Teaching notes for all campuses
T-accounts
The first key learning point for
this lecture is to introduce
students to using T-accounts,
closing them off, and
transferring the profit and loss
accounts to retained earnings.
The parts that students really
struggle with are:
(1) Closing off T-accounts and
carrying forward balances
to the next period.
(2) Dealing with the profit or
loss accounts.
The teaching method for (2)
using Colour Accounting is to
tell the students to pick out all
the income and expense tickets
and put them in the P&L bucket
sitting in equity, but to leave the
balance sheet tickets where
they are.
Trial balance
Students seem to get confused
about the purpose of the trial
balance.
This is understandable. The
trial balance is becoming an
anachronism (like day books)
as computer based accounting
systems simply report the
transactions from the ledgers
directly in financial reports.
Nevertheless, we still teach it.
Messages to students
Please continue to encourage
your students to take part in the
quizzes. Other than in Dubai,
the participation rates are much
lower than I would like.
Reassure them that quizzes
are not assessed, and they can
sit them as often as they like.
They are to help their learning
and provide contextualised
feedback to direct their efforts.
Results for quizzes 0, 1, 2 and 3

100% 100%

0 75%
2 75%

50% 50%

25% 25%

0% 0%
Hendon Dubai Mauritius Hendon Dubai Mauritius

100%

1 3
100%

75% 75%

50% 50%

25% 25%

0% 0%
Hendon Dubai Mauritius Hendon Dubai Mauritius
 Five things you should know by now…
1. The language, structure and mechanics of the BaSIS
Framework TM
Unit A3 > The Reporting framework

2. How to post the Classic Transactions to the BaSIS

Framework TM
z e s
iz
3. Qu
How to post the Classic Transactions as journals

4. The IASB definitions of the five elements

5. The IASB concepts of recognition

 A4
starts here
Notes for students using this presentation
About these slides
These slides have been
designed for teaching, not
learning. They are provided to
you because you ask for them,
not because we think they are
helpful to you.
The notes associated with each
slide are teaching notes. They
contain information that is not
relevant to your learning,
specifically highlighting to
teaching staff what not to
mention.
Using these may confuse you.
How to learn
By far the most effective way of
learning this material is to:
• make your own revision
notes and mind maps
• read from the set text.
Specifically Weetman
Chapters 3 and 7.
• attempt the self assessment
activities on UniHub.
Quiz, quiz, quiz…
Do the quizzes.
The participation rate is still
quite low.
The quizzes give you lots of
contextual feedback, so they
tell you what you have learned
and they give you the missing
information that you have not
yet learned.
Go to the quizzes…
A4: Learning outcomes

By the end of this lecture you will understand:

• The accounting process
• Recording transactions using T-accounts
• Closing off accounts at the period end
• The trial balance

Weetman, Chapter 5
A4: Learning outcomes

By the end of this lecture you will understand:

• The accounting process
• Recording transactions using T-accounts
• Closing off accounts at the period end
• The trial balance

Weetman, Chapter 5
 The objective of financial reporting is to provide
Unit A4 > Recording transactions 1

information that is useful. If it is to be useful

financial information must be relevant and
faithfully represented.

International Accounting Standard Board’s Conceptual Framework for Financial Reporting

 The objective of financial reporting is to provide
Unit A4 > Recording transactions 1

information that is useful. If it is to be useful

financial information must be relevant and
faithfully represented.

