GROUP 3E
UNISA
FAC1502-SEMESTER 01-2016
STUDY UNIT 1- 5
MENU
• Introduction
• Objective
• Basic Accounting Equation
• Accounting Cycle
• Types of Journals
• General Ledger
• Trial Balance
• Financial Statements
• MUST DO Exercises
• INSPIRATIONAL QUOTES
INTRODUCTION
Dear Group 3E Members!
I would like to take this opportunity to officially welcome you to our first group activity in this semester. I have summarized notes for study unit 1 to 5 to assist you to better understand the golden rules.
I expect everyone to go through this slides and ask questions or comment where you need clarity. You are also expected to go through the selected exercises on slide 17. For the purpose of group discussion I would like you to submit Revision Exercise on
Page 73 and 74 of the Study Guide. I will appreciate if you all submit this group
assignment under discussion forum on/before 21/02/2016.
Your on-line participation and feedback will be highly appreciated. Remember “The way to get started is to quit talking and begin doing” Walt Disney
If you need clarify let me know under on-line discussion.
Kind regards
Mr. Ramashau Aluwani
E-Tutor: FAC1502 (GROUP 3E)
OBJECTIVE OF FINANCIAL ACCOUNTING
• Accounting is a process comprises of methods
and procedures for the identification,
recognition, measurement and recording of
financial transactions and events that change
the financial results and position of an entity.
• The objective of financial accounting is to
enable the users of financial information to
ascertain readily what the financial results and
financial position of the entity is.
2016-02-06 UNISA E-TUTOR- A. RAMASHAU
Basic Accounting Equation (BAE)
• Asset is what the entity owns
• Equity and Liabilities is what the entity owes
• Basic Accounting Equation formula is as follows
:
Assets=Equity less Liabilities (A=E+L) OR (E=A-L)
• A minimum of two accounts must be used for each
transaction.
• The equation must remain in balance after each
transaction. In other words the debit side (A) is equal to
the credit side (E+L)
• What is important in this topic is to understand the
Golden Rules
OVERVIEW OF ACCOUNTING EQUATION
ASSETS Debit(+) Credit (-) EQUITY Debit (-) Credit (+) LIABILITIES Debit (-) Credit (+) Drawings CapitalNON-CURRENT ASSETS EXPENSES INCOME NON CURRENT LIABILITIES
Land Cost of sales Sales Long term Loan
Building Rent expenses Rent Income Mortgage bond
Furniture Interest expense Interest Income Machinery Wages & Salaries Dividend Income Vehicle Advertising Credit Losses recovered Investments Insurance Profit on sale of assets
CURRENT ASSETS Repairs & Maintenance Fees earned CURRENT LIABILITIES
Inventory Telephone etc. Creditors Control
Debtors Control Water & Electricity Bank Overdraft
Bank Packing materials Accrued Expenses
Petty Cash Credit losses Income received in advance
Prepaid expenses Depreciation etc.
Accounting Cycle
• Transactions
• Completion of source documents
• Recording of transactions in journals
• Posting to ledgers
• Trial balance
• Reporting in financial statements
• Analysis and interpretation of financial
statements
Accounting Cycle
E.G Paid Telephone by cheque, R 6 800.
• Very important, read and understand Accounting Cycle on
page 60 of the Study Guide.
2016-02-06 UNISA E-TUTOR- A. RAMASHAU FAC1502-S1-2016-GROUP 3E 8
Transaction
See example above
Source document
Cheque
Journal
Cash Payment Journal (CPJ)
Ledger or T account
Bank (B5) and Telephone (N9)
Trial Balance
Bank (B5) and Telephone (N9)
Financial Statements
Telephone -Financial Performance
Bank-Financial Position
Types of Journals & Source Documents
Journals Source Documents
Cash Receipts Journal (CRJ)
Cash sales, Deposit Slips, Cash register roll, Cash receipt etc.
Cash Payment Journal (CPJ)
Cheque counterfoil, Debit notes, cash payment etc.
