Final

በኢትዮጵያ ልማት ባንክ
እና
በኢትዮጵያ የንግድና ዘርፍ ማኅበራት ምክር ቤት
የሂሳብ መግለጫ አዘገጃጀትና እና ትንተና
(Financial Statement Preparation and Analysis)
2
ዝግጅት : ወጋየሁ ወ/ኢየሱስ
ኢትዮጵያ
ÓO 2014 ዓ.ም
3
እንደምን
አደራችሁ?
እንኳን ደህና
መጣችሁ!!!
4
የሥልጠናው ዋና ዋና ዓላማዎች
5
1. ጥቃቅንና ኣነስተኛ ኢንተርፕራይዞችን የሂሳብ መግለጫ አዘገጃጀት

(Financial Statements Preparation) እና የሂሳብ መግለጫ ትንተና
( Financial Statements Analysis ) መሰረታዊ እውቀት ማስጨበጥ ፤
2. ጥቃቅንና ኣነስተኛ ኢንተርፕራይዞች (SMEs) የተበደሩትን ብር በአግባቡ

መጠቀም እንዲችሉና እያንዳንዱ ገቢ እና ወጪ እንድቆጣጠሩ የኣካውንቲንግ
ሚና ማስገንዘብ ፤
3. ጥቃቅንና ኣነስተኛ ኢንተርፕራይዞች (SMEs) ገበያ ላይ ተወዳዳሪ ሆነው
እንዲዘልቁ እና ቁመናቸው በየጊዜው እንድመዝኑ የሂሳብ መግለጫ ትንተና
ስልቶችን እንድተገብሩ ማብቃት ፡፡
6 የሥልጠናው ንዑስ ዓላማዎች
ሥልጠናው ሲጠናቀቅ ሠልጣኙ:
1) Accounting Cycle (አካውንቲንግ ኡደት ) ይገነዘባል፤
2) Types of Financial Statements ( የ ሂሳብ መግለጫ አይነቶችን ) ይለያል፤
3) Financial Statements Elements ( የሂሳብ መግለጫ ኢለመንቶችን ) ይገነዘባል ፤
4) Financial Statements (የሂሳብ መግለጫዎችን ) ማዘጋጀት ይችላል፤
5) Financial Analysis Techniques ( የሂሳብ መግለጫ ትንተና ስልቶችን ) ይገነዘባል፤
6) Financial Analysis ( የሂሳብ መግለጫ ትንተና ን) ይሠራል ::

የሥልጠናው አካሄድ
7
1) የጊዜ አስተዳደር
(የሥልጠናው አስተባባሪ እና ሰዓት ተቆጣጣሪ)
2) የሥልጠና ደንቦችን ማውጣት
3) የአነቃቂ ቡድን
(Fun Groups & Energizers )
What is Accounting ?
(አካውንቲንግ / የሂሳብ መዝገብ አያያዝ ማለት ምን ማለት ነው?)
9
Accounting :
 It is the language of business;
 It is an information system.
 It is a process/activity;
 It is a means and not an end;
 It deals with financial information and
transactions.
 Its outcome are financial/accounting reports;
10
(አካውንቲንግ / የሂሳብ መዝገብ አያያዝ ማለት ምን ማለት
ነው?)
 Accounting - consists of three basic activities. It :
1. Identifies (የመለየት ሂደት)
2. records) (የምዝገባ ሂደት) and
3. communicates (ሪፖርት የማዘጋጀት ሂደት)

the economic events of an organization to interested users.
11
(አካውንቲንግ / የሂሳብ መዝገብ አያያዝ ማለት ምን ማለት ነው?)
The activities of the accounting
Three Activities process
The accounting process includes

the bookkeeping function.
Characteristics of Accounting Information
(የ አካዉንቲንግ መረጃ ባህሪያት)
1. Financial - expressed in terms of monetary terms.
2. Quantitative- measurable events.
3. Understandable, complete, accurate, relevant, reliable,
etc.
4. Business transactions - Sources of accounting data.
5. Output- Various summaries, analysis and reports
6. Process - Manual accounting system or an electronic
data processing machines.
1
2
Users of Accounting Information
13 (የ አካዉንቲንግ መረጃ ተጠቃሚዎች )…
Internal Users Information Need
1. Managers ( የድርጅቱ ሐላፊዎች )
 Top level managers ,  To plan future operations
 Middle level managers,  To conduct day-to-day operations;
 Operational level Mangers,  To evaluate current operations;
14
(የ አካዉንቲንግ መረጃ ተጠቃሚዎች ) ….
S. No External users: Information Need
1 Investors (ባለሃብቶች)  financial soundness, profitability and
riskiness of investments
2 Creditors  financial soundness of customers
( አበዳሪዎች እና አቅራብዎች) before granting credit or loan.
3 Customers (ደንበኞች)  product quality, price and

warranties.
4 Government ( መንግስት )  formulation and inaction of national
policies.
5 Tax-authorities  imposing and collecting taxes.
(ገቢዎች እና ጉምሩክ)
15
(የ አካዉንቲንግ መረጃ ተጠቃሚዎች ) ….
S. No External users Information Need
…… ………………………………….. ..................................................................
7 Industrial Authorities  development and supervision of industries in

(የኢንዱስትሪ ዎች ተቆጣጣሪ ባለሥልጣን) the country.
8 Board of Directors  business concerns/decisions

( የድርጅቱ ቦርድ አባላት)
9 Parliament ( የሕዝብ ተወካዮች )  national socio economic decisions.
10 Economists and Researchers  research-work & developmental thesis.
(የምጣኔ ባለሙያዎች እና ተመራማሪዎች )
Forms of Business Ownership
16
( የንግድ ድርጅቶች )
Proprietorship Partnership Corporation
(የ ግለሰብ ድርጅት) ( የ ሸርክና ድርጅት ) ( የ አክስዮን ማህበር ድርጅት)
 Generally owned by one  Owned by two or more  Ownership divided into

person. persons. shares of stock
 Often small service-type  Often retail and service-  Separate legal entity
businesses type businesses organized under state
 Owner receives any corporation law
 Generally unlimited
profits, suffers any personal liability  Limited liability
losses, and is personally
 Partnership agreement
liable for all debts.
Accounting Concepts and Principles
(የ አካዉንቲንግ ፅንሰ-ሀሳቦች እና መርሆች )
1. Business entity/ Economic Entity Concept
( የንግድ ድርጅት እሳቤ )
It requires that the activities of the business entity should be
kept separate and distinct from that of owners & other parties.
ምሳሌ ፡ Bank Account , Properties, Debts, Revenues, Expenses,
Accounting Records and Reports, etc.
1
7
Accounting Concepts and Principles
18
(የ አካዉንቲንግ ፅንሰ-ሀሳቦች እና መርሆች )
ይሞክሩት!
Which one of the following is correct as per Business entity/ Economic Entity
Concept ?
a. Having the same bank account for business and personal purpose.
b. Separation of personal properties from business properties.
c. Buying automobile to the spouse from business income.
d. Reporting personal expenses on the income statement.

