Basics of Accounting
Introduction to International Bookkeeping and Financial Accounting
Zusammenfassung
This textbook introduces you to international bookkeeping and accounting. It is designed as self study materials and covers the syllabus of an introductory class in accounting. After studying the Basics, you are well prepared to keep bookkeeping records and prepare financial statements like the balance sheet, the income statement, the cash flow statement and the statement of changes in equity.
All chapters outline the learning objectives, provide an overview, include case studies and how-it-is-done-paragraphs. They end with a summary, the explanation of new technical terms and a question bank with solutions for checking your learning progress. On the internet, you can find more than 350 exam tasks including solutions as well as youtube-videos from the author.
The textbook prepares you to study accounting and assists you with the transition from German bookkeeping to international accounting when qualifying for IFRSs.
Schlagworte
- 1–18 Titelei/Inhaltsverzeichnis 1–18
- 19–20 II Introduction 19–20
- 21–26 1 Conventions 21–26
- 1.1 Accounting Periods
- 1.2 Accounting Technical Terms
- 1.3 Account Names
- 1.4 Alphabetic Order
- 1.5 Basics
- 1.6 Bookkeeping Entries
- 1.7 Bookkeeping Entry Format
- 1.8 Calculations
- 1.9 Case Studies (C/S)
- 1.10 Case Study Text
- 1.11 Cash Flow Separation
- 1.12 Companies
- 1.13 Cost-Expense-Congruence
- 1.14 Country
- 1.15 Currency Unit
- 1.16 Data Format in Tables
- 1.17 Prepayments of Income Taxes
- 1.18 How it is Done
- 1.19 Income Taxes
- 1.20 Financial Statements for Taxation
- 1.21 Names
- 1.22 Language
- 1.23 Learning Objectives and Summaries
- 1.24 Legal Forms of a Business
- 1.25 Length of a Month/Year
- 1.26 Level of Precision
- 1.27 Literature
- 1.28 Non-existing Items
- 1.29 Online Materials
- 1.30 Payment Terms
- 1.31 Presentation of Accounts
- 1.32 Proportional Calculation of Depreciation and Interest
- 1.33 Question Bank
- 1.34 Quotation of Law Texts/Standards
- 1.35 Sequence of Bookkeeping Entries
- 1.36 Tax on Capital Returns (Dividend Tax)
- 1.37 Transaction Costs
- 1.38 Value Added Tax, Goods and Service Tax
- 1.39 VAT Reduction
- 1.40 Working Definition(s)
- 1.41 Work-in-Process Account
- 1.42 Writing Management Terms
- 1.43 WWW
- 1.44 Youtube Videos
- 1.45 10-20-30 Rule
- 27–47 2 Cafeteria Example and what is on the Balance Sheet 27–47
- 2.1 What is in the Chapter?
- 2.2 Learning Objective
- 2.3 Statement of Financial Position
- 2.4 Our first Balance Sheet
- 2.5 Accounting Equation
- 2.6 Income Statement
- 2.7 Reading Financial Statements
- 2.8 C/S NEWINGTON Ltd
- 2.9 What is on the Balance Sheet’s Asset side?
- 2.10 What is on the Capital and Liabilities Side of the Balance Sheet?
- 2.11 What is on the Income Statement?
- 2.12 What is on the Statement of Cash Flows?
- 2.13 What is on the Statement of Changes in Equity?
- 2.14 C/S KENSINGTON
- 2.15 Summary
- 2.16 Working Definitions
- 2.17 Question Bank
- 2.18 Solutions
- 48–54 3 Shareholders’ View 48–54
- 3.1 What is in the Chapter?
- 3.2 Learning Objective
- 3.3 McDonald's Corp
- 3.4 Summary
- 3.5 Working Definition
- 3.6 Question Bank
- 3.7 Solutions
- 55–65 4 Legal Aspects of Accounting 55–65
- 4.1 What is in the Chapter?
- 4.2 Learning Objectives
- 4.3 Who prepares Financial Statements?
- 4.4 How to Establish a German Limited Company
- 4.5 Necessity to Prepare Financial Statements
- 4.6 Scope of IFRSs
- 4.7 What are the Standards?
