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INTRODUCTORY ACCOUNTING COURSE

AUDCIF compliant -
SYSCOHADA REVISED

Academic year 2022/2023

By
Ms. SIGNE Marcelle
Lecturer UD

Contents

FOREWORD ...........................................................................................................................................................3

GENERAL INTRODUCTION .................................................................................................................................4

I. Accounting: from the origins to the present day .......................................................................................4

II. Accounting within the Entity Governance System ...............................................................................5

III. Accounting and its different branches......................................................................................................10

C HAPTER 1: THE ENTITY AND THE HERITAGE.................................................................................................................13

I. The constitution of the patrimony by the partners at the creation of the entity ....................................13
II. Determination of the entity's main financial performance indicators from the balance sheet
..............................................................................................................................17

1) Arithmetic determination of net position .................................................................................................17

2) Arithmetic determination of the entity's result ..............................................................................................17

III. Practical application work.........................................................................................................................20

C HAPTER 2: COUNTABLE OPERATIONS AND FLOW ANALYSIS .....................................................................................22

I. Accounting operations and observation of flow exchanges ........................................................................22

II. From economic flows to resource/job analysis ..............................................................................25

III. Practical work on economic flow analysis................................................................................................28

CHAPTER 3: THE ACCOUNT AND THE DOUBLE-ENTRY PRINCIPLE ..............................................................................................................30

I. The nomenclature of accounts.....................................................................................................................30
III. Coding of accounts ............................................................................................................................32
IV. Application exercises ................................................................................................................................39

0
C HAPTER 4: O RGANIZATION OF COUNTED WORK .............................................................................................................................42

I. Theoretical approaches to the accounting organization ........................................................................42

II. The accounting organization of SYSCOHADA .....................................................................................................................50

Syllabus for the Accounting Orientation Course

Name of instructor Ms. SIGNE MAECELLE
Name of course : general accounting
Length of course : 20 hours in lecture
: 10 hours of practical work
Chapter 1 : The entity and the heritage
Section 1 : The constitution of the entity's assets
Section 2 : Determination of the main financial performance indicators from the
entity's balance sheet
Section 3 : The practical work
Chapter 2 : Accounting operations and the analysis of economic flows
Section 1 : Accounting operations and the observation of flow exchanges
Section 2 : From economic flows to the analysis of resources and uses
Section 3 : The application work
Chapter 3 : The account and the double-entry principle
Section 1 : The accounting
Section 2 : nomenclature The coding
Section 3 : of accounts Application
work
Chapter 4 : Organization of accounting work
Section 1 : Theoretical approach to the accounting
Section 2 : system Empirical principles of the
Section 3 : syscohada Application work
The duration of each chapter is 5 hours
The indications : The practical work will take place over a period of 10 hours
Practices including 2h30 for each chapter
Grades and exams : Continuous assessment grades will be awarded to students
based on effort in class and in class assignments

: A semi-annual review will be conducted and considered a

final examination
: A make-up exam will be held for students who
will not not validated the education during
the sessions
normal.
SEL ECTIVE BIBL IOGRAPHY

1. Kamdem D. " Système comptable OHADA (SYSCO) comptabilité générale"; Cameroon

University Press 2004.
2. Minko G. F. "Introduction to accounting techniques in accordance with the revised AUDCIF-
SYSCOHADA
1
 "; Collection Dynamiques Economiques et Développement, Edition Ch eikh Anta Diop 2020.
3. Perochon C., "Comptabilité générale", Paris, Foucher, 2001.

2
4. Rossignol A, Prost A., Perochon C., Essomba Minkoulou J; " initiation comptable plan O.C.A.M
"Foucher; 1979.
5. Sakutu Amvene J. "Comptabilité générale"; Edition la Co lombe, 2005.

3
BEFORE - ABOUT

The introductory accounting course (general accounting) given in the first year is structured
according to a simple methodological logic. It begins with definitions of basic concepts to allow
students to become familiar with them. Other more elaborate concepts are gradually
introduced to reach higher levels of learning. The course
is presented in the form of a thematic collection that places accounting at the heart of the
governance system of entities. The accounting system produces financial information that
aggregates the financial expectations of stakeholders in their investment decisions. The
relevance of the decisions taken depends on the quality of the accounting information
produced.

The student who is taking his or her first steps in accounting must submit to the proposed
methodology, as must university-level learners who have already studied accounting at the
secondary level.

A series of exercises is offered to students at each level of learning to allow them to practice the
concepts initially covered in lectures.

4
INTRODUCTION GENERAL E

The French dictionary "Le Petit Robert" defines accounting as "the action of keeping
accounts". But in reality, accounting is a function of a country's economic activity from which
financial information is produced by entities for the use of the actors involved. Accounting
professionals speak o f a " system
of identifying, measuring and communicating information of an economic nature in order to
inform the judgments and decisions of the users of this information "1.

Accounting is a daily activity practiced individually or collectively by the actors of the economic
life of a country. It is for example the case of a family manager who calculates his income to
anticipate his family expenses. It is also the case of a student who receives the money from his
parents and plans his school expenses for the year. Accounting becomes a professional activity
within the framework of a company, a legal entity, having business relations with economic
partners, internal and external. It is therefore accounting as a professional practice within
organizations that constitutes the substance of this book.

The introductory course in general accounting begins with a brief historical review of the
origins of accounting up to the present day, considering the company as an organization of
means to achieve planned objectives. It continues with the study of basic concepts such as
economic flows that characterize exchanges between the entity and its internal or external
economic partners. The concepts of uses and resources are approached following the economic
flows in a logic that determines the mandatory processing steps
of accounting operations. Then come the concepts of accounts and their multiple
The course concludes with a study of the concept of the accounting system, which is
discussed in a general way and then restrictively in the context of the revised syscohada.
The course concludes with a study of the concept of the accounting system, which is approached in
a general way and then in a restrictive way in the context of the revised syscohada.

I. Accounting: from its origins to the present

Since its origins, accounting has been one of the oldest professions in the world. Religious dogma
and the history of nations underpin these assertions from ancient history. For example, great
civilizations such as Egypt, Greece and Rome have left traces o f accounting records. The
development of trade over the centuries has led to the need for information on the assets of
individuals and companies. But it is with the work of applied mathematics of Lucas Pacioli
that accounting acquires its letters of nobility. In this document, entitled "Summa de
arithmetica, geometrica, proportioni e proportionalità", the author sets out, in a chapter on
transactions and entries, the fundamental principles of double-entry bookkeeping, one of the
theoretical foundations of modern accounting.
For a long time, accounting was treated empirically, but it has now become a real technique with very
precise rules of organization, set out in the general chart of accounts, the first of which is

1
American Accounting Association definition

5
 version in the Francophone countries of Central and West Africa was that of the OCAM2 .
This version was modelled on the 1972 French chart of accounts. The OCAM was replaced
in 2000 by the OHADA following the requirements of the international accounting reform
enacted by the globalization of economies and inevitable in the African context. The
current version known as "SYSCOHADA" had its first revision in January 2017, for an immediate
application from January 2018. It is thanks to legal, economic and technological developments
that accounting has become a predictive tool for managers. The regular development of
information technology allows to increase, for the future,
the appearance of new accounting systems: this is currently the path followed by accounting
theorists and researchers with the development of enterprise resource planning (ERP)
software.

II. Accounting within the governance system of entities

In order to address the issue of the usefulness of accounting information for stakeholder
decision-making, it is necessary first to consider the concept of the entity and its relationship
with internal and external stakeholders.

1) The company: definition and classification

Innumerable characteristics are generally retained by the authors to define the concept of
"the company". These characteristics are most often dependent on the field

In this book, the concept of the company that is used is that of corporate law. In the context of this
work, the concept of the enterprise that is retained is that of corporate law. However, a few brief
definitions relating to other fields will be given to further define the concept of the work.
It should also be noted that for the purposes of compliance with SYSCOHADA, the concept of the
entity and that of the enterprise are considered equally.

a) Definition

The enterprise or the entity is a structure which implements material and human means of
varying importance with the aim of producing, exchanging or circulating goods or market
services. In a restrictive way, an entity in the sense of SYSCOHADA is an "organized group o f
one or more natural or legal persons and tangible or i n t a n g i b l e elements".
intangible assets that enable an economic activity to be carried out for a specific purpose... by
economic activity is meant any activity (civil or commercial) producing goods or services,
whether market or non-market, carried out for profit or not "3.

Example: Mrs. Eyenga decides to create on January 1, 2018 a small entity to manufacture
sweetened drinks commonly sold in the Cameroonian informal market. These are drinks made
from locally consumed vegetable ingredients such as "foléré", "jinja
"The ingredients are "kosam", and soy. These ingredients are packaged in plastic containers in the
form of ice cream lollipops. To carry out this project, Mrs. Eyenga made a capital contribution of 500
000 FCFA drawn from her personal reserves. She also borrowed from her tontine "les femmes
vaillantes" a sum of 500 000 FCFA which she committed to
to pay back within a year and a half. With this start-up money (1,000,000 FCFA), she has
2
African and Malagasy accounting organization.
3
Definition from the SYSCOHADA Official Journal, page 173.
6
purchased a second-hand freezer for 100,000 CFA francs to store the ingredient mix and all
other packaging following appropriate processing. She also bought a second-hand icebox for
25,000 FCFA to keep the lollipops in ice condition for daily sales. Raw materials, notably "foléré",
"kosam", "soja", "jinja", and plastic packaging for a total amount of 650,000 FCFA were also
acquired in cash. She built a small shed for 60,000 FCFA in front of her house, for the sale of
her products. She paid a final tax to the tax authorities for 15,000 CFA francs, which is the
same as for businesses of this size in Cameroon. She deposited the rest of her money in an account
opened in the name of the establishment with a micro finance company, i.e. 110,000 CFA
francs, and kept 40,000 CFA francs in the cash register for her current needs.

This structure created by Mrs Eyenga is characterized by the following elements

– It is an entity whose legal form is strongly linked to its promoter Mrs.
Eyenga. It is therefore a one-person entity;
– Its individual capital contribution is relatively modest (500,000 FCFA) and
corresponds to the volume of activity of a small entity;
– Its operation is a small industry requiring modest means of production
- The nature of the tax paid to operate also relates to the very small business classes in
Cameroon.
This example shows that the classification of companies or entities is based on certain
characteristics such as the nature of the activity (trade, industry, services, works, crafts,

agriculture, etc.), legal status (one-person company, partnership, capital company, etc.), size or
importance (number of employees, value of invested capital, turnover, etc.), or ownership
(private, public, parapublic, etc.).

b) Classification of entities according to activities

According to the activities carried out by an entity, the following classification can be made:
• Commercial or trading entities, which purchase goods for the purpose of reselling them as is,
i.e. without any further intermediate processing;
• Service entities, which carry out activities in the fields of transport, banking, insurance,
hotel business, entertainment, education, intellectual consultancy etc. ;
• Industrial entities, which manufacture finished products from raw materials
Artisanal entities that carry out activities in the field of arts; Agricultural entities that carry
out activities in the field of agriculture.

c) Classification of entities according to their size (importance)

According to the characteristics of the dimension we distinguish :

• Very small entities (one or two people);
• Small entities (one to 30 people);
• Medium-sized entities (31 to 200 people);
• Large entities (over 200 people).
d) Classification of entities According to the particular characteristics of
SYSCOHADA
we distinguish

7
According to the revised syscohada we distinguish :
Very small and medium-sized entities in the minimum treasury system;
Me
dium and large entities in the normal system.

e) Classification of entities according to legal status (ownership)

The classification of entities by legal status distinguishes between:

• Individual entities (owned by one person)

• Corporate entities (belonging to a group of individuals). The latter can take the
following forms: o Partnerships (SNC, SCS) o Corporations (SA, SCA) o Limited
liability companies (SARL) o Joint ventures o Factual companies o Economic
interest groupings.
f) Classification of entities according to ownership

This classification makes it possible to distinguish between private, semi-private, parapublic and public
entities.
The entities so classified declare in the company contract established for this purpose, their
corporate name as well as the objectives they set to satisfy the needs of individuals. The
achievement of these objectives requires the availability of information in favor of the company.

2) The entities: objectives and information needs

We noted earlier the opaque nature of the objectives pursued by the various stakeholders linked
to the entity's activity, as the contracts and interests sometimes seem to diverge. For example,
the shareholder will certainly be more inclined towards the objective of financial profitability,
8
which ensures the remuneration of invested capital. Meanwhile, the employee manager could

9
be inclined towards the objective of management under constraints, which obliges it to give
priority to maximizing the turnover that enables it to cover operating costs and perpetuate the
entity's activity. The bank, which is often solicited to finance certain needs related to the
operation of the entity, will naturally be inclined towards the economic profitability of the
company. The State, the central balance sheet office and other institutions with planning,
management and control powers are also involved.
and control will be directed towards the economic profitability that ensures the
social balance of the environment in which the entity operates. Other stakeholders such as
insurers, employees, suppliers and customers also have financial information needs for their
own purposes.

