5.1 Bookkeeping

• Meaning of basic terms used in bookkeeping
• Importance of bookkeeping for a business
• The bookkeeping equation: assets = liabilities + capital
• Calculating assets, liabilities and capital
• Cash transactions
• Credit transactions
• Cost, price, profit and loss
• Components of a statement of financial position
• Simple statement of financial position
• Simple income statement
• Simple cash-flow statement
• Preparing simple financial statements for a small Kenyan business in KSh

• explain the importance of bookkeeping in entrepreneurship
• classify business transactions in bookkeeping
• prepare simple financial statements for a business
• appreciate the importance of financial records in day-to-day life

“Why is bookkeeping important to a business?”

“How are the statements of financial position, cash flow and income statement prepared?”

The titles are open to everyone. Reading a lesson needs an account — sign in or create one.

1. What bookkeeping is
   40 min · 1 practice tasks · quiz
   Define bookkeeping as the dated, honest record of a business’s money, goods and debts, starting with a kiosk notebook.
2. Basic bookkeeping terms
   40 min · 1 practice tasks · quiz
   Define assets, liabilities, capital, drawings, debtor and creditor using a Kenyan kiosk.
3. Why bookkeeping is important
   40 min · 1 practice tasks · quiz
   Explain why records matter for profit, debts, stock and honesty in a Kenyan business and in daily life.
4. The bookkeeping equation
   40 min · 1 practice tasks · quiz
   State and rearrange Assets = Liabilities + Capital, and test it on a small kiosk in KSh.
5. Calculating assets, liabilities and capital
   40 min · 1 practice tasks · quiz
   List assets, add them, and find whichever of assets, liabilities or capital is missing, always in KSh.
6. Cash transactions
   40 min · 1 practice tasks · quiz
   Classify cash transactions as money in or out now, including notes, coins and business M-Pesa, and record them.
7. Credit transactions
   40 min · 1 practice tasks · quiz
   Classify credit sales and credit purchases, name debtors and creditors, and contrast them with cash.
8. Cost, price, profit and loss
   40 min · 1 practice tasks · quiz
   Calculate simple profit or loss from cost and selling price in KSh, including a spoiled-stock loss.
9. Parts of a statement of financial position
   40 min · 1 practice tasks · quiz
   Name the heading, asset list, liabilities, capital and matching totals that make a simple SOFP.
10. Preparing a simple SOFP
    40 min · 1 practice tasks · quiz
    Draw a balanced statement of financial position for a small Kenyan business in KSh.
11. A simple income statement
    40 min · 1 practice tasks · quiz
    Prepare a simple income statement for a period: sales, cost of sales, expenses, profit or loss in KSh.
12. A simple cash-flow statement
    40 min · 1 practice tasks · quiz
    Prepare a simple cash-flow statement and explain why profit is not the same as cash in the tin.
13. Three statements for one kiosk
    40 min · 1 practice tasks · quiz
    Prepare simple SOFP, income and cash-flow statements from one Kenyan kiosk story and appreciate why records matter.