Basic Accounting Equation
19
(የ አካዉንቲንግ መሪ ቀመር )…
Assets Liabilities
(ሃብት ) = + Owner’s Equity
(እዳ) ( የተጣራ ሃብት )
 Provides the underlying framework for recording and summarizing economic events.
 Assets are claimed by either creditors or owners.
 Claims of creditors must be paid before ownership claims.
20
Asset (ሃብት)
 Resources a business controls.
 provide future economic services or benefits to the entities that use them.
 Cash, Inventory, Equipment, Machine, Furniture, Vehicle, Land, Building, etc.
Assets =
Liabilities
+ Owner’s Equity
(ሃብት ) (እዳ) ( የተጣራ ሃብት )
21
Liabilitiy (እዳ)
 Claims against assets (debts and obligations).
 creditor’s claim on total assts.
 Creditors - party to whom money is owed.
 Accounts payable, Accrued Liabilities/Expenses, Unearned Revenues,
Mortgage Liability , Lease Liability , etc.
Assets Liabilities Owner’s Equity

(ሃብት ) = + ( የተጣራ ሃብት )
(እዳ)
22
Owner’s Equity / Capital / Net Asset (የተጣራ ሃብት)
 Ownership claim on total assets.
 Referred to as residual equity.
 Investment by owners and revenues (+)
 Drawings and expenses (-).
Assets Liabilities Owner’s Equity

(ሃብት ) = + ( የተጣራ ሃብት )
(እዳ)
Owner’s Equity (የተጣራ ሃብት)…
23
Increases in Owner’s Equity

1. Investments by owner are the assets the owner puts into the business.
2. Revenues result from business activities entered into for the purpose of earning
income.
 Common sources of revenue are: sales, fees, services, commissions, interest,
dividends, royalties, and rent.
24
Decreases in Owner’s Equity

1. Drawings An owner may withdraw cash or other assets for personal use.
2. Expenses are the cost of assets consumed or services used in the process of earning
revenue.
 Common expenses are: salaries expense, rent expense, utilities expense, tax expense,
etc.
25
ይሞክሩት!
Net income will result during a time period when:
a. assets exceed liabilities.
b. assets exceed revenues.
c. expenses exceed revenues.
d. revenues exceed expenses.

Business Transaction (የንግድ ልውውጥ / ግብይት )
 What is a business
transaction ?
Business transaction - is an economic event or condition that directly

changes an entity’s financial condition or directly affects its results of
operations.
2
6
ይሞክሩት!
27
የሚከተሉት ክስተቶች
ምሳሌ: Are the ይመዘገባሉ
following events / አይመዘገቡም
recorded ? records?
in the accounting
Purchase computer Discuss product Pay rent

Event design with
(ኮምፒውተር ገዛ) customer. (የቢሮ ኪራይ ከፈለ)
(ክስተት)
Criterion Is the financial position (assets, liabilities, or equity) of the company

changed?
( መስፈርት )
Record/ Don’t Record

(ውሳኔ)
Transaction Analysis ( የንግድ ግብይት ትንታኔ )
28
ግብይት (1). Investment by Shareholders. R. Jonson decides to open a computer

programming service which he names Software Company. On September 1, 2014, they invest
€15,000 cash in exchange for €15,000 of ordinary shares.
29
ግብይት (2). Purchase of Equipment for Cash . Software Company purchases

computer equipment for €7,000 cash.
30
ግብይት (3). Purchase of Supplies on Credit. Software Company purchases for

€1,600 from Acme Supply Company computer paper and other supplies
expected to last several months. The purchase is on account.
31
ግብይት (4). Services Provided for Cash. Software Company receives €1,200
cash from customers for programming services it has provided.
32
ግብይት (5). Purchase of Advertising on Credit. Software Company receives a bill for €250
from the Daily News for advertising but postpones payment until a later date.
33
ግብይት (6). Services Provided for Cash and Credit. Software Company provides €3,500 of
programming services for customers. The company receives cash of €1,500 from customers,
and it bills the balance of €2,000 on account.
34
ግብይት (7). Payment of Expenses. Software Company pays the following expenses in cash for
September: store rent €600, salaries and wages of employees €900, and utilities €200.
35
ግብይት(8). Payment of Accounts Payable. Software Company pays its €250

Daily News bill in cash.
36
ግብይት (9). Receipt of Cash on Account. Software Company receives €600 in

cash from customers who had been billed for services [in Transaction (6)].
37
ግብይት (10). Dividends. The corporation pays a dividend of €1,300 in cash.

38
ግብይት (10) . Drawing : R. Jonson withdraws $1,300 in cash from the business for his personal use.
Accounting Cycle (የ አካዉንቲንግ ኡደት)…
39
Accounting cycle (የአካውንቲንግ ኡደት)…
40
 Accounting Cycle in Computerized System/data processing cycle

consists of four steps:
1. Data input ( መረጃ ማስገባት)
2. Data storage ( መረጃ ማከማቸት)
3. Data processing ( መረጃ ማጠናቀር)
4. Information Output ( ሪፖርት ማዘጋጀት)
Accounting cycle (የአካውንቲንግ ኡደት)…
41
DATA INFORMATION
INPUT PROCESS OUTPUT

(ግብዓት) (ሂደት) (ውጤት)
FEEDBACK
Recording Business Transactions and Preparation
of Financial Statements
42
(የሂሳብ መዝገብ አያያዝ የምዝገባ ሂደት እና የሂሳብ መግለጫ
ዝግጅት)
I.
43
The Recording Process
(የሂሳብ መዝገብ አያያዝ የምዝገባ ሂደት )
Flow of Business Transactions
44
(የንግድ ግብይቶች ፊሰት )
Transaction Transaction takes Document
1 authorized 2 place 3 prepared
Entry recorded in Entry posted to

4 journal 5 ledger
Account/ Ledger Account (አካውንት/ ሂሳብ)
45
 Record of increases and decreases in a specific

Account asset, liability, equity, revenue, or expense item.
 Debit = “Left”
 Credit = “Right”
An account can be illustrated in a Account Name

T-account form.
Debit / Dr. Credit / Cr.
Account/ Ledger Account (አካውንት/ ሂሳብ)
46
Debits and Credits ( ዴቢት እና ክሬዲት )

Double-entry system ( ሚዛናዊ የ ምዝገባ ስርዓት )
► Each transaction must affect two or more accounts to keep the basic accounting
equation in balance.
► Recording done by debiting at least one account and crediting another.
► DEBITS must equal CREDITS.
► Italy in 15th century (1494).
► Franciscan monk , Luca Pacioli, Italian Renaissance
mathematician.
Debits and Credits ( ዴቢት እና ክሬዲት)
47
If Debit amounts are greater than Credit amounts, the account will have a
debit balance.
Account Name
Transaction #1 $10,000 $3,000
Transaction #3 8,000
Balance $15,000
48
If Debit amounts are less than Credit amounts, the account will have a
credit balance.
Account Name
Transaction #1 $10,000 $3,000

8,000
Balance $1,000
49
Assets  Assets - Debits should exceed credits.

