In Grade 12 Accounting, Company Ledger accounts play a crucial role in understanding financial reporting and compliance with Generally Accepted Accounting Principles (GAAP) .
The curriculum covers key concepts such as chart of accounts, double-entry accounting, journal entries, posting, balancing, and trial balance.
It also delves into important aspects related to companies, including the Companies Act, limited liability, separation of ownership from control, Johannesburg Stock Exchange, legal entity, public and private companies, and Annual General Meeting.
Additionally, students are encouraged to practice with past examination papers and other resources to enhance their understanding of financial statements, general ledger accounts, accounting concepts, and rules
Key Concepts and Principles Grade 12 Accounting Company Ledger Accounts
Here are some of the key concepts and principles that learners need to understand when working with company ledger accounts:
- Chart of accounts: A chart of accounts is a list of all the accounts used by a business to record its financial transactions. The chart of accounts is organized in a hierarchical manner, with asset, liability, equity, income, and expense accounts grouped together.
- Double-entry accounting: Double-entry accounting is a system of accounting in which every financial transaction is recorded in two accounts: a debit account and a credit account. The total debits must always equal the total credits, ensuring that the accounting equation (assets = liabilities + equity) remains in balance.
- Journal entries: Journal entries are used to record financial transactions in the ledger accounts. Each journal entry includes the date of the transaction, the accounts affected, and the amount of the transaction.
- Posting: Posting is the process of transferring information from the journal to the appropriate ledger accounts. The information is recorded in the appropriate debit and credit columns of the ledger accounts.
- Balancing: Balancing is the process of ensuring that the debit and credit columns of the ledger accounts are equal. If there is a discrepancy, an adjustment may need to be made to correct the error.
- Trial balance: A trial balance is a report that lists all the accounts in the chart of accounts and their current balances. The trial balance is used to ensure that the total debits and credits are equal and that the accounting equation remains in balance.
By mastering these concepts, learners will be able to create and maintain accurate company ledger accounts, which are essential for understanding the financial health of a business. In addition, learners will develop their problem-solving skills, analytical thinking, and ability to apply accounting principles to real-world scenarios.
Important concepts relating to companies
Companies Act: Regulates all matters pertaining to companies:
- Limited liability: The concept whereby a person’s financial liability is limited to the amount invested in the company. The investor is not personally responsible for the debts and obligations of the company.
- Separation of ownership from control: One group of people, the directors, is responsible for managing the money contributed by another group of people, the shareholders.
- Johannesburg Stock Exchange (JSE): A place where shareholders can buy and sell shares according to certain rules
- Legal entity: Has legal capacity to enter into agreements or contracts, assume obligations, incur and pay debts, sue and be sued in its own right, and to be held responsible for its actions
- Public company: When the public is invited to buy shares and these shares can be transferred freely.
- Private company: Its Memorandum of incorporation prevents it from offering securities to the public and restricts the transferability of securities
- Annual General Meeting or AGM: a formal meeting that is held once a year
Important parts of Grade 12 Accountng
In order for you to be successful in Accounting you MUST:
- Ensure that you know the formats or layouts of the:
– Statement of Comprehensive Income (Income Statement) – Statement of Financial Position (Balance Sheet) with notes – Cash Flow Statement
– Production Cost Statement
– General Ledger accounts, e.g. Asset disposal, etc.
– Bank reconciliation statement - Understand and know: – basic Accounting concepts, e.g. income, expenses, assets, liabilities, etc. – rules for AOL
– basic calculations, e.g. interest on loan/investment, depreciation, etc. - Work through as many past examination papers and other resources (e.g. Telematics material) as you can. Do it over and over.
- Your success in the final exam will depend on how much EXTRA time you put into your preparation.