ACCOUNTING AND FINANCE

LEVE-II
BASED ON NOVEMBER 2022, CURRICULUM VERSION 2

Module Title: - Process Customer Accounts and Transactions

Module code: LSA ACF2 M05 1122

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Ministry of Labor and Skills Process Customer Accounts and
November , 2022
Transactions
Level- II
 Nominal duration: 80 hours

Prepared by: Ministry of Labor and Skill

November, 2022
Adama , Ethiopia

Table of Contents
INTRODUCTION OF THE MODULE ........................................................................................................ 1
UNIT ONE: IDENTIFY CUSTOMER ACCOUNT NEEDS........................................................................ 2

1.1 OVER VIEW CUSTOMER..................................................................................................................... 3

1.2. IMPORTANT OF INFORMATION TO CUSTOMERS FOR BUSINESS ............ ERROR! BOOKMARK NOT DEFINED.
1.3. ASSISTING CUSTOMERS IN PREPARING COMPLETE RELEVANT DOCUMENTATION....... 7
1.3.1 DEFINITION OF RELEVANT DOCUMENTS AND ITS CRITERIA..................................................................... 7
1.3.2 IMPORTANT OF PREPARING RELEVANT DOCUMENTS............................................................................. 7
SELF-CHECK-I ............................................................................................................................................. 7
UNIT TWO -OPEN CUSTOMER ACCOUNT ............................................................................................ 9
2.1 DEFINITION OF ACCOUNT AND CRITERIA OF OPEN CUSTOMER ACCOUNT ......................10
2.1.1 DEFINITION OF ACCOUNT ...................................................................................................................10
2.1.2 CRITRIA OF OPEN CUSTOMER ACCOUNT .............................................................................................11
2.1.2.1 OBJECTIVES OPEN CUSTOMER ACCOUNT ...........................................................................................13
2.2 INTERVIEWING POTENTIAL ACCOUNT HOLDERS .................................................................14
2.2.2 NEED OF INTERVIEWING POTENTIAL ACCOUNT HOLDERS ......................................................................14
2.3 DEFINITION AND PURPOSE OF GATHERING INFORMATION .......................................................................14
2.3.1 DEFINITION OF GATHER INFORMATION ................................................................................................14
2.4 VERIFYING COMPLETED DOCUMENTATION AND ACCEPTING DEPOSITS .........................14
2.5 UNDERSTANDING OF TRANSACTIONS AND PROCESSING NEW APPLICATIONS ................15
2.6. PROVIDING INFORMATION TO CUSTOMER ABOUT ACTIVATION OF ACCOUN................15
UNIT –THREE; CLOSE CUSTOMER BANK ACCOUNT .......................................................................17
3.1 UNDERSTAND AND REASONS CLOSE CUSTOMER BANK ACCOUNT ......................................17
3.1.3 PROCEDURES OF CLOSE CUSTOMER BANK ACCOUNTS .......................................................18
3.2VERIFYING COMPLETED DOCUMENTATION ...............................................................................19
3.2 PROCESSING APPLICATIONS .......................................................................................................19
3.4 PROVIDING INFORMATION TO BANK MAIN BRANCH ..............................................................19
SELF CHECK- THREE...............................................................................................................................19
CHAPTER FOUR- ADMINISTER THE PROCESS ..................................................................................20
4.1 STANDARD OF ORGANIZATION PROCESSES AND PROTOCOLS .............................................21

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Level- II
4.1.1 DEFINITION OF STANDARD ...........................................................................................................21
4.2. FOLLOWING UP CUSTOMER QUERIES OR COMPLAINTS........................................................22
4.3 PROVIDING REPORTS ON ACCOUNT ACTIVITY .........................................................................23
UNIT FIVE: PROVIDE CUSTOMER SERVICE.......................................................................................24
5.1 GREETING AND SERVING CUSTOMER ..........................................................................................24
5.1.1 IMPORTANT OF GREETING ...........................................................................................................24
5.1.2 DEFINATION OF CUSTOMER SERVICE ......................................................................................25
5.1.3 PRINCIPLES OF GOOD CUSTOMER SERVICE............................................................................26
5.2. PROVIDING CUSTOMER WITH INFORMATION ..........................................................................26
5.3. ANSWERING QUERIES ABOUT TRANSACTIONS.........................................................................27
5.4. REFERRING TRANSACTIONS OUTSIDE OWN KNOWLEDGE ...................................................27
UNIT SIX. FINANCIAL TRANSACTIONS AND CLASSIFICATION OF ACCOUNTS .......................28
6.1 DEFINITION OF FINANCIAL TRANSACTION ................................................................................29
6.2 UNDERSTANDING OF CHART OF ACCOUNTS AND RULE OF DEBIT AND CREDIT..............29
6.2.1 CHART OF ACCOUNT ......................................................................................................................29
6.2.2 CLASSIFICATIONS OF ACCOUNTS ...............................................................................................29
6.3 RULES OF DEBITS AND CREDITS ....................................................................................................32
6.3 BUSINESS TRANSACTIONS AND THE ACCOUNTING EQUATION ............................................32
SELF-CHECK SIX.......................................................................................................................................35
7.1. ANALYZING AND RECORDING OF ACCOUNTING TRANSACTION.........................................37
7.1.2 POSTING .............................................................................................................................................39
7.1.3THE TRIAL BALANCE ......................................................................................................................41
SELF-CHECK SEVEN ................................................................................................................................42
REFERENCES .............................................................................................................................................43

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 Acknowledgement
Ministry of Labor and Skills wish to extend thanks and appreciation to the many representatives
of TVT instructors and respective industry experts who donated their time and expertise to the
development of this Teaching, Training and Learning Materials (TTLM).

