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Extra info for CIMA Official Learning System Fundamentals of Financial Accounting: CIMA Certificate in Business Accounting
The greater number of owners compared with a sole trader increases the availability of ﬁnance and this is often the reason for forming such a structure. (c) Limited companies. These are organisations recognised in law as ‘persons’ in their own right. Thus a company may own assets and incur liabilities in its own name. The accounting of these organisations must meet certain minimum obligations imposed by legislation, for example, via company law and other regulations. Some of these requirements constitute recommended accounting practice for other types of organisation.
The book contains many pages – many accounts – and is referred to as a ledger. In this chapter we are concerned with the nominal ledger, which is the ledger containing all of the accounts necessary to summarise an organisation’s transactions and prepare a statement of ﬁnancial position and income statement. ) Each account comprises two sides: the left-hand side is referred to as the debit side, and the right-hand side is referred to as the credit side. 3 Details $ Credit Date Details $ What is double-entry bookkeeping?
Nadim had originally been charged $3,000 for it. 3. Received $8,000 from his receivables. They all paid him by cheque. We can now see how these transactions affected his accounting equation. 1. Assets (ofﬁce equipment) increase by $7,000 Assets (bank balance) decrease by $2,000 Liabilities (payables) increase by $5,000 Nadim’s accounting equation is amended to: Assets ϭ Liabilities ϩ Capital 327, 000 ϭ 262, 000 ϩ 65, 000 2. Assets (ofﬁce equipment) decrease by $3,000 Liabilities (payables) decrease by $3,000 Nadim’s accounting equation becomes: Assets ϭ Liabilities ϩ Capital 324, 000 ϭ 259, 000 ϩ 65, 000 3.