- 4.8 Difference between HGB and IFRSs
- 4.9 Summary
- 4.10 Working Definitions
- 4.11 Question Bank
- 4.12 Solutions
- 66–82 5 The Excel Accountant 66–82
- 5.1 What is in the Chapter?
- 5.2 Learning Objectives
- 5.3 Accounting Software
- 5.4 Accounting with MS-Excel
- 5.5 Acc (Accounts)
- 5.6 JL (Journal)
- 5.7 TB (Trial Balance)
- 5.8 BS (Statement of Financial Position)
- 5.9 Ger BS (German Balance Sheet)
- 5.10 IS (Statement of Comprehensive Income)
- 5.11 Ger-IS (German Income Statement)
- 5.12 CFS (Statement of Cash Flows)
- 5.13 SCE (Statement of Changes in Equity)
- 5.14 RoA (Register of non-current Assets)
- 5.15 Int&Pay-off (Interest and Pay-off Schedule)
- 5.16 PCB (Petty Cash Book)
- 5.17 CB (Cash Book)
- 5.18 BankST (Bank statement)
- 5.19 Cons (Consolidation)
- 5.20 BP (Business Plan)
- 5.21 Summary
- 83–91 6 Introduction to Balance Sheet and Income Statement 83–91
- 6.1 What is in the Chapter?
- 6.2 Learning Objectives
- 6.3 Approach to Accounting
- 6.4 Asset Side of the Balance Sheet
- 6.5 Capital and Liability Side of the Balance Sheet
- 6.6 Income Statement
- 6.7 Summary
- 6.8 Working Definitions
- 6.9 Question Bank
- 6.10 Solutions
- 92–98 7 Activities on the Asset Side of the Balance Sheet 92–98
- 7.1 What is in the Chapter?
- 7.2 Learning Objectives
- 7.3 Asset Exchanges
- 7.4 C/S ROHRBACH Ltd
- 7.5 Activity 1: Purchase on Cash
- 7.6 Activity 2: Acquisition of Equipment on Cash
- 7.7 Activity 3: Cash Sale
- 7.8 Activity 4: Disposal of non-current assets
- 7.9 Summary
- 7.10 Working Definitions
- 7.11 Question Bank
- 7.12 Solutions
- 99–108 8 Activities on Both Sides of the Balance Sheet 99–108
- 8.1 What is in the Chapter?
- 8.2 Learning Objectives
- 8.3 Activities Changing Balance Sheet Items
- 8.4 C/S EDENVALE AG
- 8.5 Activity 1: Establishment of the Business
- 8.6 Activity 2: Purchase of Goods
- 8.7 Activity 3: Borrowing Money from the Bank
- 8.8 Activity 4: Acquisition of non-current Assets
- 8.9 Activity 5: Payment of Debts
- 8.10 Activity 6: Selling Goods
- 8.11 Activity 7: Receipts from Customers
- 8.12 Activity 8: Payment for Debts
- 8.13 Effects of the Activities
- 8.14 Summary
- 8.15 Working Definitions
- 8.16 Question Bank
- 8.17 Solutions
- 109–118 9 Profit and Loss Activities 109–118
- 9.1 What is in the Chapter?
- 9.2 Learning Objectives
- 9.3 Profit Calculation
- 9.4 C/S RIVERGATE (Pty) Ltd
- 9.5 Taxable Profit
- 9.6 Retained Earnings
- 9.7 C/S PELZERHAGEN (Pty) Ltd
- 9.8 Activity 1: Payment for Rent
- 9.9 Activity 2: Payment for Labour
- 9.10 Activity 3: Acquisition on Credit Followed by Depreciation
- 9.11 Activity 4: Rendering Service and Cash Receipt
- 9.12 Income Tax Calculation
- 9.13 Summary
- 9.14 Working Definitions
- 9.15 Question Bank
- 9.16 Solutions
- 119–131 10 Introduction to T-Accounts for Items on the Balance Sheet 119–131
- 10.1 What is in the Chapter?
