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Chapter 2 Transaction Analysis - BAE and Integrated Reporting
Chapter 2 Transaction Analysis - BAE and Integrated Reporting
Chapters 2
Transaction Analysis &
Integrated Financial Reporting
Prepared by
Dr Msizi Mkhize ©
Introduction
In mathematics:
Numerical numbers 1, 2, 3, 4, 5 ...
+ - X ÷ four basic operations
Variables i.e. A B C x y
x 5 10 Mathematical equation
A=O+L
Remember: If you transpose a variable to the
Rule right or left hand side then sign changes
A O L
+ - - + - +
A positive on the left hand side. O positive on the right hand side. L positive on the right hand side.
If you transpose to the right hand If you transpose to the left hand If you transpose to the left hand
side then sign changes to negative side then sign changes to negative side then sign changes to negative
©
Prepared by Dr Msizi Mkhize
Basic Accounting Equation (BAE)
A=O+L
or O=A-L
or L=A-O
©
Prepared by Dr Msizi Mkhize
THE DOUBLE ENTRY SYSTEM
Luca Pacioli Father and Founder
+ Msizi -
2 000 5 000
+ Nethi -
5 000 2 000
©
Prepared by Dr Msizi Mkhize
Bank balance
If bank has a favourable/positive/ debit balance then regard
bank as an ASSET
If bank has an unfavourable/overdraft/negative/credit
Transaction
Business activity or event
Account
Place where business transactions are methodically recorded
Ledger
Collection of accounts
©
Prepared by Dr Msizi Mkhize
BOOK EXAMPLE
Pages 28 -49
Introduction to Accounting
5th Edition (Revised)
Worksheet:
Transaction analysis and
Integrated Financial Reporting ©
©
Transaction: Judy’s Business
1. Deposited R8 000 of her own money into a bank account in the business’s name
A OE
Bank Capital
8 000 8 000
+ - - +
A L
Bank Loan
2 000 2 000
- +
+ -
A A
Bank Cellphone (Equipment)
1 200 1 200
+ -
+ -
A A
Bank Trestle table & chair/Furniture
950 950
+ -
+ -
A A
Bank Inventory
3 600 3 600
+ -
+ -
4. Purchased 20 small black handbags with single pocket – still owe the wholesaler
for R600 for the bags.∴ 𝐶𝑜𝑠𝑡𝑝𝑒𝑟 h𝑎𝑛𝑑𝑏𝑎𝑔= 𝑅 600 = 𝑅 30
20
L
Trade payables Inventory
600 600
- +
+ -
Bank A Sales OE
660 660
+ - - +
A OE
Bank Drawings
300 300
- +
+ -
2.1(B)
2.2(C)
2.3(A)