FAC1502 Control Accounts Notes

8/16/2019 FAC1502 Control Accounts Notes

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GROUP 3E

UNISA

FAC1502-SEMESTER 01-2016

STUDY UNIT 1- 5

PREPARED BY RAMASHAU ALUWANI.

2016-02-06 1UNISA E-TUTOR- A. RAMASHAU FAC1502-S1-2016-GROUP 3E


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MENU

• Introduction• Objective

• Basic Accounting Equation

• Accounting Cycle

• Types of Journals

• General Ledger

• Trial Balance

• Financial Statements• MUST DO Exercises

• INSPIRATIONAL QUOTES



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INTRODUCTIONDear Group 3E Members!

I would like to take this opportunity to officially welcome you to our first groupactivity in this semester. I have summarized notes for study unit 1 to 5 to assist you tobetter understand the golden rules.

I expect everyone to go through this slides and ask questions or comment where youneed clarity. You are also expected to go through the selected exercises on slide 17.

For the purpose of group discussion I would like you to submit Revision Exercise onPage 73 and 74 of the Study Guide. I will appreciate if you all submit this group

assignment under discussion forum on/before 21/02/2016.

Your on-line participation and feedback will be highly appreciated. Remember “The way to get started is to quit talking and begin doing” Walt Disney

If you need clarify let me know under on-line discussion.

Kind regards

Mr. Ramashau Aluwani

E-Tutor: FAC1502 (GROUP 3E)

A goal is a dream with a deadline - Napoleon Hill



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OBJECTIVE OF FINANCIAL ACCOUNTING

• Accounting is a process comprises of methodsand procedures for the identification,recognition, measurement and recording of

financial transactions and events that changethe financial results and position of an entity.

• The objective of financial accounting is toenable the users of financial information toascertain readily what the financial results andfinancial position of the entity is.

2016-02-06 UNISA E-TUTOR- A. RAMASHAU FAC1502-S1-2016-GROUP 3E

4


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Basic Accounting Equation (BAE)

•Asset is what the entity owns

• Equity and Liabilities is what the entity owes

• Basic Accounting Equation formula is as follows: Assets=Equity less Liabilities (A=E+L) OR (E=A-L)

• A minimum of two accounts must be used for eachtransaction.

• The equation must remain in balance after eachtransaction. In other words the debit side (A) is equal to

the credit side (E+L)• What is important in this topic is to understand the

Golden Rules



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OVERVIEW OF ACCOUNTING EQUATION

ASSETS

Debit(+) Credit (-)

EQUITY

Debit (-) Credit (+)

LIABILITIES

Debit (-) Credit (+)

Drawings Capital

NON-CURRENT ASSETS EXPENSES INCOME NON CURRENT LIABILITIES

Land Cost of sales Sales Long term Loan

Building Rent expenses Rent Income Mortgage bond

Furniture Interest expense Interest Income

Machinery Wages & Salaries Dividend Income

Vehicle Advertising Credit Losses recovered

Investments Insurance Profit on sale of assets

CURRENT ASSETS Repairs & Maintenance Fees earned CURRENT LIABILITIES

Inventory Telephone etc. Creditors Control

Debtors Control Water & Electricity Bank Overdraft

Bank Packing materials Accrued Expenses

Petty Cash Credit losses Income received in advance

Prepaid expenses Depreciation etc.



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Accounting Cycle

• Transactions

• Completion of source documents

• Recording of transactions in journals

• Posting to ledgers

• Trial balance

• Reporting in financial statements

• Analysis and interpretation of financialstatements

• Decision making by the management



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Accounting Cycle

E.G Paid Telephone by cheque, R 6 800.

• Very important, read and understand Accounting Cycle onpage 60 of the Study Guide.


Transaction See example above

Source document Cheque

Journal Cash Payment Journal (CPJ)

Ledger or T account Bank (B5) and Telephone (N9)

Trial Balance Bank (B5) and Telephone (N9)

Financial Statements

Telephone -Financial Performance

Bank-Financial Position


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Types of Journals & Source DocumentsJournals Source Documents

Cash Receipts Journal

(CRJ)

Cash sales, Deposit Slips, Cash register roll, Cash

receipt etc.

Cash Payment Journal

(CPJ)

Cheque counterfoil, Debit notes, cash payment

etc.

Sales Journal (SJ) Sales invoices (sold goods on credit)etc.

Sales Returns Journal

(SRJ)

Credit note (Damaged goods returned) etc.

Purchases Journal (PJ) Original invoice (Purchased goods on credit) etc.

Purchases Returns

Journal (PRJ)

Debit note (Returned goods) etc.