In a context similar to the one we have just described, financial information is therefore useful for the
decisions of actors both inside and outside the company.

a) Financial information needs of internal use to the entity

Management is responsible for the preparation and presentation of the financial statements.
Although they are primarily intended to provide information to users. These internal and
external users are interested in the return on their investment. They want to see the capital
they have invested grow. They are :
– Partners of small business corporations are interested in the economic, financial and operating
performance contained in the entity's financial statements
;
– Shareholders of large companies, whether listed or not on a stock exchange, are more sensitive to
financial aspects than to the economic and management aspects of the entity;
– Managers are naturally interested in the information contained in the financial statements for
management decisions;
– Financial statements are also useful for promoters of small and medium-sized enterprises
whose resources are sometimes limited to produce information that meets their specific
needs.

b) The financial information needs of stakeholders

The entity also has numerous relationships with external parties. These business relationships
are translated into financial data by the accounting mechanisms. In this respect, it is said that
the accounting system transforms cash flows into accounting quantities. The external utility
information requirements can be expressed as follows:
– Capital providers: the investors who supply the risk capital;
– The banks: to appreciate the credits distributed by the banking system ;
– The State: is interested in financial information from the fiscal and statistical point of view
and in the economic actions envisaged;
– The Central Balance Sheet Office is an organization that centralizes structured information from the
the entity's accounting package. Its role is to collect, analyze and disseminate financial and
accounting information by sector of activity and by economic zone
;
– The staff: is interested in sharing the added value;
– Suppliers: are interested in knowing if the amounts owed to them by the entity will be paid
on time;
– Customers: are interested in information about the continuity of the entity, especially when
10
they have a long-term relationship with it;

11
 – Other interest groups, including professional bodies, the trade press and media, researchers,
various bodies and associations and the general public, are also interested in the entity's
financial and accounting information for reasons of individual utility.

This non-exhaustive list shows that accounting is at the heart of the governance system of the
entities. It allows internal actors to obtain information and make appropriate decisions. However, it
is also used to inform and make decisions for partners outside the entity.

III. Accounting and its different branches

Accounting has multiple branches, each of which relates to a particular field of work. The
definition of accounting used in this book is that of the business sector. The description of
some of these branches makes it possible to dissociate it from the particular accounting
activities of other economic sectors.

1) Definition of accounting

Accounting is a technique for translating into financial values the commercial and financial
relationships that the various economic agents establish between themselves.
Its purpose is t o observe the exchange of flows, t h e analysis of flows in resources and in
In addition, the accounting process includes the recording of assets and liabilities, the
recording of assets and liabilities in the accounts, the summarization of financial information,
the dissemination of the summarized information and the filing of documents. The diagram
below shows the different stages of processing accounting information in an entity.

There are two main categories of accounting including:

a) Commercial Accounting (Private)

12
It consists of general and cost accounting.

🟅 General accounting and its annexes

According to SYSCOHADA, "accounting is a system for organizing financial information that
allows ;
­ To enter, classify and record numerical data;
­ To provide, after appropriate processing, a set of information in accordance with the
needs of the various interested users".
It is compulsory for all companies carrying out profit-making or non-profit activities to
the information of these partners. General accounting is said to be extroverted
since it is more focused on informing external parties.

🟅 Analytical Accounting
According to SYSCOHADA, "Cost accounting (CAGE) is the system of analysis and
autonomous processing of data that makes it possible to calculate costs and analytical results
that provide useful information for the management of the entity. The purpose of cost
accounting is management. It is neither standardized nor mandatory. Cost accounting is said
to be inward-looking, i.e., oriented toward providing information to third parties within the
entity.

b) Public or National Accounting

It is the macroeconomic tool that allows the government to know and regulate economic
activity. All the information is grouped in global accounts called institutional sector accounts.
3) Role of the accounting department

Accounting has two main functions: to provide financial information to stakeholders and to provide
the basis for management decisions.

a) Accounting is a financial information tool

To say that accounting is a technique is to underline its nature as a tool, conceived with a
purpose: useful (relevant) information for the directors and managers of the Company but also
for its economic partners (investors, financiers, bankers, suppliers, personnel through trade
unions...). The information is communicated :
🟅 relatively continuously in real time (immediately throughout the year to executives and
internal users) ;
🟅 periodically (in principle once a year) to external partners in the form of tables and
documents called annual financial statements.

b) Accounting is a management tool

The information expressed in monetary units of the country where the entity is located (in
CFA francs in the countries of the CFA zone, in Euros in the countries of the European
Union, in Dollars in the countries of the dollar zone, etc.) is intended for use by its various
users for decision-making purposes:
🟅 management decision of the Company's managers and collaborators (produce a product B
or C, have a product D made outside...);

13
 🟅 decision to provide capital (investments); 🟅 decision to grant credit to the company (suppliers)
;
🟅 decision to award grants to the Enterprise (state and other agency).

Depending on the development plan chosen, the first part deals with the fundamentals of
accounting, in particular, the observation of the exchange of flows between the company and
its external business partners, but also within the company itself. The observation of the
exchange of flows facilitates the understanding of the sequence of analysis of these flows in
resources and uses, then the recording of resources and uses in the accounts.

The second part deals with t h e study of the "accounting system", which is considered as the mode of
organization and processing of accounting information.

14
C HAPTER 1 : T HE ENTITY AND THE HERITAGE

When an entity is created, as in the example studied in the introduction, the partners of this
entity contribute financial and material elements that constitute its initial assets. However,
during its life, the entity can improve this initial asset base through the economic activities
carried out within the framework of its operation. In this first chapter, we will study the entity's
assets.
I. The constitution of the patrimony by the partners at the time of the creation of the
entity

After having defined the concept of heritage, we will study the process of its constitution by its
economic partners.

1) Definition of heritage

Let us take the example of application stated in the introduction for the constitution of the
entity Eyenga to see how the patrimony is constituted during the creation of a company. In
practical terms, it is a matter of classifying in a two-column table, on the one hand, the means
implemented by the partner and the use of these means to acquire a given number of goods.
Summary table of the resources provided by the partners and their use
The use of resources (jobs) The means (resources)
Final tax 15 000 (contribution from the 500 000
Freezer Shed 60 000 operator)
500 000
100 000 Borrowing from the tontine
Cooler
25 000
Raw materials
650 000
Microfinance Fund
110 000
40 000

Total 1 000 000 Total 1 000 000

This first table cannot be considered as a summary of the entity's assets because of certain
asset-related considerations, but simply as an inventory
the means provided by the partners and the use that was made of them.
- The means provided are called "resources".
- The use of these resources is called "jobs" in accounting

Uses and resources are important concepts in general accounting. We will have time to dwell on them
again in the following chapters.

In order to distinguish between assets, resources and uses, it is necessary to classify these
elements as "assets" and "debts" because all the resources available to an entity at the time of
its creation can be considered as debts owed by the entity to third-party partners (in our case,
the debt owed by the Eyenga company to its promoter, Eyenga, and the debt owed by the
Eyenga company to the tontine "les femmes vaillantes").

15
Proceeding with this classification in another identical table we will have :

16
 Eyenga's balance sheet as of January 1, 2018

Assets Liabilities

Shed Freezer 60 000 Capital 500 000

Cooler 100 000 Income (loss) (15 000)
Raw materials 25 000 Borrowing 500 000
650 000
Microfinance Fund
110 000
40 000

Total 985 000 Total 985 000

In this table, which we call the asset situation of the entity, the assets are classified on the left
and the liabilities on the right. We can also observe that certain elements considered in
advance as uses and classified on the left of the initial table are not finally taken into account in
the counting of the entity's assets, in particular the use that consisted in paying
the tax in full discharge. Thus, not all uses are assets and, similarly, not all resources are
debts. However, we can see that this second table classifies assets and liabilities.

By definition, an entity's assets and liabilities are "all the property owned or economically
controlled by the entity and the various resources placed at its disposal
It is also possible to use the property for the purpose of carrying on the business of the
entity.4 . Assets are under the control of an entity when it owns them or when it has exclusive
use of them. In simple terms, the assets of an entity consist of all the property
that it owns but also of all the debts that it has contracted to acquire these goods.

The second table that allowed us to distinguish between the entity's assets and liabilities is called the
balance sheet.

2) Definition of the balance sheet

By definition, the balance sheet is a table that presents the situation of a company's assets and
liabilities at a given date. The balance sheet is therefore theoretically a numerical table that
gives details of the elements that make up the assets for a specific date generally chosen
by the makers of financial statements for operational purposes. It has two parts: the left part is
called "Assets" and the right part is called "Liabilities" .

SYSCOHADA completes this theoretical definition and considers the balance sheet on a
practical level as "a summary financial statement that is part of the annual accounts. It
describes separately the assets and liabilities and shows separately the equity of the entity
"5. From this definition, it follows that it is important to specify the concepts of assets and
liabilities in the balance sheet.
a) Characteristics of the assets of the balance sheet

4
SYSCOHADA Official Journal page 189
5
SYSCOHADA Official Journal page 156

17
An asset is an identifiable item of property representing a current economic resource
controlled by the entity as a result of past events. The asset side of the balance sheet is the left-
hand side of the table and includes all of the following items:

– Intangible assets
An intangible asset is a non-monetary asset without physical substance. An intangible
asset is identifiable if it is separable from the entity's operations, i.e., capable of being
separated from the entity and sold, transferred, licensed, leased or exchanged. It is also
identifiable if it arises from a legal or contractual right, even if that right is not exercised.

right is not transferable or separable from the entity or from other rights and obligations. Computer
software, for example, is an intangible asset.

– Property, plant and equipment

An item of property, plant and equipment is a physical asset held for use in the
production or supply of goods or services, for rental to others, or for internal management
purposes, which the entity expects to use for more than one year. An office cabinet is a
tangible fixed asset. - Financial assets
A financial asset is a financial asset of durable use. When an entity participates in the
capital of another by purchasing equity securities, the latter constitute financial assets for the
acquiring entity. Another example is the case of financial guarantees paid to third parties to
secure certain rights.
– Stocks
According to SYSCOHADA, an inventory is an asset held for sale in the normal course of
business, or in the course of production for such sale, or intended to be consumed in the
process of production or provision of services, in the form of raw materials or supplies. In the
case of Mrs. Eyenga's company, the inventories consist of the following raw materials:
"foléré", "kossam", "jinja" and plastic packaging.

– Receivables from customers and other third parties

Receivables are personal rights that allow one person to demand a certain performance or
forbearance from another. In the vast majority of cases, receivables represent pecuniary rights
resulting from the transfer by the entity of a good or service. Certain receivables are recorded
in the balance sheet under the relevant current asset items. These are amounts due from
customers or other third parties who have a business relationship with the entity, such as
insurance companies, employees, the government, social security bodies, etc.

– Active cash flow

Cash is an accounting term that refers to all cash on hand, in the entity's bank or on hand.
Investment securities and other cashable securities also constitute cash assets.

b) Characteristics of balance sheet liabilities

The liabilities represent all the resources of the entity which are grouped in the right-hand part of the
table and consist of the following elements
– Shareholders' equity

18
Capital is the designation of the financial or material resources made available to the
company by the shareholders. The term "equity" therefore refers to all of the entity's own
resources contributed by the shareholders or created by its operations. - Financial debts and
similar resources
Financial debts represent stable resources f r o m loans or debts contracted for a term of more than
one year at the outset.

– Operating liabilities
Operating liabilities represent short-term resources arising from commercial agreements with
suppliers and customers, or from sums belonging to third parties whose repayment term is
short, generally less than one year.
– The passive treasury
Cash liabilities represent short-term financial resources made available to the company by
financial institutions and whose repayment period is very short, generally counted in days.

The balance sheet is therefore composed of two parts as indicated above, the left part which is
The right side is the "asset" and the left side is the "liability".

In the configuration described above, the assets of the balance sheet are classified in an order
described in accounting terms as "increasing liquidity", and the liabilities in an order of
"increasing due date". This is not a linear growth in the mathematical sense, but a
standardized accounting classification whose rule is to read the balance sheet from top to
bottom according to the logic of liquidity and exigibility. For example, when looking at the
assets of the balance sheet, fixed assets are less liquid than current assets, and are therefore
classified in a lower order of growth than current assets. The current assets themselves are less
liquid than the cash, and are classified in a lower growth order than the cash. Similarly, on the
liabilities side, stable resources are less payable than short-term operating debts, which are
themselves less payable than cash debts.

Equality: Assets = Liabilities

The assets and liabilities of a balance sheet describe, at the date of its establishment, the
patrimonial situation of the company from the double point of view: 🟅 O n the one hand
the resources (liabilities)
🟅 On the other hand the jobs (assets).
Since it is resources that finance uses, there is perfect equality between assets and liabilities.
This equality is fundamental and constitutes what is known in accounting as the "double entry
principle". According to this principle, the above equality must always be respected for any
accounting operation

II. Determination of the entity's main financial performance indicators from the
balance sheet

The financial indicators make it possible to assess the financial situation of the entity after the
balance sheet is prepared. The most important indicators are: net worth, profit and loss,

1) Arithmetic determination of the situation does tte

19
The manager of the entity may wish to know the net situation of its assets, i.e. the net value of
the assets representing its own resources. We have already noted that the company's own
resources are made up of the partners' contributions and the additional wealth created by
the company and set aside in the form of reserves or retained earnings.

The net position of the company can be determined in two ways, either from the top of the
balance sheet or from the bottom of the balance sheet.
✞From the top of the balance sheet: net position = ∑ of equity.
∑ Equity = capital + various premiums +Revaluation surplus + reserves + retained
earnings + undistributed profit for the year.
✞From the bottom of the balance sheet: net position = total assets - ∑ foreign
capital (including short-term and cash liabilities).
∑ Of foreign equity = total liabilities - ∑ of equity

Example:
Let's take the case of the company "Eyenga" created previously and calculate the net situation (SN) as
follows
From the top of the balance sheet: SN = ∑ of equity = 500,000 - 15,000 = 485,000
From the bottom of the balance sheet: SN = total assets - ∑ foreign capital.
Total assets or total assets = 985,000 FCFA
∑ of foreign capital = 500,000 FCFA
SN =485,000 FCFA
This example shows that, regardless of the calculation method used, the net position of an entity is
always the same.

