EMS Accounting Grade 8 Term 1

• Accounting equation simplifies each transaction according to

  The source document, Journal, The accounts involved, The amount, and The effect on the AOL
• Bank account


  A T account consisting of two sides
• Every cash transaction has an influence on the business's bank account
• Accounts involved in cash received

  • Duplicate receipt = d.rec
  • Cash register roll = crr
  • Customer Bank Statement = BS
• When we receive money, the bank always debits (dr). When we pay or buy things, the bank always credits (cr)
• Source documents


  • Cash received
  • Cash paid
  • Bank Statement
• Accounting equation

  Show the effect of a transaction on the Assets, Owners Equity, and Liabilities of a business
• Difference between the bank account and the bank statement

  Bank account is in the books of the business and viewed as an asset. Bank statement is in the books of the bank and viewed as a liability
• When we receive money, the bank is debited. When we pay or buy, the bank is credited
• Owners equity refers to the money that the owner receives after subtracting Liabilities from the assets
• Incomes

  • Money received by the business, Rent received, Interest received, Commission received, Discount received
• Expenses

  • Money paid by the business, Interest paid, Salaries, Packing material, Cost of sales, Rent paid, Stationery, Advertising, Wages, Discount allowed, Telephone, Repairs, Water and electricity, Consumables
• Assets


  • Land and buildings, Vehicles, Equipment, Petty cash, Cash float, Fixed deposit, Trading stock, Debtors control
• Accounting words

  • Capital, Drawings, Incomes, Expenses
• All items needed to run the business


  • Cash register
  • Furniture
  • Computers
  • Machinery
• Items with a long life that the business bought with no intention to re-sell

  • Packing material
  • Telephone
  • Salaries
  • Wages
  • Trading licence
• Non-current assets


  • Land and buildings
  • Vehicles
  • Equipment
• Fixed deposit / Surplus funds can be invested in a bank for a specific term

  • Vehicles bought for use by the business
• Liabilities

  • Bank (overdraft)
  • Loan
  • Creditors control
• Cash float is money kept in the cash register to give change to customers
• Petty cash is cash kept aside to pay out small amounts, like stamps, pens, milk
• Goods bought to resell them at a higher price
• Electronic Fund Transfer (EFT) refers to the direct transfer of funds WITHOUT actual money changing hands
• A bank statement is a document received from the bank at the end of the month showing money going in and out of a business account
• The accounting process is a series of activities that begins with transactions and ends with the closing of the books
• The accounting cycle


  Series of activities that begins with transactions and ends with the closing of the books of the business
• Source documents for receiving money

  • Cash register rolls (CRR)
  • Duplicate receipt (d.rec)
• Source documents


  Contain important information which needs to be entered into the books, including the date of the transaction, source document number, person/business involved, reason for the transaction, and amount of money involved
• Major steps in the accounting cycle

  • Transactions
  • Source Documents
  • Journals
  • General Ledger
  • Trial Balance
  • Financial Statements
• Source documents are evidence that transactions took place
• An EFT can be reversed, therefore a business needs to ensure that the money has entered their bank account before transferring the goods
• Source documents for paying money

  • Bank statement(BS)
• Cash register roll/cash register slip

  At the end of the day, all cash receipts are deposited in the business's bank account
• Equipment refers to all tangible things that the business will use
• Deposit slip


  Checking that the amount on the deposit slip equals the cash recorded in the books for internal control
• Examples of equipment for the business

  • Tables and Chairs, Computers, Cupboards
• We use different words for certain things in accounting terminology
• Operating expenses are expenses that need to be paid for in order to keep the business running
• The contribution the owner makes to start and run the business
• Operating expenses

  • CAPITAL
  • Water and electricity
  • RENT EXPENSES
  • EQUIPMENT
  • STATIONARY
  • CONSUMABLES
  • FEE INCOME
  • BANK CURRENT ACCOUNT
  • OVERDRAFT
  • DEPOSIT
  • TELEPHONE