- 10.2 Learning Objectives
- 10.3 Overview
- 10.4 T-Accounts
- 10.5 Balancing-off
- 10.6 Real and Nominal Accounts
- 10.7 Basics-Chart of Accounts
- 10.8 Applying T-Accounts for ROHRBACH Ltd
- 10.9 Applying T-Accounts for EDENVALE AG
- 10.10 Summary
- 10.11 Working Definitions
- 10.12 Question Bank
- 10.13 Solutions
- 132–141 11 T-Accounts for Profit and Loss 132–141
- 11.1 What is in the Chapter?
- 11.2 Learning Objectives
- 11.3 Applying Nominal Accounts
- 11.4 Closing-off Accounts
- 11.5 C/S PELZERHAGEN (Pty) Ltd
- 11.6 Calculation of Income Tax
- 11.7 Transfer of Profit or Loss to Equity
- 11.8 Summary
- 11.9 Working Definition
- 11.10 Question Bank
- 11.11 Solutions
- 142–154 12 Introduction to Bookkeeping Entries 142–154
- 12.1 What is in the Chapter?
- 12.2 Learning Objectives
- 12.3 Formal Description of Bookkeeping Entries
- 12.4 Double Entry System
- 12.5 Common Regulations for Bookkeeping
- 12.6 Bookkeeping Entries at ROHRBACH Ltd
- 12.7 Bookkeeping Entries at EDENVALE AG
- 12.8 Bookkeeping Entries at PELZERHAGEN (Pty) Ltd
- 12.9 Summary
- 12.10 Working Definitions
- 12.11 Question Bank
- 12.12 Solutions
- 155–164 13 Special Asset Accounts 155–164
- 13.1 What is in this Chapter?
- 13.2 Learning Objectives
- 13.3 Asset Recognition
- 13.4 Non-current Assets
- 13.5 Current Assets
- 13.6 Summary
- 13.7 Working Definitions
- 13.8 Question Bank
- 13.9 Solutions
- 165–172 14 Special Equity Accounts 165–172
- 14.1 What is in the Chapter?
- 14.2 Learning Objectives
- 14.3 Equity Section on the Balance Sheet
- 14.4 Issued Capital
- 14.5 Reserves
- 14.6 Retained Earnings
- 14.7 Summary
- 14.8 Working Definitions
- 14.9 Question Bank
- 14.10 Solutions
- 173–186 15 Special Liability Accounts 173–186
- 15.1 What is in the Chapter?
- 15.2 Learning Objectives
- 15.3 Liabilities
- 15.4 Effective Interest Calculation
- 15.5 Disclosure of Liabilities
- 15.6 Annuities ..................................................................................................... 15
- 15.7 Bank Loans with constant Pay-offs
- 15.8 Leases
- 15.9 Bonds
- 15.10 Down Payments and Partial Payments
- 15.11 Provisions
- 15.12 Income tax liabilities .................................................................................. 15
- 15.13 Summary
- 15.14 Working Definitions
- 15.15 Question Bank
- 15.16 Solutions
- 187–196 16 Reconciliation Accounts 187–196
- 16.1 What is in the Chapter?
- 16.2 Learning Objectives
- 16.3 Account Structure
- 16.4 Asset Management
- 16.5 Reconciliation Account
- 16.6 C/S DAGBREEK Ltd. (Asset Management)
- 16.7 C/S RETIEF (Pty) Ltd
- 16.8 Purchase and Sales Ledger
- 16.9 C/S DESPATCH Ltd
- 16.10 C/S SCHECKTER Ltd
- 16.11 Summary
- 16.12 Working Definitions
- 16.13 Question Bank
- 16.14 Solutions
- 197–212 17 Depreciation 197–212
- 17.1 What is in this Chapter?
- 17.2 Learning objectives
- 17.3 Regulations for Depreciation
- 17.4 Depreciation Parameters
- 17.5 Straight-line Method
- 17.6 Recording Depreciation
- 17.7 Register of Non-Current Assets
- 17.8 C/S FAIRBRIDGE Ltd
- 17.9 Declining Method for Depreciation
- 17.10 C/S KROLLER Ltd
- 17.11 Depreciation Following Asset Deployment
- 17.12 C/S FLYSCHER Ltd
- 17.13 Summary
- 17.14 Working Definitions
- 17.15 Question Bank
- 17.16 Solutions
- 213–220 18 Further Expenses and Accruals 213–220
- 18.1 What is in the Chapter?