2) Arithmetic determination of the result of the entity

The result shows the financial performance achieved by the company during a given period of
activity. The financial performance expressed by the result can be an additional wealth
created by the activity of the entity, or a deficit of wealth compared to the initial stake. The
additional wealth is expressed by the excess of assets over liabilities, while the shortfall is a
deterioration of the entity's initial resources at the beginning of the period, characterized by an
increase in liabilities. These explanations show that the result can be a profit or a loss. The two
situations can be presented schematically as follows:
The following formula is used to determine the result of the entity:

INCOME = Revenue -

Expenses INCOME = ASSETS

- LIABILITIES

In the event of a loss, this relationship is reversed since the total of the items to be recorded as liabilities
is greater than the total of the items to be recorded as assets. The determination of the loss in

20
A loss reflects the fact that the capital available for operations has deteriorated as a result of
particular economic conditions. This deterioration must therefore be visible in the equity structure
on the liabilities side of the balance sheet.

Example:
Assume that the company Eyenga has carried out the operations during the first quarter of the
year 2018. As a result of these operations, the assets of the company are as follows:
establishment costs 15,000 FCFA, Hangar 60,000 FCFA, Freezer 100,000 FCFA,
Cooler 25 000 FCFA, Raw materials 175 000 FCFA, Sweetened beverages (finished products) 85
000 FCFA, Micro finance 120 000 FCFA, Cash 95 000 FCFA, capital 500 000 FCFA, debts
to suppliers 45 000 FCFA, debts to the State 16 250 FCFA.

Required work
Neglecting the physical wear and tear of the fixed assets, calculate the profit or loss of the "Eyenga
company
"during its first quarter of operation.

Solution
The classification of the assets of the "Eyenga company" at the end of this period is as
follows Hangar60 ,000
Freezer 100 000
Cooler 25 000
Raw materials 175,000
Finished products 85 000
Microfinance 120 000
Fund 95 000

Total assets (assets) 660,000

The classification of liabilities is as follows Capital500

,000
Supplier debt 45 000
State debt 16 250

Total liabilities 561,250

The result of the "Eyenga company" at the end of the first quarter is therefore calculated as follows
Result = Assets - Liabilities
Hence: Result = 660 000 FCFA - 561 250 FCFA = 98 750 FCFA (profit)
Eyenga's balance sheet is then as follows following the first quarter 2018 operating activities:

21
 Eyenga's balance sheet as of March 31, 2018

Assets Liabilities

Hangar 60 000 Capital 500 000

Freezer 100 000 Result (profit) 98 750
Cooler 25 000 Trade payables 45 000
Raw materials Finished 175 000 State debts 16 250
products 85 000
Microfinance 120 000
Fund 95 000

Total 660 000 Total 660 000

III. Practical work of application

Exercise 1: Determining balance sheet items

The assets and liabilities of the company "Marie Ange" are as follows as at 31/12/2018. Suppliers 1 000
000 FCFA, Customers ? ; Loan from CBC
6 400 000
FCFA; central fund ?; capital 15,000,000 FCFA; deficit 400,000; office equipment 5,000,000
FCFA; goods 5,600,000 FCFA, buildings 10,000,000 FCFA; bank
CBC 1 160 000 FCFA.

Required work
1) Determine the values of the items: customers and central cash desk,
2) Determine the net position of the company "Marie Ange" successively by the top and bottom
of the balance sheet method,
3) Present schematically the balance sheet of the company "Marie Ange" at 31/12/2018. NB: the
value of the cash item is one third of the customer item. Exercise 2

Presentation of the balance sheet and calculation of the net position

The company "Marie Ange" reports the following information as of January 1, 2018:
Supplier 2,200,000 FCFA; Loan 1,600,000 FCFA; Capital 7,000,000 FCFA; Customers
2,800,000 FCFA; cash 100,000 FCFA; land 1,400,000 FCFA; patent 1,000,000 FCFA;
goods 2,000,000 FCFA; notary fees for the constitution of the company 1,200,000 FCFA;
equity securities 800,000 FCFA; investment securities 200,000 FCFA; buildings 2,900,000
FCFA; debts on Ndomé 1,600,000 FCFA.

Required work:
1) Present the balance sheet of the company "Marie Ange" as of January 1, 2018,
2) Calculate your net position using the bottom of the balance sheet method

Exercise 3
Determination of balance sheet items
From the balance sheet of the company "Ndomé" as of 01/01/2018 we can read the following
information: Loan 3,000,000 FCFA; capital 7,200,000 FCFA; customers 7,500,000 FCFA; office
equipment 750
000 FCFA; suppliers 600 000 FCFA; cash ?; goods 1 050 000 FCFA; bank ? Required work

22
 1) Determine the amounts of the cash and the bank knowing that the cash
represents 1/5 of the cash,
2) Present the balance sheet of the company "Ndomé" as of
01/01/2018, 3) What
type of balance sheet is it?

Exercise 4
Determination of balance sheet items
At the beginning of 2018, the following items are extracted from the assets of the company
"Eyenga": Transport equipment 12 000 000 FCFA; goods 2 560 000 FCFA; receivables from
customers 1 200 000 FCFA; bank CBC 2 400 000 FCFA; suppliers
2,960,000 FCFA; loans 8,000,000 FCFA
Required work
1) Present the balance sheet of the company "Eyenga" as of
January 1, 2018, 2) What type of balance sheet is it?
NB: the loss of the company "Eyenga" at this date represents 10% of the capital.

23
C HAPTER 2 : A CCOUNTING OPERATIONS AND
ANALYSIS OF FLOWS

The balance sheet expresses at a given date the asset situation of an entity. However, as a
going concern, the asset situation of the entity can change rapidly with new operations that
give rise to numerous financial flows (purchase; sale ;
collection of receivables; payment of suppliers; borrowing from banks,
acquisition of fixed assets, etc.). These different operations modify the initial situation and
render the initial balance sheet null and void.

Moreover, since transactions are sometimes numerous over relatively short periods, it is not
possible to draw up a balance sheet after each one. The entity records all transactions on a
continuous basis as they occur using accounting techniques, which include the following steps: 1)
observing the exchange of flows between the entity and external or internal third parties, 2)
analyzing the flows in terms of resources and uses, 3) recording resources and uses in the
accounts in accordance with the double-entry principle, 4) synthesizing financial
information, 5) disseminating the synthesized information, 6) filing accounting documents The
purpose of this chapter is to introduce the learner to the technical methodology that makes it
easy to perform these different tasks.

I. Accounting transactions and the observation of exchanges of flows Accounting

transactions between the entity and its internal and external economic partners are
understood from the movements that these transactions generate between the two parties.
Accounting observes these movements as exchanges of flows between the entity and its
economic partners. The purpose of this section is to propose to the learner the methodology
for the accounting analysis of the observation of exchanges of flows.

1) Definition of an economic flow

An economic flow is a movement of goods, services, currencies or means of payment between

the agents of economic life. Economic flows are classified according to their nature and origin.

a) Classification of economic flows according to their nature

According to the nature of the flows we distinguish :

- Real flows Real flows are movements of tangible or

intangible objects representing goods or services. For example, goods entering or
leaving the entity are tangible physical objects visible to the naked eye and
therefore constitute real flows of goods. Or services received by the entity and
performed by third parties or those rendered by the entity to third parties represent
intangible objects that constitute real flows of services (cleaning of company
premises, administrative work of employees, insurance of vehicles, expertise of
documents, office telephone,
office electricity, accounting assistance etc.).

24
- Financial or monetary flows

25
Financial or monetary flows are movements of money in the form of cash or cashless money,
debts, claims, or any other conventional means of settling financial transactions (commercial
paper etc.).

b) Classification of economic flows according to their origin

Economic flows have a double origin: internal and external.

- Internal flows:
Internal flows represent movements of accounting transactions within the entity. For example,
the movement of goods between the warehouse and the sales warehouse, or the movement of
cash between the bank and the cashier, the creation of wealth
activity, the margins generated by certain activities, and the costs of the company's
etc.

- External flows
External flows represent movements of transactions between the entity and its business
partners outside the entity. For example, the purchase of goods from suppliers, the sale of
goods to customers, the purchase of services, the sale of services etc.

The economic flows thus defined are the subject of analysis for their inclusion in the financial
data of the company. Thus to facilitate the understanding of the analysis, we adopt the
technique of the representation of figures to materialize the movements of the flows following the
activity of exploitation.

2) Analysis of economic flows

The analysis of economic flows is carried out by distinguishing between external and internal flows.

a) Analysis of external flow exchanges

We propose a few examples to better support the analysis of external flows, i.e. those observed
through economic exchanges between the company and its external partners.

Example 1 On January 10, 2018, the company

"Marie- Ange", purchases goods worth 1,200,000 FCFA from its supplier "Eyenga". It pays for
this transaction by bank check.

The representative diagram of the exchanges of flows between the company "Marie-Ange" and its supplier
"Eyenga" is the following:

company. Looking at the diagram, we have the company "Eyenga" on the right and the
company "Marie-Ange" on the left. In the company "Marie-Ange", for example, there is an
26
arrow at the

27
In this case, the arrow at the beginning represents the resource sacrificed (the availability at
the bank), and the arrow at the end represents the use of this resource, which is the
acquisition of goods. Similarly, the analysis carried out with the company "Marie-Ange" can
also be applied to the company "Eyenga" and in this case the merchandise will be the resource
sacrificed by "Eyenga" in order to have the cash at the bank in view of the direction of the
arrows on arrival and departure

Example 2
On January 28, 2018, the company "Marie -Ange" has the statement of salaries due to its staff for the
month of January 2018 which amounts to an amount of 3,500,000 FCFA. The scheme of

The company "Marie Ange" receives from the company ENEO on February 3, 2018, the electricity
bill for the month of January 2018, in the amount of 48,250 FCFA excluding taxes. The
presentation diagram

Example 1
On February 15, 2018, the company "Marie Ange" draws a check 2 000 000 FCFA on His account Example

2
On March 31, 2018, the company "Marie Ange" notes the exit of the store, goods worth 650,000
FCFA sold during the month of March. The analysis scheme of the

28
II. From economic flows to the analysis of resources/ uses

The second stage of the accounting technique used in the introductory definition consists of
analyzing the transition between economic flows and resources and uses. This step is crucial since it
already prepares the reader for the initiation of accounting records in the accounts. But in the
meantime we define the notions of resources and uses.

1) Definition of an accounting resource

The resource is the means by which the accounting operation is carried out, it is the starting
point of this operation which corresponds either to a financial means, disbursed or not
disbursed, or to a material means which allows the accounting realization of this operation.
In accounting, there are two types of resources: external resources and internal resources.

a) External resources

It corresponds to an external means that allows the enterprise to carry out its investments and
its operation. When speaking of external resources, we distinguish between stable
resources, operating resources and cash resources (see chapter on the study of the balance
sheet). b) Internal resources

Internal resources represent financial resources available within the entity. These are generally
previously realized results, not distributed to shareholders but retained within the company in
the form of reserves or retained earnings. Internal resources are therefore those constituted by
the company itself as a result of its operations.

Example

On 31/10/2018 the company "Marie -Ange" sold a batch of goods for an amount of 1,600,000
CFA on credit to the customer. This batch of goods had cost at the front end of the purchase
1,200,000 CFA francs. The accounting analysis of this transaction is as follows in the
company "Marie-Ange
":

The analysis of this operation allows us to make the following observations:

- Financial flows are exchanged between the company "Marie-Ange" and its customer
in the form of trade receivables and sales of goods.
29
 - Within the company "Marie-Ange", the financial flow coming from the receivables from the
customer represents the use of the company's resources,
- Within the company "Marie-Ange", the financial flow from the sale of goods is
subdivided into two resources, namely an external resource corresponding to the
cost of the goods sold and an internal resource representing the result, i.e. the value
created following the sale of these goods.

2) Definition of a job

The use is defined as the use of the resource, i.e. the end point of an accounting operation. This
use can be definitive when the use corresponds, for example, to a service that is definitively
consumed (payment of commercial rent, fuel for vehicles not kept in stock, the electricity bill
from ENEO, etc.) or temporary when it corresponds to the acquisition of an asset that enters
the assets and must be used in a specific way.
(acquisition of land, a car, a computer, merchandise etc.). a) Temporary jobs

Temporary uses are those that have no impact on the value of the entity's assets. Their
recognition in the accounts does not lead to any particular depletion or enrichment for
the entity. For example, the acquisition of a fixed asset by financial resources d o e s not
bring any additional financial value or any impoverishment for
the entity.

b) Permanent jobs

The final uses are the services acquired, for example the payment of the electricity bill, the
water bill, the payment of salaries, taxes, insurance, etc. 3) Analysis of the resources and uses
generated by the economic flows

The resources and uses of accounting operations are generally analyzed following the movements of
external or internal flows.
a) Analysis of resources and uses generated by external flows

When we look at the flow analysis diagrams, we can see that within each frame that represents
the entity or the third parties with which it has a business relationship, there are arrows at the
beginning and at the end. The arrows at the beginning are materialized in the entity by the letter
(R), while the arrows at the end are materialized by the letter (E). The letter (R) designates the
resource, while the letter (E) designates the job.

