Preparing and Maintaining Financial

Records and Reports

WORDS TO STUDY
Assets are things of value owned by the business
Receivables are summarized accounts maintained with
debtors and creditors.
Capital is an excess of assets over liabilities
Balance Sheet is the formal statement of the financial
position of the business that shows the assets, liabilities and
owner’s equity.
Income statement is a report that summarizes the revenue
items, expense and the difference between, which is called
net profit/loss for the period.
ACCOUNTING
-The language of business
-The art of recording, classifying, summarizing
in a significant manner and in terms of money,
those transactions and events which are part, at
least of a financial character and interpreted as
the results thereof.
BOOKKEEPING
The act of recording business and events in
systematic and chronological manner. The
person involved in this task is the
bookkeeper. His main job is to record and
process data in the accounting system
 PREPARATION OF FINANCIAL STATEMENTS

FINANCIAL STATEMENTS
 
Balance Sheet
Income Statement
Statement of Cash Receipt and
Disbursement
BALANCE SHEET
It is a formal statement of the financial
position of the business that shows the assets,
liabilities and owner’s equity. It contains too
main sections:
Assets
Liabilities
INCOME STATEMENT
 
It is a report that summarizes the revenue,
items, expense and the difference between
is called net profit/loss for the period.
BALANCE SHEET ACCOUNTS
Cash reported in the balance shows in your cash book,
with the total cash on hand and the bank deposits

Receivables or payables – are summarized from the

accounts maintained with debtors and creditors.

Merchandise and supplies inventory – are determined by

having physical count.
Capital is simply the excess of assets over
liabilities
Assets – are things of value owned by a
business
Assets are normally classified as current,
fixed and other assets.