- 18.2 Learning Objectives
- 18.3 Prepaid Expenses
- 18.4 C/S SIMONI Ltd
- 18.5 Summary
- 18.6 Question Bank
- 18.7 Solutions
- 221–234 19 Accounting for Labour 221–234
- 19.1 What is in the Chapter?
- 19.2 Learning Objectives
- 19.3 Pay-days
- 19.4 Components of Labour
- 19.5 Net Salary
- 19.6 Gross Salary
- 19.7 Assumptions
- 19.8 Case study SUIDERLAND Ltd
- 19.9 Piecework Labour
- 19.10 C/S CLARITON Ltd
- 19.11 Accruals for Piecework Labour
- 19.12 Summary
- 19.13 Working Definitions
- 19.14 Question Bank
- 19.15 Solutions
- 235–243 20 Trading Business – (1) Purchases and Returns 235–243
- 20.1 What is in the Chapter?
- 20.2 Learning Objectives
- 20.3 Bookkeeping Entries for Trading Business
- 20.4 C/S APPLEDENE (Pty) Ltd
- 20.5 Accounting for Returns Outwards
- 20.6 C/S KLIPFONTAIN Ltd
- 20.7 Summary
- 20.8 Working Definitions
- 20.9 Question Bank
- 20.10 Solutions
- 244–256 21 Trading Business – (1) Purchases and Returns plus VAT 244–256
- 21.1 What is in the Chapter?
- 21.2 Learning Objectives
- 21.3 Value Added Tax VAT
- 21.4 How to Calculate input-VAT
- 21.5 C/S APPLEDENE (Pty) Ltd
- 21.6 VAT Consideration for Returns Outwards
- 21.7 C/S KLIPFONTEIN Ltd
- 21.8 Summary
- 21.9 Working Definitions
- 21.10 Question Bank
- 21.11 Solutions
- 257–275 22 Trading Business – (2) Sales and Returns 257–275
- 22.1 What is in the Chapter?
- 22.2 Learning Objectives
- 22.3 Revenue Recognition
- 22.4 Trading Account
- 22.5 C/S APENDORP (Pty) Ltd
- 22.6 C/S DURANT (Pty) Ltd
- 22.7 Summary
- 22.8 Working Definitions
- 22.9 Question Bank
- 22.10 Solutions
- 276–293 23 Trading Business – (2) Sales and Returns plus VAT 276–293
- 23.1 What is in the Chapter?
- 23.2 Learning Objectives
- 23.3 How to Record Output-VAT
- 23.4 C/S APENDORP (Pty) Ltd
- 23.5 C/S DURANT (Pty) Ltd
- 23.6 Summary
- 23.7 Question Bank
- 23.8 Solutions
- 294–314 24 Privately-owned Business: Drawings 294–314
- 24.1 What is in the Chapter?
- 24.2 Learning Objectives
- 24.3 Why running a Private Business?
- 24.4 Drawings
- 24.5 Balance Sheet for a privately-owned Company
- 24.6 How to Record a Drawing
- 24.7 C/S T.L. vanGuard
- 24.8 C/S PAROW HOUTBANK
- 24.9 Summary
- 24.10 Working Definitions
- 24.11 Question Bank
- 24.12 Solutions
- 315–325 25 Production Firms 315–325
- 25.1 What is in the Chapter?
- 25.2 Learning Objectives
- 25.3 Inventory Valuation and Recording
- 25.4 C/S REGENT BIKE (Pty) Ltd
- 25.5 Summary
- 25.6 Working Definitions
- 25.7 Question Bank
- 25.8 Solutions
- 326–351 26 Inventory Systems 326–351
- 26.1 What is in the Chapter?