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Level- II
 Introduction of the module
This module covers the knowledge, skills and attitudes required to understand basic
knowledge and awareness of Process Customer Accounts and Transactions as they apply to
account transaction of accounting cycle and found in modern accounting International
financial accounting standard.
This module covers
 Identify customer account needs
 Open customer account
 Close Customer account
 Administer the process
 Provide customer service
 Process basic financial transactions
 Administer the transaction process
Learning objectives of the Module:
At the end of this session, the students will able to:
 Understand and identify customer account needs
 Assess and verify open customer account
 Understand Close Customer account
 Administer the process
 Assess provide customer service
 Compute Process basic financial transactions
 Administer the transaction process

Module Instruction
For effective use this modules trainees are expected to follow the following module
instructions:
1. Read the information written in each unit
2. Accomplish the Self-checks at the end of each unit
3 .Perform Operation Sheets which were provided at the end of units
4. Read the identified references book for Examples and exercise

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Ministry of Labor and Skills Process Customer Accounts and
November , 2022
Transactions
Level- II
 UNIT ONE: IDENTIFY CUSTOMER ACCOUNT NEEDS

This unit is developed to provide you the necessary information regarding the following content
coverage and topics:
 Addressing requests for information
 Providing information to customers
 Assisting customers in completing relevant documentation
This unit will also assist you to customer attain the stated objective. Specifically, upon
completion of this learning guide line, you will be able to:
 Assess and Address requests for information
 Understand and Provide information to customers
 Assist customers in completing relevant documentation

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 1.1 Addressing requests for information

1.1.1. Over view customer

A customer is individual or a group of individual that recipient of an offering or offerings
obtained from a seller via a financial transaction or an exchange of something of value. A
customer can be a business or an individual who receives the offering. He can consume the
offering, sell it again, or use it to develop a different offering.
1.1.2 Types of Customers in Business
Customers can be divided into different types on the following basis:
1. Customer Objective
2. Brand Loyalty
3. Sales Generated
4. Origin of the Customer
5. On The Basis Of Customer Behavior
1. On the Basis of Customer Objective
Every customer has a different objective of buying a good or a service or interacting with the
seller. Therefore, customers can be divided into the following types on the basis of their
objectives:
A. Price Buyers: These customers are interested in buying goods or services only at the
lowest possible price. They don’t care about the quality of the product but only the money
that they will be taking out of their pockets in exchange for the product or service.
B. Relationship Buyers: Relationship buyers are concerned about the relationship with the
seller. They want to build trust between the two of them and are looking for relationships
where they can depend on each other.
C. Value Buyers: These types of customers are concerned about the value that the product or
service adds in their life. This could be through better efficiency, lower costs, better quality,
etc. They can be convinced to buy a particular product or a service by telling them how
exactly the seller’s product adds value to their portfolio as compared to other sellers’
products.
D. Poker Players: Poker players are looking for something and display something else. They
act as if they care more about the quality when in reality they are after the price of the
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 product or the relationship that can be developed between them and the seller.

2. On the Basis of Brand Loyalty

Brand loyalty is a hard feat to achieve. But any business that succeeds in acquiring it can
guarantee years of success to itself. Customers can be divided into the following three types
on the basis of the brand loyalty they possess or display:
A. Loyal Customers: These customers belong to the most loyal breed of customers. They
won’t switch the product or service they presently use in any case. Selling at even zero price
or providing the best quality product in the market, they will buy the product from only one
seller forever.
B. Disloyal: Disloyal customers are self-center. They are not loyal to any seller. They are just
looking for products that fulfill their needs. They can be convinced to buy a product by
offering them the maximum value.
C. Partly Disloyal: These kinds of customers agree to buy any product if it is offered to them
at a price lower than the one, they are currently paying. They don’t care about the quality or
the product value but how much money do they need to give to the seller.
3. On the Basis of Sales Funnel Stage
Different types of customers support the business through its sales funnel in different ways.
They can be thus, divided into:
A. Potential Customers: Potential customers are not yet the customers of the business but
they fall within the target market and there are high chances that they might become a
customer someday.
B. New Customer: New customers are customers that have recently made their first purchase
from the business.
C. Regular Customer: Regular customers make purchases from the brand repeatedly or
often. They are well-versed about the brand and its offering and act as a good source of word-
of-mouth marketing
4. On the Basis of Origin of the Customer
Customers approaching a seller might originate from inside as well as outside the
organization. Therefore, they can be divided into the following two types:

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 Internal Customer: Internal customers are the employees that work within the organization
but act as customers for the product.
External Customers: They exist outside the organization and depend on the business for
consuming or reproducing a good or service.
5. On the Basis of Customer Behavior
Every customer has a different personality which directs their customer behavior. They can
be divided into the following four types on the basis of their behavior and personality:
A. Directors: This type of customer is demanding, authoritative and likes to take charge in
every situation. They are in search of the best deal possible which often includes demanding
the best quality product at the lowest price possible. They are aware of what they want and
when they want it. They often come out as intimidating but all they are looking for is facts
and short and relevant talk.
B. Analysts: Analysts look for more than what is being presented. They do thorough research
and analysis before making a decision. They are the ones who can even go through a
hundred-page manual just to make sure that their decision is well informed and not taken in
haste.
C. Relators: They look for a group which they can fit in or relate to. They have a huge
network wherein they know someone who knows someone who further knows someone, thus
forming an in exhaustive network from where they can get whatever they want. The only
thing that they demand in the market is to be included, either by asking them for their opinion
or by taking their inputs while making decisions. This group of customers can help in
spreading positive information about the product or service through their extended network.
D Socializers: Socializers do not just look for a one-time purchase of a product or a service.
They are outgoing, love to make friends, socialize and despise small talk. They will buy a
particular product or a service based on how much do they like the seller. Facts, Figures,
Long Descriptions don’t attract them, and neither does loyalty, they look after their own self-
interest and it is important to build relationships with them to ensure their continuous support.
1.1.3 Meaning of information
Blood needed to human being, so. Information is the vital of businesses that how to perform
every aspect of transaction based effective time basis or specified period of time to plan of

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 strategy, finance or risk

1.2 Provide information to customer

Information refer transaction may be related to:
Account services, including:
 savings
 retirement
 superannuation
 investment services
processes for completing transactions including:
 cash or non-cash transactions
 EFTPOS
 cheese
 credit cards
 The interests of customer include knowledge of the changing circumstances of
the customer and how these contexts influence customer needs in relation to
 Financial
 Retirement
Investment

In the present day society, there is a great and urgent need for access and availability of
information. The information need for the various purposes is enumerated below as:
A. Information is an aid in decision making, policy making needed for the policy makers,
decision makers, and managers and forecasting of budget in the future.
B. Information will have a reinforcing/ transforming effect on human beings on receiving it.
C.A great deal for change can be perceived in the human minds/ attitudes on obtaining the
information, as it increases the ability of personal knowledge for the recipient.
D. Information generates new information. This is the existing knowledge/ information helps
in generating new information; new knowledge; new theories,
E. information also used as for business to minimization of risk in future period of time.

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 1.3. Assisting customers in preparing complete relevant documentation
1.3.1 Definition of relevant documents and its criteria
Relevant documents are files that provide details related to a company’s internal and
external transactions. Relevant Business documents may be digital, occurring as electronic
files, or they may come in physical form, written or printed on paper. Some common
examples of business documents include letters, invoices and order sheets.
Criteria of Relevant Documents
A. It must be prepared based on rule and regulation of the government
B. It must be prepared and report based on setting defined time period
C. It should be done based procedure of accounting transaction of events
D. The documents should be done by using compression of current period with preceding
time
1.3.2 Important of Preparing Relevant Documents
The important of relevant documents for customer for business as follows:
A.to avoid fraud and misappropriation of assets
If one company or business prepare relevant documents it encourage utilization of
resource in proper arrangement (efficiency) and avoid embezzlement of assets from
chatter individual person or firms.
B.to determine company profit or loss in easy ways
Relevant documents are prepare company total summarize revenue and loss whether
reject or not
C. avoid misunderstanding of customer and government
Relevant documents used as an evidence for explaining the misunderstanding of
customer and government in tax or other issue
D.as input for future task
Document is transfer the ending of this year for base for the next year or in short it is the base
for setting course of action interims of plan.

Self-check-I
Instruction: Select the correct answer for the give match column A with B.

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 Part I: Matching
A. B
1. Price object A. On The Basis Of Customer Objective
2. Brand Loyalty B. Loyal Customers
3. Sales Generated C. new customer
4. Origin of the Customer D. director
5. On the Basis of Customer Behavior E. internal customer
Part II: Short Answer writing
Instruction: write short answer for the given question. You are provided 3 minute for
each question and each point has 5Points each.
1. Write and describe the important of information?
2. Describe the definition of customer?
3. Describe the base Classification of customer

1.______________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
2.______________________________________________________________________
________________________________________________________________________
________________________________________________________________________
3.______________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

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 UNIT TWO -OPEN CUSTOMER ACCOUNT

This unit is developed to provide you the necessary information regarding the following content
coverage and topics:
 Interviewing potential account holders
 Gathering information
 Verifying completed documentation and accepting deposits
 Processing new applications and transactions
 Providing information to customer about activation of account
This unit will also assist you to customer attain the stated objective. Specifically, upon
completion of this learning guide line, you will be able to:
 Interviewing potential account holders
 Gathering information
 Verifying completed documentation and accepting deposits
 Processing new applications and transactions
 Providing information to customer about activation of account

