Ø Chart of Accounts:
A structured list of all accounts used to record financial transactions.
Step 1: Liabilities
(What business owes)
Ø Liabilities:
Total obligations the business must pay.
Ø Current Liabilities:
Short-term debts payable within one year.
Ø Accounts Payable:
Amount owed to suppliers.
Ø Creditors for Purchases:
Suppliers from whom goods are purchased on credit.
Ø Duties & Taxes:
Taxes payable to government.
Ø Profit & Loss Account:
Accumulated profit or loss of the business.
Ø Opening Balance:
Previous period balance.
ØCurrent Period:
Profit or loss of the current year.
Step 2: Assets
(What business owns)
ØAssets:
Resources owned by the business.
ØCurrent Assets:
Short-term assets convertible to cash.
ØBank:
Money available in bank accounts.
ØCash:
Physical cash in hand.
Ø Closing Stock:
Unsold inventory at period end.
Ø Accounts Receivable:
Amount to be received from customers.
Ø Debtors for Sales:
Customers who purchased on credit.
Step 3: Income
(Earnings)
ØIncomes:
Money earned by the business.
Ø Sales Account:
Revenue from selling goods.
Ø VAT Sales:
Sales including tax.
Ø Non-VAT Sales:
Sales without tax.
Ø Export Sales:
Sales made outside the country.
Ø Indirect Incomes:
Other income not from main business.
Ø Purchase Discount:
Discount received from suppliers.
Ø Sale Delivery Charge:
Delivery income collected from customers.
Step 4: Expenses
(Costs)
Ø Expenses:
Costs incurred to run the business.
Ø Purchase Accounts:
Cost of goods purchased.
Ø Indirect Expenses:
General business expenses.
Ø Finance Cost:
Interest or loan-related expenses.
Ø Operational Expenses:
Day-to-day running costs.
Ø Purchase Delivery Charge:
Transport cost for purchases.
Ø Round Off:
Small adjustment for final bill value.
Ø Direct Expenses:
Expenses directly related to goods.
Ø Other Expenses:
Miscellaneous business expenses.