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4-Unit6 Sem2

Accounting is the process of recording and tracking financial transactions for businesses and organizations. Luca Pacioli introduced the double-entry method of accounting in 1494, which requires each transaction to be recorded twice - as a debit and credit. This system helps ensure accuracy by requiring the total debits and credits to be equal. Modern accounting provides objective financial information to managers, investors, and others through financial statements like the balance sheet, income statement, and cash flow statement.

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38 views

4-Unit6 Sem2

Accounting is the process of recording and tracking financial transactions for businesses and organizations. Luca Pacioli introduced the double-entry method of accounting in 1494, which requires each transaction to be recorded twice - as a debit and credit. This system helps ensure accuracy by requiring the total debits and credits to be equal. Modern accounting provides objective financial information to managers, investors, and others through financial statements like the balance sheet, income statement, and cash flow statement.

Uploaded by

Ramzi Amar
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Semester : 02

Unit : 06 lesson 1 and 2

Accounting
In 1494, in his famous book on mathematics and accounting*1, the Italian mathematician Luca Pacioli
introduced the “Double Entry Method”1 which became the backbone of modern accountancy. According to
this system each transaction2 should be recorded twice, first as a debit 3
and second as a credit 4 to reduce
mistakes associated with bookkeeping, because at the end of the day it is expected that the sum of the debit
side should be equal to the credit side otherwise something has gone wrong somewhere**2.

Nowadays, the accounting profession is crucial to the operation of the whole economic system.
Managers, shareholders 5, creditors, investors 6…and stock market operators7depend on accountants to provide
them with objective, reliable information about the financial condition of the companies they deal with.

The basic principles of accountancy are very simple: all flows of funds in8 and out9 of the company
need to be recorded, with clear tracking of debits and credits. This recording of transactions is known as
bookkeeping, since it involves preparing "books" or more likely, computer records with financial information
about the company. These bookkeeping records are known as the company’s journal10. At regular intervals,
for example, every month the books must be examined to ensure that they balance correctly.

Example: On May 7, Burger Company purchased on account11 DZD 300.000 of raw materials12.
Accountants should use some account codes13 to record this transaction in the company’s journal as follows:

Debit Credit 07/ 05 Amounts Amounts


381 Purchases of raw materials 300.000

401 Supplier payables14 300.000

Purchase invoice15 number ……

1
* Summary of arithmetic, geometry, proportions and proportionality).

2
**If you buy a new computer that costs DZD 30.000, your cash account will decrease by DZD 30.000 and
your assets ( the computer) will increase by DZD30.000 .
At the end of each accounting period accountants must prepare financial statements16 to analyze the
company’s financial performance. According to the Algerian Financial Accounting System17, these obligatory
statements are: the balance sheet18, the income statement19, the cash-flow statement20, the statement of changes
in equity21 and the accompanying notes22.

- The balance sheet is related to the fundamental accounting equation:


Assets 23= Liabilities24 + Equity25

Assets (owns) Liabilities + equity (owes)


Fixed assets26 Equity
Long term liabilities

Current assets27 Short term liabilities

- The income statement: Also known as the profit and loss statement

Revenues
+ Sales revenue28

-Expenses
-Production costs29

Profit/loss

Main concepts

English Arabic French


1 Double entry bookkeping ‫محاسبة القيد المزدوج‬ Le principe de la partie double
2 Transaction ‫معاملة‬ Transaction
3 Debit ‫حساب مدين‬ Débit
4 Credit ‫حساب دائن‬ Crédit
5 Shareholders ‫الشركاء‬ Actionnaires
6 Inverstors ‫المستثمرون‬ Investisseurs
7 Stock market operators ‫المتعاملون في البورصة‬ Opérateurs de bourse
8 Flows of funds in the ‫التدفقات المالية الداخلة‬ Flux financiers entrant à
company l’entreprise
9 Flows of funds out of the ‫التدفقات المالية الخارجة‬ Flux financiers sortant de
company l’entreprise
10 Journal ‫دفتر اليومية‬ Le journal
11 Purchases on account ‫مشتريات على الحساب‬ Achats au comptant
12 Raw materials ‫مواد أولية‬ Matières premières
13 Account codes ‫أرقام الحسابات‬ Codes des comptes
14 Supplier payables ‫ديون الموردين‬ Dette fournisseurs
15 Purchase invoice ‫فاتورة الشراء‬ Facture d’achat
16 Financial statements ‫القوائم المالية‬ Etats financiers
17 Algerian Financial ‫النظام المحاسبي المالي الجزائري‬ Système comptable financier
Accounting System algérien (SCF)
18 The balance sheet ‫الميزانية‬ Le bilan
19 The income statement ‫جدول حسابات النتائج‬ Les comptes de résultats
20 The cash-flow statement ‫جدول التدفقات النقدية‬ Tableau des flux de trésorerie
21 The statement of changes ‫جدول تغيرات األموال الخاصة‬ Tableau de variation des
in equity capitaux propres
22 The accompanying notes ‫المالحق‬ Les notes annexes
23 Assets ‫األصول‬ actifs
24 Liabilities ‫الخصوم‬ Passifs
25 Equity )‫أموال خاصة (أموال المساهمين‬ Capitaux propres
26 Fixed assets ‫أصول ثابتة‬ Actifs non courants
27 Current assets ‫أصول جارية‬ Actifs courants
28 Sales revenue )‫مداخيل المبيعات(رقم األعمال‬ Le chiffre d’affaires
29 Production costs ‫تكاليف اإلنتاج‬ Coûts de production
Activities

1. Why is accounting important to businesses?


2. Match each concept to the correct definition

Sales revenue A financial statement that shows the financial position


of the company at a specific period (usually one year)

Income statement A table where the accountant records the company’s


daily financial transactions.

Balance sheet One of the core financial statements, it displays the


company’s revenues, expenses and profit (or loss).

Journal The company’s revenue from sales.

3. Give synonyms to these words

Creditors, Accounting, Annual accounts, Journal.

4. Give opposites to these words

Creditors, Objective .

5. Turn the following sentence into the active form

The books must be examined to ensure that they balance correctly.

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