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 2.1 Interviewing potential account holders
2.1.1 Definition of Account
An account is a record of all relevant business transactions in terms of money. Account
consists all the statements by data wise regarding the business transactions as person,
companies, representatives, asset & liabilities, income & expenditures, profit & loss. For e.g.
cash account, bank account.
In banking principle and practice account can be dividing in three categories. This are:
A. Checking account: checking account offers easy access to your money for your daily
transactional needs and helps keep your cash secure. The bank is not paid interest and
every individual can withdrawal of money without restriction.
B. Savings account: savings account allows you to accumulate interest on funds you've
saved for future needs. Interest rates can be compounded on a daily, weekly, monthly,
or annual basis. Savings accounts vary by monthly service fees, interest rates, and
account features.
C. A fixed deposit account is a type of savings account where your money is kept in a
financial institution for a fixed amount of time. This is usually a one-time deal, where
you deposit a set amount into the account and earn interest on that amount as long as
you hold the account. However, you can’t withdraw your money until the period is
over.

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 Figure: 2.1 open customer accounts
2.1.2 Critria of Open Customer Account
The criteria of open customer accounts are including in the following ways.
 Legal identity id card
 Photograph
 Authorization of confirmation Signature
 Fulfillment of form or back ground profile of the respondents
Specifically, contact address, phone number, email or other.
 Initial amount of capital
Sample form criteria of open customer accounts
Ethiopia citizen saving account form
Opening form
Branch__________________________Date__________________________
1. Applicant’s full name
First name ___________middle name________last name______________
2. Passport No_________________________ yellow card_____________
Expiry date (______________________) expiry date (__________________)

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 3. citizenship________________________________________________
4. marital statues
o Married
o not married
o Divorced
5. If married
5.1 please fulfill
First name___________middle name_____________last name______
6. Applicant address
Foreign
Country____________________state_________________city______
Mobile address_______________________email address_________
Postal address___________________________________________
Social media (optional)
Facebook_______________________
Twitter_________________________
Other__________________________
Domestic address (optional)
Region ____________________city_________________worda______
Sub city___________________________house no_________________
Mobile address_______________________email address_________
P.Box__________________________________________
If the account is opened by agent
First name___________middle name_____________last name______
Region ____________________city_________________worda______
Sub city___________________________house no_________________
Mobile address_______________________email address_________
P.Box____________________________________
7. Types of forging currency to be used
 USD

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  GBR
 Euro
 Other
8. Intail deposit__________________________________name of forging currency
9. Monthly expected saving__________________________
10. Source of income_______________________________________
11. Full name of applicant__________________sign________________date
11. Approved body____________________
Objectives open customer account
The objective of open customer account interacts of customer with banking sector in
minimization of risk and mutual benefits for customer and banking sector. Specifically, the
objective of bank Accounts is as follows.

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  Safety preservation of saved money of clients.
 Easy transfer of money from one place to another was including foreign & domestic areas.
 Creation of savings and savings mentality.
 Increasing incomes & profits of each other.
 Formation and creation of capital and liquidity.
 Creating loan facilities.
 Assist in foreign exchange.
 Information collection & providing if necessary.
 Advising to subscribers on various facts for the interests of them.
 Creating exchange medium
2.1 Interviewing potential account holders
2.2.1 Definition of potential account holders
A potential account holder refers to an individual or company that has an ability of investments in the
bank or other sectors.
2.2.2 Need of interviewing potential account holders
A. To understand of customer needs regarding which types of account is needed
B. To interact good relationship between banks and potential customer
C. To increase of investment of saving and receive mutual benefit
2.2 Definition and Purpose of Gathering Information
2.3.1 Definition of gather information
Gathering information is the act or process of searching and collating relevant evidence by accepting that
which is relevant and rejecting that which is not relevant evidence.
2.3.2 Purpose of Gathering Information
The purpose of gathering information provides opportunities are an opportunity for business. The purposes
are:
A.to receives feedback from customer and change to opportunity and strength
B. to identify the greatest problem and comes to solution by the bank
C. used as input future task
D. it is used to assess the environment in great deal to banking objectives
2.4 Verifying completed documentation and accepting deposits
Deposit is the amount of money that invested in the bank depend up on individual or company capacity
As we have seen in the above the customer should be accepted sufficient amount of money to open an
account and that complete documents should be authorized by the bank authority to run of the accounts.
N.B .without complete documents individual have cheating of cash or other asset.
 2.5 understanding of transactions and processing new applications
2.5.1 Transaction
A transaction is a business event that has a monetary impact on an entity's financial statements, and is
recorded as an entry in its accounting records.
Transaction is an event that records the aspects of accounting treatment interims of monetary terms.
2.5.2 Procedure new applications
New application is an individual customer that enter the bank in the first time and applied performing of
transaction by fulfillment of full document like id card and receive the bank function based the rule and
regulation of the bank.
2.6. Providing information to customer about activation of account
After the customer fulfillment of process of open account she/he should be in providing information the
activation of accounts by using:
 Cell phone calling
 sent of message
 Or other advance technology to activation of accounts
Self-check-2
Test-I multiple choice questions
Instruction: Choose the best answer and write the capital letter of your best choice in the space provided
before each question number
1. Which one the following the means of providing of customer information
A. Cell phone calling B. message C. A&B
2. Which one the following accounts paid high interest?
A. Fixed B. current C. saving D .none
3. Among the following is unique in a period of duration?
A. fixed accounts B. saving accounts C. current accounts D. none
Part II Matching:
Instruction: match column A with B in more acceptable ways.
A. B
1. No payment of interest A. fixed account
2. Defined period of time B. current account
3. High rate of interest C. saving account
Part III: short answer
1. Describe the types of account
2. What is the difference between account and accounting?
3. Describe the meaning of transaction
Answer sheet for writing essay
1.______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
______________________________________________________________________________
2.______________________________________________________________________________
_______________________________________________________________________________
______________________________________________________________________________
3.-
_______________________________________________________________________________
_______________________________________________________________________________
________________________________________________
UNIT –THREE; CLOSE CUSTOMER Bank ACCOUNT
This unit to provide you the necessary information regarding the following content coverage
and topics:
 Gathering the required information
 Verifying completed documentation
 Processing applications
Providing information about the finalization of the process
This guide will also assist you to attain the learning outcomes stated in the cover page.
Specifically, upon completion of this learning guide, you will be able to:
 Assess and collect the required information
 Understand complete documentation
 Assess processing applications of customer

