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ACCN1- Introduction to Financial Accounting




ACCN1- Introduction to Financial Accounting
Chapter One ­ Balance Sheets
ASSETS ­ are assets that are owned by an organization. They are used to help the organization survive a function.
Assets in a business may could include premises, vehicles, computers, etc.
LIABILITIES ­ represent the…

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ACCN1- Introduction to Financial Accounting


As at 31 December 20-1

£ £ £
FIXED ASSETS/NON CURRENT ASSETS
Premises 100,000
Equipment 30,000
130,000

CURRENT ASSETS
Stock/Inventories 16,300
Debtors/Receivables 23,850
Cash/Bank 125
Prepayments XXXXX
40,275

LESS CURRENT LIABILITIES
Creditors/Payables 12,041
Bank Overdraft 851
Accruals XXXXX
12,892

NET CURRENT ASSET 27,383
157,383

LESS…

Page 3

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ACCN1- Introduction to Financial Accounting





Chapter Two ­ Profits
The owners of a business are interested in what their business is worth. This can be determined by preparing a
balance sheet or by using the accounting equation.
Not only are the owners of the business interested in what their business…

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ACCN1- Introduction to Financial Accounting


PURCHASE RETURNS ­ are goods that the business sends back to the supplier. They are also known as RETURNS
OUT or RETURNS OUTWARDS.



TRADING ACCOUNT LAYOUT

Bunty
Trading account for the year ended 31 August 20*8
£ £ £
Sales 314,000
Less returns inwards (930)…

Page 5

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ACCN1- Introduction to Financial Accounting





Chapter Five ­ The Final Accounts
FINAL ACCOUNTS ­ is the term often used to describe the trading account and the profit and loss account and the
balance sheet produced by the owner of a business at the financial year end.

A full set of…

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ACCN1- Introduction to Financial Accounting


CREDIT CUSTOMERS ­ are people or businesses whom we sell goods to; they will pay for their goods at some time in
the future. They are goods sold on CREDIT. Until credit customers pay for the goods that they have purchased they
will be DEBTORS/RECEIVABLES.…

Page 7

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ACCN1- Introduction to Financial Accounting




Are then posted to the General Ledger and Purchases Ledger (The Purchases account and is put on the debit
side which is the General Ledger side, then put into the Purchases Ledger which is the individual suppliers'
accounts on the credit side)

















THE SALES DAY…

Page 8

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ACCN1- Introduction to Financial Accounting


Are then posted to the General Ledger and the Sales Ledger (The Sales Account is put on the credit side and is part of
the General Ledger, They are then put into the individual accounts of the customers on the debit side which will be…

Page 9

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ACCN1- Introduction to Financial Accounting


Each individual entry in the sales returns day book is posted to the credit side of the customer who returned the
goods (they have `lost' the goods).

Sales Returns Day Book

The source document (in this case the source document will be the copy of…

Page 10

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ACCN1- Introduction to Financial Accounting


Liabilities are always credit balances. Creditors/Payables are examples are where the owner of a business or a
company owes money to a supplier.


USES OF THE TRAIL BALANCE
The trail balance has only one function and that is: to check the arithmetic accuracy of the…

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