International Accounting Standard Board’s Conceptual Framework for Financial Reporting

Unit A4 > Recording transactions 1

The accounting process

 The accounting process
Unit A4 > Recording transactions 1

Dr
Useful Cash £20,000
information
this way
Cr Bank loan £20,000
Unit A4 > Recording transactions 1

The accounting process

A4: Learning outcomes

By the end of this lecture you will understand:

• The accounting process
• Recording transactions using T-accounts
• Closing off accounts at the period end
• The trial balance

Weetman, Chapter 5
A4: Learning outcomes

By the end of this lecture you will understand:

• The accounting process
• Recording transactions using T-accounts
• Closing off accounts at the period end
• The trial balance

Weetman, Chapter 5
 The problem with ‘tickets’
Uses of funds Sources of funds

_Assets Liabilities_

£6,000

£600

£30,000
£5,000
£100

£250
£6,000
£600

£100
£80
Balance Sheet
Unit A4 > Recording transactions 1

Equipment Accounts receivable Bank loan Trade payables Deferred income

£20,000

£3£06,0

Equity_
£5000

£10,000
£700

80000

£800
£100

£20,000
£300
£10,0

£200 Profit &

£300
£20
00 0
£5£,0

Loss
Cash at bank Prepayments Inventory Share capital

_Expenses Income_
Profit & Loss

£300
£250

£600
£300
££120000

£700
£20
£50

£80
Depreciation
Advertising Maintenance Cost of sales Sales
 Using T-accounts to record transactions
Uses of funds Sources of funds

_Assets Bank loan Liabilities_

Dr Cr
Balance Sheet

Cash at bank
Unit A4 > Recording transactions 1

Dr Cr
£20,000

£3£06,0

Equity_
£5000
£700

80000
£100
£10,0

Profit &
00 0
£5£,0

Loss
Cash at bank

_Expenses Income_
Profit & Loss
 Using T-accounts to record transactions

Cash at bank Bank loan

Dr Cr Dr Cr
Unit A4 > Recording transactions 1

Decrease

Decrease
Increase

Increase
Unit A4 > Recording transactions 1

£2£07,00000
£10£ £100
,05000
£5,000
£30£,060000
£800
Cash at bank
Using T-accounts to record transactions
 Using T-accounts to record transactions
Unit A4 > Recording transactions 1

£30,000 £5,000

£20,000 £10,000

£700 £50

£100 £800

£600
 Using T-accounts to record transactions

Cash at bank
Date Description £ Date Description £
Unit A4 > Recording transactions 1

5 Feb Bank loan 30,000

£30,000 11 Feb Bank loan 5,000
£5,000

7 Feb Share capital 20,000

£20,000 10 Feb Inventory 10,000
£10,000

11 Feb Cash sales 700

£700 12 Feb Cleaning 50
£50

21 Feb Gift voucher £100100 25 Feb Prepayments 800

£800

23 Feb A/c receivable £600600

 A word about 3-column ledger accounts
Cash at bank
Date Description £ Dr £ Cr £ Bal

5 Feb Bank loan 30,000 30,000

Unit A4 > Recording transactions 1

7 Feb Share capital 20,000 50,000

10 Feb Inventory 10,000 40,000
11 Feb Bank loan 5,000 35,000
11 Feb Cash sales 700 35,700
12 Feb Cleaning 50 35,650
21 Feb Gift voucher 100 35,750
23 Feb Accounts receivable 600 36,350
25 Feb Prepayments 800 35,550
 The problem with ‘tickets’
Uses of funds Sources of funds

_Assets Liabilities_

£6,000

£600

£30,000
£5,000
£100

£250
£6,000
£600

£100
£80
Balance Sheet
Unit A4 > Recording transactions 1

Equipment Accounts receivable Bank loan Trade payables Deferred income

00
£10

£3
£20,000

£3£06,0

Equity_
£5000
£700

,000
80000

£800
£100

£20,000
£10,0

£20
£200 Profit &
00 0
£5£,0

00
£3
Loss
Cash at bank Prepayments Inventory Share capital

_Expenses £2 Income_

£600
Profit & Loss

0
£300
£250
££120000

£700
£50

£3

0
£8
00

Depreciation
Advertising Maintenance Cost of sales Sales
 The problem with ‘tickets’
Uses of funds Sources of funds

_Assets Bank loan

Liabilities_
Equipment Accounts receivable 5,000 30,000 Deferred income

Trade payables
6,000 100 600 600 20 100
Balance Sheet
Unit A4 > Recording transactions 1