3.1 understand and reasons close customer bank Account

3.1.1 Understand Close Customer Bank Account
Close customer account is an individual or a group of individual or company that close customer bank
based on different reason with rational due unsatisfied of their service or others.
A closed account is any account that has been deactivated or otherwise terminated, either by the customer,
custodian or counterparty.
3.1.2 Reasons close customer bank Account
Customer bank accounts are close based on several reasons. Among this are:
A. Poor Customer Service
When you're using a financial institution, you trust them with your personal finances. The least you can
expect is great customer service.
Closing a bank account and moving to a new bank, or by using alternative financial services like Check
City's Check Cashing Services, you can find the personal, warm customer service you deserve.
B. Becoming Unbanked
Some people choose to be what's called "unbanked." This means that you choose to not have a bank
account. Some people choose to be unbanked to avoid bank fees or because they prefer alternative
financial institutions.
C. Bank Availability
If you are moving or travel very often, you might need to learn how to close a bank account so you can
open a more travel-friendly bank account.
D. Requirements and Fees
Another reason to learn how to close a bank account is to avoid bank account requirements and fees. Some
bank accounts will have minimum balance requirements, overdraft fees, fees to transfer money, or fees for
negative balances.

3.1.3 Procedures of Close Customer Bank Accounts

In Ethiopia the procedures of close customer bank accounts are dividing in five categories.
Step 1: Stop automatic payments
If you have any automatic payments set up, you'll want to stop all of those before closing the account.
You might have automatic payments set up for recurring payments like credit card payments or bill
payments.
Step 2: Clear all your charges and pending payments
If you have any charges or pending payments, you'll need to pay those or wait for the payments to go
through before you close your account.
Step 3: Download documents
Download files like credit reports, joint account forms, bank statements, account closure forms, and any
other account information.

Step 4: Transfer money

Taken care you’ve taken care of all the business affiliated with your account, you're ready to transfer
money.
Step 5: Close the account
After you transfer money, it's time to close the account. You can close the account in person, over the
phone, by mail, or online, but every bank is different. Talk to your bank to know for sure what their
process for account closure might be.
 3.2Verifying completed documentation
As stated the above the customer are eager to close the bank account it should be verif the documents
compted depend up on the banking rule and regulation.if the cusomer are close account it should be check
the bank side of the documents by verify full docuements in rational perception by higher authority the
authority.
Specfically, the customer should be returen account book to the bank after processing transfer of money
after the bank accpted fulfillement of rule and regulation of the docuements.
3.2 Processing applications
After the bank has crocess cheking over all documents the bank should be process of appilication to close
the customer bank account in real banking rule and regulation by sign of signiture for close of accounts.
3.4 Providing information to bank main branch
The branch should be provide information about specifcally, list of companey close customer account for
date, name of customer for providing main branch of the bank sectors in real practice aspects.
Self Check- Three
Part I: True or False Questions
Read the following sentences carefully and write TRUE if the statement is correct or FALSE if the
statement is not correct on the space provided before each question number
1. Accounts are close any period of time without consdring compnaey procdures.
2. Customer is the key king for any sectors.
3. The first steps of close accounts are initial stop online payements.
4. Accounts are may close the government direction for real phnomona.
Part -I multiple choice questions
Instruction: Choose the best answer and write the capital letter of your best choice in the space provided
before each question number
 1. The first steps of customer close accounts are:
A.indifying legal documents B. perception of real account or nominal accounts C.stop online bill
payements d. none
2. Which one the following is not the reason of close customer accounts?
A.poor communcation skill B.poor service C.instability D. none
3 . bank accounts are includes
A. Id card B. signtature C. background pprofile D. all of the above
PartIII:Short answer
1.what mean close customer accounts?
2.list the the pocdure of close customer accounts?
3.list the reason of close customer accounts?
Answer sheet for wrting essay
1.____________________________________________________________________________________
_____________________________________________________________________________________
2.____________________________________________________________________________________
_____________________________________________________________________________________
3.____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

