1. Book - Keeping Double entry Book-keeping

2. Why set up a business?

3. Capital Expenditure Purchase of long term assets for use by the business.

4. Capital Income Sale of long term assets for use by the business.

5. Revenue Expenditure Day to day running costs of the business.

6. Revenue Income Day to day sales made by the business.

7. Accounting Equation Assets = Capital + Liabilities

8. Accounting Equation Assets = Capital + Liabilities Purchase of a Delivery Van funded by 20% personal capital invested and a bank loan for the balance

9. Accounting Equation Assets = Capital + Liabilities Van= Owner + Loan

10. Accounting Equation Assets = Capital + Liabilities Van= Owner + Loan £10,000= £2000 + £8000

11. A production machine bought for £10,000 on credit Assets=Capital+Liabilities 10,000=2,000+8,000 Continuing from previous slide

12. Assets=Capital+Liabilities 10,000=2,000+8,000 Q1 20,000=+ Van10,000 Machine10,000 A production machine bought for £10,000 on credit

13. Assets=Capital+Liabilities 10,000=2,000+8,000 Q1 20,000=2,000+ A production machine bought for £10,000 on credit

14. Assets=Capital+Liabilities 10,000=2,000+8,000 Q1 20,000=2,000+18,000 A production machine bought for £10,000 on credit

15. Stock is bought for £1,000 on credit Assets=Capital+Liabilities 10,000=2,000+8,000 Q1 20,000=2,000+18,000

16. Stock is bought for £1,000 on credit Assets=Capital+Liabilities 10,000=2,000+8,000 Q1 20,000=2,000+18,000 Q2 21,000=+

17. Stock is bought for £1,000 on credit Assets=Capital+Liabilities 10,000=2,000+8,000 Q1 20,000=2,000+18,000 Q2 21,000=2,000+

18. Stock is bought for £1,000 on credit Assets=Capital+Liabilities 10,000=2,000+8,000 Q1 20,000=2,000+18,000 Q2 21,000=2,000+19,000

19. Accouting Equation Card Activity

20. Accounting Equation Worksheet

21. Financial Transactions Any event which affects the financial position of the organisation.

22. Recording Transactions The financial transactions are recorded in: – Ledgers – Books of Prime Entry The transactions are recorded using the Dual Aspect principle.

23. Ledger accounts The business transactions are entered into Ledger accounts. A separate ledger account is kept for each different type of transaction. Make a list of examples of Ledger Accounts

24. Double entry principle Double entry book-keeping involves the making of two entries for every transaction in the books of the business ie Ledgers. Double entry involves identifying two ledger accounts & making two entries.

25. Two Accounts Example: A company buys a digital camera for £200 Which two ledger accounts would be involved in this transaction? 1. Equipment account 2. Bank account

26. Ledger accounts Activity for each business transaction identify the two ledger accounts that would be used to record the business transaction.

27. Activity TransactionLedger Account 1Ledger Account 2 Sale of stock, cheque £120 Payment of Wages £1,200 by cheque Purchased goods £3,000 - cheque Received a Bank loan £5,000, paid into bank account

28. Activity TransactionLedger Account 1Ledger Account 2 Cash Sales, cheque £120 received SalesBank Payment of Wages £1,200 by cheque Purchased goods £3,000 - cheque Received a Bank loan £5,000, paid into bank account

29. Activity TransactionLedger Account 1Ledger Account 2 Cash Sales, cheque £120 received SalesBank Payment of Wages £1,200 by cheque WagesBank Purchased goods £3,000 - cheque Received a Bank loan £5,000, paid into bank account

30. Activity TransactionLedger Account 1Ledger Account 2 Cash Sales, cheque £120 received SalesBank Payment of Wages £1,200 by cheque WagesBank Purchased goods £3,000 - cheque PurchasesBank Received a Bank loan £5,000, paid into bank account

31. Activity TransactionLedger Account 1Ledger Account 2 Cash Sales, cheque £120 received SalesBank Payment of Wages £1,200 by cheque WagesBank Purchased goods £3,000 - cheque PurchasesBank Received a Bank loan £5,000, paid into bank account LoanBank

32. Ledger Accounts Dual Aspect Each transaction must have a Debit and Credit entry. Debit Entry – the account which gains value or derives benefit – left side of the account Credit entry – the account which looses value – right side of the account