6,250

Prepayments Inventory
Equity_
10,000 300 Profit &
800 200 Share capital
300 Loss
20 20,000

_Expenses Income_
Profit & Loss
A4: Learning outcomes

By the end of this lecture you will understand:

• The accounting process
• Recording transactions using T-accounts
• Closing off accounts at the period end
• The trial balance

Weetman, Chapter 5
A4: Learning outcomes

By the end of this lecture you will understand:

• The accounting process
• Recording transactions using T-accounts
• Closing off accounts at the period end
• The trial balance

Weetman, Chapter 5
 T-accounts: two types of ‘closing off’
Uses of funds Sources of funds

_Assets Liabilities_
00 0 0 0
£6,000
9 £0 0 5 0

£600
,

£30,000
£5,000
£100

£250
5,

£6,000
£600
£5 2 £2

£100
6,

£80
£ 2 £
Balance Sheet
Unit A4 > Recording transactions 1

Equipment Accounts receivable Bank loan Trade payables Deferred income

0
£20,000

5
£3£06,0

Equity_
£5000

5 0 0

£10,000
5,
£700

80000

0 8 0
£800
£100

£20,000
£300
£10,0

£200 Profit &

£300
£6 9,3 0

£20
00 0

3
£5£,0

£ £ Loss 0, 0
Cash at bank Prepayments Inventory
2
£Share capital
_Expenses Income_
Profit & Loss

£300
£250

£600
£300
££12000

£78000
£50

£20

£
0

Depreciation
Advertising Maintenance Cost of sales Sales
 T-accounts: two types of ‘closing off’
Uses of funds Sources of funds

_Assets Liabilities_
00 0 0 0
£6,000
9 £0 0 5 0

£600
,

£30,000
£5,000
£100

£250
5,

£6,000
£600
£5 2 £2

£100
6,

£80
£ 2 £
Balance Sheet
Unit A4 > Recording transactions 1

Equipment Accounts receivable Bank loan Trade payables Deferred income

0
£20,000

5
£3£06,0

Equity_
£5000

5 0 0

£10,000
5,
£700

0
80000

0 8 0
£800
£100

£20,000
£300
£10,0

£200 Profit6&

£300
£6 9,3 0

£20
00 0

3
£5£,0

£ £ 1
Loss 0, 0
£ 2
Cash at bank Prepayments Inventory
£Share capital
0
_Expenses
0 Income_
2 0
Profit & Loss

£ 00 00 20 8
£300

3
£250

£600
1
£300

6
££12000

1,

£78000
3
£20
£50

£ £ £

£
£
0

Operating expenses Maintenance Cost of sales Sales

 T-accounts: two types of ‘closing off’
Uses of funds Sources of funds

_Assets Liabilities_
0 0
0 0
£31,270 0
£6,000
9 £0 0 20 5

£600
,

£30,000
£5,000
£100

£250
5,

£6,000
£600
£5 2

£100
6,

£80
£ 2 £ £
£51,430
Balance Sheet
Unit A4 > Recording transactions 1

Equipment Accounts receivable Bank loan Trade payables Deferred income

0
£20,000

5
£3£06,0

Equity_
£5000

5 0 0

£10,000
,
£700

0
£20,160
80000

0 8 0
£800
£100

£20,000
£300
£10,0

5 £200 Profit6&

£300
£6 9,3 0

£20
00 0

£3
£5£,0

£ 1
Loss 0, 0
£ 2
Cash at bank Prepayments Inventory
£Share capital

Assets =
– Liabilities +
= Equity

£54,130 =
– £31,270 +
= £20,160
 T-accounts: two types of ‘closing off’
Uses of funds Sources of funds

