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Double Entry System Frank Wood and Alan Sangster

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Added on  2022-01-24

Double Entry System Frank Wood and Alan Sangster

   Added on 2022-01-24

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Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12th Edition, © Pearson Education Limited 2012
Slide 1.1
Topic 1
Introduction and
Double Entry System
Double Entry System Frank Wood and Alan Sangster_1
Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12th Edition, © Pearson Education Limited 2012
Slide 1.2
Learning objectives
After you have studied this chapter, you should
be able to:
➢ Explain what accounting is about
➢ List the main users of accounting information
and what accounting information they are
interested in
➢ Present and explain the accounting equation
➢ Explain the relationship between the
accounting equation and the layout of the
statement of financial position (balance sheet)
Double Entry System Frank Wood and Alan Sangster_2
Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12th Edition, © Pearson Education Limited 2012
Slide 1.3
Learning objectives (Continued)
➢ Explain the meaning of the terms assets,
capital, liabilities, accounts receivable
(debtors) and accounts payable (creditors)
➢ Describe how accounting transactions
affect the items in the accounting equation
➢ Draw up statements of financial position
after different accounting transactions have
occurred
Double Entry System Frank Wood and Alan Sangster_3
Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12th Edition, © Pearson Education Limited 2012
Slide 1.4
What is accounting?
Accounting can be defined as:
The process of identifying, measuring and
communicating economic information to
permit informed judgements and decisions
by users of that information.
Double Entry System Frank Wood and Alan Sangster_4
Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12th Edition, © Pearson Education Limited 2012
Slide 1.5
Users of accounting information
➢ Managers
➢ Owner(s) of the business
➢ A prospective buyer
➢ The bank
➢ Tax inspectors
➢ A prospective partner
➢ Investors
➢ Creditors
Double Entry System Frank Wood and Alan Sangster_5
Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12th Edition, © Pearson Education Limited 2012
Slide 1.6
The accounting equation
Resources in business = Resources supplied by
owner
Assets = Capital
But if someone else has provided some of the
assets:
Assets = Capital + Liabilities
Assets – Liabilities = Capital
Double Entry System Frank Wood and Alan Sangster_6
Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12th Edition, © Pearson Education Limited 2012
Slide 1.7
Land
Equipment
Buildings
Cash
Motor
vehicles
Stocks/
inventory
Prepaid
expensesAc
counts
Accounts
Receivable/
debtor/
customer
Asset
Accounts
Asset Accounts
Double Entry System Frank Wood and Alan Sangster_7
Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12th Edition, © Pearson Education Limited 2012
Slide 1.8
Accrued
Liabilities
Unearned
Revenue
Notes
Payable
Accounts
Payable/
creditor/
Supplier
Liability
Accounts
Liability Accounts
Double Entry System Frank Wood and Alan Sangster_8

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