ELEMENTS OF ACCOUTING SYSTEM

Question 1

WHAT ARE THE ELEMENTS OF ACCOUNTING SYSTEM ?

Answer 1

• FINANCIAL DOCUMENTS
• BOOKS OF PRIME ENTRY
• DOUBLE ENTRY SYSTEM OF LEDGERS
• TRIAL BALANCE
• FINANCIAL STATEMENT

Question 2

FINANCIAL DOCUMENTS

Answer 2

THEY ARE SOURCES OF ACCOUNTING INFORMATION:
Invoices (issued or received)
Credit Notes (issued or received)
Bank payment in slips
Cheque issued
BACS
Faster payment documents

Question 3

BOOK OF PRIME ENTRY

Answer 3

THESE ARE FOR GATHERING AND SUMMARISING ACCOUNTING INFORMATION:

• DAY BOOKS
• JOURNALS
• CASH BOOKS (ALSO USED IN DOUBLE-ENTRY)

Question 4

DOUBLE-ENTRY SYSTEM OF LEDGERS

Answer 4

THIS IS USED FOR RECORDING THE DUAL ASPECT OF BUSINESS TRANSACTIONS IN THE ACOUNTING SYSTEM.

• SALES LEDGER ( ACCOUNT FOR CUSTOMERS)
• PURCHASE LEDGER ( ACCOUNT FOR SUPPLIERS)
• GENERAL LEDGER:
• INCOME (REVENUE)
• EXPENSES (COSTS)
• ASSETS (CURRENT ASSET AND NON-CURRENT ASSET)
• LIABILITIES (CURRENT AND NON-CURRENT LIABILITIES
• CAPITAL (EQUITY)
• CASH BOOK (BANK AND CASH TRANSACTIONS)

Question 5

TRIAL BALANCE

Answer 5

THIS IS USED FOR ARITHMETICAL CHECKING OF DOUBLE ENTRY BOOKKEEPING.
- EXTENDED TO PRODUCE DATA FOR FINANCIAL STATEMENTS

Question 6

FINANCIAL STATEMENT

Answer 6

MEASUREMENT OF PROFIT OR LOSS, ASSETS , LIABILITIES AND CAPITAL

• STATEMENT OF PROFIT OR LOSS
• STATEMENT OF FINANCIAL POSITION