_Assets Liabilities_
00 0 0 0
£6,000
9 £0 0 5 0

£600
,

£30,000
£5,000
£100

£250
5,

£6,000
£600
£5 2 £2

£100
6,

£80
£ 2 £
Balance Sheet
Unit A4 > Recording transactions 1

Equipment Accounts receivable Bank loan Trade payables Deferred income

0
£20,000

5
£3£06,0

Equity_
£5000

5 0 0

£10,000
5,
£700

0
80000

0 8 0
£800
£100

£20,000
£300
£10,0

£200 Profit6&

£300
£6 9,3 0

£20
00 0

3
£5£,0

£ £ 1
Loss 0, 0
£ 2
Cash at bank Prepayments Inventory
£Share capital
_Expenses Income_
Profit & Loss

Operating expenses Maintenance Cost of sales Sales

 The profit and loss account

Profit and loss account

Date Description £ Date Description £
Unit A4 > Recording transactions 1

31-Jan Cost of sales 620 31 Jan Sales 1,380

31-Jan Maintenance 300

31-Jan Depreciation 100

31-Jan Advertising 200

 Closing “carry forward” T-accounts

Cash at bank
Date Description £ Date Description £
Unit A4 > Recording transactions 1

5 Feb Bank loan 30,000 11 Feb Bank loan 5,000

7 Feb Share capital 20,000 6 Feb Inventory 10,000

Decrease
11 Feb Cash sales 700 12 Feb Cleaning 50
Increase

21 Feb Gift voucher 100 25 Feb Prepayments 800

23 Feb A/c receivable 600 28 Feb Balance c/fwd 35,550

51,400 15,850
51,400

1 Mar Balance b/fwd 35,550

 Closing “carry forward” T-accounts

Cash at bank
Date Description £ Date Description £
Unit A4 > Recording transactions 1

5 Feb Bank loan 30,000 11 Feb Bank loan 5,000

7 Feb Share capital 20,000 6 Feb Inventory 10,000

Decrease
11 Feb Cash sales 700 12 Feb Cleaning 50
Increase

21 Feb Gift voucher 100 25 Feb Prepayments 800

23 Feb A/c receivable 600 28 Feb Balance c/fwd 35,550

51,400 51,400

1 Mar Balance b/fwd 35,550

 Closing income and expense T-accounts

Cost of sales
Date Description £ Date Description £
Unit A4 > Recording transactions 1

5 Feb 300

7 Feb 300

Decrease
11 Feb 20
Increase
 Closing income and expense T-accounts

Cost of sales
Date Description £ Date Description £
Unit A4 > Recording transactions 1

5 Feb 300

7 Feb 300

Decrease
11 Feb 20
Increase

620 620
 Closing income and expense T-accounts

Cost of sales
Date Description £ Date Description £
Unit A4 > Recording transactions 1

5 Feb 300 28 Feb Profit & loss 620

7 Feb 300

Decrease
11 Feb 20
Increase

620 620
 Closing income and expense T-accounts

Profit and loss account

Date Description £ Date Description £
Unit A4 > Recording transactions 1

28 Feb Cost of sales 620

Decrease

Increase
Dr Profit & loss £620
Cr Cost of sales £620
 Closing income and expense T-accounts

Profit and loss account

Date Description £ Date Description £
Unit A4 > Recording transactions 1

28 Feb Cost of sales 620 28 Feb Sales 1,380

28 Feb Maintenance 300

Decrease

28 Feb Depreciation 100

Increase
28 Feb Advertising 200
 Closing income and expense T-accounts

Profit and loss account

Date Description £ Date Description £
Unit A4 > Recording transactions 1

28 Feb Cost of sales 620 28 Feb Sales 1,380

28 Feb Maintenance 300

Decrease

28 Feb Depreciation 100

Increase
28 Feb Advertising 200

1,220 1,380
 Closing income and expense T-accounts

Profit and loss account

Date Description £ Date Description £
Unit A4 > Recording transactions 1

28 Feb Cost of sales 620 28 Feb Sales 1,380

28 Feb Maintenance 300

Decrease

28 Feb Depreciation 100

Increase
28 Feb Advertising 200

1,220 1,380

1 Mar Balance b/fwd 160

 Closing income and expense T-accounts

Profit and loss account

Date Description £ Date Description £
Unit A4 > Recording transactions 1

28 Feb Cost of sales 620 28 Feb Sales 1,380

28 Feb Maintenance 300

Decrease

28 Feb Depreciation 100

Increase
28 Feb Advertising 200

28 Feb Balance c/fwd 160

1,380 1,380

1 Mar Balance b/fwd 160

A4: Learning outcomes

By the end of this lecture you will understand:

• The accounting process
• Recording transactions using T-accounts
• Closing off accounts at the period end
• The trial balance

Weetman, Chapter 5
A4: Learning outcomes

By the end of this lecture you will understand:

• The accounting process
• Recording transactions using T-accounts
• Closing off accounts at the period end
• The trial balance

Weetman, Chapter 5
Unit A4 > Recording transactions 1

The accounting process

 Balance sheet Profit & loss
Account Dr Cr Dr Cr
Equipment
Inventory
Accounts receivable
Prepayments
Cash at bank
Accounts payable
Unit A4 > Recording transactions 1

Deferred income
Bank loan
Share capital
Profit and loss account
Sales
Cost of sales
Maintenance
Advertising
Depreciation

Profit for the year

 The trial balance
Uses of funds Sources of funds

_Assets Liabilities_

£6,000

£600

£30,000
£5,000
£100

£250
£6,000
£600

£100
£80
Balance Sheet
Unit A4 > Recording transactions 1

Equipment Accounts receivable Bank loan Trade payables Deferred income

£20,000

£3£06,0

Equity_
£5000

£10,000
£700

80000

£800
£100

£20,000
£300
£10,0

£200 Profit &

£300
£20
00 0
£5£,0

Loss
Cash at bank Prepayments Inventory Share capital

_Expenses Income_
Profit & Loss

£300
£250

£600
£300
££12000

£78000
£20
£50

£
0

Operating expenses Maintenance Cost of sales Sales

 The trial balance
Uses of funds Sources of funds

_Assets Liabilities_
00 0 0 0
£6,000
9 £0 0 5 0

£600
,

£30,000
£5,000
£100

£250
5,

£6,000
£600
£5 2 £2

£100
6,

£80
£ 2 £
Balance Sheet
Unit A4 > Recording transactions 1

Equipment Accounts receivable Bank loan Trade payables Deferred income

0
£20,000

5
£3£06,0

Equity_
£5000

5 0 0

£10,000
5,
£700

80000

0 8 0
£800
£100

£20,000
£300
£10,0

£200 Profit &

£300
£6 9,3 0

£20
00 0

3
£5£,0

£ £ Loss 0, 0
Cash at bank Prepayments Inventory
2
£Share capital
0
_Expenses
0 Income_
2
Profit & Loss

£ 00 00 20 80
£300
£250

£600
1 ,3
£300

6
££12000

£78000
3
£20
£50

£ £ £ 1

£
£
0

Operating expenses Maintenance Cost of sales Sales

 Balance sheet Profit & loss
Account Dr Cr Dr Cr
Equipment 5,900
Inventory 9,380
Accounts receivable -
Prepayments
00 600
0 0 0
, 9 £0 0 5 0
Cash at bank
£5
35,550
25, 6, 2 £2
Accounts payable 6,250
£ £
Unit A4 > Recording transactions 1

Deferred income 20
Bank loan 25,000
Share capital
50 20,000

5, 5
Profit and loss account
0 0 160
80 0
3 £6 9,3 00
£ 0,
Sales 1,380
Cost of sales £ 620
2
Maintenance 300 £
Advertising 200
Depreciation 100

200 0
£ 00 00
1,220
20 160
1,380
38
£ 1 3
£ 51,430 £ 6 1,
51,430 1,380 1,380 £
Unit A4 > Recording transactions 1

The accounting process

A4: Learning outcomes

By the end of this lecture you will understand:

• The accounting process
• Recording transactions using T-accounts
• Closing off accounts at the period end
• The trial balance

Weetman, Chapter 5