Fundamentals of Accounting

Explore double-entry accounting for expenses and revenues, including debit and credit treatments, drawings, and practical examples. Learn how to balance ledgers and prepare a trial balance and final accounts.

Explore how four journals of original entry capture credit sales and purchases—sales journal, returns inward, purchases journal, and returns outward—using invoices, credit notes, and debit notes.

Explore how to treat irrecoverable debts as bad debt in final accounts, recording it as an expense in the income statement and adjusting debtors with the provision for bad debts.

Explore the trial balance and the suspense account, including error types and correction methods using journal entries to ensure debits equal credits and accurate net profit.

Explore accruals and prepayments, and learn to match revenues with expenses in the period, recognizing revenue when goods are sold and recording expenses when incurred.

Discover how depreciation reduces fixed assets and is charged as an expense in the profit and loss account, using straight-line and reducing balance methods.

Learn how the trading profit and loss account, or income statement, calculates gross profit from net sales minus cost of goods sold and derives net profit after expenses.

Explore how the balance sheet reports assets, liabilities, and capital, follows the equation assets equals liabilities plus capital, and contrasts order of permanence with order of liquidity.

Compare cashbook and bank statements to complete bank reconciliation, highlighting timing differences such as late lodgment, outstanding checks, standing orders, credit transfers, direct debits, and dishonored checks.

Learn how to write the bank reconciliation statement and update the cashbook, balancing debit and credit sides, handling elements like balance brought forward, credit transfer, standing orders, and bank charges.