CHAPTER FOUR- ADMINISTER THE PROCESS

This unit to provide you the necessary information regarding the following content coverage
and topics:
 Using Standard organization processes and protocols
 Following up customer queries or complaints
 Providing reports on account activity
This guide will also assist you to attain the learning outcomes stated in the cover page.
Specifically, upon completion of this learning guide, you will be able to:
 Apply Standard organization processes and protocols
 Assess and follow up customer queries or complaints
 Understand and provide reports on account activity

.
 4.1 Standard of organization processes and protocols
4.1.1 Definition of standard
Standards can be voluntary or mandatory, and as technology and needs change, become superseded. They
are created by industrial societies and government bodies.
Standard is the guide line that manages the business for voluntary basis or involuntary basis for specified
business or organizations.
A standard is an agreed way of doing something. It could be about making a product, managing a process,
delivering a service or supplying materials – standards can cover a huge range of activities undertaken by
organizations and used by their customers.
Standard may relate or be influenced by:
• Administrative and clerical systems
• Database and IT systems
• Product and account and service range
• Range of responsibility
• Size, type and location of branch
• Types of equipment used
Standards are the distilled wisdom of people with expertise in their subject matter and who know the
needs of the organizations they represent – people such as manufacturers, sellers, buyers, customers, trade
associations, users or regulators.
4.1.2 Types of standard
A. Voluntary Standards
These are standards whose use is theoretically voluntary, but in practice is widely adopted for the sake of
ease of manufacture, interchangeability, and safety. Virtually all industrial standards are voluntary
standards. At times, such standards have been used in an exclusionary way, to favor one group or
organization over its rivals.
B. Mandatory Standards
Mandatory standards are, in effect, laws. Failure to follow them could result in legal penalties and liability.
They are generally adopted out of concern for safety, and promulgated by the Federal government or one
of its agencies or departments. Codes are groups of standards on the same topic, generally created for
government agencies, and are thus mandatory standards.
C. Performance Specification Standards
These standards specify the performance levels of a particular item or process, such as a grade of steel or
test methods. It doesn't matter how a thing is made or done, but it must meet a certain level performance.
That performance can be on a spectrum, with major points designated as a grade or class.
D. Criteria Standards
Criteria standards discuss how to go about an activity, kind of the "opposite" of a performance standard.
Criteria standards set up recommendations considering certain aspects of an activity, such as bridge
building, or a laboratory process.
E. Superseded Standards
Because quality, technology, and human need change, standards change. Sometimes the area covered by
the rules of a new standard must change to meet the new guidelines. Other times, only new activities must
conform. Superseded standards provide information on how things used to be done, and provide valuable
information when an older area of activity (like the capabilities of an old elevator or results from a lab
using older reporting techniques) is being evaluated. The Art, Architecture & Engineering Library has a
large number of superseded standards in our collection.
4.1.3 Important of organization Standard
The important of Organization standard as follows in the following ways for real aspects.
Standards cover a wide range of subjects from construction to nanotechnology, from energy management
to health and safety, from cricket balls to goalposts. They can be very specific, such as to a particular type
of product, or general such as management practices.
The point of a standard is to provide a reliable basis for people to share the same expectations about a
product or service. This helps to:
 Facilitate trade
 provide a framework for achieving economies, efficiencies and interoperability
 Enhance consumer protection and confidence.
Organizations might use:
A quality management standard to help them work more efficiently and reduce product failures
An environmental management standard to help reduce environmental impacts, reduce waste and be
more sustainable.
A health and safety standard- to help reduce accidents in the workplace
An IT security standard -to help keep sensitive information secure
A construction standard -to help build a house
An energy management standard- to help cut energy consumption
A food safety standard -to help prevent food from being contaminated
An accessibility standard- to help make buildings accessible to disabled users
An interoperability standard- to ensure that bank and credit cards fit into ATMs and can be used
throughout the world.
4.2. Following up customer queries or complaints
4.2.1 Customer complaints
Customer compliant is an individual or group individual or company that is unsatisfied in product or
service. Customer complaint examples related to products include:
  Poor product or service quality
 High price compared to competitor products
 Missing or unintuitive features
4.2.2 Useful following up customer queries or complaints
The useful of following up customer complaints are as follows.
 Receive of fee back by business from customer
 Improve of productivity
 Improve of service in the future
4.3 Providing reports on account activity
Report the fundamental concepts of individual business for performing the rational aspects of transaction
in real perspectives.

