MIDLANDS STATE UNIVERSITY

P. BAG 9055 Tel: 227411

Gweru Fax: 260442
Zimbabwe
FACULTY OF COMMERCE
DEPARTMENT OF ACCOUNTING

MODULE OUTLINE

MODULE TITLE: FINANCIAL ACCOUNTING FOR BUSINESS 1 A (ACC 135)

1. PREAMBLE
This is the first module of a series of four financial accounting for business modules presented by
the Department of Accounting to non-accounting students. The module is intended to develop the
learner’s awareness, skills and understanding of the principles of double entry book-keeping and
how these principles are applied to produce the financial information required in business.

2. MODULE ASSESSMENT
Continuous assessment (course work) will contribute 30% to the overall assessment while the
sessional examination will contribute 70% to the overall assessment. Continuous assessment will
be by way of in-class tests.

3. PURPOSE OF THE MODULE

This module aims at providing a thorough knowledge which at the end should enable the student
to:
 Gain knowledge and understanding of the aims and activities of business;
 Acquire practical skills in understanding the accounting techniques and procedure
appropriate in business organisations and the implications thereof;
 Develop an understanding of the principles and purposes of accounting in providing an
information system for monitoring progress and decision making;
 Acquire a broad understanding of accounting concepts, conventions and terminologies as
applied in the preparation of accounts.
4. MODULE OBJECTIVES
By the end of the module the students should be able to:
 State the types of business organisations and their differences;
 Show the differences between bookkeeping and accounting;
 State the importance of accounting in commerce and industry;
 Identify the users of financial information;
 Describe the accounting cycle;
 Define the various accounting terms;
 Identify source documents for particular transactions;
 Explain the purpose of source documents;
 State the significance of each source document;
 Interpret the information on the source document;
 Name the subsidiary books;
 Explain purpose of each subsidiary book;
 Correct errors by journal entry and make closing transfers;
 Explain forms of ledger accounts;
 Post entries from subsidiary books to the relevant ledger accounts showing correct
narrations;
 Balance ledger accounts;
 Define capital and revenue expenditure;
 Define a trial balance;
 Explain the purpose of preparing a trial balance; outline the uses and limitations of a trial
balance;
 Extract a trial balance;
 State the types of errors that are not revealed by a trial balance;
 Explain the reasons for preparing the statement of profit or loss and other comprehensive
income;
 Explain the difference between gross profit and profit for the period, profit and loss;
 prepare the statement of profit or loss and other comprehensive income of sole traders;
 state the basis of inventory valuation;
 draft ledger accounts that show payments and receipts in advance and in arrears, stock of
consumables and transfers to final accounts;
 define depreciation;
 state the causes of depreciation;
 calculate depreciation using straight line method and reducing balance method;
 draw up the depreciation expense account and the accumulated depreciation account and
asset account;
 show depreciation in the statement of profit or loss and other comprehensive income;
 draw up the disposal account of a non-current asset and show profit/loss in the statement
of profit or loss and other comprehensive income;
 explain the meaning of bad debts and bad debts recovered;
 prepare journal entries and ledger accounts to record bad debts written off and bad debts
recovered;
 state the reasons of maintaining a provision of bad debts;
 prepare adjusting entries in the general journal and ledger to record the creation of, and
adjustment to, a provision for bad debts;
 Make closing entries to the statement of profit or loss and other comprehensive income for
all adjusted figures.
5. MODULE OUTLINE
5.1. Introduction to Accounting
 Types of business organisations;
 Importance of accounting;
 Definition of terms.
5.2. Source documents used in Accounting
 Documentary records and their significance;
 Invoice;
 Credit note;
 Debit note;
 Cheque;
 Voucher;
 Receipt;
 Bank statement;
 Statement of accounts.
5.3. The Subsidiary books
 Cash receipts and cash payments journal, purchases journal and purchases returns
journal, sales journal and sales returns journal, the general journal;
 Use of subsidiary books;
 Correction of errors and closing transfers by journal entry.
5.4. The ledger
 Forms of ledger;
 Posting to the ledger;
 Use of folio columns;
 Balancing;
 Classification of ledger accounts;
 Capital and revenue items.
5.5. Trial balance
 Trial balance, its extraction, uses, limitations and use of the suspense account;
 Errors and their corrections.
5.6. Final accounts of Sole Traders
 Trading account;
 Statement of profit or loss and other comprehensive income;
 The nature of profit or loss and its ascertainment for a specific period;
 Valuation of inventory;
 Treatments of amounts in advance and of amounts due but not yet paid and stocks /
inventories of consumables;
 Causes of depreciation;
 Provision for depreciation: straight line, diminishing balance and revaluation;
 Disposal of non-current assets;
 Provision for bad debts and doubtful debts.
6.0. RECOMMENDE READING LIST
1. Faul et al (1994) Accounting – An Introduction
2. Flynn D et al (2000) Fundamental Accounting: Juta & Co. Ltd
3. Tulsian P.C. Financial Accounting. Tata McGraw-Hill Publishing Co. Ltd
4. Wood F and Sangster A. (2001) A-Level Accounting Prentice Hall
5. Dyson J.R. (1997) Accounting for Non-Accounting Students, Pitman Publishing