Sales Journal (SJ) Sales invoices (sold goods on credit)etc. Sales Returns Journal
(SRJ)
Credit note (Damaged goods returned) etc. Purchases Journal (PJ) Original invoice (Purchased goods on credit) etc. Purchases Returns
Journal (PRJ)
Debit note (Returned goods) etc. Petty Cash Journal (PCJ) Small items, Petty cash voucher
General Journal (GJ) Non-cash transactions, Errors and Omissions, Year end adjustments
General Ledger
• General Ledger account is also known as T account.
• When the subsidiary journals are completed and the
summarized information is transferred to the General
Ledger.
• Take note of the Golden rules e.g. Assets increases on
the Debit side (Dr) and Decreases on the Credit side (Cr)
• Equity (Capital) and Liabilities (Creditors) increases on
the credit (Cr) side and Decreases on the debit (Dr) side
of the account
• Income (e.g Sales) increases Equity
• Expense (e.g Wages) decreases equity
• Refer to the Study guide
Trial Balance (TB)
• A Trial Balance is a list of the balances brought down (b/d) of
the accounts in the General Ledger of a specific date.
• Take note of the all Golden Rule e.g. The balance “brought
down”(b/d) must be used to prepare the Trial Balance.
• Assets and Expenses accounts have Debit (Dr) balances
brought down (b/d)
and entered on the debit side of the Trial
Balance.
• Equity (Capital), Liability and Income accounts have Credit
(Cr) balances brought down (b/d)
and entered on the credit
side of the TB.
• Very easy and straight forward topic, its just copy and paste
closing balance from the General Ledger Account
• For more info on TB refer to your study guide
Statement of Comprehensive Income
• We use information from Trial Balance under
Nominal Account Section to prepare a Statement of
Comprehensive Income
• You need to know the correct framework or structure
of Statement of Comprehensive Income
• The financial result of an entity is measured in terms
of profit or loss
• Income > Expenses= Profit
Statement of Changes in Equity
• This statement shows all the changes in equity which
have occurred during the financial period.
• The purpose is to reconcile the equity at the
beginning of the financial period with the equity at
the end of the financial year.
The balance at the end
of the period on the Statement of Changes in Equity
must be the same as “Capital” reflected in the
Statement of Financial Position.
• Very easy and straight forward
• Easy marks
• Refer to the Study Guide
Statement of Financial Position
• The financial position is always reflected in terms of
three elements in the Basic Accounting Equation,
Assets, Liabilities and Equity
• You need to know the correct framework or structure
of Statement of Financial Position (Balance Sheet)
For more info refer to the Study Guide
• Assets=Equity + Liabilities (A=E+L)
Notes to the Financial Statements
• Additional information on items appearing in the
financial statements is given in the notes to the
financial statements
• Very important, that you read and understand Note
to Property , Plant and Equipment (PPE) from the
Study Guide
• PPE and cost price
• Methods of calculating depreciation (refer to the
Study Guide)
Stop & Do Self assessment
• Very important, You must understand the
Principles, Principles and Principles!
• Its time to evaluate and assess yourself
• Very important, this notes are not replacing
the study guide. You are expected to go
through everything starting from Tutorial
letters, Study Guide and Prescribed Textbook
• Are you ready for exercises!!!!
MUST DO EXERCISES
Do the following Exercises in the Study Unit 4 of the Study Guide
– Revision Exercise 1 on page 32 to 33
– Revision Exercise 2 on page 34
Do the following Exercises in the Study Unit 4 of the Study Guide
– Revision Exercise 2 on page 48
– Revision Exercise 3 on page 49
– Revision Exercise 4 on page 51
– Revision Exercise 5 on page 53
Do the following Exercises in the Study Unit 5 of the Study Guide
– Revision Exercise on page 73 & 74 -To be submitted under
on-line discussion forum on/before 21/02/2016
– Revision Exercise on page 88 and 90
A goal is a dream
with a deadline - Napoleon Hill
SELF ASSESSMENT
NO. TOPIC STATUS TICKBOX1 STUDY UNIT 1 DONE a
2 STUDY UNIT 2 DONE a
3 STUDY UNIT 3 DONE a
4 STUDY UNIT 4 DONE a
5 STUDY UNIT 5 DONE a
