Financial Accounting for Managers new course

Financial Accounting

1. WELCOME COURSE FINANCIAL ACCOUNTING PRINCIPLES BBA CHAPTER 03

2. 01 02 03 04 05 ANALYSING BUSINESS TRANSACTION GENERAL JOURNAL LEDGER ACCOUNTS UNADJUSTED TRIAL BALANCE ADJUSTING ENTRIES ACCOUNTING CYCLE NINE STEPS CYCLE UNADJUSTED TRIAL BALANCE ADJUSTING ENTRIES

3. 06 07 08 09 ADJUSTED TRIAL BALANCE FINANCIAL STATEMENTS CLOSING ENTRIES CLOSING TRIAL BALANCE ACCOUNTING CYCLE

4. FLOW OF ACCOUNTING TRANSACTION

5. 1- Analyzing Business Transaction Does this event impact the Business, if yes than we record it . For Example ( People are planning a vacation may see a Disney theme park advertisement on television . These events may create awareness and, ultimately, new business for The Walt Disney Company . However, no transaction occurs until someone actually buys tickets to the theme park ). Whenever they buy tickets then we will record it as a business transactions in General Journal. ACCOUNTING CYCLE STEPS

6. 2- General Journal First Transaction are analyzed then it will be recorded in General Journal. Journal is a book of prime entry or book of original entry in which transactions are first recorded in a chronological order or in the sequence they are occurred.

7. Format of GENERAL JOURNAL Date Account Title and Description L F Ledger Folio Debit (Rs) Credit( Rs ) ABC COMPANY GENERAL JOURNAL 31 December 2019

8. GOLDEN RULES OF ACCOUNTING TYPES OF ACCOUNT Personal Account Real Account Nominal Account Owner :- Eg , Mike is owner Business:- Amazon, Engroo Foods,etc Represented group:- Employees of Production department All Expense and losses All Incomes and gain All Assets Furniture, Buildings, Equipment's, Machinery etc .

9. Records Example #02 in General Journal Date Account Title and Description LF Debit (Rs) Credit( Rs ) Furniture Account 10,000 To Selena Account ( Liability) 10,000 Furniture Purchased from Selena on credit. ABC COMPANY GENERAL JOURNAL 31 December 2019

10. Practice Exercise Problem 1 April 2016 Anees started business with Rs. 100,000 cash 2 April Purchase Furniture for Cash Rs. 7,000 8 April Purchase Goods for Cash Rs. 2,000 and for Credit Rs. 1,000 from Khalid Store 14 April Sold Goods to Khan Brothers Rs. 12,000 on credit and Cash Sales Rs. 5,000 18 April Owner withdrew of worth Rs. 2,000 for personal use 22 April Paid Khalid Retail Store Rs. 500 26 April Received Rs. 10,000 from Khan Brothers 30 April Paid Salaries Expense Rs. 2,000

11. 3-Ledger or T Accounts:- Once Business Transactions are recorded in General Journal then we will post those business transaction to Ledger in order to classify each transaction and this process is called “Posting”. Ledger is called book of final entry or Principle books of final account.

12. FORMAT OF GENERAL LEDGER SHEET

13. The posting procedure on Ledger Step 1- Locate the account title used by the journal entry in the general ledger. Step 2 - Determine if the journal entry is a debit entry or a credit. If it is a debit entry, it should be posted on the debit side of the located ledger account. If it is credit entry, it should be posted on the credit side of the located ledger account. Step 3 - Record the date of the journal entry in the date column . If the posting is to be done on a fresh page, write the year on the first line. Then write the month and day of the journal entry on the second line. Step 4 - Write a brief explanation of the journal entry in the explanation column Step 5 - Write the amount of the journal entry in the amount column. Step 6 - In the Journal folio column, write the page number of the general journal page that contains the posted journal entry .

14. EXAMPLE

15. Tria l Balance A basic rule of double-entry accounting is that for every credit there must be an equal debit amount. From this concept, one can say that the sum of all debits must equal the sum of all credits in the accounting system. If debits do not equal credits, then an error has been made. The trial balance is a tool for detecting such errors. The trial balance is calculated by summing the balances of all the ledger accounts. The account balances are used because the balance summarizes the net effect of all of the debits and credits in an account. To calculate the trial balance, construct a table in the following format : Format of Trial Balance

16. Steps to Prepare the Trial Balance For each ledger account — Cash, Accounts Payable, etc. — total your credits and debits. If the credit total is larger, subtract the debit total from the credit total to get your ledger account total which goes in the credit column of the trial balance If the debit total is larger, subtract the credit total from the debit total to get your ledger account total which goes in the debit column of the trial balance Put the ledger account total in the credit or debit column of your trial balance (as identified above).  When you have debit or credit totals for each ledger account, add all of your credit totals to get a credit grand total.  Add all of your debit totals to get a debit grand total. This is your trial balance.

17. PRACTICE Practice QUESTION is attached separately on page 80 .

18. ASSIGNMENT : 01 Complete the General Journal Entries, Ledger and Trial Balance for different transaction which is shared with you on VLE . Assignment should submitted in hand written. Assignment Deadline 08 Th October 2019.