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In this book, Financial Accounting I, the authors,
Messrs N.A. Ukpai, B.D Kiabel and i.c Obara of the Rivers State University of Science and Technology, Port Harcourt, lucidly treated the topics at the introductory level of Financial Accounting in our Universities and other related tertiary institutions. The topics are adequate for theinstitute of Chartered Accountants of Nigeria (ICAN) stage one examinations and other professional bodies. The concepts and principles are defined, explained and illustrated with practical local examples. The focus of this book is to show how financial accounting data are accumulated and how periodic financial statements are prepared to enable the student interpret and use accounting information intelligently and effectively. The ease to read design of the book practice questions and exercises with solutions at the end of all chapters specially distinguished the book and recommends it for reading to all accounting students and practitioners
FINANCIAL
ACCOUNTING 1
N. A. Ukpai
B. D. Kiabel
L. C. Obara
Dept. of Accountancy
Rivers State University of Science and Technology
Port Harcourt
Nigeria
Reprinted by:
DAYIDSTONES PUBLISHERS LTD.
Port Harcourt
~.
Second reprint by:
DAVIDSTONES PUBLISHERS LTD.
Chief Wali Estate, Rumualogu,
Port Harcourt, Nigeria.
Tel.: 08035079193
FirstPublished, 1998 Pen Paper Publishers First reprint by:
HORIZON CONCEPT
ISBN' 978-2873-87-X
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical photocopying, recording or otherwise, without the prior written permission of Davidstones Publishers Ltd.
A.
:;.,~
Preface. .. _ " ,. "."
Acknowledgn·;,·nts _.,_,mm..'''''''·
Forward _".""",,",,"""
CHANERl
Definition of Accounting.."""".".
Book Keeping defined-."""",,'"
Book Keeping & Accoudimnl!
CBAPTER2
History, Principles a.'ld GmmmI
Principles and Com-ent:iaIJmui;
Basic Concepts, Principies.a
CHAPTER 3 Accounting in the Opet'" The role of AccountingillulII Different Types of &KiIIaIlii Financial Accounting ~ Users of Fi:naJ'!ciaI Jnk;ii:i8iIIiIII
CHAPTEll4 Double Entrv"'1 '.Ii~ Advantages of OIl IiIaIIIl The Accoun..n-r JFs S +,. Debits and CrecBs,,_~ Expenses and Rev; ... The Account and Ihl!-
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TAinJ: \,; CUNTENTS Preface. . xiii
Acknowledgln'.·nts........................................................................................................ ix
Forward.............. x
CHAPTER 1
Definition of Accounting......................................................................................... Book Keeping defined ·· ·..·..·· ···· ·..··........................... Book Keeping & Accounting ···..···· ·..· · ·· ····..·..· ·..·.............
1
3
3
C(IAPTER2
J.
?:5
History, Principles and Convention of Accounting............................ Principles and Conventions Basic Concepts, Principles and Convention · · ·......................
6
7
7
CHAPTER 3
Accounting in the Operation of an Enterprise....................................... The role of Accounting in an Enterprise Different Types of Business Organizations Financial Accounting Statements Users of Financial InformatioI1............................................................................
14
14
16
17
19
CHAPTER 4
Double Entry Book-keeping :.......... Advantages of Double Entry System of Bookkeeping The Accounting Equation Debits and Credits ;................................................................... Expenses and Revenue Accounts The Account and the Double-Entry Principles
23
23
24
25
27
28
CHAr CHAPTERS Source Documents and Books of Original Entry Books of Original Entry (Journal) Sales Day Book Purchase Day Book The Two-Column Cash Book . The three-Column Cash Book Cash Discounts '.. , " Trade Discounts . Contra Entry.................................................................................................. , Use of Folio Columns................................................................. ,., Petty Cash Book " The ImprestSystem , CHAPTER 6 Classification of Capital and Revenue Items Classification of Account
CHAPTER 7 The Ledger The General Ledger Balancing an Account in the Ledger Trial Balance "
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36 37 38 38 42 42 4~
4..± 45 46 41' 49
............... 59 . 60
", .................. 61 . ............... 64 . 65 . 67 , ..,
CHAPTER 8 Errors ,. Errors not Affecting Trial Balance Agreement Correction of Errors Errors Revealed by the Trial Balance Suspense Account.....................................................................................
. . . .
79 79 81 84 85
Adjustnv or Financial AccC'u: Accrued E>_:t·enses -._.. Prepaid Expenses __ . Accrued Income -_ . Income in Advance __.. Treatment of bad Debt and Pros Provision for Discount on I.>eblI!lr Provision for Discount on Cred CHAPTER 10 The Final Account Trading Account Profit & Loss Account
_ . - .. __ .
CHAPTER11
Control Account _ .
Debtors Control Account _ . Creditors Control Account _ . .
Sales Ledger Control Accomnllt
Control Accounts and Doublhl
CHAPTER 12
Method of Calculating Depre RevalnationMethod ...... Unit \.J Production Method .
Machine Hour Method -_ .
Sum of years Digits -_ .
Accounting for Depreciat:icmmI.
The Use of the Provision Ii
