This note will explain the meaning of accounting, the distinction between bookkeeping and accounting, highlight the various forms/types of financial statements prepared by businesses, and explain why lawyers should study accounting or the importance of accounting to lawyers.
This note will discuss the various classes of persons that use accounting information. By accounting information, we mainly refer to the financial statements prepared by accountants. Two broad classes of users will, internal users and external users, will be discussed.
This note will discuss the meaning of the accounting cycle and the processes of the accounting cycle. This note will cover key steps in the accounting cycle, particularly identifying transactions, recording them in books of prime entry, posting them to ledgers, preparing a trial balance, and preparing financial statements.
At the heart of accounting is what is known as the accounting equation. This note will discuss this equation, its various forms, and the meaning of its constitutive elements (assets, liabilities, and capital).
This note will explain the double entry system, the rationale behind it, which is the dual aspect of business transactions, and how transactions are recorded using the double entry system.
This note will discuss the meaning of a trial balance, how it is prepared, and its essence.
Usually, it is assumed that a trial balance with equal debit and credit columns is evidence of accurate entries in the ledger accounts. This assumption is not always true, as there are several errors that may exist in a ledger account but will not be revealed by a trial balance. These errors are sometimes described as errors that do not affect the trial balance and are discussed in this note.
This note will highlight and briefly discuss the various financial statements that are prepared for a business. The statements to be discussed are the statement of financial position and the income statement. These are often the financial statements of a sole trader. The financial statements for a company shall be discussed in subsequent notes.
This note will briefly discuss the meaning of the statement of financial position, all the key components of the statement of financial position such as assets, liabilities, and capital, the essence of the statement of financial position, and the various ways in which the statement of financial position can be prepared.
This note will discuss the meaning of the statement of comprehensive income, its basic structure, key components (net sales, gross profit, and net profit or loss), and its essence or significance.
This note will discuss the meaning of depreciation, its essence, and its causes.
This note will discuss five methods of calculating depreciation and the advantages and disadvantages associated with each. The methods to be discussed are the straight-line method, the reducing or diminishing balance method, the sum of years’ digits, the depletion method, and the revaluation method.
This note will discuss how to record depreciation using the double-entry system of bookkeeping. The note will highlight the accounts that are affected upon depreciation and how to record transactions in those assets.
This note will examine the effect of depreciation on the statement of financial position. The note will proceed from the point where the accounts have been balanced and the trial balance has been extracted.