Bookkeeping
ELEMENTARY FINANCIAL STATEMENT
Bookkeeping is the recording, on a day-to-day basis, of the financial transactions and information pertaining to a business. It ensures that records of the individual financial transactions are correct, up-to-date and comprehensive.. Example if Abel is a trader, all his business transaction are recorded as those of the business and not as Abel's own transaction. In this subject you will able to record those transactions correctly, accuracy in recording is therefore important.
ELEMENTARY FINANCIAL STATEMENT
Statement of Financial Position
Prepare Statement of Financial Position
A Statement of Financial Position, formerly known as a Balance Sheet, is a financial statement that shows the assets, liabilities, and capital of a business at a specific date. It helps to determine the financial position of a business.
Format of a Statement of Financial Position
Name of Business
Statement of Financial Position as at [Date]
A. Assets
1. Non-Current Assets (Fixed Assets)
-Land and Buildings
-Motor Vehicles
-Furniture and Fittings
-Equipment
2. Current Assets
-Stock (Inventory)
-Debtors (Accounts Receivable)
-Cash at Bank
-Cash in Hand
Total Assets = Non-Current Assets + Current Assets
B. Liabilities
1. Non-Current Liabilities
-Longterm Loans
2. Current Liabilities
-Creditors (Accounts Payable)
-Accrued Expenses
-Short-term Loans
Total Liabilities = Non-Current Liabilities + Current Liabilities
C. Owner’s Equity (Capital)
-Capital (initial investment)
-Add: Net Profit (if any)
-Less: Drawings
Total Capital = Final Owner’s Equity
Final Equation:
Assets = Liabilities + Capital
Determine the value of non-current assets, liabilities and owners' equity
To prepare a Statement of Financial Position, you must be able to calculate the values of non-current assets, liabilities, and owner’s equity. Here's how each is determined:
1. Non-Current Assets (Fixed Assets)
These are long-term assets used in the business and not intended for resale. Their value is determined by adding the cost of all such assets.
Examples include:
-Land and Buildings
-Motor Vehicles
-Furniture and Fittings
-Equipment
Formula:
Total Non-Current Assets = Sum of all fixed asset values
2. Liabilities
These are amounts the business owes to other people or organizations.
a) Current Liabilities – payable within one year
Examples:
-Creditors (Accounts Payable)
-Short-term loans
-Accrued expenses
b) Non-Current Liabilities – payable after more than one year
Describe a Statement of Financial Position
Income Statement
Prepare an Income Statement
Explain the treatment of stock in Income Statement
Describe an Income Statement
Concepts of Financial Statements
Identify the Key user of Financial Statements
Describe the purpose of Financial Statement
Meaning of Financial Statements
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