19/02/2024

THE ACCOUNTING PROCESS

Transaction / event


Journal (prime entry)  Profit or loss (P/L)

Statement of financial position

(SFP)
Statement of changes in
General ledger (accounts)  equity (SCE)

Cash flow statement (C/F)

Trial balance and

adjustments  Notes and policies
Chapter 4_LESSON 5_FINANCIAL STATEMENTS
ACC 100
AFS (Annual Financial
Statements) 2

ACCOUNTING EQUATION ANNUAL FINANCIAL STATEMENTS

 Statement of profit or loss

Assets = Equity + Liabilities

SFP
SFP Capital (+) Statement of changes in equity
SCE
Drawings (-)
Income (+)
P/L
Expenses (-) Statement of financial position

3 4

CLASS EXAMPLE 2 – KHOSI ENTITY List of accounts Statement of profit or loss

KHOSI (PTY) LTD
STATEMENT OF PROFIT OR LOSS FOR THE REPORTING PERIOD 28 FEBRUARY 2018
Revenue 150 000
Cost of sales (90 000)
Gross profit 60 000
Other income 0
Share capital
Dividends Income from subsidiary 0
Income from other financial assets 0
Distribution costs
Administrative costs (30 000 + 3 100 + 580 + 12 000) (45 680)
Revenue Other expenses
Finance costs 0
Profit before tax 14 320
Tax expense 0

5
Profit after tax 14 320
6

1
 19/02/2024

CLASS EXAMPLE 2 – KHOSI ENTITY List of accounts

Statement of changes in equity From Statement
of profit or loss

Share
Capital
Share capital
Dividends
Share issue

Dividends
Revenue

7 8

CLASS EXAMPLE 2 – KHOSI ENTITY List of accounts Statement of financial position

KHOSI (PTY) LTD
STATEMENT OF FINANCIAL POSITION AS AT 28 FEBRUARY 2018
ASSETS
Non-current assets
Property, plant and equipment (600 000 + 700 000 + 165 000) 1 465 000
Total non-current assets 1 465 000
Share capital
Dividends
Current assets
Trade inventories 335 000
Trade and other receivables 34 000
Revenue Cash and cash equivalents 1 147 020
Total current assets 1 516 020
Total assets 2 981 020

9 10

Statement of financial position ACCOUNTING EQUATION

EQUITY AND LIABILITIES

Equity
Share capital 2 300 000
Retained earnings (10 680)
Total equity 2 289 320
Assets = Equity + Liabilities
Share Capital (+)
Non-current liabilities
Long-term borrowings (500 000 + 165 000) 665 000 Dividends (-)
Total non-current liabilities 665 000 Income (+)
Expenses (-)
Current liabilities
Trade and other payables (25 000 + 1 700) 26 700
Total current liabilities 26 700
Total liabilities 691 700
Total equity and liabilities 2 981 020
11
2 981 020 = 2 289 320 + 691 700 12

2
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ACCOUNTING EQUATION ELEMENTS Assets = Equity + Liabilities



 
Definition
Accrual
accounting 
Assets = Equity + Liabilities
Share Capital (+) Going concern  Elements
Dividends (-)
Income (+)  
Measurement Recognition
Expenses (-)

13 14

THE ACCOUNTING PROCESS

Transaction / event



Journal (prime entry)  Profit or loss (P/L)

Statement of financial position

(SFP)
Statement of changes in
General ledger (accounts)  equity (SCE)

Cash flow statement (C/F)

Trial balance and

adjustments  Notes and policies

AFS (Annual Financial

Statements)  15