 Liabilities – Credits should exceed debits.
Normal Balance
 Normal balance is on the increase side.
Chapter
3-23
Liabilities
Normal Balance
Chapter
3-24
50
Owner’s Equity  Owner’s investments and revenues increase

owner’s equity (credit).
 Owner’s drawings and expenses decrease
Normal Balance
owner’s equity (debit).
Chapter
3-25
Owner’s Capital Owner’s Drawing Helpful Hint Because

Debit / Dr. Credit / Cr. Debit / Dr. Credit / Cr. revenues increase owner’s
equity, a revenue account
has the same debit/credit
rules as the Owner’s
Normal Balance Normal Balance Capital account. Expenses
have the opposite effect.
Chapter Chapter
3-25 3-23
51
Revenue  The purpose of earning revenues is to benefit

the owner(s).
 The effect of debits and credits on revenue
Normal Balance
accounts is the same as their effect on Owner’s
Chapter
3-26 Capital.
 Expenses have the opposite effect: expenses
Expense
Debit / Dr. Credit / Cr. decrease owner’s equity.
Normal Balance
Chapter
3-27
Debits/Credits Rules (የዴቢት እና ክሬዲት ህጎች )
52
ይሞክሩት!
Debits:
a. increase both assets and liabilities.
b. decrease both assets and liabilities.
c. increase assets and decrease liabilities.
d. decrease assets and increase liabilities.

Debits/Credits Rules (የዴቢት እና ክሬዲት ህጎች )
53
ይሞክሩት!
Accounts that normally have debit balances are:
a. assets, expenses, and revenues.
b. assets, expenses, and equity.
c. assets, liabilities, and owner’s drawing.
d. assets, owner’s drawing, and expenses.

Steps in the Recording Process
54
(የሂሳብ መዝገብ አያያዝ የምዝገባ ሂደት)
Analyze each transaction Enter transaction in a journal Transfer journal information to ledger
accounts
 Business documents - such as a sales slip, a check, a bill, or a cash register

tape, provide evidence of the transaction.
55
Journal (ጆርናል / የሂሳብ መዝገብ)
 Book of original entry.
 Transactions recorded in chronological order.
 Contributions to the recording process:
1. Discloses the complete effects of a transaction.
2. Provides a chronological record of transactions.
3. Helps to prevent or locate errors because the debit and credit amounts can be
easily compared.
56
Journalizing - Entering transaction data in the journal.
ምሳሌ # 1 : On September 1, R. Johnson invested $15,000 cash in the business, and
Software Company purchased computer equipment for $7,000 cash.
General Journal
Date Account Title Ref. Debit Credit

Sept. 1 Cash 15,000
Owner’s Capital 15,000
Equipment 7,000
Cash 7,000
57
ምሳሌ # 2: On July 1, Software Company purchases a delivery truck costing $14,000. It

pays $8,000 cash now and agrees to pay the remaining $6,000 on account.
General Journal
Date Account Title Ref. Debit Credit

July 1 Equipment 14,000
Cash 8,000
Accounts payable 6,000
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Ledger (ለጄር / የሂሳብ sƒ)
 General Ledger contains the entire group of accounts maintained by a company.
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( የሂሳብ መዝገብ አያያዝ የምዝገባ ሂደት )
Standard Form of Account ( የተለመደ ሌጀር አካውንት ፎርም )
Steps of Posting ( ከ ጆርናል ወደ ሌጀር የ ማስተላለፍ ሂደት
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)
Posting –
process of
transferring
amounts from the
journal to the ledger
accounts.
Posting ( ከ ጆርናል ወደ ሌጀር ማስተላለፍ )
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ይሞክሩት!
Posting:
a. normally occurs before journalizing.
b. transfers ledger transaction data to the journal.
c. is an optional step in the recording process.
d. transfers journal entries to ledger accounts.

Chart of Accounts ( የሌጀር አካዉንት ቻርት/ዝርዝር)
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 Accounts and account numbers arranged in sequence in which they are presented in the
financial statements.
The Recording Process (የምዝገባ ሂደት ምሳሌዎች )
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Follow these steps:

1. Determine what type of
account is involved.
2. Determine what items
increased or decreased
and by how much.
3. Translate the increases
and decreases into debits
and credits.
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65
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ይሞክሩት !
Kate Brown recorded the following transactions in a general journal during the month of
March. Post these entries to the Cash account.
Mar. 4 Cash 2,280

Service Revenue 2,280
Mar. 15 Salaries and Wages Expense 400
Cash 400
Mar. 19 Utilities Expense 92
Cash 92
Summary of Journalizing ( የምዝገባ ሂደት ማጠቃለያ )
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Summary of Posting (ከ ጆርናል ወደ ሌጀር የ ማስተላለፍ ሂደት ማጠቃለያ )
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Trial Balance ( የ ሂሳብ ሚዛን )
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Trial Balance ( የ ሂሳብ ሚዛን )
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Limitations of a Trial Balance ( የ ሂሳብ ሚዛን ጉድለቶች )

The trial balance may balance even when
1. a transaction is not journalized,
2. a correct journal entry is not posted,
3. a journal entry is posted twice,
4. incorrect accounts are used in journalizing or posting, or
5. offsetting errors are made in recording the amount of a transaction.

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II.
Adjusting the Accounts
(የሂሳብ መዝገብ አያያዝ የ ሂሳቦች ማስተካከያ ሂደት )
Timing Issues ( የጊዜ ጉዳይ )
79
Accountants divide the economic life of a business into artificial time periods
(Time Period Assumption).
.....
Jan. Feb. Mar. Apr. Dec.
Generally a
Alternative Terminology
 month, The time period assumption
is also called the
 quarter, or periodicity assumption.
 year.
Cash Basis Accounting versus Accrual Basis Accounting
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Cash-Basis Accounting ( ገንዘብ - መር አካውንቲንግ ) :

 Revenues recognized when cash is received.
 Expenses recognized when cash is paid.
 Cash-basis accounting is not in accordance with generally accepted
accounting principles (GAAP).
Basis of Accounting ( የ አካውንቲንግ ስርዓቶች )
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Accrual-Basis Accounting ( ድርጊት - መር አካውንቲንግ )

 Transactions recorded in the periods in which the events occur.
 Companies recognize revenues when they perform services (rather than when
cash is received).
 Expenses are recognized when incurred (rather than when paid).
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Revenue Recognition Principle ( የገቢ ምዝገባ መርህ )
Recognize revenue in the accounting period

in which the performance obligation is
satisfied.
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Expense Recognition Principle ( የወጪ ምዝገባ መርህ )
Match expenses with revenues in the

period when the expense makes its
contribution to revenue.
“Let the expenses follow the revenues.”

