Financial Record keeping

• Entrepreneurship
• Secondary Education

Why should the accounting equation be balanced?

Chapter 20.1

:Financial Record Keeping 

Pages 460-470

Objectives

Determine the accounting assumptions

Compare and contrast the hand kept and computerized accounts

Discuss the accounting equation

Accounting

When creating accounting books, you will make  assumptions about your business.

Accounting assumptions can be defined as a set of rules that ensures the business operations of an organization and are conducted efficiently and as per the standards defined by the FASB (Financial Accounting Standards Board) which ultimately helps in laying the groundwork for consistent, reliable and valuable organizations.

Activity 1: Individual:What are the accounting assumptions?Give the importance of these accounting assumptions.

What is block of time covered by an accounting
report ?

1. Financial report
2. Accounting assumptions
3. Calender year
4. Accounting period

Hand kept accounting 

A manual bookkeeping system can be put into place quickly. It’s a simple method of bookkeeping that can work well for sole traders or small business owners.

Computerized accounting systems are software programs that are stored on a company's computer, network server, or remotely accessed via the Internet. Computerized accounting systems allow you to set up income and expense accounts, such as rental or sales income, salaries, advertising expenses, and material costs.

Activity 2: In pairs find what is the difference between hand kept and computerized accounts.

What are the advantages and disadvantages of the hand kept accounts ?

Assets

Account receivable

Liabilities

Account Payable

anything of value that the
 business owns

 the amount customers owe your business.

the debts of the business.

This is the

a mount your business owes to creditors.

Activity 3:Group Work What is meant by accounting equation ?Frame three different accounting equations involving various accounts.Keep at least one of the items missing so as to allow its calculation.

Challenge: In the accounting equation formed try to keep two unknown items?

Do you think the accounting equation prepared by your friend is correct?

Give the important terms of the lesson.