Example
Using the schematic representation of the example on the ENEO invoice received by the

30
used the financial means that consisted of paying the invoice on credit, i.e. with a slight
deferral corresponding to the payment date indicated by ENEO on its invoice. This possibility
of paying on deferred payment is therefore the resource of this accounting operation which is
materialized in the company "Marie Ange" by the letter (R). In the same way, we can see that
the company "Marie Ange" has used the electricity without having paid any money in advance;
it is therefore a "use" of a resource that is materialized in "Marie Ange" by the letter (E). Thus,
for each accounting operation, we have the following flow directions in resources and uses:

resource: to use (R) at start to finish ( E ) employment: use of the

resource

b) Analysis of resources and uses generated by internal flows

If we look at the operation that allowed the company "Marie Ange" to withdraw money from
its account at the CBC bank to supply its cashbox, we see that the operation is carried out
between two elements of the assets of this company. The bank account opened at the CBC is
an element of the patrimony of the company "Marie Ange", just as the cash box that receives
the money from the bank is also an element of the patrimony of the company "Marie Ange".
Ange". This is therefore an internal operation that generates an internal cash flow. The letter
(R) at the start of the arrow designates the resource of the operation, while the letter (E) at the end
of the arrow indicates the use. The interpretation is that the bank is the means by which the
fund is supplied, i.e. the resource, while the fund uses this means to supply itself, i.e. the use.

c) Equality of resources = jobs: double-entry principle

It is important to note that each accounting transaction has at least one resource that finances a
use. In particular cases, two or more resources can finance a single use, for example, the
purchase of transport equipment, part of which is paid in cash by bank check and the other part
on credit through commercial paper commitments. In this operation, there is a first resource, which
is the bank, and a second resource, which is the bill of exchange, to finance a job, which is the
purchase of transport equipment. The total of the resources used to finance a job is always
equal to the amount (value) of that job, in accordance with an accounting principle known as
the "double-entry principle.

31
Statement of the principle of the double part:

For any accounting operation of the entity, the sum of the resources used for the operation must
always be equal to the corresponding use.

III. Practical work on flow analysis

Exercise 1
During the month of October 2018 the company "Eyenga" buys industrial equipment on credit from its
supplier at a price of 80,000,000 F.
Required work:
1) Present the flow chart of this operation,
2) Complete the flow chart with resources and uses. 3)
What type of flows are we talking about?

Example 2
The company "Ako" buys goods for 1.000.000 F against a cash payment.
Required work:
1) Present the flow chart,
2) Complete the diagram by analyzing the resources and uses 3) What
type of flow is involved?

Example 3 During the month of October 2018, the company "Esso" performed the following
accounting transactions:
02/10: Purchase of goods in cash for 100 000
04/10: Payment of the customer by bank check for 240,000
09/10: Purchase of transport equipment by bank check for 2,400,000 11/10: Sale of
goods on credit for 200 000
14/10 : Payment of the supplier by postal check 850 000
16/10 : Esso, operator of the company withdraws money from the bank for 800 000
personal use.
19/10 : Took out a loan from the CBC 8 000 000
25/10: Sale of office equipment by bank check 1 600 000
26/10 : Withdrawal from the bank to supply the company's cash box 400,000
27/10: Payment to CBC bank 480,000
28/10: Deposit to ENEO, as advance for electricity consumption 80,000
29/10: Esso, the operator brings a transport equipment worth 5 000 000
Required work
1) Perform accounting analysis using flow charts and resource and use diagrams
2) Specify for each operation the type of flow analyzed

32
C HAPTER 3 : THE ACCOUNT AND THE
PRINCIPLE OF THE DOUBLED PARTY

The third step in the accounting technique is the recording of resources and uses (analyzed
above) in the accounts. In the following sections we develop the logic underlying the nomenclature
of accounts.
I. The nomenclature of accounts

The nomenclature of accounts is a set of conventional considerations that make it

possible to classify the accounts of an accounting system according to a previously defined
logic that underlies this classification. In the case of SYSCOHADA, the accounts are numbered
and classified according to the logic of decimal coding, the characteristics of which are developed in
the following sections of this same chapter. However, it is important to first define the notion
of "account" before developing its mechanisms of use. 1) Definition of the account

By definition, the account is a table with two columns in which the accounting operations of the
company are recorded by nature. The right-hand column, called "credit", is used to record
resources, while the left-hand column, called "debit", is used to record uses.

Although the reader can see that there are many columns in the table representing the account,
it should be remembered that the two main columns are "debit" and "credit", and that all the
other columns represent only the details of these two main columns.

2) Account presentation

Depending on the accounting uses, the account can have different presentations according to the
educational and professional needs of the users.

a) The separate column account

Account title (account name)
Flow Credit
rate
Dates Labels Amount Dates Labels Amount

Total X Total X

This is an account that has two distinct columns (debit and credit). Each of the columns is
detailed by precise information which are: the date, the wording and the amount of the
transaction.
b) The married or twin column account

33
 Account name

Date Labels Amounts Sale

Flow Credits Receivable Accounts
rates s payable

The married column account is a presentation of the account that allows the two main columns
(debit and credit) to be juxtaposed for common use of the detail columns (date, labels etc.).

c) The "T" account

This is a simple presentation of the account with two columns similar to a "T", hence the
name "T-account". This model is generally used for pedagogical simplifications in
general accounting instruction.

Debit Account name Credit

d) Definition of the elements of the account

We then unroll definitions for some of the account elements including:

- Account name: this is the name of the account (e.g. cash account, bank account, customer
account etc.);
- To charge an account: it is to enter an amount to the debit or credit of the account;
- Debiting an account: this means charging it
- Crediting an account: this is the crediting of the account
- The balance of the account: it is the difference between the total of the debit amount and
the credit amount; o Debit balance: if the total debit amount is higher than the credit
amount o Credit balance: if the total credit amount is higher than the debit amount o Nil
balance: if the total debit amount is equal to the credit amount

Debit Account name Credit Debit Account name Credit

SD SC

SN

Debit Account name Credit With :

SD = debit balance
34
SC = credit balance
SN = zero
balance
We can see that when the balance is in debit, the amount of the balance is credited indicating that it
is a debit balance, conversely when it is in credit, the amount is debited indicating a credit
balance. This is simply the technique of stopping the accounts. This practice is used more for
manual accounting or for teaching purposes in accounting courses. This is not necessarily the
case for accounting treatments by accounting software packages.

Therefore, the balance gives the situation of the account at a specific date. Thus, managers may
need to know the account status of a particular customer, a supplier, debts to the government,
the situation at the bank, at the cash desk etc.

II. Coding of accounts

Accounts are coded according to their nature and use. The classification of accounts used by
SYSCOHADA is generally referred to as the class of accounts. All the indications related to the
classification of accounts are recorded in a document called the OHADA general chart of accounts
(PCGO).

1) The SYSCOHADA general chart of accounts (PCGO)

SYSCOHADA has nine classes of accounts, the first eight of which are reserved for general
accounting, while the ninth class is reserved for off-balance sheet commitments and accounting.

a) The different classes of accounts

Accounts are grouped into the following nine classes:

Class 1: Sustainable Resource Accounts

Class 2: Fixed asset accounts
Class 3: Inventory accounts
Class 4: Third-party accounts
C lass 5: Cash accounts
Class 6: Ordinary activities expense account
Class 7: Revenue account
Class 8: Other expenses and other income account
Class 9: Off-balance sheet commitments and cost accounting account.
Each class of accounts is then coded to group together all the accounting elements that deserve to
be understood according to the same nature. This coding follows a decimal logic that we will
detail below.

b) Coding of accounts according to decimal logic

35
SYSCOHADA uses the logic of decimal coding inspired by the IASB 5 and IFRS6 standards.
According to the decimal coding it can be admitted that between two successive accounts of the
same level, it is possible to insert ten other accounts of the next lower level.

Example of decimal coding

Between the level of class 4 to the level of class 5 we can have :

Class 4 third party accounts

40 Trade accounts payable
41 Trade receivables and related accounts
42 staff
43 social organizations
10 accounts44 State and public authorities
45 international organizations
46 associates-group
47 miscellaneous debtors and creditors
48 receivables and payables outside ordinary activities
49 Impairments and risks provided for Class 5 accounts
cash flow

The logic of decimal coding allows for detailed accounts in the same class. These details
represent codes and keys that facilitate their location in the list and their use. The basic coding
of the syscohada system is a root of up to four digits, and in some cases three digits. In addition
to the roots that are mandatory when creating a c o r p o r a t e chart of accounts, the additional
digits allow for
meet a specific use need for this company. This makes it possible to observe that even if the
charts of accounts are different from one company to another, the roots of the first four or
three digits are always necessarily identical for all companies using the SYSCOHADA chart of
accounts. Below is an illustration of a combination of digits according to the logic of decimal
coding, which leads to a well-defined account in the class to which it belongs.

5
International Accounting Standards Board
6
International Financial Reporting Standards

36
 Digit combination scheme in decimal coding

Accounts 1 2 ............ 6 ................ 8

................
Class1:1 2 34 .........8....
Stable resources

Borrowin
g
16 Other
Borrowing
s Equity
168 loans 1684

It can be understood from the account "1684 equity loans" that there is a root of four digits
from the decimal logic. The following comment can be made:
- The first number designates the class of the account which is the "durable resources class".
These have a duration in the company beyond one year,
- The second number is a code that distinguishes the special case of loans from all durable
resources,
- The third number is a key that distinguishes the case of s other loans from all the loans
that an entity can take out,
- The fourth number is a final key that distinguishes the case of equity loans from other
loans.
If the company wants to detail the participatory loans that it would have contracted at different
periods and with different characteristics, it can add a fifth figure or even a sixth or nth according
to its own needs of use. But these figures beyond the root are not mandatory by the syscohada.

2) Account grouping

There are two main groups of accounts in most accounting systems, including the OHADA system,
namely: asset accounts and management accounts.

a) Asset accounts

The asset accounts are those of classes 1 to 5. They record the elements of the
assets. The asset situation is determined from the elements of the balance sheet. The balance
sheet accounts are also divided into two main groups, namely :
- Asset accounts
- Liability accounts

b) Asset accounts

These are the accounts of class 2 "fixed assets", class 3 "inventories", some accounts of class 4
"customers, other receivables", class 5 "cash". By their nature, the asset accounts of the balance sheet
increase on the debit side and decrease on the credit side, as illustrated in the diagram below.

37
 Debit Asset accounts Credit

Example
The company "Marie Ange" supplies its cash by a check drawn on its bank account for an amount of
1 000 000 FCFA.

This operation involves two accounts on the assets side of the balance sheet, which we have
just described as increasing on the debit side and decreasing on the credit side. The following
comment can be made from this example:
- The bank account decreases since the money withdrawn from the bank allows to
reflow the cash for an amount of 1 000 000 FCFA

Debit 5211 Bank Credit

that the cash account increases by - Soçoit money
1,000,0001,000FCFA000
withdrawn from the bank

Flow rate 5711 Cashier

Credit

1 000 000

c) Balance sheet liability accounts

These accounts are those of class 1 "stable resources", some accounts of class 4 "suppliers and
other short-term debts", some accounts of class 5 "cash advances, bank overdrafts etc.".

By their nature, balance sheet liability accounts increase on the credit side and decrease on the debit side.
Debit Liability accounts Credit

Example
The company "Marie Ange" buys the goods for an amount of 2 800 000 FCFA on credit from its
supplier.

This operation involves a "supplier" account on the liabilities side of the balance sheet and a
management account on the assets side, which we will study later.

- Employment: purchase of goods

- Resource: supplier
Debit 6011 Purchases Credit Debit 4011 Supplier
Credit

38
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Debit Asset accounts Credit

Example
The company "Marie Ange" supplies its cash by a check drawn on its bank account for an amount of
1 000 000 FCFA.

This operation involves two accounts on the assets side of the balance sheet, which we have
just described as increasing on the debit side and decreasing on the credit side. The following
comment can be made from this example:
- The bank account decreases since the money withdrawn from the bank allows to
reflow the cash for an amount of 1 000 000 FCFA

Debit 5211 Bank Credit

that the cash account increases by - Soçoit money
1,000,0001,000FCFA000
withdrawn from the bank

Flow rate 5711 Cashier

Credit

1 000 000

c) Balance sheet liabilities accounts

These accounts are those of class 1 "stable resources", some accounts of class 4 "suppliers and
other short-term debts", some accounts of class 5 "cash advances, bank overdrafts etc.".

By their nature, balance sheet liability accounts increase on the credit side and decrease on the debit side.
Debit Liability accounts Credit

Example
The company "Marie Ange" buys the goods for an amount of 2 800 000 FCFA on credit from its
supplier.

This operation involves a "supplier" account on the liabilities side of the balance sheet and a
management account on the assets side, which we will study later.

- Employment: purchase of goods

- Resource: supplier
Debit 6011 Purchases Credit Debit 4011 Supplier Credit

32
 2 800 000 2 800 000

The supplier's debt to the company "Marie Ange" increases. This increase is therefore the
resource that made it possible to purchase the goods and is recorded on the credit side. The
supplier account, which is a liability account on the balance sheet, is therefore increased on the
credit side. 3) The management accounts

The management accounts are those of classes 6, 7, and 8. These accounts record expenses and
income from operations. The management accounts are subdivided into two main groups:
- Expense accounts
- Revenue accounts

Expense accounts

These are the class 6 accounts "expenses from ordinary activities", and the class 8 accounts
with an odd number "expenses from non-ordinary activities". The expense accounts increase on
the debit side and decrease on the credit side.
Debit Expense accounts Credit

It should be noted that the expense accounts record expenses arising from operations. These
accounts therefore do not operate according to a rigid logic of increase and decrease like the
asset accounts. When expenses are incurred, they are justified by
and recorded as an increase in said expense by nature. The
decrease in an expense is exceptional and may be t h e result of either a n error correction
of allocation, or an adjustment of the expense in relation to the reality of the operation. These
adjustments, which are decreases in charges, can also be made on the debit side of the account, but
with the sign (-).

