Append below the various book of original entry, the transactions being recorded and the related source document(s) being used.

1. Journals
2. Ledger and then
3. Trial Balance

For the Journal:

• transaction takes place;
• determine whether an asset, a liability, owner’s equity, revenue or expense is effected by the transaction and
• apply the rules of debit and credit

For the Ledger:

• periodically, the journal entries are transferrd to the accounts in the ledger and
• the ledger is a list of accounts that the company have, normally known as Chart of Accounts

Lastly, the Trial Balance:

• the trial balance is a list of account balance from the ledger;
• at the end of each accounting period, the company will prepare a trial balance and
• the trial balance should balance i.e. the total debit should equal to credit.

• Assets
• Liabilities
• Owner’s Equity namely Capital & Drawing
• Revenues
• Expenses

The rules of debit(dr) and credit(cr) apply to these accounts:

Accounts Debit Credit Normal Balance

Assets Increase Decrease Debit

Liabilities Decrease Increase Credit

Capital Decrease Increase Credit

Drawings Increase Decrease Debit

Revenues Decrease Increase Credit

Expenses Increase Decrease Debit

1. Accounting entity concept/economic entity,business entity concept- the business is a separate entity from its owners.
2. Accrual concept-revenue is recognized when it is earned and expenses when they are incurred.
3. Accounting period concept-the indefinite life of a busiess entity is divided into accounting periods for the purpose of preparing financial reports.
4. Consistency concept-states that accounting methods and practises should not differ from period to period so as to enable comparisons between periods to be made.
5. Going concern concept-is the assumption that a business will operate indefinitely.
6. Historical cost concet-where all transactions are recorded at the original cost to the business.
7. Money measurement-refers to the identification and measurement of economic events in financial terms ( say in USD).
8. Matching principle/concept-revenue earned during an accounting period has to be matched with the expenses associated with the revenue generated.
9. Objectivity concep- states that there must always be objective verifiable evidence for the occurence of any business transaction.
10. Prudence concept-considers that it is prudent neither to overstate profits and assets nor understate losses and liabilities.

• The accounting equation =Assets=Owner’s Equity + Liabilities

• Assets are items of value owned by the business

• Liabilities are amounts owed by a business to external parties.

• Owner’s equity is the owner’s interest or claim on the business

• Owner’s Equity=Assets-Liabilities

• Owner’s equity can be increased through investment by the owner or as a result of profit earned from business operations
• Owner’s equity can be decreased through withdrawals by the owner for personal use or as a result of losses made from business operations.
• The Balance Sheet is a statement listing all assets, owners’s equity and liabilities AT A PARTICULAR DATE
• The balance sheet totals WILL ALWAYS BALANCE because the assets will always be equal to owner’s equity plus liabilities
• The accounting equation and the Balance Sheet are two different ways of expressing the same idea.
• The equality of the accounting equation and the balance sheet totals are always maintained no matter what transactions take place in the business

• Source documents are important to businesses – to provide evidence or proof that a transaction has occured;used as part of a process to record information into the books of original entry and are required for audit purposes.

• Good features of source documents – date when transaction took place;names and addresses of the parties concerned namely the buyer and seller;nature of the transaction ie description of the goods or services; terms and conditions of the transaction ie trade discount, cash discount, delivery details and an authorised signature.

• Uses of source document:

• Invoice: to inform buyer of the amount to pay for goods&services supplied by the seller

• Credit note: to correct an overcharge in the invoice
• Debit note: to correct an undercharge in the invoice
• Payment voucher: as evidence of payment to a named party
• Cheque counterfoil: as record of amount paid on a particular numbered cheque to the payee
• Receipt: To acknowledge money received
• Bank Statement: Summary of monthly transactions of current account holders with the bank.

• it discloses in one place the complete effects of a transaction
• it provides a chronological record of transactions
• it helps to prevent or locate errors because the debit and credit amounts for each entry could be readily compared.

3. Journalizing means entering transaction data in the journa

4. The standard form and content of journal entries are as follows:

• the date
• the name of account to be debited and the amount
• the name of the account to be credited and the amount
• a description and explanation of the transaction ( i.e. narrative)
• a reference number for the source documents giving proof of the transaction

5. There are different types of Journal:

(a) General Journal

• Debit entries are debited to the particular account in the ledger
• Credit entries are credited to the particular account in the ledger

(b) Purchases Journal

• Net amounts owing to individual suppliers are credited to their individual accounts in the Purchases Ledger.
• The total credit purchases of goods for the period are debited to the Purchases Account in the General Ledger

(c) Returns Outwards Journal

• Net amount of returns to individual suppliers is debited to each individual account in the Purchases Ledger.
• The total returns outwards for the period should be credited to the Returns Outwards Account in the General Ledger

(d) Sales Journal

• Net amount owing by individual customes is debited to each individual account in the Sales Ledger
• The total credit sales of goods for the period are credited to the Sales Account in the General Ledger.

(e) Returns Inwards Journal

• Net amount of returns from individual customers is credited to each individual account in the Sales Ledger.
• The total returns inwards for the period should be debited to the Returns Inwards Account in the General Ledger.