- 26.2 Learning Objectives
- 26.3 Recall of the Periodic Inventory System
- 26.4 Perpetual Inventory System
- 26.5 C/S WITSAND (Pty) Ltd. - Periodic Inventory System
- 26.6 C/S WITSAND (Pty) Ltd. - Perpetual Inventory System
- 26.7 Summary
- 26.8 Working Definitions
- 26.9 Question Bank
- 26.10 Solutions
- 352–365 27 Cost Formulas 352–365
- 27.1 What is in the Chapter?
- 27.2 Learning Objectives
- 27.3 Cost Formulas
- 27.4 C/S MALGAS (Pty) Ltd
- 27.5 Application of Weighted Average (A)
- 27.6 Application of First-In-First-Out (B)
- 27.7 Application of Last-In-First-Out (C)
- 27.8 Summary
- 27.9 Working Definitions
- 27.10 Question Bank
- 27.11 Solutions
- 366–403 28 Income Statement Following the Cost of Sales Format 366–403
- 28.1 What is in the Chapter?
- 28.2 Learning Objectives
- 28.3 Statement of Profit or Loss and Other Comprehensive Income
- 28.4 Nature of Expense Method
- 28.5 Cost of Sales Format
- 28.6 Similarities/Differences
- 28.7 Application of NoE and COS
- 28.8 C/S ASHTON Ltd
- 28.9 C/S ASHTON Ltd. – Nature of Expense Method (NoE)
- 28.10 C/S ASHTON Ltd. – Cost of Sales Format (COS)
- 28.11 C/S MONTAGU (Pty) Ltd
- 28.12 Summary
- 28.13 Working Definitions
- 28.14 Question Bank
- 28.15 Solutions
- 404–423 29 Trial Balance 404–423
- 29.1 What is in the Chapter?
- 29.2 Learning Objectives
- 29.3 How to Prepare a Trial Balance
- 29.4 C/S PENTZ Ltd
- 29.5 Step (A): Making Bookkeeping Entries
- 29.6 Step (B): Preparing the Trial Balance
- 29.7 Step (C): Checking the Trial Balance
- 29.8 Step (D): Making Adjustments
- 29.9 Step (E): Preparing the Adjusted Trial Balance
- 29.10 Step (F): Deriving Financial Statements
- 29.11 Summary
- 29.12 Working Definitions
- 29.13 Question Bank
- 29.14 Solutions
- 424–434 30 Tax Calculation, Profit Appropriation and Equity Changes 424–434
- 30.1 What is in the Chapter?
- 30.2 Learning Objectives
- 30.3 Profit Appropriation
- 30.4 Auditing
- 30.5 C/S RAATS Ltd
- 30.6 Statement of Changes in Equity
- 30.7 Summary
- 30.8 Working Definitions
- 30.9 Question Bank
- 30.10 Solutions
- 435–455 31 Multiple-Period Bookkeeping 435–455
- 31.1 What is in the Chapter?
- 31.2 Learning Objectives
- 31.3 End of Accounting Period Procedures
- 31.4 Beginning of Accounting Period Procedures
- 31.5 Timeline for Financial Statements
- 31.6 C/S GOUSBLOM Ltd. - 20X7
- 31.7 C/S GOUSBLOM Ltd. – 20X8
- 31.8 Summary
- 31.9 Question Bank
- 31.10 Solutions
- 456–483 32 Introduction to Statements of Cash Flows 456–483
- 32.1 What is in the Chapter?
- 32.2 Learning Objectives
- 32.3 Cash Flow Statement Requirements in Germany
- 32.4 Cash Flow Statement Requirements by IFRSs
- 32.5 Categories of Cash Flows
- 32.6 Cash Flow Statement and Value added Tax
- 32.7 Direct Method
- 32.8 C/S MANSELL Ltd
- 32.9 Reconciliation Method
- 32.10 C/S DEERHURST
- 32.11 Formal Procedure for the Reconciliation
- 32.12 Reconciliation at MANSELL Ltd
- 32.13 C/S SUNLANDS AG
- 32.14 Summary
- 32.15 Working Definitions
- 32.16 Question Bank
- 32.17 Solutions
- 484–523 33 Establishment of a Business and Legal Form Changes 484–523
- 33.1 What is in the Chapter?