Example The company "Marie Ange" receives the electricity bill for the month of March 2016, for
an amount of 84,520 FCFA. This invoice, which will be paid later, is analyzed as follows:
- Resource: electricity supplier
- Use: electricity consumption Debit 6052

84 520 84 520

Electricity Credit Debit 4011 Suppliers Credit

33
Electricity, which is an expense for the company "Marie Ange", increases and is recorded on
the debit side of the account that concerns the nature of this expense. We can therefore see
that the expense account is increasing on the debit side.

a) Revenue accounts

These are the accounts of class 7 "ordinary activities", and those of class 8, the second
figure of which is "revenue from other activities". Revenue accounts increase on the
credit side and decrease on the debit side.
Debit Revenue accounts Credit

Note that as with expenses, decreases in revenue are credited to the relevant account with a (-) sign.

Example
The company "Marie Ange" sells the goods for 4,250,000 FCFA to Clie nt Eyenga on credit. An
accounting analysis of this transaction shows that
- Resource: merchandise sales
- Employment: Eyenga customer receivables

Debit 4111 Accounts receivable Credit Debit 7011 Sales of goods Credit

4 250 000 4 250 000

The sale of goods increases and is recorded to the credit of the relevant account. The revenue
accounts therefore increase on the credit side and decrease on the debit side.

4) Special considerations that facilitate the use of accounts

There are some special considerations in the SYSCOHADA plan that make it easier to find and use
certain accounts. These particularities are the following:

a) The parallelism of certain accounts

A parallelism can be observed between certain expense accounts and revenues. This
parallelism reflects the fact that the expenses incurred at the operating level are likely to
generate corresponding income. For example, we have :
Figure 5: Comparison of certain expense and revenue accounts
expense accounts product accounts

6011 purchases of goods ........................................... 7011 sales of goods

602 purchases of raw materials ........................................... 702 sales of finished goods
65 other expenses ........................................... 75 other products
67 financial expenses ........................................... 77 financial income
697 allocations to financial provisions ........................................... 797 reversals of financial provisions

34
 b) Reciprocity of certain accounts

Two accounts are said to be reciprocal when, kept in two different accounts
(companies), they record the same transactions with the same amounts and must at all times
present identical balances but in reverse. Reciprocity expresses movements between two
entities that have regular commercial or business relations.
This is the case, for example, of a company that opens an account with a bank and regularly
carries out transactions there. In this case, the company opens the "bank" account in its
accounts, while the bank opens the "company" account in its accounts. The "bank" account
held by the company and the "company" account held by the bank are reciprocal accounts.
The same is true between a supplier and its customer. When reciprocity is not verified at the
request of the reciprocal positions, the two structures can carry out reconciliation operations.

Example
The company "Marie Ange" opens an account at the bank C BC and deposits 10,000,000 FCFA. The
two accounts are as follows at the end of this operation:

In the company " Marie Ange " At the CBC bank

Debit 5211 CBC Bank Credit Debit Marie Ange Credit

10 000 00010 000 000

This SD : 10 000 000 SC : 10 000 000

diagram illustrates the reciprocity of accounts
held in their respective structures after the accounting analyses of this transaction. We can therefore
observe that the debit balance of the CBC bank account in the company "Marie Ange" is
reciprocal to the credit balance of the customer "Marie Ange" at the CBC bank.

c) The accounting transfer

The accounting transfer is a technique that consists of transferring an amount from the debit of
one account to the debit of another account, or possibly from the credit of one account to the
credit of another account. The transfer technique is generally used either to split a main account
into two or more individual accounts, or to combine individual accounts into a single account.

Example
The main account "4111 Local Customers" of the company "Marie Ange" has a debit
balance of 12,000,000 FCFA as of March 13, 2016. An analysis of this account shows that the
receivable is detailed as follows:
- Client Eyenga : 8 000 000 FCFA
- Client Ndomé : 4 000 000 FCFA

The accountant of the company "Marie Ange" can decide to split this account between the two

35
while the individual accounts are in debit for the amounts that concern them, respectively, by
8,000,000 FCFA and 4,000,000 FCFA. Therefore, a total of 12,000,000 FCFA was debited
from the main "client" account to the "Eyenga" and "Ndomé" individual accounts, this is the
accounting transfer technique. The accounting transfer can also be used to correct errors that
led to one account being charged instead of another. The transfer can then allow the
erroneous account to be debited or credited with the amount, in order to debit or credit
the normal account.

d) The meaning of the number 9 in the 3e or 4e position of an account

The number 9 in the 3rd or 4th position of an account means that the account is operating in the
opposite way to its nature.

Example
The company "Marie Ange" pays its supplier Nebo an amount of 3,000,000 FCFA by bank check when
ordering goods that will not be delivered immediately.
The analysis of this operation is as follows:
­ Resource: bank
­ Employment: receivable for advance to supplier

Debit 4091 Suppliers, advances received Credit Debit 5211 Bank Credit

3 000 000 3 000 000

The supplier account is an inherently credit account that increases on the credit side and
decreases on the debit side. In the case of the above example, the number 9 is in the 3rd position
of the account and the supplier account becomes exceptionally debit because it increases here
on the debit side and decreases on the credit side. Similar examples are as follows:

basic account 101capital basic nature account with number 9

Creditor Debtor 109 uncalled capital
401 suppliers
409 accounts receivable
411 clients Creditor
419 accounts payable
601 purchases of goods Debtor
6019 discounts obtained

36
inverse
nature
Debtor
Debtor
Creditor

37
In accounting jargon, an account is said to be "in debit" when it naturally increases on the debit
side and decreases on the credit side; conversely, an account is "in credit" when it increases on
the credit side and decreases on the debit side.

III. Application exercises

Questions
1) For the payment received, a customer's account was recorded as 5,049 CFA francs when
the actual payment was 5,409 CFA francs. If this customer's account balance is 12,600
CFA francs in debit at the end of the month, what would be the actual balance after
correcting this error?
2) Can a company's cash account be in credit?
3) Can a company's bank account be in credit? 4) What does the debit nature of an account
mean?
5) What does the credit nature of an account mean?
6) Which classes of asset accounts can be found on the assets and liabilities side of the
balance sheet? Why this particularity?
7) A company's income at the end of a period is 1,020,000 CFA francs. The accountant
notices that a batch of goods worth 420,000 CFA francs in inventory has been omitted from
the calculations. What would be the result of this company after correcting this omission?
8) An accountant wants to keep individual client accounts from a regularly moving control
account. What technique can he use to achieve this goal?
9) At the end of each week, a multi-branch company consolidates the excess cash from the
various branch cash accounts into a single "central cash" account. On the Friday of the
closing of the accounts, the branch cash accounts

the surplus being transferred to the central fund. Before this operation, the "central fund" account
was as follows:

Debit Akwa Cashier Credit

6 240 510 3 280 610

Present the four accounts after these transfers.

10) What does it mean to post an account, to stop an account, to transfer funds?

38
Exercise 1

The accounts of the company "Marie Ange" was moved in the following manner during the period
of January 2016.
1-1-2016: receipt of a sum of 30.000 F in cash from a customer
2-1-2016: payment of cash from another customer 40.000 F
3-1-2016 : Cash payment of a water bill 10.000 F
4-1-2016 : Purchase of a merchandise for cash 50.000 F
5-1-2016: Sale of merchandise on 4-01-12 to a customer on credit 70.000 F
6-1-2016 : Payment by Bank check of the customer to whom we sold the goods on 5 -01- 16
7-1-2012: Payment of a CAMTEL invoice by bank transfer 10.000 F Work
requested
Draw up the "T" accounts: Cash and bank after accounting analysis of these operations.

Example 2
The following transactions were performed by the company "Marie Ange" during the month of December
2016:
01/012016 : Capital contribution of the operator 1.000.000 F paid in bank
02/01/2016 : Purchase of goods on credit from a supplier 60.000 F 03/01/2016: Long
term loan contracted with the CBC 300.000 F

04/01/2016: We have to pay the state a tax of 75.000 F

05/01/2016 : We settle a part of the debt towards our Supplier 45.000 F by Bank check 06/01/2016 :
Payment of a part of the tax 38.000 F in cash
07/01/2016 : Operator withdraws 50,000 F from the fund for his needs Work
requested
1) Present the accounting analysis of these operations
2) Present the accounts: capital, long-term loan, supplier and debt to the State.

Example 3
The company BARRO has realized during the month of November 2016 the following operations:
10/11/2016: Cash in hand: 500.000 F
11/11/2016: Cash sale for cash of goods: 120,000 F 14/11/2016: Pay transportation
costs in cash: 45.000 F
17/11/2016 : Pay the invoice N° 56 of the supplier André (in cash) : 23.000 F 20/11/2016
: Pay cash to the Bank to the account of the company : 100.000 F
22/11/2016 : Sold for cash a used furniture for : 75.000 F 23/11/2016 :
Pay various taxes in cash: 89.000 F
25/11/2016: Pay cash for an office supply purchase: 56,000 F
26/11/2016: Pay an electricity bill in cash: 25.000 f 28/11/2016: Withdraw
cash from the bank: 40.000 F
30/11/2016 : Pay staff salaries net in cash: 125,000 F Required work
Present the cash account
a) In married or paired columns
b) In separate columns

39
C HAPTER 4 : O RGANIZATION OF
ACCOUNTING WORK

The organization of accounting work is the way in which work is designed to enable an entity
to be efficient in its accounting activity. It is generally understood under the generic name of
"accounting system". By definition, the "accounting system" is
a set of rules, principles and tables designed by accounting legislation to
enable an entity to achieve the objectives assigned to accounting, namely
production of reliable financial information that is useful for decision-making by all
stakeholders.

In this section we will discuss two approaches to the study of accounting systems. First, a
purely theoretical approach that allows us to highlight the mode
A "system" organizational approach that distinguishes the classic system from the centralizing
system. Secondly, an empirical approach based on specific aspects to distinguish the two
configurations proposed by SYSCOHADA, namely, the minimal treasury system (S MT) and the
normal system (SN).

I. Theoretical approaches to the accounting organization

Two methods of organizing accounting work are often mentioned in teaching manuals: the traditional
accounting system and the central accounting system.

1) The classic accounting system

The classic accounting activity is organized according to the following steps:

- Accounting analysis based on basic documents
- The recording of basic documents in the operations log,
- The transfer of transactions from the journal to the general ledger,
- The realization of the general account balance from the general ledger,
- Preparation of summary documents based on the trial balance.

This sequence of treatments is illustrated in the diagram below.

a) Basic accounting documents

By basic accounting documents, we mean all the evidential accounting documents that justify
an accounting entry in the journal. We can mention authentic invoices, bank documents,
cash documents, extra-accounting statements (depreciation plan of fixed assets, statement of
provisions etc.). In all cases, the basic accounting documents must not be falsified, erased or
issued fraudulently.

b) The newspaper

7
Approved by top management, auditors and even the statutory auditor.
40
The journal is a book in which the company's operations are recorded chronologically,
mentioning several relevant pieces of information, in particular the date of the operation, the
accounts to be debited and credited, the corresponding sums, the reference of the basic
document that underlies this entry and which is generally called the "wording of the
operation". The wording of a transaction is, by definition, a summary of this transaction based
on the basic accounting document relating to it. The wording must be brief and precise
because the space reserved for its formulation is generally reduced whatever the accounting
format (manual or computerized).

It should also be noted that all entries for the same transaction in the journal constitute a
"journal entry. When a journal entry uses only one debit and one credit account, it is called a
single entry, but when it uses more than two debit or credit accounts, it is called a compound
entry.

The configuration of the journals differs depending on whether it is a manual or computerized

accounting. In the case of manual accounting, the journal book is a document that can have the
form of a notebook or a register, with linked pages that should be
to initial at the court clerk's office. The initialing is considered as an official seal that
would prevent any accounting fraud by removing the sheets of the journal that have
been previously counted one by one. It is therefore an obligatory step that gives the financial
data the confidence and sincerity laid down by the OHADA legislation.

Example
On March 25, 2018, the company TAS SARL buys from its supplier Manga goods consisting
of table cutlery for a value of 140,000 F (cash purchase by bank check). The invoice issued by
the supplier Manga bears the number 0012/MA/2018. Required work
Record this transaction in the TAS SARL company journal.

Indeed, the extract of the journal of the company TAS SARL following this operation is the following:
Number Date of account titles and wordings Sum
Flow Credit 25/03/2018 Flow rate Credit
rate
6011 Purchase of goods 140 000
5211 Bank Cheque 140 000
#0012/MA/2018
Total to be 140 000 140 000
carried forward
Note
As the journal of a manual accounting system is different from the journal of a computerized
accounting system, the types of wording (reference to the basic accounting document(s)) relating to
it are also assessed differently. In the case of manual accounting, the wording is considered
in a global way for the operation recorded (see previous illustration), whereas
in the case of computerized accounting, the wording is considered line by line, according to
the account moved and the nature of the transaction that must be filled in. The manual
accounting approach is simplistic in order to facilitate the understanding of the transaction, and
the relevant justification which refers to a real and identifiable accounting document. The
computerized approach is complete and favors accounting relevance based on the reading of
the major

41
books of account. Students must ensure that school practices do not transfer to
not in the professional world, because the accounting wording can seriously weaken the readability
of an accounting and therefore its relevance.

