ACCT102

ACCT102

1. Week 1

   • Balance sheet
     • Assets= Liabilities + Owner's Equity
   • Entity convention- Provides the scope or boundary within which the user of the reports can know that the information has been properly prepared
   • Statement of changes in equity
   • Accrual Basis- relates to when the activity/action takes place
     • Income statement
     • Statement of changes in equity
     • Balance sheet
   • Cash basis- relates to when the cash changes hands
     • Cash flow statement
   • Matching principle- costs of operating the entity should be associated with the income that is generated in the same accounting period
     • Deppreciation
     • Inventory evaluation
     • Accruals
     • Defferals (?)
   • Monetary convention- All events need to be expressed in money terms before they can be recorded
   • Period convention- Arbitrary division of time into periods of standard length

2. Week 2

   • Steps in the recording process
     • 1. Analyse transaction for its effect on accounts
       • 2. Enter transaction information into journal
         • 3. Transfer the journal information to ledger accounts
   • Account: specific format; purpose is to record finc. Transactions
   • Journal: chronological order of transactions
   • Ledger: list of indv. Accounts that summaries the whole picture
   • Trial balance- ending balance on all accounts (before official)
   • General Journal
     • Narration at bottom for what things represent
     • Comments- date, what interest is, when you have to repay it etc. (essential details to make sense of records in future)
     • Identted second line- doesn't matter if name is also indented
     • Monetary amount MUST be indented to right / separate column to right So debits match the credits @ end

3. Week 3

   • Cost neutral to business
     • To cover GST if you are using a loan interest will be charged for that GST also
       • Not really 'cost neutral' always
   • Trial balance errors

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