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ይሞክሩት !
One of the following statements about the accrual basis of accounting is false? That
statement is:
a. Events that change a company’s financial statements are recorded in the periods in
which the events occur.
b. Revenue is recognized in the period in which the performance obligation is satisfied.
c. The accrual basis of accounting is in accord with generally accepted accounting
principles.
d. Revenue is recorded only when cash is received, and expenses are recorded only
when cash is paid.
Adjusting Entries (የ ሂሳቦች ማስተካከያ ምዝገባ ሂደት)
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 Adjusting Entries -
 Ensure that the revenue recognition and expense recognition principles are
followed.
 Necessary because the trial balance may not contain up-to-date and complete
data.
 Required every time a company prepares financial statements.
 Will include one income statement account and one balance sheet account.
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ይሞክሩት !
 Adjusting entries are made to ensure that:
a. expenses are recognized in the period in which they are incurred.
b. revenues are recorded in the period in which services are performed.
c. balance sheet and income statement accounts have correct balances at
the end of an accounting period.
d. all of the above.
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Types of Adjusting Entries (የ ሂሳቦች ማስተካከያ ዓይነቶች)
Deferrals Accruals
1. Prepaid Expenses. Expenses paid in 1. Accrued Revenues. Revenues for

cash before they are used or consumed. services performed but not yet received in
cash or recorded.
2. Unearned Revenues. 2. Accrued Expenses. Expenses incurred

Cash received before services are but not yet paid in cash or recorded.
performed.
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Types of Adjusting Entries (የ ሂሳቦች ማስተካከያ ዓይነቶች)

Trial Balance – Each
account is analyzed to
determine whether it is
complete and up-to-date.
Adjusting Entries ( የ ሂሳቦች ማስተካከያ ምዝገባ ሂደት )
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Adjusting Entries for Deferrals ( ድፌራሎችን ማስተካከል )

Deferrals - are expenses or revenues that are recognized at a date later
than the point when cash was originally exchanged. There are two types:
 Prepaid expenses and
 Unearned revenues.
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Prepaid Expenses ( ቅድመ-ክፍያ ለወጪ)

Payment of cash, that is recorded as an asset because service or benefit will be received in the
future.
Cash Payment BEFORE Expense Recorded
Prepayments often occur in regard to:

 insurance  rent
 supplies  equipment
 advertising  buildings
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Prepaid Expenses ( ቅድመ-ክፍያ ለወጪ)

 Expire either with the passage of time or through use.
 Adjusting entry:
► Increase (debit) to an expense account and
► Decrease (credit) to an asset account.
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ምሳሌ : Pioneer Advertising Agency purchased supplies

costing $2,500 on October 5. Pioneer recorded the
payment by increasing (debiting) the asset Supplies. This
account shows a balance of $2,500 in the October 31 trial
balance. An inventory count at the close of business on
October 31 reveals that $1,000 of supplies are still on hand.
Oct. 31 Supplies expense 1,500

Supplies 1,500
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ምሳሌ : On October 4, Pioneer Advertising Agency paid $600

for a one-year fire insurance policy. Coverage began on October
1. Pioneer recorded the payment by increasing (debiting)
Prepaid Insurance. This account shows a balance of $600 in the
October 31 trial balance. Insurance of $50 ($600 ÷ 12) expires
each month.
Oct. 31 Insurance expense 50

Prepaid insurance 50
95
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Depreciation ( የእርጅና ቅናሽ )

 Buildings, equipment, and motor vehicles (assets that provide service for
many years) are recorded as assets, rather than an expense, in the year
acquired.
 Depreciation is the process of allocating the cost of an asset to expense over

its useful life.
 Depreciation does not attempt to report the actual change in the value of the
asset.
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ምሳሌ : For Pioneer Advertising, assume that depreciation

on the equipment is $480 a year, or $40 per month.
Oct. 31
Depreciation expense 40
Accumulated depreciation 40
Accumulated Depreciation is called a contra asset

account.
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Unearned Revenue (ቅድመ-ክፍያ ለገቢ)

Receipt of cash that is recorded as a liability because the service has not been performed.
Cash Receipt BEFORE Revenue Recorded
Unearned revenues often occur in regard to:

 Rent  Magazine subscriptions
 Airline tickets  Customer deposits
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Unearned Revenues (ቅድመ-ክፍያ ለገቢ)

 Adjusting entry is made to record the revenue for services performed during the
period and to show the liability that remains at the end of the period.
 Results in a decrease (debit) to a liability account and an increase (credit) to a
revenue account.
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ምሳሌ : Pioneer Advertising Agency received $1,200 on October 2 from a customer for
advertising services expected to be completed by December 31. Unearned Service
Revenue shows a balance of $1,200 in the October 31 trial balance. Analysis reveals that
the company performed $400 of services in October.
Oct. 31 Unearned service revenue 400

Service revenue 400
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Adjusting Entries for Accruals (አኩራሎችን ማስተካከል )

Accruals are made to record-
 Revenues for services performed
OR
 Expenses incurred
in the current accounting period that have not been recognized through daily
entries.
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Accrued Revenues (Assets) ( ያልተሰበሰቡ ገቢዎች )

Revenues for services performed but not yet received in cash or recorded.
Revenue Recorded BEFORE Cash Receipt
Accrued revenues often occur in regard to:

 Rent  Services performed
 Interest
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Accrued Revenues (Assets) ( ያልተሰበሰቡ ገቢዎች )

 Adjusting entry shows the receivable that exists and records the revenues for
services performed.
► Increases (debits) an asset account and
► Increases (credits) a revenue account.
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ምሳሌ : In October Pioneer Advertising Agency earned $200 for

advertising services that had not been recorded.
Oct. 31
Accounts receivable 200
Service revenue 200
On November 10, Pioneer receives cash of $200 for the

services performed.
Nov. 10 Cash 200

Accounts receivable 200
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Accrued Expenses ( Liabilities) ( ያልተከፈሉ ወጪዎች )

Expenses incurred but not yet paid in cash or recorded.
Expense Recorded BEFORE Cash Payment
Accrued expenses often occur in regard to:

 Rent  Taxes
 Interest  Salaries
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Accrued Expenses ( Liabilities ) ( ያልተከፈሉ ወጪዎች )

 Adjusting entry records the obligation and recognizes the expense.
► Increase (debit) an expense account and
► Increase (credit) a liability account.
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ምሳሌ: Pioneer Advertising Agency signed a three-month note payable in the amount of
$5,000 on October 1. The note requires Pioneer to pay interest at an annual rate of 12%.
Oct. 31 Interest expense 50

