Level 3 Diploma

Accounts Preparation 1

Revision of accounting systems and double entry

bookkeeping

• Recording and summarising

• Assets and Liabilities

• Double entry

• Posting from day books

Recording and summarising

Principles of Bookkeeping.

• Single Entry Bookkeeping

• The Concept of Double Entry Bookkeeping

• The Basic rules and disciplines of double entry bookkeeping

Recording and summarising

Single entry bookkeeping

• Involves writing down each entry once. I.e. list of income and expenditure.

• Can prove figures by agreeing cash and bank

Single entry bookkeepingLimitations are: • Errors may not be noticed.• Money owing to the organisation is

not shown.• Money owed by the organisation is

not shown.• Long-term assets are not shown.

Recording and summarising

Double entry bookkeeping

• Every transaction is written into the books twice, once as a credit and once as a debit.

• Advantages are:– Control. The total of debits equal the total of

the credits.

– A complete view of the financial status of the organisation can be taken.

Newton’s Third Law

Book keeping’s First Rule!

Every Debit Must have a credit!

Double entry bookkeeping

Disciplines of double entry bookkeeping

• Debit on the left.

• Credit on the right.

• For every debit there must be a credit.

Recording and summarising

Recording and summarising

Assets and Liabilities

Assets and Liabilities

Double entry

Double entry

Posting from day books

Quick Test 1Asset or Liability?

• Office Machinery

• A loan from the bank

• Fixtures and fittings

• Motor vehicles

• Money owed to a supplier for goods

• Asset

• Liability

• Asset

• Asset

• Liability

Quick test 2Asset or Liability?

• Premises

• Creditors for goods

• Stock of goods

• Debtors

• Cash in hand

• Bank overdraft

• Machinery

• Asset

• Liability

• Asset

• Asset

• Asset

• Liability

• Asset