ACCOUNT

TRANSACTIONS

Business daily activities

Purchase of goods/stocks/inventory
Sales of goods
Cash/ cheque receipt
Cash/ cheque payment

ACCOUNTING PROCEDURES

1) Recording – (bookkeeping) transactions

2) Selecting – Purchase/ Sales/ Receipt/ Payment
3) Summarizing – Total purchase/ total sales
4) Reporting – Profit/ Loss (Sales-cost)
5) Analyzing – The business transactions

Interest Parties
Internal External
Owner – interest on the business success for Customer – interest for the reliable source of
his/her livelihood goods to buy when they need to buy when they
need them
Manager – interest for making future decision Supplier – they are concerned that they are
paid on time and that the business makes the
repeat order
Employee – interest on the success of business Bank – interest whether the business will make
for their wages and salaries and continued repayment of loan with interest
employment
Competitor – interest to compete with their
business position
Government – to improve taxation

Accounting Elements

i) Assets
ii) Liability
iii) Capital
iv) Expense
v) Income

i. Assets – resources owned by the business. E.g. Premises (Buildings), Furniture, Land,
Fixture, Equipment, Machine, Computer, Stock (Inventory, Goods), Cash in Hand (Cash),
Cash at Bank (Bank), Trade Receivable (Debtor)
ii. Liability – the amount owned by the business. E.g. Trade payable (creditor, supplier),
Loan, Bank overdraft, Amount owing (payable)
iii. Capital – Resources supplied by the owner to operate the business. E.g. Amount
invested, Investment, Owner’s contribution, Value of owner’s stake, Equity
iv. Expense – Amount spent for daily operations of business. E.g. Purchase (buy goods/
stocks), Rent, Rate, Salary, Wages, Office, General expenses, Interest (paid), Commission

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 (paid), Discount allowed, Insurance, Electricity, Heat and Light, Travelling expenses,
Cleaning expenses, Motor Vehicle Repair
v. Income – Amount earned from trading activities. E.g. Sales (Sales of Good/Stock),
Commission Received, Discount Received, Fees Received from Client

‘DUALITY CONCEPT’

Every transaction has two aspects, giving and receiving for every outgoing, income or benefit
earned.

‘DUALITY CONCEPT’

All the transactions must be viewed from the side of business. Not from the side of owner.
Owner and business must be viewed separately.

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