Lesson 2 Business Transactions and Supporting documents THE VIDEO STARTS WITH A REVIEW OF LESSON 1 BUSINESS TRANSACTIONS AND SUPPORTING DOCUMENTS The following were covered: Further understanding of the double entry principle, Various applications of the accounting equation, Identification of the different types of business transactions and relating them to the accounting equation. Understanding the perpetual inventory system, Relevant examples of each of the above were given to show how accounting applies in our day-to-day lives. Practice questions were given to enable everyone to follow the programme. The lecture ended with a call to all participants to engage in leadership, in order to make accounting at all levels more meaningful and beneficial to society. LESSON 2. BUSINESS TRANSACTIONS AND SUPPORTING DOCUMENTS 2.1 INTRODUCTION: Areas covered: Calculation of Profit, Selling price and cost price, Additional information on types of business transactions, How transactions are recorded, Source documents, the starting point of the recording process. 2.2 CALCULATION OF PROFITS, SELLING PRICE AND COST PRICE As already explained, two double entries are required when selling inventory on the perpetual inventory system. In the coming studies, on the accounting system or the general ledger, we are going to use the perpetual inventory system. On a number of transactions, given the selling price and the profit margin or mark up, you will be required to calculate the cost in order to make the cost price entry. 2.3 Why are transactions recorded ? 2.4 How are transactions recorded ? 2.5 Impact of leadership on the recording of transactions 2.6 Conclusion Areas covered: Calculation of Profit, Selling price and cost price, uses the mark-up on cost or margin on sales as a percentage to arrive at the required amount. A sale increases owner’s equity on the LHS, and an increase either cash or debtor on the RHS. The corresponding cost reduces owner’s equity on the LHS and a decrease in inventory on the RHS. Details of why and how the various types of business transactions, are recorded, were given. Source documents as the starting point of the recording process, was explained with an example. Accountants play an important role in financial leadership. Politicians should depend on them to ensure efficient and effective service delivery. Closing remarks Accounting transactions should be always recorded, using authentic supporting documents as evidence of the dates and amounts involved. Before we come to the end of this session, please note that in your comments, we also need your advice on the topics that you feel really crucial in your opinion, so that we can give them priority and preference in the next lecture or in our list of coverage topics.