Interest payable 50
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ምሳሌ : Pioneer Advertising Agency last paid salaries on October 26; the next payment
of salaries will not occur until November 9. The employees receive total salaries of $2,000
for a five-day work week, or $400 per day. Thus, accrued salaries at October 31 are
$1,200 ($400 x 3 days).
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III.
Completing the Accounting Cycle
(የአካውንቲንግ ኡደት የ ማጠናቀቅ ሂደት)
Worksheet ( የሂሳብ ሥራ አጋዥ ሰንጠረዥ )
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Worksheet ፡
 Multiple-column form used in preparing financial statements.
 Not a permanent accounting record.
 Five step process.
 Use of worksheet is optional.
Steps in Preparing a Worksheet ( የሂሳብ ሥራ አጋዥ ሰንጠረዥ አዘገጃጀት ሂደት )
116
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1. Prepare a Trial Balance on the Worksheet
Adjusted Income
Trial Balance Adjustments Trial Balance Statement Balance Sheet
Account Titles Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 15,200
Supplies 2,500
Prepaid Insurance 600
Office Equipment 5,000
Notes Payable 5,000
Accounts Payable 2,500
Unearned Revenue 1,200
Owner's Capital 10,000
Owner's Drawing 500
Service Revenue 10,000
Salaries Expense 4,000

Rent Expense 900
Totals 28,700 28,700
Trial balance amounts come directly from

ledger accounts.
Include all accounts with
balances.
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Adjusting Entries
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2. Enter the Adjustments in the Adjustments Columns
Adjusted Income
Cash 15,200
Supplies 2,500 (a) 1,500
Prepaid Insurance 600 (b) 50
Office Equipment 5,000 Adjustments Key:
Notes Payable 5,000
Accounts Payable 2,500
(a) Supplies Used.
Unearned Revenue 1,200 (d) 400 (b) Insurance Expired.
Owner's Capital 10,000
Owner's Drawing 500 (c) Depreciation Expensed.
Service Revenue 10,000 (d) 400 (d) Service Revenue Earned.
(e) 200
Salaries Expense 4,000 (g) 1,200 (e) Service Revenue Accrued.
Rent Expense 900 (f) Interest Accrued.
Totals 28,700 28,700
Supplies Expense (a) 1,500 (g) Salaries Accrued.
Insurance Expense (b) 50
Accumulated Depreciation (c) 40
Depreciation Expense (c) 40
Accounts Receivable (e) 200
Interest Expense (f)
50
Enter adjustment amounts, total adjustments
Interest Payable (f) 50 columns,
(g)
Salaries Payable 1,200 and check for equality.
Totals 3,440 3,440
Add additional accounts as needed.

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3. Complete the Adjusted Trial Balance Columns
Adjusted Income
Cash 15,200 15,200
Supplies 2,500 (a) 1,500 1,000
Prepaid Insurance 600 (b) 50 550
Office Equipment 5,000 5,000
Notes Payable 5,000 5,000
Accounts Payable 2,500 2,500
Unearned Revenue 1,200 (d) 400 800
Owner's Capital 10,000 10,000
Owner's Drawing 500 500
Service Revenue 10,000 (d) 400 10,600
(e) 200
Salaries Expense 4,000 (g) 1,200 5,200
Rent Expense 900 900
Totals 28,700 28,700
Supplies Expense (a) 1,500 1,500
Insurance Expense (b) 50 50
Accumulated Depreciation (c) 40 40
Depreciation Expense (c) 40 40
Accounts Receivable (e) 200 200
(f)
Interest Expense 50 50
Interest Payable (f) 50 50
Salaries Payable (g) 1,200 1,200
Totals 3,440 3,440 30,190 30,190
Total the adjusted trial balance columns and check

for equality.
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4. Extend Amounts to Financial Statement Columns
Adjusted Income
Cash 15,200 15,200
Supplies 2,500 (a) 1,500 1,000
Prepaid Insurance 600 (b) 50 550
Office Equipment 5,000 5,000
Notes Payable 5,000 5,000
Accounts Payable 2,500 2,500
Unearned Revenue 1,200 (d) 400 800
Owner's Capital 10,000 10,000
Owner's Drawing 500 500
Service Revenue 10,000 (d) 400 10,600 10,600
(e) 200
Salaries Expense 4,000 (g) 1,200 5,200 5,200
Rent Expense 900 900 900
Totals 28,700 28,700
Supplies Expense (a) 1,500 1,500 1,500
Insurance Expense (b) 50 50 50
Accumulated Depreciation (c) 40 40
Depreciation Expense (c) 40 40 40
Accounts Receivable (e) 200 200
(f)
Interest Expense 50 50 50
Interest Payable (f) 50 50
Salaries Payable (g) 1,200 1,200
Totals 3,440 3,440 30,190 30,190 7,740 10,600
Extend all revenue and expense account balances to the

income statement columns.
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5. Total Columns, Compute Net Income (Loss)
Adjusted Income
Cash 15,200 15,200 15,200
Supplies 2,500 (a) 1,500 1,000 1,000
Prepaid Insurance 600 (b) 50 550 550
Office Equipment 5,000 5,000 5,000
Notes Payable 5,000 5,000 5,000
Accounts Payable 2,500 2,500 2,500
Unearned Revenue 1,200 (d) 400 800 800
Owner's Capital 10,000 10,000 10,000
Owner's Drawing 500 500 500
(e) 200
Totals 28,700 28,700
Accumulated Depreciation (c) 40 40 40
Accounts Receivable (e) 200 200 200
(f)
Interest Payable (f) 50 50 50
Salaries Payable (g) 1,200 1,200 1,200
Totals 3,440 3,440 30,190 30,190 7,740 10,600 22,450 19,590
Net Income 2,860 2,860
Totals 10,600 10,600 22,450 22,450
Compute Net Income or Net Loss.
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ይሞክሩት !
Net income is shown on a worksheet in the:
a. income statement debit column only.
b. balance sheet debit column only.
c. income statement credit column and balance sheet debit column.
d. income statement debit column and balance sheet credit column.

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Financial Statements Preparation
(የ ሂሳብ መግለጫ አዘገጃጀት)
Financial Statements (የሂሳብ መግለጫዎች )…
125
 They are the end products of accounting cycle.

 They provide information about ፡
i. the financial position ;
ii.financial performance and
iii. cash flows of an entity that is useful to users in making
business decisions.
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 There are four (4) basic kinds of Financial Statements.

1. Statement of Financial Performance or Income
Statement (የገቢ ና ወጪ መግለጫ )
2. Statement of Owners’ Equity or Capital Statement
(የካፒታል/ የተጣራ ሃብት መግለጫ )
3. Statement of Financial Position or Balance Sheet)
( የሃብትና እዳ መግለጫ )
4. Statement of Cash Flow (የጥሬ ገንዘብ ፍሰት መግለጫ )
127
 International Accounting Standards 1 (IAS 1) covers the
guidelines for the presentation, structure and content of
financial statements.
 The main components are:
1) Statement of financial position
2) Statement of profit or loss and other comprehensive income
3) Statement of changes in equity
4) Statement of cash flows
5) Notes to the financial statements
128
Income Statement
 Reports the revenues and expenses for a specific period of time.
 Lists revenues first, followed by expenses.
 Shows net income (or net loss).

