Unit 2: Accounting

Equation & Double Entry

Mr Mdletshe
 The Accounting Equation
- Net Worth = What you own – What you owe
- Equity = Assets – Liabilities
- Defining the elements of the accounting equation
- E = A – L or A= E+L or L=A-E
- Discuss Question 2.2
- Class work Question 2.4
 The business entity rule
• Transaction 1: Andrew start a business and opens a bank account as Super Traders
and transfers R60 000 into the business account
• Transaction 2: Super Traders purchases stock for R10 000 on cash
• Transaction 3: Super Trader purchases more stock for R20 000 on credit
• Transaction 4: Super Trader sells stock worth R10 000 for R40 000 cash
• Transaction 5: Super Traders sells stock worth R5 000 for R20 000 on credit
• Transaction 6: Super Traders buy a delivery van R250 000 on credit
• Class work: Question 2.7
 Inventory Systems
• Perpetual inventory System vs Periodic inventory System
 Inventory Systems
Details Perpetual System Periodic System
1.When inventory is purchased Inventory (Asset- Debit) Purchases (expenses – Debit)
2. When inventory is sold Two double entry One double entry
3. Additional Cost Added to Inventory Separate Accounts (carriage on
purchases, Import tariffs)
4. Cost of sales Is recorded at the point of sale Determined at the end
 VC learn and Homework
- VC Learn: Blog Activity 1.1.1
- Homework: Question 2.13