8bed72a64cd9d0d8edaefa58c6189bbcb2a81120662aa4b800d5ccf0733415852

Double Entry Book Keeping The principle states that for every debit entry, there must be a corresponding credits entry and vice-versa. It operates on the basis that every financial transaction must have two aspects i.e. Dr Receiver (receiving account) Cr Giver (giving account) The procedures are: The keeping of books of account The division of each book into separate accounts Each account is divided into two halves i.e. left-hand side; debit (Dr) and right-hand side; credit (Cr) All transactions must be recorded in two accounts- one account debited and another credited. The giver (Cr) is credited with the value of whatever it gives and the receiver is debited with the same amount. Cash Transactions: Where the buyer pays immediately for goods bought, an account will be opened in respect of a supplier or customer. Steps in recording cash transactions: Prepare two accounts Identify the giving and receiving the accounts Apply the principle of Cr (Giver) and Dr (receiver) All cash transactions must pass through the cash book Credit Transactions: Most commercial transactions are referred to as credit transactions because the transfer of ownership takes place before payment to the supplies i.e. settlement is deferred to a future date. Steps in recording Credit Transactions Prepare the day books: Sales, Purchase, Returns and Journal books Prepare two accounts Identify the giving and the receiving accounts Apply the principle of double entry. A debit entry represents A credit entry represents i. An increase in the value of assets i. A decrease in the value of assets ii. A decrease in the amount of a liability ii. An increase in the amount of a liability iii. An item of expenditure or expense iii. An item of income or gain Illustration of Double entry Jan 1: Mr Ojo started business with N40,000 cash Effect: Increase in capital : Capital a/c Increase in asset : Cash a/c Action Required: Cr Capital a/c (giver) Dr Cash a/c (receiver) Jan 2: Paid N450 cash for rent Effect: Increase in expenditure : Rent a/c Decrease in asset : Cash a/c Action Required: Dr Cash a/c (receiver) Cr Capital a/c (giver) Jan 3: Received refund of insurance N300 cash Effect: Increase in asset : Cash a/c Decrease in expenditure : Insurance a/c Action Required: Dr Cash a/c (receiver) Cr Insurance a/c (giver) Jan 4: The proprietor put N500 into the bank Effect: Increase in Capital : Capital a/c Increase in asset : bank a/c Action Required: Dr Bank a/c (receiver) Cr Capital a/c (giver) Jan 5 : Bought motor vehicle N60 by cheque Effect: Increase in asset : Motor vehicle a/c Decrease in asset : bank a/c Action Required: Dr Motor vehicle a/c (receiver) Cr Bank a/c (giver) Jan 6: Cash sales N1,000 Effect: Increase in sales : sales a/c Increase in asset : Cash a/c Action Required: Dr Cash a/c (receiver) Cr Sales a/c (giver) Jan 7: Cash purchase N30 Effect: Increase in purchases : purchase a/c Decrease in asset : Cash a/c Action Required: Dr purchase a/c (receiver) Cr Cash a/c (giver) Jan 8: Withdrew cheque for private use N1,500 Effect: Increase in Drawings : Drawings a/c Decrease in asset : Bank a/c Action Required: Dr Drawings a/c (receiver) Cr Bank a/c (giver) Jan 9: Withdrew N150 cash from bank for office Effect: Reduction/decrease in asset : Bank a/c Increase in asset : Cash a/c Action Required: Dr Cash a/c (receiver) Cr Loan a/c (giver) Jan 10: Receive N1,000 cash loan from Alex Effect: Increase in asset : Cash a/c Increase in liability : Loan a/c Action Required: Dr Cash a/c (receiver) Cr Loan a/c (giver) Jan 13: Paid cash N6,000 into the bank Effect: Increase in asset : Bank a/c Decrease in asset : Cash a/c Action Required: Dr Bank a/c (receiver) Cr Cash a/c (giver) Jan 15: Purchase