129
Owner’s Equity Statement

 Reports the changes in owner’s equity for a specific period of time.
 The time period is the same as that covered by the income statement.
130
Owner’s Equity
 Proprietorship - one capital account.
 Partnership - capital account for each partner.
 Corporation - Capital Stock and Retained Earnings.
131
Balance Sheet
 Reports the assets, liabilities, and owner’s equity at a specific date.
 Lists assets at the top, followed by liabilities and owner’s equity.
 Total assets must equal total liabilities and owner’s equity.
 Is a snapshot of the company’s financial condition at a specific moment in time

(usually the month-end or year-end).
LO 8 Understand the four financial statements and how they are prepared.
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Statement of Cash Flows

 Information for a specific period of time.
 Answers the following:
1. Where did cash come from?
2. What was cash used for?
3. What was the change in the cash balance?

133
ይሞክሩት !
Which of the following financial statements is prepared as of a specific date?
a. Balance sheet.
b. Income statement.
c. Owner's equity statement.
d. Statement of cash flows.
LO 8 Understand the four financial statements and how they are prepared.
General Features of Presentation of F/S
( የ ሂሳብ መግለጫ አዘገጃጀት መርሆች)
134
1. Fair presentation & compliance with IFRS

2. Going concern
3. Accrual basis of accounting
4. Materiality & aggregation
5. Offsetting
6. Frequency of reporting
7. Consistency of presentation
Financial Statements (የሂሳብ መግለጫዎች )
135
Financial Statements are prepared directly from the Adjusted Trial Balance.
Income Owner’s Equity

Balance Sheet
Statement Statement
136
137
Preparing Statements from a Worksheet
138
(ከ ሂሳብ ሥራ አጋዥ ሰንጠረዥ የሂሳብ መግለጫዎችን ማዘጋጀት)
1. Income statement is prepared from the income statement columns.
2. Balance sheet and owner’s equity statement are prepared from the balance
sheet columns.
3. Companies journalize and post adjusting entries.

139
5. Total Columns, Compute Net Income (Loss)
Adjusted Income
Cash 15,200 15,200 15,200
Supplies 2,500 (a) 1,500 1,000 1,000
Prepaid Insurance 600 (b) 50 550 550
Office Equipment 5,000 5,000 5,000
Notes Payable 5,000 5,000 5,000
Accounts Payable 2,500 2,500 2,500
Unearned Revenue 1,200 (d) 400 800 800
Owner's Capital 10,000 10,000 10,000
Owner's Drawing 500 500 500
(e) 200
Totals 28,700 28,700
Accumulated Depreciation (c) 40 40 40
Accounts Receivable (e) 200 200 200
(f)
Interest Payable (f) 50 50 50
Salaries Payable (g) 1,200 1,200 1,200
Totals 3,440 3,440 30,190 30,190 7,740 10,600 22,450 19,590
Net Income 2,860 2,860
Totals 10,600 10,600 22,450 22,450
LO 1 Prepare a worksheet.
Illustration 4-4
Preparing Adjusting Entries from a Worksheet
( ከ ሂሳብ ሥራ አጋዥ ሰንጠረዥ የ ሂሳቦች ማስተካከያ መመዝገብ )
 Adjusting entries are prepared from the adjustments columns of the worksheet.
 Journalizing and posting of adjusting entries follows the preparation of financial
statements when a worksheet is used.
Closing the Books ( ሂሳብ የ መዝጋት ሂደት)
144
At the end of the accounting period, the company makes the accounts ready for
the next period.
Closing the Books (ሂሳብ የ መዝጋት ሂደት)
145
Preparing Closing Entries

Closing entries formally recognize, in the general ledger, the transfer of
 net income (or net loss) and
 owner’s drawing
to owner’s capital.
Closing entries are only made at the end of the annual accounting period.
146
Note:
Owner’s Drawing is closed directly to
Capital and not to Income Summary
because Owner’s Drawing is not an
Owner’s Capital is a permanent
expense. account; all other accounts are
temporary accounts.
147
Closing
Entries
148
Posting
Closing
Entries
Post-Closing Trial Balance (ድህረ-መዝጊያ የሂሳብ ሚዛን )
149
Purpose is to prove the equality of the permanent account balances after journalizing
and posting of closing entries.
Correcting Entries (የሂሳብ ምዝገባ ስህተቶችን የ ማረም
150
ሂደት)
Correcting Entries—An Avoidable Step
 Unnecessary if the records are error-free.
 Made whenever an error is discovered.
 Must be posted before closing entries.
Instead of preparing a correcting entry, it is possible to reverse the incorrect entry

and then prepare the correct entry.
Correcting Entries (የሂሳብ ምዝገባ ስህተቶችን የ ማረም ሂደት)
151
ምሳሌ # 1 : On May 10, Mercato Co. journalized and posted a $50 cash collection on account from
a customer as a debit to Cash $50 and a credit to Service Revenue $50. The company
discovered the error on May 20, when the customer paid the remaining balance in full.
Incorrect entry Cash 50

Service Revenue 50
Correct entry Cash 50
Accounts Receivable 50
Correcting entry Service Revenue 50

Accounts Receivable 50
Correcting Entries (የሂሳብ ምዝገባ ስህተቶችን የ ማረም ሂደት)
152
ምሳሌ # 2 : On May 18, Mercato purchased on account equipment costing $450. The transaction
was journalized and posted as a debit to Equipment $45 and a credit to Accounts Payable $45.
The error was discovered on June 3,
Incorrect entry Equipment 45

Accounts Payable 45
Correct entry Equipment 450
Accounts Payable 450
Correcting entry Equipment 405

Accounts Payable 405
153
Financial Statements Analysis

(የሂሳብ መግለጫ መተንተን)
Financial Statements Analysis ( የሂሳብ መግለጫ መተንተን )
154
 It is also called Financial Analysis / Accounting analysis / Analysis of
finance.
 It is the process of analyzing a company's financial statements for
decision-making purposes.
 It is the process of identifying the financial strengths and weaknesses
of the firm by properly establishing relationship between financial
statements items for certain period.
 It is concerned with the selection, evaluation, and interpretation of
financial data to assist investment, financing, and dividend decisions.
Techniques of Financial Analysis
157
(የሂሳብ መግለጫ ትንተና ስልቶች)
 Major Types of Financial Analysis (ዋና ዋና