42
The abbreviations used to illustrate the labels must be legible and audible to facilitate
understanding and future research. We insist on the wording of accounting transactions
because our long professional experience has allowed us to observe that in lecture halls, the
wording of a transaction is very often confused with the name of an account, whereas
that these are completely different concepts. Also, in practice, the wording used by young
accountants is often rather simplistic and of general formulation for all the operations that
concern an account. We propose to our readers, some models of useful wording in both
manual and computerized accounting.
AbbreviatedL ibels Unabridged L ibels

5711cash pc n°.... /rule ment invoice. cash document no. For payment
.... no... invoice no...
4011 suppliersAteb n/check a s/invoice no . ......iser Ateba sa invoice n°...... 521 1 banks
n° ... to Fatou provide our checkseur Fatou
4111 customersFankam #... to the supplier #... Theon cheque n°......
, s/ch 4121 customer Fankam, s exchange rate n°. drawn on the customer
customers notes receivable Lc n°.... on Bona Let Bona The labels are
often abbreviated because the space reserved for their entry in the journal is generally limited,
regardless of the accounting format used (manual or computerized). Accountants must
therefore develop the ability to use abbreviations that are audible, understandable, and
searchable when necessary during the audit of the accounts. Incomprehensible and search-
limiting wording can lead to an impertinence interpreted as a deliberate attempt to manipulate
the figures in the table.

For example, the company TAS receives the check n°124325 of the customer Onguene of an
amount of 1 562 000 FCFA for the payment of its invoice n° V4521/TAS/2016.

In a computerized accounting system, you can have the following wording:

account Title date flow credit
number
5211 Bank check # 124325 Onguene 1 562 000
4111 Customer Invoice no. V4521 by check 124325 1 562 000

In a manual accounting system, the wording can be as follows:

Flow rate Credit date flow credit
5211 Bank 1 562 000
4111 Customer 1 562 000
Onguene s/cheque n°124325/fact. V4521
c) The account ledger

The general ledger is a summary of all the accounts used by the company over a given
accounting period. It lists for each account the transactions that have been recorded during
that period. The ledger can be presented in two formats, namely the loose-leaf ledger (folio)
and the card ledger.

In manual accounting, at the end of the accounting period, the general ledger accounts are
either closed or stopped. An account is said to be "closed" when its balance is zero and it is not
expected to operate at a later date. An account is said to be closed when, following
calculations, it is possible to draw a balance (debit or credit) which gives the situation of this
account at this moment. At the beginning of the fiscal year, accounts that have not been
closed during the fiscal year
43
 previous year, are reopened. This is done by debiting the debit balances of the previous year and
crediting the credit balances of the previous year.

In a computerized accounting system, the accounts are closed following a general meeting
of shareholders which approves the accounts presented by the directors and closes them. In this
case, no additional accounting entries can be justified without arousing the curiosity of the
auditors who may mention this in their report. The reopening of the accounts is done
automatically by the operation of the carry forward. Accounts with a zero balance that
have been closed will not be carried forward to the next period, unless expressly indicated
by the accounting officer.

d) The balance of accounts

The balance is a table that shows, at a given moment, all the accounts of the company
(general ledger accounts). For each of these accounts, the balance shows the total of the
amounts entered on the debit side, the total of the amounts entered on the credit side and the
balance (debit or credit).
credit). More precisely, the balance sheet includes all the balance sheet accounts (classes 1 to 5)
and
all management accounts (class 6, 7, 8). The general ledger accounts are transferred to the
balance according to the order of the account numbers in the chart of accounts. The
balance enables the accountant to carry out an initial check of the entries in the general
ledger. There are several types of balance, namely: o The 4-column balance: basic system
(debit/credit movements, debit/credit closing balance)
o 5-column balance: developed system (debit/credit transactions, closing debit/credit
balances, compared period balance).
o The 6-column balance (initial debit : credit balances, debit/credit movements for the
period, closing debit/credit balances)
o The balance with 8 columns (initial debit/credit balances, debit/credit movements for
the period, cumulative debit/credit movements, closing debit/credit balances).
Example of a scale
accoun Amounts Sale
t
number
Account name D C D C
10 Capital 15 000 15 000

16 Borrowings and similar liabilities 10 000 10 000

22 Land 3 050 3 050

23 Buildings and facilities 10 700 10 700

31 Goods 4 500 1 500 3 000

40 Suppliers 3 000 4 000 1 000

41 Customers 3 000 950 2 050

52 Banks 10 000 2 500 7 500

57 Fund 2 500 1 800 700

44
 60 Purchases and changes in inventory 3 000 3 000
701 Sales of goods 4 000 4 000

Totals 39 750 39 750 30 000 30 000

A balance is fair when the totals of the debit and credit amounts are the same and the totals of
the debit and credit balances are also the same. When a balance is correct, the balance is said
to be "balanced." An imbalance in a balance is an indicator that the double-entry principle
has not been followed for a specific transaction or transactions, which must be found and
corrected. However, the balance does not detect errors in charging a transaction to
inappropriate accounts.

e) The correction of the errors of imputation in the journal

Several procedures are used to rectify imputation errors that may have occurred during journal
entries, in particular the reversal method, zeroing and negative reversal. This last method is
strongly recommended by SYSCOHADA.

The reversal method

Example: After a purchase of goods on credit by customer Kamga, Mr. Manga (supplier) debited
customer Kamga's account for 120,000 francs instead of 150,000 francs.
You are asked to correct this error using the reverse posting method (transaction date: 10/2,
correction date: 12/2).

Solution
What was done in error
10/2

4111 Customer Kamga 120 000

7011 Sales of goods Cheque n°
... supplier Manga
Account titles and labels

120 000

Cancellation of the error by the technique of counter-passing

12/2
120 000
7011 Sale of goods 120 000
4111 Customer Kamga
Cancellation of the wrong
item
Correct the entry using the appropriate accounts
150 000

45
 d°

4111 Customer Kamga 150 000

7011 Sale of goods
According to invoice n° ...
In the
Manga's ledger, the accounts are as follows after the error has been corrected.
4111 Kamga customers 7011
120 000 120 000 sales of
150 000 goods 120 000 120 000

150 000

The disadvantage of the reversal process is that it can lead to an erroneous reading of the
general ledger transactions. Indeed, the reading of an amount of 120,000 francs to the credit of
the account "4111 clients" can be interpreted as a cash flow coming from the payment of
the client when it is not. The z e r o balance method
The zero complement of a number is the same number preceded by the sign (-). Thus, 250 000 has
for zero complement -250 000, similarly 3 542 has for zero complement -3 542.

We can notice here that -3 542 = 6 458 - 10 000 which we note by convention ( 6 458).
The zero complement of 3 542 is therefore equal to 6 458. To check that the zero complement
of a number cancels this number, the following operation is performed: 3 542 + 1 6 458 = 0
Rule for determining the zero complement of a number
To find the zero complement of a number, proceed as follows:

- 9 is subtracted from all the digits of the number, except for the last digit on the right which is
subtracted from 10. However the last significant digit on the right must be different from
zeros; - the number obtained after the operation is preceded by the digit

Example
Or to cancel the article below by the complement to zero:

date
6011 Purchase of goods 525 500
4011 Supplier 525 500
Following invoice n° ...
Cancellation of the erroneous article by the complement to zero
12/2
6011 Purchase of goods 525 500
1 474 500
525 500
4011 Supplier 1 474 500
Cancellation of the wrong item
Total --- --- --- ---
The advantage of zeroing over the reversal process is that when zeroing is used, the accounting
records show the totals and balances they would have shown if no error had been made.
Likewise, the journal totals will match the totals without the error. The disadvantage of this
method is that it is inoperative in the case of computerized accounting in accounting software.

46
The method of writing in negative

Example

Or to cancel the article below: 6011

4011 Purchase of goods 525 500
Suppliers 525 500
According to invoice n° ...

47
 Cancellation of the erroneous article by the method of the counter-pass

6011- 525 500

4011- Purchases of goods12/2 525 500
Suppliers
Cancellation of the wrong
The method of joint writing in negative
solves the disadvantages mentioned for the other methods, which is why it is the method
recommended by SYSCOHADA.

f) Correction of general ledger errors

This can be done in the following way: (i) by overcharging, (ii) by adding to zero. As regards the
rectification of recording errors, the OHADA Uniform Act relating to Accounting Law
recommends, in its article 20, and this exclusively, a single method, namely the negative entry
of erroneous elements. 2) The centralized accounting system

It is an accounting organization parallel to the classical one, based on the division of labor and
the separation of tasks. The work is carried out in specific or auxiliary journals, and by different
people. It is therefore an organization based on the efficiency and performance of the
accounting activity in large enough organizations. The centralized system is the main
accounting format used in an accounting system.
computerized.

a) General information on the centralized model of accounting activity

Like the traditional system, the centralized system is based on the method of indirect recording
of transactions in the accounts, since it uses the journal and the
general ledger. Entries are then made in specialized journals according to the nature of each
transaction. The centralizing mode can also be used when the administrator of the accounting
activity wishes to secure certain financial information, by dispersing it among several accounting
managers.
Periodically (at the end of the month), each subsidiary journal (respectively subsidiary
ledger) gives rise to a centralization entry in a general journal (respectively general ledger).

In the centralizing system, there will be, for example, the following auxiliary journals: o
Auxiliary cash journal, o Auxiliary bank journal, o Auxiliary sales journal, o
Auxiliary purchase journal, o Miscellaneous operations journal.

The number of subsidiary journals to be kept will depend on t h e size of t h e company's accounting
activity.

The implementation of the centralizing system requires the use of specific accounts called
internal transfer accounts to avoid double entries. These accounts are balanced at the time of
the periodic centralization of the subsidiary journals. For example, a cash deposit at the bank
will be recorded in both the cash journal and the

48
In order to avoid this situation, the following procedure is used: (i) in the cash journal, the
cash account will be credited by debiting the corresponding internal transfer account; (ii) in
the bank journal, the bank account will be debited by crediting the same internal transfer
account.

b) An example of the organization of the centralized accounting system The

example of the organization of the centralized system will be discussed in a lecture.

II. The accounting organization of SYSCOHADA

Established in January 2000, the OHADA accounting system underwent its first overhaul in
January 2017 and to be implemented as of January 1, 2018. The main reasons for this
overhaul are as follows:

- The obsolescence of the 1999 repository after 15 years of use (2000-2017) without any update;
- The alignment of the accounting systems of member countries' entities with developments in
international accounting standards (IAS/IFRS);
- The simplification of the configuration of the summary financial statements reinforced by the
qualitative information in the notes to the financial statements.

We first present the two main accounting systems retained by the syscohada, before looking
at the main principles that regulate accounting practice according to the innovations
brought by the revised syscohada. Other innovations will be discussed in the relevant chapters, as
appropriate.

1) The main accounting systems used by SYSCOHADA

The syscohada distinguishes between the normal system (SN) and the minimum cash flow
system (SMT). This distinction is made through specific characteristics relating to turnover and
the nature of the activity. In this section we present a description of the summary financial
statements of these two systems.

a) Normal System (NS) financial statements

The financial statements of the SN consist of the balance sheet, income statement, cash flow
statement, notes to the financial statements and the standard system item/account transfer
table.