33. Debits and Credits Drive on the left (DR) Crash on the right (CR) Debit (DR) Credit (CR)

34. Debits & Credits DRCR DRCR DR (Money in) CR (Money out) PurchasesBank Sales Materials purchased for £100

35. Debits & Credits DRCR DRCR DR (Money in) CR (Money out) 100 PurchasesBank Sales Materials purchased for £100

36. Debits & Credits DRCR 100 DRCR DR (Money in) CR (Money out) 100 PurchasesBank Sales Materials purchased for £100

37. Debits & Credits DRCR 100 DRCR DR (Money in) CR (Money out) 100 PurchasesBank Sales Materials purchased for £100 Sales made for £175

38. Debits & Credits DRCR 100 DRCR 175 DR (Money in) CR (Money out) 175100 PurchasesBank Sales Materials purchased for £100 Sales made for £175

39. Debits & Credits DRCR 100 DRCR 175 DR (Money in) CR (Money out) 175100 PurchasesBank Sales Materials purchased for £100 Sales made for £175 Materials purchased for £56

40. Debits & Credits DRCR 100 DRCR 175 DR (Money in) CR (Money out) 175100 56 PurchasesBank Sales Materials purchased for £100 Sales made for £175 Materials purchased for £56

41. Debits & Credits DRCR 100 56 DRCR 175 DR (Money in) CR (Money out) 175100 56 PurchasesBank Sales Materials purchased for £100 Sales made for £175 Materials purchased for £56

42. Debits & Credits DRCR 100 56 DRCR 175 DR (Money in) CR (Money out) 175100 56 PurchasesBank Sales Materials purchased for £100 Sales made for £175 Materials purchased for £56 Materials purchased for £25

43. Debits & Credits DRCR 100 56 25 DRCR 175 DR (Money in) CR (Money out) 175100 56 PurchasesBank Sales Materials purchased for £100 Sales made for £175 Materials purchased for £56 Materials purchased for £25

44. Debits & Credits DRCR 100 56 25 DRCR 175 PurchasesBank Sales Materials purchased for £100 Sales made for £175 Materials purchased for £56 Materials purchased for £25 DR (Money in) CR (Money out) 175100 56 25

45. Debits & Credits DRCR 100 56 25 DRCR 175 DR (Money in) CR (Money out) 175100 56 25 PurchasesBank Sales Materials purchased for £100 Sales made for £175 Materials purchased for £56 Materials purchased for £25 Sales for £500

46. Debits & Credits DRCR 100 56 25 DRCR 175 DR (Money in) CR (Money out) 175100 50056 25 PurchasesBank Sales Materials purchased for £100 Sales made for £175 Materials purchased for £56 Materials purchased for £25 Sales for £500

47. Debits & Credits DRCR 100 56 25 DRCR 175 500 DR (Money in) CR (Money out) 175100 50056 25 PurchasesBank Sales Materials purchased for £100 Sales made for £175 Materials purchased for £56 Materials purchased for £25 Sales for £500

48. Debits & Credits DRCR 100 56 25 DRCR 175 500 DR (Money in) CR (Money out) 175100 50056 25 PurchasesBank Sales Materials purchased for £100 Sales made for £175 Materials purchased for £56 Materials purchased for £25 Sales for £500 Sales for £250

49. Debits & Credits DRCR 100 56 25 DRCR 175 500 250 DR (Money in) CR (Money out) 175100 50056 25 PurchasesBank Sales Materials purchased for £100 Sales made for £175 Materials purchased for £56 Materials purchased for £25 Sales for £500 Sales for £250

50. Debits & Credits DRCR 100 56 25 DRCR 175 500 250 DR (Money in) CR (Money out) 175100 50056 25 PurchasesBank Sales Materials purchased for £100 Sales made for £175 Materials purchased for £56 Materials purchased for £25 Sales for £500 Sales for £250

51. Debits & Credits DRCR 100 56 25 DRCR 175 500 250 DR (Money in) CR (Money out) 175100 50056 25 PurchasesBank Sales

52. DRCR 100 56 25 DRCR 175 500 250 DR (Money in) CR (Money out) 175100 50056 25 Purchases Bank Sales 856 1106

53. DRCR 100 56 25 DRCR 175 500 250 DR (Money in) CR (Money out) 175100 50056 25025 Purchases Bank Sales 856 1106

54. DRCR 100 56 25 DRCR 175 500 250 DR (Money in) CR (Money out) 175100 50056 25025 Purchases Bank Sales 1106 1106

55. Debits and Credits Drive on the left (DR) Crash on the right (CR) Debit (DR) Credit (CR)

56. Debits and Credits Debit (DR) Credit (CR) P E A R L S Purchases Expenses Assets Reserves (Inc Capital) Liabilities Sales