የሂሳብ መግለጫ ትንተና ስልቶች )
I. Ratio Analysis ( ሬሾ /አንፃራዊ ትንተና )
II. Horizontal Analysis ( አግድም ትንተና )
III.Vertical Analysis ( ሰያፍ ትንተና )
I) Ratio Analysis (ሬሾ /አንፃራዊ ትንተና ሬሾ ትንተና ) …
158
 Ratio analysis is an analytical technique that typically

involves a comparison of the relationship between two
financial statement items;
 Financial ratios are used to evaluate the financial
condition and profitability of the firm. Ratio analysis is a
powerful tool of financial analysis. Ratios are more
meaningful if there is standard of measurement or
comparison.
I) Ratio Analysis (ሬሾ /አንፃራዊ ትንተና ) …
159
ሬሾ በተለያየ መልኩ ሊገለጽ ይችላል:

i. በ ንፅፅር (፡ ) , current ratio of 2:1
ii.በ መቶኛ (%) , profit margin of 2%
iii.በ ዋጋ ( $ ) , EPS of $2.25
I) Ratio Analysis (ሬሾ /አንፃራዊ ትንተና ) …
160
Major Types of Financial Ratios (ዋና ዋና ሬሾ ዓይነቶች )
I) Liquidity Ratios
 የ ገንዘብ ክምችት መለኪያ ሬሾዎች
II)Asset Management/ Activity /Efficiency Ratios
የ ሃብት አጠቃቀም መለኪያ ሬሾዎች
II)Debt Management Ratios
 የ ብድር አጠቃቀም መለኪያ ሬሾዎች
III)Profitability Tests
 የ ትርፋማነት መለኪያ ሬሾዎች
1) Liquidity Ratios (የ ገንዘብ ክምችት መለኪያ ሬሾዎች)…
161
….
a) Current Ratio:
 It measures the ability of the firm to meet short-term obligations
from its current assets.
 It is a measure of a firm’s short-term solvency.
 Generally, the Current ratio greater than or equal the standard is
desirable. Thus it must be 1 or more.
1) Liquidity Ratios (የ ገንዘብ ክምችት መለኪያ ሬሾዎች)…
162
b) Quick/Acid Test Ratio :

 It measures an entity's ability to pay its current liabilities by using
its most liquid assets excluding least liquid inventories.
 Generally, Quick ratio greater than or equal to the standard is
desirable. Thus its quick ratio must be 1 or more.
2) Asset Management Ratios (የ ሃብት አጠቃቀም መለኪያ ሬሾዎች )…
163
a) Inventory Turnover (ITO):

 It measures the average number time per year that an entity
sells or turns over its inventory
 High inventory turnover ratios are taken as a sign of efficient
management of inventory where as low inventory turnover is
a sign of slow moving or obsolete items in inventory.
 Generally, higher ITO is desirable.
164
b) Receivable Turn over (RTO) :

It tells us the number of times A/R have been turned
over/ turned into cash during the year.
Generally, RTO greater than or equal to the standard is
desirable.
165
c) Average Collection Period (ACP):

It is called Receivable Turn Over in Days (RTD) or Days
Sales Outstanding.
It tells us the average number of days that receivables are
outstanding before being collected.
Generally, a lower ACP is desirable.
166
d)Fixed Assets Turnover (FATO)

It is used to measure how effectively the firm uses its
plant assets in generating sales.
Generally, FATO greater than or equal to the standard is
desirable.
167
f) Total Assets turn over (TATO)

It shows the firm’s ability in generating sales from all
financial resources committed to total assets.
Generally, TATO greater than or equal to the standard is
desirable.
3) Debt Management Ratios (የ ብድር አጠቃቀም መለኪያ ሬሾዎች)
168
…
a) Debt (D/A) Ratio :

 It measures the extent to which the firm is using borrowed
money.
 Generally, creditors would like a lower debt ratio.
169
4) Profitability Ratios (የ ትርፋማነት መለኪያ ሬሾዎች)
a) Gross Profit Margin (GPM)Ratio :

 It reflects management’s effectiveness in pricing policy,
generating sales and production efficiency.
 Generally, gross profit margin ratio greater than or equal
to the standard is desirable.
170
b) Net Profit Margin (NPM) Ratio :

 It indicates management’s efficiency in manufacturing, administering,
selling, financing, pricing and tax management.
 Generally, net profit margin ratio greater than or equal to the
standard is desirable.
171
c) Return on Investment (ROI) :

 It is also called Return on Assets (ROA) .
 It measures the amount of profit generated on
investments in assets .
 Generally, a higher ROA is desirable.
172
d) Return of Equity (ROE) :

 It is also called the Return on Stockholders’ Equity/ Return on Net
Worth.
 It measures the return earned by stockholders’ on their investment
and serves as an indicator of management performance.
 Generally, a higher ROE is desirable
173
e) Earnings per Share (EPS):

 It simply shows the profitability of the firm on a
per share basis during the reporting period.
 Generally, higher EPS is desirable.
174
f) Dividend per Share (DPS) :

 It represents the Birr amount of cash dividends a
corporation paid on each share of its common
stock outstanding during the reporting period.
 Generally, higher DPS is desirable.
175
g) Payout (P/O) Ratio :

 It shows the percentage of earnings paid to
stockholders.
 That is, the payout ratio expresses the cash dividend paid
per share as a percentage of EPS.
 Generally, higher P/O is desirable.
II) Horizontal Analysis ( የ አግድም ትንተና )…
176
 Horizontal analysis –
 It is used in the review of a company's financial
performance over multiple periods.
 It allows users to easily spot trends and growth
patterns over a number of accounting periods
 It is used to compare historical data, such as ratios,
or line items, over a number of accounting periods.
 የተለያዩ የሂሳብ መግለጫዎችን በመጠቀም ከግዜ ወደ ግዜ ያለዉን
ለውጥ ማየት
177
ይሞክሩት !
በተሰጠው የሁለት ዓመት ዳታ መሰረት
የድርጅቱ የኣግድም ትንተና ከውን !
178
179
 የብር መጠን ለውጥ ለማስላት 2020 ከ 2019 አንጻር ለማስላት፡
ለውጥ =
–
180
ለውጡን በመቶኛ ለማስላት
=
181
$12,000 – $23,500 = $(11,500)