goods N100 on credit from Kyari Effect: Increase in liability : Kyari a/c Increase in purchase : purchase a/c Action Required: Dr Purchase a/c (receiver) Cr Kyari a/c (giver) Jan 16: Sold goods N550 on credit to Abednego Effect: Increase in asset : Abednego a/c Increase in sales : Sales a/c Action Required: Dr Abednego a/c (receiver) Cr sales a/c (giver) Jan 19: Yinka returned goods worth N15,000 Effect: Increase in returns inward : stock a/c Decrease in Yinka a/c : Yinka a/c Action Required: Dr Return inward (stock) a/c (receiver) Cr Yinka a/c (giver) Jan 20: Goods worth N30 were returned to supplier - David Effect: Reduction in David a/c : David a/c Decrease in returns outward a/c : Stock a/c Action Required: Dr David a/c (receiver) Cr Returns outward (stock) a/c (giver) Jan 25: Received commission N80 by cheque Effect: Increase in asset : asset a/c Increase in commission : Commission a/c Action Required: Dr Bank a/c (receiver) Cr Commission a/c (giver) Jan 30: Paid salesmen commission cash N50 Effect: Decrease in asset : Cash a/c Increase in commission : Commission a/c Action Required: Dr Commission a/c (receiver) Cr Cash a/c (giver) Questions: Enter the following transactions in the necessary a/cs Dec 1: Started business with N8,000 cash Dec 2: Paid insurance by cheque N1,500 Dec 3: Received refund of rent N500 cash Dec 4: Bought furniture by cheque N1,000 Dec 5: Took N2,000 cash from till and paid into bank Dec 6: Cash drawings N150 Dec 9: Withdrawn goods N300 for use Open the necessary book of accounts and record the following transactions Sold goods for cash N100.00 Loaned Joseph cash N50.00 Purchased goods for cash N250.00 Paid Shehu by cash N60.00 Received cash from Jerry N150.00 Sold goods for cash N350.00 Chief Oyemogum continued her provision business with cash in hand N300.00 and stock of goods of N50.00 and a capital liability of N270.00 on Jan 1st 2019. Jan 2nd: Bought goods of N80 on credit from Mr Ojo Jan 6th: Purchased goods of N100 on credit from Mr Abdul Jan 12th: Sold goods of N80 to Hassana on credit Jan 14th: Sold goods of N150 on credit to Biodun Jan 16th: Paid N100 cash to Tijani Jan 18th: Paid N60 in cash to Mr Alao Jan 20th: Received N60 in cash from Hassana Jan 23rd: Received N90 cash from Biodun Jan 25th: Sold goods N80 cash Jan 28th: Paid N50 cash for wages Jan 30th: Paid N80 cash on rent

8bed72a64cd9d0d8edaefa58c6189bbcb2a81120662aa4b800d5ccf0733415851

Business ethics deals with human conduct in relation to what is morally good and bad or what is right or wrong. It usually influences our value for decision making which include honesty, fairness, respect, responsibility and compassion. Accounting ethics thus deals with the guidelines that a professional needs to follow while practicing any form of accounting, (i.e. the judgemental and moral values applied in accounting). It therefore can be seen as a set of distinct guidelines for a business to maintain a clean balance sheet for their profit, losses and expenses incurred and prevent it from mishandling financial reports and statements. For a cost or financial manager, it is therefore very important to understand the rules and regulations of his position as any deviation from the moral code of conduct or abuse can result in the suspension of his licence, termination of right to practice and or jail term. Advantages of professional ethics It creates confidence and trust in any profession It is a guideline for professionals It protects the society from corporate scandals The public expects companies to present fact-base costs of business activities There are a lot of high expectations on professionals from the society. Accounting Equation The totality of any financial accounting is based on the accounting equation and the