Petty Cash Journal (PCJ) Small items, Petty cash voucher

General Journal (GJ) Non-cash transactions, Errors and Omissions, Year

end adjustments



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General Ledger

• General Ledger account is also known as T account.

• When the subsidiary journals are completed and thesummarized information is transferred to the GeneralLedger.

•

Take note of the Golden rules e.g. Assets increases onthe Debit side (Dr) and Decreases on the Credit side (Cr)

• Equity (Capital) and Liabilities (Creditors) increases onthe credit (Cr) side and Decreases on the debit (Dr) sideof the account

• Income (e.g Sales) increases Equity• Expense (e.g Wages) decreases equity

• Refer to the Study guide



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Trial Balance (TB)

•

A Trial Balance is a list of the balances brought down (b/d) ofthe accounts in the General Ledger of a specific date.

• Take note of the all Golden Rule e.g. The balance “brought down”(b/d) must be used to prepare the Trial Balance.

• Assets and Expenses accounts have Debit (Dr) balances

brought down (b/d) and entered on the debit side of the TrialBalance.

• Equity (Capital), Liability and Income accounts have Credit(Cr) balances brought down (b/d) and entered on the credit

side of the TB. • Very easy and straight forward topic, its just copy and paste

closing balance from the General Ledger Account

• For more info on TB refer to your study guide



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Statement of Comprehensive Income

• We use information from Trial Balance under

Nominal Account Section to prepare a Statement of

Comprehensive Income

• You need to know the correct framework or structureof Statement of Comprehensive Income

• The financial result of an entity is measured in terms

of profit or loss

• Income > Expenses= Profit



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Statement of Changes in Equity

•This statement shows all the changes in equity whichhave occurred during the financial period.

• The purpose is to reconcile the equity at thebeginning of the financial period with the equity at

the end of the financial year. The balance at the endof the period on the Statement of Changes in Equitymust be the same as “Capital” reflected in theStatement of Financial Position.

• Very easy and straight forward• Easy marks

• Refer to the Study Guide



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Statement of Financial Position

• The financial position is always reflected in terms of

three elements in the Basic Accounting Equation,

Assets, Liabilities and Equity

• You need to know the correct framework or structureof Statement of Financial Position (Balance Sheet)

For more info refer to the Study Guide

• Assets=Equity + Liabilities (A=E+L)



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Notes to the Financial Statements

• Additional information on items appearing in the

financial statements is given in the notes to the

financial statements

• Very important, that you read and understand Noteto Property , Plant and Equipment (PPE) from the

Study Guide

• PPE and cost price

• Methods of calculating depreciation (refer to the

Study Guide)



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Stop & Do Self assessment

• Very important, You must understand the

Principles, Principles and Principles!

• Its time to evaluate and assess yourself

• Very important, this notes are not replacing

the study guide. You are expected to go

through everything starting from Tutorial

letters, Study Guide and Prescribed Textbook

• Are you ready for exercises!!!!



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MUST DO EXERCISES

Do the following Exercises in the Study Unit 4 of the Study Guide

–

Revision Exercise 1 on page 32 to 33 – Revision Exercise 2 on page 34


– Revision Exercise 2 on page 48

– Revision Exercise 3 on page 49 – Revision Exercise 4 on page 51

– Revision Exercise 5 on page 53


– Revision Exercise on page 73 & 74 -To be submitted underon-line discussion forum on/before 21/02/2016

– Revision Exercise on page 88 and 90

A goal is a dream with a deadline - Napoleon Hill



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SELF ASSESSMENT

NO. TOPIC STATUS TICKBOX

1 STUDY UNIT 1 DONE

2 STUDY UNIT 2 DONE

3 STUDY UNIT 3 DONE

4 STUDY UNIT 4 DONE

5 STUDY UNIT 5 DONE



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INSPIRATIONAL QUOTES“ Road 2 Success, Victory and Prosperity 2016 - Starts here”

• “ I have a dream” Martin Luther King, Jr.

• “ To accomplish great things, we must not only act, but also dream , not

only plan, but also believe” - Anatole France

• “If you can dream it, you can achieve it’. Zig Ziglar

• Every great dream begins with a dreamer. Always remember, you have

within you the strength, the patience, and the passion to reach for thestars to change the world . Harriet Tubman

• A goal is a dream with a deadline - Napoleon Hill

• All our dreams can come true, if we have the courage to pursue them.

Walt Disney

• We all have dreams. But in order to make dreams come into reality, it

takes an awful lot of determination, dedication, self-discipline, and

effort.Jesse Owens

• “ A winner is a dreamer who never gives up” Tata Madiba



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YOU ARE ON TRACK!!!

WELL DONE!!!

KEEP IT UP!!!
