Tiếng Anh Chuyên Ngành Kế Toán 1_ Đại học Mở After carefully studying this lesson, you should be able to: 1. understand the nature of ‘the accounting equation’ 2. appreciate the basic contents of a balance sheet 3. recognise the need for recording transactions through doubleentry form 4. record some basic transactions in doubleentry form
LESSON 1: THE ACCOUNTING EQUATION AND TRANSACTIONS THROUGH ‘DOUBLE ENTRY’ After carefully studying this lesson, you should be able to: understand the nature of ‘the accounting equation’ appreciate the basic contents of a balance sheet recognise the need for recording transactions through double-entry form I record some basic transactions in double-entry form THE ACCOUNTING EQUATION I.1 The resources of a business To run your business you will need to have resources You may start with cash only and use that to purchase other resources Alternatively, you may put into the business various assets which privately you already own Thus you may put into the business not only cash but also a motor vehicle and some office furniture The resources of the business are termed ‘assets’ At the start it can be said that Assets of the business = Assets provided by the owner Remember that here the concern is with book-keeping for your (or any other) business, as distinct from your personal, domestic matters ‘Assets provided by the owner’ is given the term ‘capital’ So for the business Assets = Capital I.2 The accounting equation If, initially, you put into your business the three suggested ‘assets’ you might then show the following: £ Office furniture £ 600 Motor vehicle 4,800 Cash at bank 600 = Capital 6,000 6,000 6,000 This is what is termed the “accounting equation” The two sides will always be equal to one another Assets cannot exist in a business unless some person(s) has committed to it money (or other resources) amounting to the same total sum In a sense, the business is responsible to the owner(s) for the amount of the capital In practice, people other than the owner may lend money to the business The money lent from other people is called “Loan” The ‘equation’ could now appear like this: £ Office furniture 600 Motor vehicle 4,800 Cash at bank 1,600 7,000 £ Capital 6,000 Loan from T Wells 7,000 1,000 Any amounts owing to persons other than the owner are given the term ‘liabilities’ The equation now reads: Assets £7,000 = Capital £6,000 + Liability £1,000 Remember to keep clearly in mind the equation: Assets = Capital + Liabilities I.3 The Balance sheet The equations shown above are a form of ‘financial statement’ termed the balance sheet The previous statement might appear as follows: L Wang Balance sheet at September Year £ Office furniture 600 Motor vehicle 4,800 Cash at bank 1,600 7,000 £ Capital 6,000 Loan from T Wells 1,000 7,000 Note the important word ‘at’ in the heading The balance sheet is likened to a snapshot photograph of the business, at a given moment in time The activities of the business will involve ‘transactions’, e.g the selling of goods, and it is helpful if you trace the effect which these might have upon the balance sheet II TRANSACTIONS THROUGH ‘DOUBLE ENTRY’ II.1 Format of T-account The practice you are going to adopt has long been in use It divides each page of the ‘ledger’ into two sides, T-type Ledger accounts use the following format: Account name Debit (Dr) Date Details Credit (Cr) £ Date Details £ II.2 Double-entry rules You will soon become aware that the terms debit and credit have a special meaning in book-keeping The rules for double-entry are: Assets Capital Liabilities Transaction effect Double-entry rule an increase Debit a decrease Credit an increase Credit a decrease Debit an increase Credit a decrease Debit Alternatively, it may be viewed like this: Asset account Increases Decreases + Liabilities Decreases Increases - + Capital Decreases Increases - + Each of these represents a “T” account This two-sided account layout has long been used to apply and show double-entry book-keeping Account A1 Dr entry Account B1 Cr entry Examples: (i) Suppose that James Meredith sets up a business on May Year by placing £5,000 into a new business bank account Transaction effect Increase of asset bank Increase of capital Book-keeping action debit the bank account credit the capital account The initial transaction will then be shown as follows: Bank Date Details £ Capital 5,000 Year May Capital Date Details £ Bank 5,000 Year May Note: the ‘details’ (capital, bank) cross refers to the other account You should always follow this rule (ii) On May Year 3, James Meredith bought office furniture, paying by cheque £ 350 Transaction effect Book-keeping action Decrease of asset bank credit the bank account Increase of asset office furniture debit office furniture account Bank Year May Office Furniture Year May £ Bank 350 £ Office furniture 350 (iii) On May Year 3, James Meredith bought goods on credit £180 from Rendell Supplies Transaction effect Book-keeping action Increase in asset goods debit Goods account Increase in liability – creditor:Rendell Supplies credit Rendell Supplies Goods Year May £ Rendell Supplies 180 Rendell Supplies Year May (iv) £ Goods 180 On 23 May Year 3, James Meredith paid by cheque £80 for the amount owing to Rendell Supplies Transaction effect Book-keeping action Decrease in asset bank credit Bank account Decrease in liability from creditor: Rendell Supplies debit Rendell Supplies Bank Year £ May 23 Rendell Supplies 80 Rendell Supplies Year May 23 £ Bank 80 (v) On 16 May Year 3, sold £270 goods for cash Transaction effect Book-keeping action Decrease in asset goods credit Goods account Increase in asset Cash debit Cash Goods Year £ May 16 Cash 270 Cash Year May 16 £ Goods 270 The above transaction is recorded into accounts separately In practice, we can combine all the transactions into the accounts as follows: Bank Year May Capital £ Year 5,000 May £ Office furniture 350 May 23 Rendell Supplies 80 Capital Year May Office Furniture Year May £ Bank 350 £ Bank 5,000 Goods Year May £ Year Rendell Supplies 180 £ May 16 Cash 270 Rendell Supplies Year £ Year May 23 Bank 80 May £ Goods 180 Cash Year May 16 Goods £ 270 In a firm’s actual accounts, each account would be shown on a separate page in order to record several transactions together For your purposes, you normally need to put several accounts on one page SUMARY In this lesson, you learn main parts: The accounting equation & Rules for double-entry - Do the exercises after the lesson in your book to practise what you have just learnt - Do the enhancement exercises on line for more understanding The lessons are marked automatically including careful explanations I hope you will be successful! GLOSSARY account (n): Tài khoản asset (n) Tài sản balance sheet (n) Bảng cân đối business (n) Doanh nghiệp, công việc kinh doanh capital (n) Nguồn vốn cash at bank Tiền gửi ngân hàng cash in hand Tiền mặt credit (v) Ghi credit side (n) Bên có creditor (n) Chủ nợ debit (v) Ghi nợ debit side (n) Bên nợ debtor (n) Khách hàng nợ double-entry rules (n) Nguyên tắc định khoản kép liability (n) Nợ phải trả loan (n) Khoản tiền vay motor vehicle (n) Phương tiện vận tải office furniture (n) Nội thất văn phòng resource (n) Nguồn lực transaction (n) Giao dịch ... Bank 5,000 Goods Year May £ Year Rendell Supplies 18 0 £ May 16 Cash 270 Rendell Supplies Year £ Year May 23 Bank 80 May £ Goods 18 0 Cash Year May 16 Goods £ 270 In a firm’s actual accounts, each... Rendell Supplies Goods Year May £ Rendell Supplies 18 0 Rendell Supplies Year May (iv) £ Goods 18 0 On 23 May Year 3, James Meredith paid by cheque £80 for the amount owing to Rendell Supplies Transaction... 80 (v) On 16 May Year 3, sold £270 goods for cash Transaction effect Book-keeping action Decrease in asset goods credit Goods account Increase in asset Cash debit Cash Goods Year £ May 16 Cash