Business Accounting

EMBA LECTURE 3
Lecture Plan

 Journal
Learning Areas  Ledger accounts
 Trial Balance

Detailed  Why do we need ledger accounts?

Discussion  Journal Entry

 The nominal ledger
 Subsidiary Ledger
 The receivable and payables ledgers
 Statutory Financial Statements
Chapter 4
Evaluation Scheme

 Final Exam 30%

 Midterm 25%

 Final Project 20%

 Quizzes 25%
Recap

 Accounting Equation

 Double Entry

 Debit and Credit

 Financial events
 Performance related…..affect equity
 Non-performance……don’t affect equity generally
Recording and Summarizing Financial
Events
 Journal
 Place to record all financial events…..The transaction
 Double entry system
 Cash and credit transactions

 Account/ Ledger Account

 Place to keep record of specific transaction etc. sales, inventory
 Nomenclature in line with classification under accounting equation
Recording and Summarizing Financial
Events
 Working out ledger account balance
 Net amount of all debits and credits for a period
 Normal balance of ledger.....Same as debit and credit concpet

 Trial Balance
 Summary of all ledger accounts
 Along with account balances
Practice work

Which one of the following is the accounting equation?

A Assets – Liabilities + Share Capital = Retained Earnings

B Assets = Liabilities – Capital + Retained Earnings

C Assets – Liabilities – Capital = Retained Earnings

D Assets + Liabilities = Capital + Retained Earnings

Practice work

Which of the following is correct?

A debit entry will increase non-current assets
A debit entry will increase drawings
A debit entry will increase profit
A credit entry will increase a bank overdraft
A debit entry will increase payables
A credit entry will increase receivables
A debit entry will increase profit
A debit entry will increase receivables
A debit entry will decrease payables
A debit entry will increase receivables
A credit entry will decrease non-current assets
A credit entry will increase profit
Practice work

A credit balance on a ledger account indicates:

A an asset or an expense

B a liability or an expense

C an amount owing to the organisation

D a liability or revenue
Practice work

A credit entry could lead to:

A an increase in assets or increase in liabilities

B an increase in expense or an increase in share capital

C an increase in liabilities or an increase in share capital

D an increase in liabilities and a decrease in sales

Practice work

The double entry system of bookkeeping normally results in which of

the following balances on the ledger accounts?
Debit balances Credit balances
A Assets and revenues Liabilities, capital and expenses
B Revenues, capital and liabilities Assets and expenses
C Assets and expenses Liabilities, capital and revenues
D Assets, expenses and capital Liabilities and revenues
Record and summarize following transaction for
the month of May 2021.
May 1 – Equity injection 100,000 May 21 – Sales on credit 170,000
May 5 – Acquired loan from bank 200,000 May 23 – Sales on cash 40,000
May 6 – Purchased machinery 120,000 May 25 – Sales on cash 70,000
May 7 – Acquired office space 50,000 May 25 – Sales on credit 120,000
May 10 – Purchase for reselling 80,000 May 30 – Salaries paid 20,000
May 10 – Salaries paid 20,000 May 30 – Paid electricity paid 5,000
May 12 – Purchase for reselling 60,000 May 30 – Paid telephone bill 2,000
May 15 – Advertisement 8,000
May 18 – Advertisement 2,000
May 20 – Salaries paid 20,000