49
 Landscape assessment of the
normal system
Ref. Asse Notes Fiscal year as of EX. Ref Liabili Notes
ts 12/31/N 31/12/N-1 ties Fiscal Fiscal
Gross Amort/ Net Net year year
Prov 12/31/N 12/31/N-1
AD INTANGIBLE ASSETS 3 CA CAPITAL 13

AE Development and prospecting costs CB Shareholders uncalled capital ( -) 13

AF Patents, licenses, software and related rights CD Premiums related to share capital 14

AG Goodwill and leasehold rights CE Revaluation differences 3E

AH Other intangible assets CF Unavailable reserves 14

AI PROPERTY, PLANT AND EQUIPMENT 3 CG Free reserves 14

AJ Land (1) (1) CH Retained earnings (+ or -) 14

of which net investment /
AK Buildings (1) (1) CJ Net income for the year (+ or -)
of which net investment /
AL Fittings, fixtures and fittings CL Investment grants 15

AM Equipment, furniture and biological assets CM Regulated provisions 15

AN Transport equipment CP TOTAL EQUITY

AP Advances and deposits paid on fixed assets 3 DA Borrowings and other financial liabilities 16

AQ FINANCIAL ASSETS 4 DB Leasehold debts 16

AR Equity securities DC Provisions for liabilities and charges 16

AS Other financial assets DD TOTAL FINANCIAL LIABILITIES AND

ASSIMILATED RESOURCES
AZ TOTAL FIXED ASSETS DF TOTAL STABLE RESOURCES
BA CURRENT ASSETS 5 DH Current liabilities HAO

BB INVENTORIES AND WORK IN PROGRESS 6 DI Customers, advances received 5

BG RECEIVABLES AND SIMILAR USES DJ Operating suppliers 7

BH Suppliers, advances paid 17 DK Tax and social security liabilities 18

BI Customers 7 DM Other debts 19

BJ Other receivables 8 DN Provisions for short-term risks 19

BK TOTAL CURRENT ASSETS RF TOTAL CURRENT LIABILITIES

P
BQ Investment securities 9

BR Cash in hand 10 DQ Banks, discount credits 20

BS Banks, postal cheques, cash and similar 11 DR Banks, financial institutions and credits of 20
cash flow
BT TOTAL CASH - ASSETS DT TOTAL CASH AND CASH
EQUIVALENTS - LIABILITIES
BU Translation differences - Assets 12 DV Translation differences - Liabilities 12

BZ TOTAL ASSETS DZ TOTAL LIABILITIES

51
Income statement model of the normal system

Normal System Cash Flow Statement Model

51
(1) excluding changes in receivables and payables related to investing activities (e.g., change in receivables on
disposal of fixed assets and payables on acquisition or production of fixed assets) and financing activities (e.g.,
change in receivables on investment grants received)
Description of the normal system notes
NOTES INTITLE E
NOTE1 DEBTS GUARANTEED BY REAL SECURITIES
NOTE 2 MANDATORY INFORMATION

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NOTE 3A GROSS FIXED ASSET
NOTE 3B LEASED ASSETS ACQUISITION
NOTE 3C FIXED ASSETS (AMORTIZATION)
3D NOTE FIXED ASSETS (CAPITAL GAINS AND LOSSES ON DISPOSAL)
NOTE 3 E INFORMATION ON REVALUATIONS PERFORMED BY THE ENTITY
NOTE 4 FINANCIAL ASSETS
NOTE 5 CURRENT ASSETS HAO
NOTE 6 CURRENT STOCKS
NOTE 7 CUSTOMERS
NOTE 8 AURES CREDITS
NOTE 8 A TABLE OF AMORTIZATION OF FIXED ASSETS
NOTE 9 INVESTMENT SECURITIES
NOTE 10 VALUES TO BE COLLECTED
NOTE 11 BANKS, POSTAL CHEQUES AND CHEQUES
NOTE 12 TRANSLATION DIFFERENCES
NOTE 13 CAPITAL
NOTE 14 PREMIUMS AND RESERVES
NOTE 15 A TOTAL GRANTS AND REGULATED PROVISIONS
NOTE 15 B OTHER EQUITY
NOTE 16 A FINANCIAL LIABILITIES AND SIMILAR RESOURCES
NOTE 16 B PENSION AND SIMILAR BENEFITS (ACTUARIAL METHOD)
NOTE 16 B bis PENSION AND SIMILAR BENEFITS
NOTE 16 C CONTINGENT ASSETS AND LIABILITIES
NOTE 17 OPERATING SUPPLIERS
NOTE 18 TAX AND SOCIAL SECURITY LIABILITIES
NOTE 19 OTHER LIABILITIES AND PROVISIONS FOR SHORT-TERM RISKS
NOTE 20 BANKS, DISCOUNT AND CASH CREDIT
NOTE 21 REVENUES AND OTHER INCOME
NOTE 22 PURCHASES
NOTE 23 TRANSPORT
NOTE 24 EXTERNAL SERVICES
NOTE 25 TAXES AND DUTIES
NOTE 26 OTHER EXPENSES
NOTE 27 A PERSONNEL EXPENSES
NOTE 27 B WORKFORCE, PAYROLL AND PERSONNEL
NOTE 28 PROVISIONS AND DEPRECIATIONS RECORDED IN THE BALANCE SHEET
NOTE 29 FINANCIAL INCOME AND EXPENSES
NOTE 30 OTHER EXPENSES AND INCOME HAO
NOTE 31 DISTRIBUTION OF INCOME AND OTHER CHARACTERISTICS
NOTE 32 PRODUCTION FOR THE YEAR
NOTE 33 PURCHASES FOR PRODUCTION
NOTE 34 SUMMARY OF THE MAIN FINANCIAL INDICATORS
NOTE 35 LIST OF SOCIAL, ENVIRONMENTAL AND SOCIETAL INFORMATION TO BE PROVIDED
NOTE 36 CODE TABLE
b) Minimum Treasury System (MTS) financial statements

SMT's financial statements consist of the balance sheet and income statement and the notes thereto.

53
 SMT BALANCE SHEET MODEL

Entity name ..............................Fiscal

year ended 12/31 ...
Identification n u m b e r .....................Duration (in
months) .........
SMT BALANCE SHEET AS OF DECEMBER 31

Amount Amount
ASSET Note Fiscal Fiscal LIABILI Note Fiscal Fiscal
S year year TIES year year
N N-1 N N-1
Fixed assets (1) 1 Operator account

Stocks 2 Result for the year

Trade and other receivables 3 Borrowing

Fund Trade and other payables 3
Bank (+ or -)
Total assets Total
liabilities
(1) to be shown on the assets side of the balance sheet if they correspond to significant amounts

INCOME STATEMENT SMT AS OF DECEMBER 31 N AMOUNT

HEADINGS NOTE FISCAL YEAR N FISCAL YEAR N -1

Revenue from sales or services 4

Other revenue from activities 4

TOTAL REVENUE FROM PRODUCTS A

Expenses on purchases 4

Expenses on rents 4

Salary expenses 4

Expenses on taxes and duties 4

Interest expenses
Other expenses on activities 4
TOTAL EXPENSES ON ACTIVITIES B

BALANCE: Surplus (+) or shortfall ( -) of revenues (C=AB) C

- Change in inventory N/N-1 2

- Change in receivables N/N-1 3
3
+ Change in operating liabilities N/N-1

DEPRECIATION AND AMORTIZATION F

54
 NOTE 3: STATEMENT OF RECEIVABLES AND PAYABLES AS OF DECEMBER 31

Year ended 31 - 12 - .................. Identification number .........

Entity name ................
Duration (in months): ............................
STATEMENT OF RECEIVABLES AND PAYABLES AS OF DECEMBER 31 .............
DATE NAME OF CLIENT Amount as of Amount as of Variation
December January %

TOTAL RECEIVABLES

DATE SUPPLIER'S NAME Amount as of Amount as of Variation

December January %

55
 TOTAL LIABILITIES

2) 3) SYSCOHADA accounting principles

A major innovation of SYSCOHADA is the distinction made in the set of accounting

principles between the assumptions and the accounting policies. Under the underlying
assumption of continuity of operations, the accounting principles structure the accounting
representation of the entity. Assumptions are principles that are accepted without
demonstration but are consistent with the objectives set. They make it possible to define the
scope of the
accounting model. The policies are intended to guide the preparer of the accounts in
the measurement and presentation of items required to be disclosed in the financial statements.

According to the revised SYSCOHADA, there are five assumptions and five accounting policies
as illustrated in the diagram below.

a) Schematic illustration of the SYSCOHADA accounting principles

The assumptions that define the scope of The accounting policies that
the guide the preparer of the
SYSCOHADA statements
financial
Cost convention
history
Postulate of the entity
Cautionary Agreement

Postulate of accrual accounting Postulate

Convention of regularity and
of accrual specialization Postulate of transparency

consistency Convention of the

correspondence between the
Postulate of the pre-eminence of economic reality closing balance sheet and the
on legal appearance opening balance sheet

Convention of the importance

significant
Thecontinuityhypotherofexploymentation

The SYSCOHADA reference framework groups together accounting postulates and

conventions under the generic name of "basic accounting principle". The postulates are
universally applicable, whereas the conventions take into account the economic contingencies of
the country in which they are applied. The accounting principles are supported by the going
concern assumption that "financial statements are prepared on the assumption that
the entity will continue in operation for the foreseeable future, unless events or decisions
occurring before the reporting date make it probable that the entity will continue in
operation for the foreseeable future.
close to liquidation or cessation of operations". In fact, when the going concern status is

56
commenced or broken, the entity presents the financial statements on a liquidation basis.

57
 b) Illustrated statements of the SYSCOHADA accounting postulates

The postulates make it possible to define the scope of the accounting model. They are
principles accepted without demonstration but consistent with the objectives sought.
SYSCOHADA has retained five postulates which are: the entity, the commitment, the
specialization of the exercises, the permanence of the methods and the pre-eminence of the
economic reality over t h e legal appearance. The
postulate of the entity
This is a fundamental assumption concerning the relationship between, on the one hand, the
legal person or group and, on the other hand, its owner or owners (operator, partners,
shareholders, members). In effect, the entity is considered to be an autonomous legal entity or
group separate from its owners and economic partners. Financial accounting is based on the
separation of the entity's assets from those of its owners. It is the transactions of the entity and
not those of the owners that are reflected in the entity's financial statements. An entity extends
to any organization that carries out an economic activity and controls and uses economic
resources. When an entity (legal entity) controls one or more entities, the whole forms a
group that must present consolidated financial statements.
­ The postulate of accrual accounting
The effects of transactions and other events are recognized as they occur and not when cash
is received or paid. They are recorded in the accounting records and presented in the
financial statements for the years to which they relate. Financial information prepared in this
way, with the exception of the cash flow statement and subject to the specific provisions
concerning the minimum cash flow system, provides users with information not only on past
transactions that have resulted in cash flows, but also on obligations and other events
resulting in future receipts and payments.
­ The postulate of the specialization of exercises
It is provided for in article 59 of the regulation and means that the life of the entity is divided
into periods called "financial years" at the end of which annual financial statements are
published, and that all the income and expenses that concern it (arising from the activity of
that year), and only those, must be attached to each financial year. This principle therefore
ensures the completeness of the expenses and income of an accounting period, which
contribute to the accuracy of the published financial information. Compliance with this principle is
ensured by means of so-called accruals accounts, which allow income and expenses to be
adjusted over time.
- The postulate of the per manence of methods
It is reiterated by article 40 of the regulation. It requires that the same accounting,
measurement and presentation methods be used by the entity from one period to the next.
Indeed, accounting and consistency of accounting information over successive periods
implies the consistency of measurement and presentation methods
The term "accounting policy" applies to the methods and rules of valuation and presentation of
accounts. This principle is relevant to comparisons of financial statements over time.

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However, when the entity is required to make a change in policy in accordance with the
SYSCOHADA framework, this change must be disclosed in the notes to the financial
statements.
Illustrative example of the principle of consistency of methods
A company can find itself in a situation that artificially improves its result simply by choosing
an inventory valuation method that is favorable to its objectives. In a context of inflation, a
company wishing to improve its result can use the "first in first out" (FIFO) method because
the final inventory will be made up of the higher recent values. It can use the method of "last in first
out: LIFO" because the final inventory will be made up of older values at a lower cost. Indeed,
in the context of inflation, the following relationship is often verified:
SF (DEPS) ≤ SF (CUMP) ≤ SF (PEPS).
With
SF = ending inventory; WAC
= weighted average unit cost,
LIFO =
last entry first exit. In a deflationary situation, the opposite
relationships are manifested. It is therefore to compensate for these opportunistic choices
that the SYSCOHADA legislator has advocated the permanence of methods, and has limited
the valuation of stocks to the FIFO and CUMP methods, the LIFO method being prohibited.
The postulate of the pre-eminence of economic reality over legal
appearance

According to this premise, in order for information to be relevant to the transactions and other
events it is intended to present, it is necessary that it be recorded and presented in accordance
with their substance and economic reality, and not merely according to the
legal form.

SYSCOHADA is limited to four applications of this premise which are:

• Recognition of assets held with a "retention of title" clause on the balance sheet
";
• Recognition on the lessee's balance sheet of assets used under a capital lease (on the
lessee's side) and a finance lease receivable (on the lessor's side). These provisions
are limited to leases, hire-purchase agreements or any other lease with a purchase
option that the lessee is reasonably certain to exercise;
• Recognition of discounted bills of exchange not yet due or honored ;
• Inclusion in "personnel expenses" of personnel invoiced by other entities.

In these four cases, the accounting consequences of these solutions are as follows:
• In the liabilities, against the asset values, specific financial debt accounts (leasing
and hire purchase, property reserves...), cash debts (discount credit...);

59
 • The corresponding items are included in expenses and income: depreciation, financial
expenses (leasing, hire purchase), personnel expenses (temporary staff).
The assumptions are accompanied by accounting policies to provide a coherent set of accounting
principles.

c) Illustrated statements of the SYSCOHADA conventions

The accounting policies, because they are intended to guide the preparer of the accounts in the
evaluation and presentation of the elements of the financial statements, are less general than
the accounting postulates and may vary from one country or geographical area to another.
Five conventions are retained by SYSCIHADA to meet this objective, namely

60
 The historical cost convention
The historical cost convention consists of recording transactions on the basis of the nominal value of
the currency without taking into account any changes in its purchasing power.
It is based on the stability of the monetary unit, which must allow the addition of monetary units
from different periods without distorting the accounting information.
Under this principle, assets are recognized at the amount paid or at the value of the
consideration given to acquire them. Passives are recognized at the amount of the revenue
received in exchange for the obligation or, in certain circumstances (e.g,
(income taxes), the amount expected to be paid to extinguish the (external liability) in the
normal course of business. Thus, according to this principle:

• Assets acquired for valuable consideration are recorded in the assets at their acquisition cost,
Goods produced are recorded in the assets at their production cost, goods received
free of charge at their current value.
• Assets received by way of exchange are recognized at the present value of the
assets received, unless the present value cannot be reliably estimated. In this case, the
assets acquired are recognized at the value of the assets given in exchange.

These values can only change in the patrimonial situation of the company in the cases framed
by the SYCOHADA legislation, in particular the revaluation of fixed assets (free but motivated
by the managers, legal when imposed by the State).