57. Digital Camera purchased for £200 Debit (Dr)Credit (Cr) Debit (Dr)Credit (Cr) Camera Equipment Cash/Bank

58. Debit (Dr)Credit (Cr) 19/9 Cash/Bank 200 Debit (Dr)Credit (Cr) Camera Equipment Cash/Bank Digital Camera purchased for £200

59. Debit (Dr)Credit (Cr) 19/9 Cash/Bank 200 Debit (Dr)Credit (Cr) 19/9 Camera 200 Camera Equipment Cash/Bank Digital Camera purchased for £200

60. Purchase of scanner for £120 Debit (Dr)Credit (Cr) Debit (Dr)Credit (Cr) Scanner Equipment Cash/Bank

61. Purchase of scanner for £120 Debit (Dr)Credit (Cr) Bank 120 Debit (Dr)Credit (Cr) Scanner Equipment Cash/Bank

62. Purchase of scanner for £120 Debit (Dr)Credit (Cr) Bank 120 Debit (Dr)Credit (Cr) Scanner 120 Scanner Equipment Cash/Bank

63. Question 1 Barbaras Butchers

64. Barbaras Butchers (Dr)(Cr) Purchases Account (Dr)(Cr) Cash/Bank Account Sales Account (Dr)(Cr) (Dr)(Cr) (Dr)(Cr) Rent Paid Account Telephone Account Consider the ‘T’ accounts that are available!

65. Barbaras Butchers (Dr)(Cr) Purchases Account (Dr)(Cr) Cash/Bank Account Sales Account (Dr)(Cr) (Dr)(Cr) (Dr)(Cr) Rent Paid Account Telephone Account Purchase of meat £210 from Scragg & Co paying cash

66. Barbaras Butchers (Dr)(Cr) Cash/Bank £210 Purchases Account (Dr)(Cr) Cash/Bank Account Sales Account (Dr)(Cr) (Dr)(Cr) (Dr)(Cr) Rent Paid Account Telephone Account Purchase of meat £210 from Scragg & Co paying cash

67. Barbaras Butchers (Dr)(Cr) Cash/Bank £210 Purchases Account (Dr)(Cr) Purchases £210 Cash/Bank Account Sales Account (Dr)(Cr) (Dr)(Cr) (Dr)(Cr) Rent Paid Account Telephone Account Purchase of meat £210 from Scragg & Co paying cash

68. Barbaras Butchers (Dr)(Cr) Cash/Bank £210 Purchases Account (Dr)(Cr) Purchases £210 Cash/Bank Account Sales Account (Dr)(Cr) (Dr)(Cr) (Dr)(Cr) Rent Paid Account Telephone Account Cash sales £742

69. Barbaras Butchers (Dr)(Cr) Cash/Bank £210 Purchases Account (Dr)(Cr) Cash Sales £742Purchases £210 Cash/Bank Account Sales Account (Dr)(Cr) (Dr)(Cr) (Dr)(Cr) Rent Paid Account Telephone Account Cash sales £742

70. Barbaras Butchers (Dr)(Cr) Cash/Bank £210 Purchases Account (Dr)(Cr) Cash Sales £742Purchases £210 Cash/Bank Account Sales Account (Dr)(Cr) Cash/Bank £742 (Dr)(Cr) (Dr)(Cr) Rent Paid Account Telephone Account Cash sales £742

71. Barbaras Butchers (Dr)(Cr) Cash/Bank £210 Purchases Account (Dr)(Cr) Cash Sales £742Purchases £210 Cash/Bank Account Sales Account (Dr)(Cr) Cash/Bank £742 (Dr)(Cr) (Dr)(Cr) Rent Paid Account Telephone Account Rent paid £75

72. Barbaras Butchers (Dr)(Cr) Cash/Bank £210 Purchases Account (Dr)(Cr) Cash Sales £742Purchases £210 Rent £75 Cash/Bank Account Sales Account (Dr)(Cr) Cash/Bank £742 (Dr)(Cr) (Dr)(Cr) Rent Paid Account Telephone Account Rent paid £75

73. Barbaras Butchers (Dr)(Cr) Cash/Bank £210 Purchases Account (Dr)(Cr) Cash Sales £742Purchases £210 Rent £75 Cash/Bank Account Sales Account (Dr)(Cr) Cash/Bank £742 (Dr)(Cr) Cash/Bank £75 (Dr)(Cr) Rent Paid Account Telephone Account Rent paid £75