182
($11,500 ÷ $23,500) × 100% = 48.9%

183
184
185
ABC CORPORATION
Comparative Balance Sheets
December 31, 2020 and 2019
Increase (Decrease)
2020 2019 Amount %
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 67,000 $ 44,000 $ 23,000 52.3
Notes payable 3,000 6,000 (3,000) (50.0)
Total current liabilities 70,000 50,000 20,000 40.0
Long-term liabilities:
Bonds payable, 8% 75,000 80,000 (5,000) (6.3)
Total liabilities 145,000 130,000 15,000 11.5
Stockholders' equity:
Preferred stock 20,000 20,000 - 0.0
Common stock 60,000 60,000 - 0.0
Additional paid-in capital 10,000 10,000 - 0.0
Total paid-in capital 90,000 90,000 - 0.0
Retained earnings 80,000 69,700 10,300 14.8
Total stockholders' equity 170,000 159,700 10,300 6.4
Total liabilities and stockholders' equity $ 315,000 $ 289,700 $ 25,300 8.7
186
187
ABC CORPORATION
Comparative Income Statements
For the Years Ended December 31, 2020 and 2019
Increase (Decrease)
20120 2019 Amount %
Net sales $ 520,000 $ 480,000 $ 40,000 8.3
Cost of goods sold 360,000 315,000 45,000 14.3
Gross margin 160,000 165,000 (5,000) (3.0)
Operating expenses 128,600 126,000 2,600 2.1
Net operating income 31,400 39,000 (7,600) (19.5)
Interest expense 6,400 7,000 (600) (8.6)
Net income before taxes 25,000 32,000 (7,000) (21.9)
Less income taxes (30%) 7,500 9,600 (2,100) (21.9)
Net income $ 17,500 $ 22,400 $ (4,900) (21.9)
188
ABC CORPORATION
Increase (Decrease)
2020 2019 Amount %
Net sales $ 520,000 $ 480,000 $ 40,000 8.3
Gross margin 160,000 165,000 (5,000) (3.0)
Operating expenses 128,600 126,000 2,600 2.1
Net operating income 31,400 39,000 (7,600) (19.5)
Sales increased by 8.3% while net income decreased by 21.9%.
Net income $ 17,500 $ 22,400 $ (4,900) (21.9)
189
ABC CORPORATION
Increase (Decrease)
2020 2019 Amount %
Net sales $ 520,000 $ 480,000 $ 40,000 8.3
Gross
There weremargin 160,000
increases in both cost of goods sold (14.3%) 165,000
and operating expenses (5,000) (3.0)
Operating
(2.1%). Theseexpenses 128,600
increased costs more than offset the increase 126,000
in sales, yielding an 2,600 2.1
Net operating
overall decrease inincome
net income. 31,400 39,000 (7,600) (19.5)
Net income $ 17,500 $ 22,400 $ (4,900) (21.9)
3) Vertical Analysis ( ሰያፍ ትንተና ) …
190
 Vertical Analysis – It is a method of financial analysis in

which each line item is listed as a percentage of a base
figure within the statement.
 Thus, line items on an income statement can be stated as a
percentage of sales/revenue, while line items on a balance
sheet can be stated as a percentage of total assets .
 የአንድን የሂሳብ መግለጫ ኢለመንቶችን እርስ በራስ በማወዳደር ያሉበትን ሁነታ
ማሰስ ፡፡ ለምሳሌ፡ የአመቱ የተጣራ ትርፍ ከ ኣጠቃላይ ሽያጭ ኣንጻር
191
$82,000 ÷ $483,000 = 17% rounded

$30,000 ÷ $387,000 = 8% rounded
192
193
$76,000 ÷ $483,000 = 16% rounded

ማጠቃለያ
194
1. የኣንድ ቢዝነስ ህልውና የጀርባ ኣጥንት ፋይናንስ ነው፡፡
2. ይህ ፋይናንስ በቀጣይነት ለማግኘት ኣግባብነት ያለው ኣካውንቲንግ ሲስተም
መዘርጋት ግዴታ ነው፡፡
3. ይህ ሲሆን ቢዝነሱ ትርፉና ኪሳራዉን በኣግባቡ እየመዘገበ እንዲሁም ያለበትን
ፖዚሽን በኣግባቡ መመዝገብ እና ኣስፈላጊውን እርምት በግዜ እንዲወስድ ይረዳዋል፡፡
4. ከዚህም በተጨማሪ እዳዉን ለመክፈልም በቂ ኣቅም ይኖረዋል፡፡
5. ኣበዳሪዎችም በቀጣይነት ፋይናንስ ለማድረግ ዝግጁ ይሆናሉ፡፡
195
የሥልጠናዉ መጨረሻ
አመሰግናለሁ!

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በኢትዮጵያ ልማት ባንክ

1. ጥቃቅንና ኣነስተኛ ኢንተርፕራይዞችን የሂሳብ መግለጫ አዘገጃጀት

2. ጥቃቅንና ኣነስተኛ ኢንተርፕራይዞች (SMEs) የተበደሩትን ብር በአግባቡ

3) Financial Statements Elements ( የሂሳብ መግለጫ ኢለመንቶችን ) ይገነዘባል ፤

4) Financial Statements (የሂሳብ መግለጫዎችን ) ማዘጋጀት ይችላል፤

5) Financial Analysis Techniques ( የሂሳብ መግለጫ ትንተና ስልቶችን ) ይገነዘባል፤

6) Financial Analysis ( የሂሳብ መግለጫ ትንተና ን) ይሠራል ::

1. Identifies (የመለየት ሂደት)

2. records) (የምዝገባ ሂደት) and

3. communicates (ሪፖርት የማዘጋጀት ሂደት)

The accounting process includes

3 Customers (ደንበኞች)  product quality, price and

7 Industrial Authorities  development and supervision of industries in

8 Board of Directors  business concerns/decisions

 Generally owned by one  Owned by two or more  Ownership divided into

b. Separation of personal properties from business properties.

c. Buying automobile to the spouse from business income.

d. Reporting personal expenses on the income statement.

Assets Liabilities Owner’s Equity

Assets Liabilities Owner’s Equity

Increases in Owner’s Equity

Decreases in Owner’s Equity

a. assets exceed liabilities.

b. assets exceed revenues.

c. expenses exceed revenues.

d. revenues exceed expenses.

Business transaction - is an economic event or condition that directly

Purchase computer Discuss product Pay rent

Criterion Is the financial position (assets, liabilities, or equity) of the company

Record/ Don’t Record

ግብይት (1). Investment by Shareholders. R. Jonson decides to open a computer

ግብይት (2). Purchase of Equipment for Cash . Software Company purchases

ግብይት (3). Purchase of Supplies on Credit. Software Company purchases for

ግብይት(8). Payment of Accounts Payable. Software Company pays its €250

ግብይት (9). Receipt of Cash on Account. Software Company receives €600 in

ግብይት (10). Dividends. The corporation pays a dividend of €1,300 in cash.

 Accounting Cycle in Computerized System/data processing cycle

INPUT PROCESS OUTPUT

Entry recorded in Entry posted to

 Record of increases and decreases in a specific

An account can be illustrated in a Account Name

Debits and Credits ( ዴቢት እና ክሬዲት )

Transaction #1 $10,000 $3,000

Assets  Assets - Debits should exceed credits.

 Liabilities – Credits should exceed debits.

Owner’s Equity  Owner’s investments and revenues increase

Owner’s Capital Owner’s Drawing Helpful Hint Because

Revenue  The purpose of earning revenues is to benefit

a. increase both assets and liabilities.

b. decrease both assets and liabilities.

c. increase assets and decrease liabilities.

d. decrease assets and increase liabilities.

a. assets, expenses, and revenues.

b. assets, expenses, and equity.

c. assets, liabilities, and owner’s drawing.

d. assets, owner’s drawing, and expenses.

 Business documents - such as a sales slip, a check, a bill, or a cash register

 Transactions recorded in chronological order.

 Contributions to the recording process:

1. Discloses the complete effects of a transaction.

2. Provides a chronological record of transactions.

Date Account Title Ref. Debit Credit

ምሳሌ # 2: On July 1, Software Company purchases a delivery truck costing $14,000. It