Self-check Four
Part I: Multiple choice questions
Instruction: Choose the best answer and write the capital letter of your best choice in the space
provided before each question number
1. Which of the following statements is true?
A. Any standard is the guideline
B. Standard measure of financial performance
C. Standard may approved higher authority D.all of the above
2. Which of the following is including standard of a business?
A. health standard
B. marketing standard
C. management standard
D. none of the above
3. Which one of the standards whose use is theoretically voluntary, but in practice is widely adopted?
A. voluntary standard
B. mandatory standard
C. Management standard

Part II: short answer questions

1. What is the financial statement?
2. Write the types of financial statement and explain it?
3. Write the elements of financial statement and describe it?
Answer sheet writing
1.____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
2.____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

3.____________________________________________________________________________________
___________________________________________________________________________________

UNIT FIVE: PROVIDE CUSTOMER SERVICE

This unit to provide you the necessary information regarding the following content coverage
and topics:
 Greeting and serving customer
 Providing customer with information
 Answering queries about transactions
 Referring transactions outside own knowledge
This guide will also assist you to attain the learning outcomes stated in the cover page.
Specifically, upon completion of this learning guide, you will be able to:
 Understand greeting and serving customer
 Assess and understand customer with information
 Answer queries about transactions
 Assess and refer transactions outside own knowledge

5.1 Greeting and Serving customer

Greeting is an act of communication in which human beings intentionally make their presence known to
each other, to show attention to, and to suggest a type of relationship or social status between individuals
or groups of people coming in contact with each other.
5.1.1 important of greeting
The following are important of greeting are as follows.
 It helps to start of the day
 It helps to start to disuses other things
 It helps us show love and respect to one other
 It helps us to live and work together
  It helps promote tolerance

Figure 5.1 greeting

5.1.2 Defination of customer service
Customer service is the support you offer your customers from the moment they first contact your
business to the months and years afterward.
Customer service is the support you offer your customers from the moment they first contact your
business to the months and years afterward. Providing good customer service means being a reliable
partner to your customers—it goes beyond helping them troubleshoot, use, and make informed decisions
about your product.
Customer service is the act of providing support to both prospective and existing customers. Customer
service professionals commonly answer customer questions through in-person, phone, email, chat, and
social media interactions and may also be responsible for creating documentation for self-service support.
Why is customer service important?
 When 86% of customers quit doing business with a company due to a bad experience, it means that
businesses must approach every support interaction as an opportunity to acquire, retain, or up-sell.

 Good customer service is a revenue generator. It gives customers a complete, cohesive experience that
aligns with an organization’s purpose.

 According to a variety of studies, U.S. companies lose more than $62 billion annually due to poor
customer service and seven out of 10 consumers say they’ve spent more money to do business with a
company that delivers great service.

 Understanding that customer service is the cornerstone of your customer experience helps you leverage it
as an opportunity to delight customers and engage them in new, exciting ways.
 5.1.3 Principles of good customer service
There are four key principles of good customer service: It's personalized, competent, convenient, and
proactive. These factors have the biggest influence on the customer experience.

A. Personalized: Good customer service always starts with a human touch. Personalized interactions
greatly improve customer service and let customers know that your company cares about them and their
problems. Instead of thinking of service as a cost, consider it an opportunity to earn your customer’s
business all over again.
B.Competent: Consumers have identified competency as the element that plays the biggest role in a good
customer experience. To be competent, a customer support professional must have a strong knowledge of
the company and its products, as well as the power to fix the customer’s problems. The more knowledge
they have, the more competent they become.

C.Convenient: Customers want to be able to get in touch with a customer service representative through
whichever channel is the most convenient for them. Offer support through the channels of communication
your customers rely on most, and make it easy for customers to figure out how to contact you.

D.Proactive: Customers want companies to be proactive in reaching out to them. If one of your products
is backordered or your website is going to experience downtime, proactively reach out to your customers
and explain the problem. They may not be happy about the situation, but they will be thankful that you
kept them in the loop.
5.2. Providing customer with information
What is important of information for service business
A. New Products and Services
Any company looking to improve and secure the future has to establish a broader perspective with the use
of a well-designed and coordinated information system. The IS makes it easier to analyze independent
processes such as information to produce valuable products or services and organized work activities.
Therefore, an IS can give a company the competitive advantage by analyzing how a company creates,
produce, and sell their products or services. This means that the focus will be put on the main goal ahead.

B. Information Storage
Every organization needs records of its activities, to find the cause of problems and proper solutions.
Information systems are useful for storing operational data, communication records, documents, and
revision histories. Manual data storage will cost the company lots of time, especially when it comes to
searching for specific data. A quality information system stores data in a comprehensive and sophisticated
database which makes the process of finding it much more convenient. With such information, a company
can analyze how certain actions affected the business, as well as prepare cost estimates and forecasts.
C. Easier Decision Making
Without an information system, a company can take a lot of time and energy in the decision-making
process. However, with the use of IS, it’s easier to deliver all the necessary information and model the
results to make better decisions. The management team can use the information system to choose the best
course of action and carry out the tasks. When there are several appealing alternatives, the information
system can be used to run different scenarios by calculating key indicators such as costs, sales, and profits.
This way, you can determine the alternative with the most beneficial results.
D. Behavioral Change
Employers and employees can communicate rapidly and more effectively with an information system.
While emails are quick and effective, the use of Information Systems is more efficient, since documents
are stored in folders that can be shared and accessed by employees.