Illustrative example of the h i s t o r i c a l cost principle

The Elessa company located in Akwa Douala, bought in the year 2005, a 500 m2 land at the
price of 1,250,000 FCFA (that is 2,500 F per m 2) located in Nyalla, an enclave peripheral
neighborhood of the city of Douala. Since December 2018, land adjacent to that of the Elessa
company has been selling for 7,500 FCFA per m 2. Under the historical cost principle, the
Elessa company has never changed the amount of land recorded on its balance sheet.
The Cautionary Convention
This principle is set out in Articles 3 and 6 of the Uniform Act. According to article 3, "the
accounts must satisfy, in compliance with the rule of prudence, the obligations of
regularity, sincerity and transparency inherent in the keeping, control, presentation
and to the communication of the information it has processed". According to Article 6, the
convention of prudence is observed "on the basis of a reasonable assessment of the events
and transactions to be recorded in the financial year concerned"...

An example of the principle of prudence is the treatment of foreign exchange losses and gains.
Foreign exchange losses and gains occur in the context of companies that conduct business
with foreign customers and suppliers, i.e. outside the company's current currency zone. Due to
currency fluctuations, companies can lose or gain money from the settlement of foreign
exchange transactions.
transactions. Thus, at the end of an accounting period, foreign currency receivables and
payables in the financial statements should be treated differently in relation to the exchange rates.
Only cases of unrealized losses should be recognized and unrealized gains should be ignored,
in accordance with the principle of prudence. A decrease in the convertibility rate of receivables
should be subject to a provision for impairment of receivables, as should an increase in the

61
The convertibility rate of the debts must also lead to the allocation of a provision for
expenses. This is the purpose of the translation adjustment assets and liabilities at the
bottom of the balance sheet.
Illustrative example of the precautionary principle
According to the principle of prudence, accounting must be mainly pessimistic in reality. Thus, for
two given situations, namely that of a possible enrichment or impoverishment, the accounts
must reflect the possible impoverishment by allocating provisions, and remain cautious about
an uncertain latent enrichment.
The regularity and transparency agreement
This principle is affirmed in articles 6, 8, 9, 10 and 11 of the regulation. In fact, it permeates all acts
relating to external information. This concept must include:
• Compliance with SYSCOHADA rules and procedures, the chart of accounts and its
terminology, its financial statement presentations (concept of regularity) ... ;
• Clear and fair presentation and communication of information, with no intention of
concealing reality behind appearance (Article 6 of the Uniform Act);
• Compliance with the no-netting rule, failure to comply with which would lead to legal and
economic confusion and distort the image that the annual financial statements should give.
Only legally founded offsets (article 34 of the Uniform Act) by virtue of the law or the
contract are allowed.
The convention of the correspondenceclosing balance sheet -
opening balance sheet
This principle is reiterated in article 34 of the regulation: "the opening balance sheet of a
financial year must correspond to the closing balance sheet of the previous financial year".
This principle allows for continuity in the financial statements from one period to another.

Illustrative example of the principle of intangibility

For two successive accounting years, the intangibility of the balance sheets is a control point
that prevents the accounts approved by the shareholders' meeting from being fraudulently
modified by opportunistic accountants.
The Significance Convention
This convention, although formally stated in article 33 of the Uniform Act on Accounting and
Financial Reporting, in relation to the notes to the financial statements, also concerns all
other financial statements. All elements likely to influence the judgement of those to whom the
financial statements are addressed regarding the assets, financial situation and results of the
entity are significant

Illustrative example of the principle of materiality

A company in a structural loss position and on the verge of bankruptcy may be attractive to
some investors because of the real or personal property on its balance sheet. However, if the
preparer of the financial statements has failed to disclose in the accompanying statement that such
real or personal property is subject to mortgages, then this significant omission leads to a
misreading of the published financial statements.

In practice, the assessment of the concept of "significance" is not easy because it is not essentially

62
quantitative. This is why it is recommended that a case-by-case study be made

63
case depending on the particularities of the entity. However, in practice, quantified
information can be considered significant in the following cases
• The item it explains represents a percentage between 5 and 10% of the balance sheet
total;
• The portion of the change in the item explained by the information represents between 10
and 20% of the total amount of the item;
• The amount considered represents 10% of the net profit.
When the information in question is of a qualitative nature, it must be mentioned in the notes
attached.

To conclude this chapter, we propose to recall the working hypothesis underlying these
principles. It also seems interesting to make some comments on the grouping of these
principles from a conceptual point of view, in order to better understand the objectives sought
by the OHADA legislator through the accounting principles set out for the production of
summary financial statements.

b) SYSCOHADA's working hypothesis and conceptual grouping of principles

An important assumption underlies the organization of SYSCOHADA's accounting
treatments, and five groupings of accounting principles from a conceptual perspective are
proposed as a result of this assumption.
Going concern assumption
The SYSCOHADA organization is based on the "going concern" assumption, according to
which "under the going concern principle, the enterprise is normally considered to be in
operation, i.e. to continue to
The company must be able to continue as a going concern for the reasonably foreseeable future.
When it has expressed the intention or when it is obliged to go into liquidation or to significantly
reduce the scope of its activities, its continuity is no longer assured and the valuation of its
assets must be reconsidered. The same applies to an autonomous asset - or group of assets -
whose continued use is compromised, in particular because of irreversible market or technical
developments" (Art. 39 of the AUDCIF).
It is therefore the inclusion in the financial statements of an economic horizon of activity that
justifies the presentation and the evaluations. In fact, the financial statements are presented in
a liquidation logic when the continuity of operations is compromised.

c) Conceptual grouping of certain accounting principles The conceptual focus of

accounting principles is based on the guiding principles, observation of facts, evaluation
and responsibility of the makers of financial statements.
- Guiding principles
The guiding principles of financial accounting are the regularity, fairness and accuracy of
published financial data.
- The principles of observation
The principles of observation are based on the entity's assumption, the periodicity, the
specialization of the accounting periods and the assumption of continuity of operations. -
Valuation principles

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Valuation is a fundamental principle that allows the real value of assets to be determined from
the elements counted. The principles governing valuation are: monetary quantification,
historical cost, prudence, intangibility of balance sheets (closing n -1
and opening n)
- The principles of responsibility
Accountability limits the discretionary opportunism of those who produce financial
information. Financial information must be produced with full responsibility of the managers
in order to ensure the usefulness of the information produced for decision-making. The
principles governing accountability are the following: justification of the facts, correct
information, materiality, non-compensation, consistency of methods, pre-eminence of the
economic substance over the legal form.

Chapter 5: Application work

This third part is devoted to a set of application exercises that allow learners to practice the
required professional skills. These training exercises start with course questions developed in
a spirit of knowledge control. Then exercises of a slightly higher technical level are gradually
proposed to the learners.

Course questions
1. What are the characteristics of economic flows?
2. What are the possible classifications of the company's economic flows?
3. Define the concept of "resource" in general accounting.
4. Define the concept of "jobs" in general accounting.
5. Provide a complete definition of the concept of "general compatibility
6. Define the concept of "cost accounting", how does it differ from general accounting?
7. What is national accounting? How does it differ from general accounting?
?
8. General accounting: technique or science?
9. Define the concept of "account" in accounting.
10. What are the account groupings in accounting. Give the specificity of each group of accounts.
11. Define the following concepts: - Charge an account
- Account name
- The balance of an account
- Stop an account
- Open an account
- Reciprocal accounts
Complete the table below by checking the box corresponding to the answer to the question asked
:
Elements of analysis In what sense these elements

65
 Increase Decrease
Share capital

Debts

Assets

Recipes

Expenses
Exercise 1
MARIE ANGE performed the following operations during the month of September 2018.
01/09/2018: capital contribution for the constitution of the company 5 000 000 F, and this sum was given to the
notary who will open the company's account
03/09/2018 : creation of the company's bank account and payment of the amount received from the partner
Marie Ange
05/09/2018 : paid to the notary by bank check the costs of drafting the company's incorporation deed
for an amount of 500,000 F
05/09/2018 purchase of an office furniture set in the amount of $1,000,000
06/09/2018 Purchase of a batch of goods worth 2,000,000 F by bank check and by a debt granted by
the supplier in our favor for 500,000 F
15/09/2018: withdrawal from the bank to supply the cash box for an amount of 500 000 F
20/09/2018: received the bill from ENEO for the month's electricity consumption for 12 000 F
25/09/2018: payment of the bill from ENEO by a withdrawal made at the cash box
09/29/2018 : recognition of staff salary statement for the month of September for 350,000 F
09/30/2018 : payment of salary statement for the month of September 2016.
Required work
- Make an economic flow chart for each operation,
- Analyze these flows in terms of resources and uses, Exercise 2:
Mr. Fon John, a trader in Bamenda, managed the following flows in the framework of his
business "Up station park" located in the "Ntarikon" district.
- Deposit in the bank, in the account of "Up station park", of a check of 15 000 000 F, drawn
from the personal account of Mr. Fon John ;
- Mr. ASHU gives to the cashier of "Up station park", a sum of 11 500 000 F, taken from his
personal income;
- Purchase of a microcomputer for 2100 000 F ;
- Purchase of a set of 4 chairs and two worktops for 1 550 000 ;
- He buys goods from Mr. Abé to start his business for 13 500 000 F ;
- Transport paid in cash to "General Express" for the transport of the purchases made at Mr. Abé's:
178 000 F ;
- Sale of goods to Mr. Enoh in cash, for 14 800 000 F ;
- Remittance to the bank, "Up station park" account, of cash for 8 000 000 F; - Cash sale by
check to Agboh: 5 000 000 F;
- Remittance to ENEO of a check for 340,315 for electricity consumption.
Work requested
- In the accounting of "Up station park": - Represent these flows;
- Analyze these flows into uses and resources; Record these flows in the accounts.

66
Exercise n°3
The company "Marie Reine" has carried out the following commercial operations:
1. Cash payment of taxes: 780 000 F ;
2. Payment of the rent of the store by bank check: 850 000 F ;
3. Receipt of the insurance receipt from the Essono company: 980 000 F :
4. Payment of the Essono insurance receipt by bank check. Required
work
- Analyze the business transactions in the attached table,
- Record the business transactions in the schematic accounts (initial balance of the bank and
cash accounts of $11,150,000 and $2,100,000 respectively),
- What is the influence of these operations on the result of the company "Marie Reine"? Appendix
Operations Amount
Order of operations Jobs Resources Flow Credit
rate

Exercise n° 4
The company "Marie Ange" has carried out the following operations:
1. Cash collection of FRF 300,000 in rent for premises leased by the company to a third party,
2. Credit advice from the bank for an interest on a deposit account for 250 000 F.
Required work
- Analyze business transactions in a transaction analysis table (see sample in the appendix of the
previous exercise),
-Record the commercial transactions in the schematic accounts (bank account balance
9,320,000 F debit and cash account 1,320,000 F debit), - What is the impact of these
transactions on the company's result?

Exercise 5
Draw up the opening balance sheet of the company "Moto Ramsès" whose activity consists in
selling hardware items. These assets are as follows: iron stock 120 000F cash 112 000 F,
social security 8 000 F, tubes stock 110 000 F, transport materials 152 000 F, industrial materials
and tools 161 000 F, funds deposited in the CCP 118 000 F, long-term loan 127 000 F,
suppliers' debts 19 000 F. Required work:
1. Find the initial equity contribution,
2. What type of business is it? Exercise n° 6
The assets of the company "Ndomé" are the following: land for 80 000 F, a long-term loan 60
000 F, cash in hand 5 000 F, industrial buildings 320 000 F,
accounts receivable 27,000 F, accounts payable 33,000 F, material inventory 52,000 F, equipment
and tools 60,000 F, transport equipment 100,000 F.

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Required work
1. Determine the initial capital of this entity,
2. Present the balance sheet of the company
Ndomé, 3. What type of balance sheet
is it?

Exercise 7
The "Eyenga" company has a capital of 50,000 F, it has office furniture worth 10,000 F, goods
in store are worth 135,000 F, the cash register 23,000 F, receivables
customers 20,000 F, a long-term loan of 30,000 F, accounts payable 120,000 F. Required work
- Draw up the balance sheet as at 31/12/n,
- Calculate the result of this company, - Determine the net position of the company.
- What type of balance sheet is
this? Exercise n°8
The company "Marie Ange" is an industrial enterprise. It has a capital of 1 600 000 F, customers
700 000 F, suppliers 1 360 000 F, bank funds 300 000 F, cash in hand 50
F, materials F 1,400,000, raw materials F 500,000, manufactured goods F 800,000,
the company owns patents for 300 000 F, it must pay in 5 years 700 000 F to a financial
institution.
Required work
- Draw up the balance sheet as at 31/12/n,
- Find the result of this company, - Determine its net position.

Exercise n°9
Mr. Wansi has acquired a business formerly operated by Sakutu. Under the terms of the sale
contract, Wansi took over the intangible elements (goodwill) for a value of 20,000,000 F, the
operating equipment for 5,000,000 F, a building for 12,500,000 F, the office equipment and
furniture for 3,150,000 F, and the stock of goods for 22,500,000 F. However, it undertakes to
recover the claims on the
The receivables amount to 2 250 000 F and the debts to 3 400 000 F. Mr. Wansi
immediately pays ¾ of the amount he owes to the "Sakutu" establishments from private
funds and undertakes to pay the rest in eleven months, from the profits that will be generated
within the company. In addition, Mr. Wansi will bring a pick-up valued at 20,000,000 F and
he has deposited 13,500,000 F in an account opened at the CBC.
Work Requested
Determine the amount of Mr. YUNYUN's capital and draw up the balance sheet as of 1/01/2018.

68