1. Book - Keeping Double entry Book-keeping

2. Activity - Financial Terms Capital Drawings Asset Liability Capital expense Revenue expense Returns inward Returns outward Discounts allowed Discount received

3. Accounting Equation Assets = Capital + Liabilities

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

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

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

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

8. 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

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

10. 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

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

12. 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=+

13. 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+

14. 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

15. Accouting Equation Card Activity

16. Accouting Equation Worksheet

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

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

19. 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

20. 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.

21. 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

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

23. 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

24. 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

25. 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

26. 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

27. 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

28. Ledger Accounts Duel 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

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

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

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

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

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

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

35. 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

36. 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

37. 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

38. 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

39. 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

40. 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

41. 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

42. 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

43. 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

44. 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

45. 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

46. 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

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

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

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

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

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

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

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

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

55. 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

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

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

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

59. 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!

60. 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

61. 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

62. 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

63. 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

64. 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

65. 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

66. 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

67. 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

68. 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

69. Page 9 (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

70. Page 9 (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

71. Barbaras Butchers (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

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

73. Credit Transactions Sales on credit (Dr)(Cr) Sales (Dr)(Cr) Debtor

74. Credit Transactions Sales on credit (Dr)(Cr) Sales (Dr)(Cr) Debtor Purchases on credit (Dr)(Cr) (Dr)(Cr) Creditor Purchase

75. 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

76. 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

77. Balancing off Ledger Accounts Worksheet Secondary Traders Ltd

78. Balancing Worksheet

79. Balances transferred to a Trial Balance

80. Trial Balance

81. Lewis Blake Activity

82. 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

83. 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’

84. Trial Balance ‘Pearls’ Q1

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

86. Complete PEARLS Questions 2-4

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

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

89. Types of Ledger