Learning outcomes - Sources and Recording of Data

At the end of this unit:

The double entry system of book-keeping

• explain the meaning of assets, liabilities and owner’s equity (capital)
• explain and apply the accounting equation
• outline the double entry system of book-keeping
• process accounting data using the double entry system
• recognise the division of the ledger into the sales ledger, the purchases ledger and the nominal (general ledger).

Business documents

• recognise and understand the following business documents: invoice, credit note, debit note, statement of account
• complete proforma business documents
• understand the use of business documents as sources of information.

Books of prime (original) entry

• explain the advantage of using various books of prime entry
• explain the use of, and process, accounting data in the books of prime (original) entry – cash book, petty cash book, sales journal, purchases journal, sales returns journal, purchases returns journal and the journal
• post the ledger entries from the books of prime (original) entry
• distinguish between and account for trade discount and cash discounts
• explain the dual function of the cash book as a book of prime (original) entry and as a ledger account for bank and cash
• explain and apply the imprest system of petty cash.

The ledger

• prepare ledger accounts in either “T” account format or running balance format
• post transactions to the ledger accounts
• balance ledger accounts as required and make transfers to final accounts
• interpret ledger accounts and their balances.