- 33.2 Learning Objectives
- 33.3 C/S SALDANHA (Part 1: Sole Proprietor)
- 33.4 Requirements to Prepare Financial Statements for Small Business
- 33.5 Bookkeeping Records for a Sole Proprietorship (Case Saldanha)
- 33.6 Calculation of Profits in a Sole Proprietorship (Case Saldanha)
- 33.7 Change of Legal Form (Case Saldanha)
- 33.8 Partnerships
- 33.9 C/S SNACKY-TICKY-Shop (Part 2: Partnership)
- 33.10 C/S SNACKY-TICKY-Shop (Part 3: Limited Company)
- 33.11 Business Activities (C/S SNACKY-TICKY Ltd.)
- 33.12 Profit and Loss Calculation (C/S SNACKY-TICKY Ltd.)
- 33.13 Summary
- 33.14 Working Definitions
- 33.15 Question Bank
- 33.16 Solutions
- 524–534 34 Liquidations 524–534
- 34.1 What is in the Chapter?
- 34.2 Learning Objectives
- 34.3 Reasons for Liquidations
- 34.4 Liquidation Procedures
- 34.5 C/S MOSSEL SPORTS
- 34.6 Tax Implication for a Profit on Liquidation
- 34.7 Alternative End for the C/S MOSSEL SPORTS
- 34.8 Liquidation of Partnerships and Limited Companies
- 34.9 Summary
- 34.10 Working Definitions
- 34.11 Question Bank
- 34.12 Solutions
- 535–548 35 Disposals 535–548
- 35.1 What is in the Chapter?
- 35.2 Learning Objectives
- 35.3 Reasons for Disposals
- 35.4 Bookkeeping Entries for Disposals
- 35.5 C/S: WARDRIF Ltd
- 35.6 Summary
- 35.7 Working Definitions
- 35.8 Question Bank
- 35.9 Solutions
- 549–563 36 Discounts and Rebates 549–563
- 36.1 What is in the Chapter?
- 36.2 Learning Objectives
- 36.3 Characteristics of Discounts and Rebates
- 36.4 Recording Discounts and Rebates
- 36.5 Impact of Discounts on Financial Statements
- 36.6 Direct Discounts
- 36.7 C/S MELKBOS Ltd
- 36.8 Deferred Discount
- 36.9 C/S HETKRUIS Ltd. and FIXCARS (Pty) Ltd. - Buyer
- 36.10 C/S HETKRUIS Ltd. and FIXCARS (Pty) Ltd. – Seller
- 36.11 Discounts Received in the Next Accounting Period
- 36.12 C/S BELLICK AG
- 36.13 Summary
- 36.14 Working Definitions
- 36.15 Question Bank
- 36.16 Solutions
- 564–578 37 Cash Book: Reconciliation with the Bank Statement 564–578
- 37.1 What is in the Chapter?
- 37.2 Learning Objectives
- 37.3 Need for Bank Reconciliation
- 37.4 Bank Statements
- 37.5 C/S KRAGGA Consultants Ltd
- 37.6 Reconciliation
- 37.7 Summary
- 37.8 Working Definitions
- 37.9 Question Bank
- 37.10 Solutions
- 579–592 38 Petty Cash Book 579–592
- 38.1 What is in the Chapter?
- 38.2 Learning Objectives
- 38.3 Need for a Petty Cash Book
- 38.4 Bookkeeping Records for Expenditures Paid from Petty Cash
- 38.5 C/S SWARTKLIP Ltd
- 38.6 Summary
- 38.7 Working Definitions
- 38.8 Question Bank
- 38.9 Solutions
- 593–606 39 Books of Original Entry 593–606
- 39.1 What is in the Chapter?
- 39.2 Learning Objectives
- 39.3 Need for Books of Original Entry
- 39.4 Concept of Books of Original Entry
- 39.5 C/S MUIRFIELD (Pty) Ltd
- 39.6 Summary
- 39.7 Working Definitions
- 39.8 Question Bank
- 39.9 Solutions
- 607–610 40 Abbreviations 607–610
- 611–620 41 Table of Figures 611–620
