = Assets- Liabilities Liabilities = Assets - capital 5 Accounting Equation (cont.) Assets are . | ACCOUNTING & FINANCIAL SYSTEMS MCPC 606 LECTURERS: DR. JOHN MACCARTHY & DR. DOLI-WURA ZAKARIA 1 1 LECTURE 3 & 4 2 Lecture 3-4: Accounting Process Overview: The Accounting Equation Source Documentation Books of Prime Entry Ledger Accounting Extraction of Trial Balance Control Procedure 3 Accounting equation has two sides to the equation. One aspect is Assets of the business and other is capital provided to the finance the business. Resources of the business = Resources supplied by the owners of the business Capital = Assets The equation is fundamental in accounting and all entries must be entry doubly and one debit and other credit. When other supply assets other owners to the business. It is called liabilities because the business has to settle in the future. 4 Accounting Equation Accounting Equation (cont.) Assets = Liabilities + Capital A = L + C This can be rearranged as: Capital = Assets- Liabilities Liabilities = Assets - capital 5 Accounting Equation (cont.) Assets are valuable resources that are owned and controlled by an entity. They represent probable future economic benefits and arise as the result of past transactions or events. Assets can be tangible assets or intangible assets. Class exercise!!!! List three examples of tangible assets List three examples of intangible assets Distinguish between current assets and noncurrent assets 6 Accounting Equation (cont.) Liabilities are present obligations of the firm due to the past transactions. They are probable future sacrifices of economic benefits which arise as the result of past transactions or events. Liabilities are claims by people external to the business. Both liabilities and equity represent claims on the assets of a business. Class exercise!!!! Distinguish between current liabilities and noncurrent liabilities 7 Type Liabilities 8 Non-current liabilities Redeemable preference shares Long and medium term loans Deferred Tax provisions Other Provisions Current liabilities Trade Payables Other .