principle of double entry was developed from the axiom of accounting equation. This equation is given as: Assets = Capital + Liabilities Assets: These are the properties of a business and owned by the business (not by the partners or owners of a business). They are expected to be of present and future benefits and examples include furniture, motor vehicle, equipment, landed properties (i.e. lands and buildings), cash. Capital: This is the total amount invested by the owner into a business. It is also the net worth of the business. Liabilities: These are the amounts owed by a business to members of the public. It is an obligation to pay someone in either cash or monetary worth (these include creditors, bank overdrafts, etc.) The sources of assets are; claims of the owners of the business (i.e. capital) and claims from outsiders e.g. loan facilities and suppliers of goods and or services (liabilities). Both sides of the equation must be equal as an asset creates a corresponding capital and liability and vice versa. Now complete the following table. Assets (N) Liabilities (N) Capital (N) 300,000.00 110,000 190,000.00 210,000 140,000.00 70,000.00 32,000 18,000.00 14,000.00 130,000.00 40,000.00 90,000.00 260,000.00 210,000.00 50,000.00 5,000,000.00 2,000,000.00 3,000,000.00 15,653.00 4,532.00 4,000.00 1,000.00 Effects of Transaction 1. Introduction of Capital in cash Increase in assets (Cash) Increase in Capital 2. Purchase of goods on credits Increase in asset (stock) Increase in liability (creditor) 3. Sale of goods on credit Increase in asset (debtor) Reduction in asset (stock) 4. Settlement of creditor by cheque Reduction in liability (creditor) Reduction in asset (bank) 5. Cash drawings for own use by owner Decease in asset (cash) Decrease in capital 6. Owner pays creditors from private money Increase in assets (cash) Increase in capital 7. Receipt from a debtor (cash) Increase in asset (cash) Reduction in asset (debtor) Balance Sheets: Started business with N30,000 bank Effects would be: Increase in asset (bank) Increase in capital (bank) N k N k Capital 30,000 : 00 Bank 30,000 : 00 Purchased motor vehicle for N316,000 on credit Effects would be: Increase in liability (creditor) Increase in assets (motor vehicle) The balance sheet thus changes to read thus; N k N k Capital 30,000 : 00 Cash 30,00 : 00 Creditor 316,000 : 00 Motor vehicle 316,000 : 00 346,000 : 00 346,000 : 00 Bought goods N5,000 from Shehu on credit Effects would be: increase in liability (creditors) Increase in asset (stock) The balance sheet thus changes to read thus; N k N k Capital 30,000 : 00 Bank 30,00 : 00 Creditor 321,000 : 00 Motor vehicle 316,000 : 00 Stock 351,000 : 00 351,000 : 00 Sold goods for cash N3,000 Effects would be: increase in asset (cash) decrease in asset (stock) The balance sheet reads N k N k Capital 30,000 : 00 Cash 3,000 : 00 Creditor 321,000 : 00 Motor vehicle 316,000 : 00 Bank 30,000 : 00 Stock (5,000-3,000) 2,000 : 00 351,000 : 00 351,000 : 00 Paid creditors N20,000 with cheque Effects would be: reduction in liability (creditor) Reduction in asset (bank) N k N k Capital 30,000 : 00 Cash 3,000 : 00 Creditors(321,000-20,000) 301,000 : 00 Motor vehicle 316,000 : 00 Bank(30,000-20,000) 10,000 : 00 Stock 2,000 : 00 331,000 : 00 331,000 : 00 Sold goods to David on credit N k N k Capital 30,000 : 00 Cash 3,000 : 00 Creditors 301,000 : 00 Motor vehicle 316,000 : 00 Bank 10,000 : 00 Stock 2,000 : 00 3,000 : 00 Debtor 3,000 : 00 334,000 : 00 334,000 : 00 Question 1: Draft the balance sheet for Isiaka and sons Ltd from the following details Land and Building N20,000.00 Cash in hand N15,000.00 Equipment N8,000.00 Creditors N16,000.00 Debtors N1,000.00 Stock N300.00 Motor vehicle N2,500.00 Cash at bank N200.00 Loan N5000.0