74. (Dr)(Cr) Cash/Bank £210 Purchases Account (Dr)(Cr) Cash Sales £742Purchases £210 Rent £75 Cash/Bank Account Sales Account (Dr)(Cr) Cash/Bank £742 (Dr)(Cr) Cash/Bank £75 (Dr)(Cr) Rent Paid Account Telephone Account Telephone bill paid £43

75. (Dr)(Cr) Cash/Bank £210 Purchases Account (Dr)(Cr) Cash Sales £742Purchases £210 Rent £75 Telephone £43 Cash/Bank Account Sales Account (Dr)(Cr) Cash/Bank £742 (Dr)(Cr) Cash/Bank £75 (Dr)(Cr) Rent Paid Account Telephone Account Telephone bill paid £43

76. (Dr)(Cr) Cash/Bank £210 Purchases Account (Dr)(Cr) Cash Sales £742Purchases £210 Rent £75 Telephone £43 Cash/Bank Account Sales Account (Dr)(Cr) Cash/Bank £742 (Dr)(Cr) Cash/Bank £75 (Dr)(Cr) Cash/Bank £43 Rent Paid Account Telephone Account Telephone bill paid £43

77. Queston 2 Trevor Smith Top Tip!! Before starting your postings check what T accounts you have been given!

78. Buying & Selling

79. Cash & Credit Transactions Timing!

80. Cash Transaction Immediate payment Receipt ChequeCashCard Bank Transfer

81. Credit Transaction Future payment What problem would this cause us?

82. Cash & Credit Transactions (Dr)(Cr) Sales (Dr)(Cr) Debtor (Dr)(Cr) Bank/Cash Purchases (Dr)(Cr) (Dr)(Cr) Creditor

83. Question 6

84. Balancing off T Accounts

85. Balancing off ‘T’ accounts Dr Bank AccountCr Mar 1Sales350Mar 6Insurance50 Mar 10 Sales 1,000Mar 12Petty Cash100 Mar 23Sales460Mar 19Drawings150

86. Balancing off ‘T’ accounts Dr Bank AccountCr Mar 1Sales350Mar 6Insurance50 Mar 10 Sales 1,000Mar 12Petty Cash100 Mar 23Sales460Mar 19Drawings150 Enter the balance on the LOWER side of the account 1810 300 1810 Total both columns Mar 31 balance c/d1510 April 1 balance b/d £1510 Bring down the balance to the opposite side of the account ‘Strike’ the balance by totalling both sides of the account Deduct lower total from higher total

87. Balancing off ‘T’ accounts Dr Bank AccountCr Mar 1Sales350Mar 6Insurance50 Mar 10 Sales 1,000Mar 12Petty Cash100 Mar 23Sales450Mar 19Drawings150 1810 Mar 31 balance c/d1510 April 1 balance b/d £1510

88. Balancing off ‘T’ accounts Dr Bank AccountCr Mar 1Sales350Mar 6Insurance50 Mar 10 Sales 1,000Mar 12Petty Cash100 Mar 23Sales450Mar 19Drawings150 1810 Mar 31 balance c/d1510 April 1 balance b/d £1510

89. Balancing off Ledger Accounts Question 6 - Jake

90. Balances transferred to a Trial Balance

91. Trial Balance It should balance!!!!!

92. Double Entry Bookkeeping Rules If cash is paid out of the business, then the cash account is always credited – therefore some other account must be debited Assets are always recorded as debits Liabilities are always recorded as credits Expenses are always debits Income is always a credit

93. Debits and Credits Debit (DR) Credit (CR) P E A R L S Purchases Expenses Assets Reserves (Inc Capital) Liabilities Sales Top Tip!!!! – First identify the Account ‘TYPE’

94. Trial Balance ‘Pearls’

95. £PEARLSDrCr Capital14850 Opening Stock1176 Premises10800 Fixtures2850 Trade receivables3450 Trade payables4892 Purchases16748 Sales22391 Bank overdraft1873 Salaries3994 Rent1250 General expenses965 Drawings2773 Totals

96. Trial Balance Card Game

97. Types of Ledger

99. Complete remaining questons

100. Activity - Financial Terms Capital Drawings Asset Liability Capital expense Revenue expense Returns inward Returns outward Returns outward

101. Homework Complete all handout questions Review what we have covered today Lewis Blake