5.3. Answering queries about transactions

After the financial information is identified it should be understand the real phenomena for customer for
the sake of increasing for real perceptions.
5.4. Referring transactions outside own knowledge
Customer is greeted and served with respect and professionalism in accordance with the company service
standards and expectations. Customer is provided with information as required in a timely, accurate and
effective manner with any queries about transactions answered fully and clearly to ensure customer is
appropriately informed. Transactions outside the knowledge or delegated authority of the officer are
referred to other personnel for resolution as required.

Self-check –five
Part :Instruction: Matching
Match column A with column B with respective answer.
A. B
1. Account service A. saving
2. Interest of customer B. improve of product
3. Process of transaction C. credit card
4. Posting D. investment
5. important of information E. transferring of journal to ledger
Part II: short answer
1. What is important of information for service business?
2. Writing is the principle customer service?
 3. Why is customer service important?
Answer sheet for writing
1.______________________________________________________________________________
_______________________________________________________________________________
______________________________________________________________________________
2.______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
3.______________________________________________________________________________
_______________________________________________________________________________
______________________________________________________________________________

UNIT SIX. FINANCIAL TRANSACTIONS AND CLASSIFICATION OF ACCOUNTS

This unit to provide you the necessary information regarding the following content coverage
and topics:
 Definition of financial transaction
 understanding of chart of accounts
 rule of debit and credit
This guide will also assist you to attain the learning outcomes stated in the cover page.
Specifically, upon completion of this learning guide, you will be able to:
 Understanding of financial transaction
 Assess the element of chart of accounts
 Understand rule of debit and credit
 Compute of elements of financial statements
 6.1 Definition of financial transaction
a transaction which in any way or degree affects interstate or foreign commerce involving the movement
of funds by wire or other means, involving one or more monetary instruments, involving the transfer of
title to any real property, vehicle, vessel, or aircraft, a transaction involving the use of a financial
institution which is engaged in, or the activities of which affect, interstate or foreign commerce in any way
or degree.
Customer transactions are processed in an accurate and timely manner using standard policies,
procedures and systems. Documentation or systems entry to support transactions is checked for accuracy
and completeness and customer account and transaction details maintained and verified using correct
procedures. Customer complaints and disputes are resolved or referred to other authorized personnel and
customer accounts are rectified where necessary. Accurate reconciliation of subsidiary ledgers to general
ledger accounts is performed and fees appropriate to the transaction are levied in accordance with standard
procedures.

6.2 understanding of chart of accounts and rule of debit and credit

6.2.1 Chart of Account

The list of account based the respective code in accounting treatment
6.2.2 Classifications of Accounts
In order to provide the necessary informat ion to users, accountants maintain separate records on each
element of the financial statements. For example, to report the balance for cash at the end of a year, a
record regarding cash should be kept. The record includes beginning cash balance, cash payments & cash
collect ions during the period. This record is called an account.

Definition: An account is a subdivis io n under the three elements of the accounting equat ion used to
record the changes over a single element in the financial statements. An account has three parts, Tit le,
Debit, and credit. For illustration purposes an account can be represented in the form of capital letter ‘T’.

Example
Tit le
Debit Credit
Dr Cr

Accounts are classified into five: assets, liabilities, capital, revenue and, expenses. The first three are
called balance sheet accounts and the other two are called income Statement accounts. Balance Sheet
accounts are those reported on the balance sheet at the end of the reporting period and Inco me Statement
accounts are reported on the Inco me Statement.
The five groups of account are discussed below
1. Assets: Resources owned by a business or individual are called assets. Assets could be tangible or
intangible. Tangible assets are assets having physical existence, like cash, land, computer, stationery
materials. Intangible assets do not have physical existence. Example: Goodwill, Copyright, patent right.

On the balance sheet assets are classified into two current assets and non – current assets.

Current Assets – are those assets, which can be used, sold, or converted into cash within one account ing
year. Example: cash, supplies, prepayments, receivables etc.

Non-current Asset: All assets other than current assets are called non-current assets. Example: land,
patent right, office equipment, vehicles.

2. Liabilities: Creditors’ claims to the assets of a business; amounts owed to creditors are called
liabilities. Like assets, liabilit ies are classified in to two as current liabilit ies and non – current liabilit ies

Current liabilities: The liabilit ies that are payable within the next (one) accounting year are known as
current liabilit y. Example: Accounts Payable, Rent Payable, Salary Payable.

Non – Current Liabilities: Debts that are not required to be paid wit hin the next accounting period.
Example long term notes payable.

3. Capital: The excess of the assets of a business over its liabilit ies is referred to as capital. It is the equit y
of the owner in the business.

4. Revenue: Are increases in owner’s equit y result ing fro m the main operations of the business.

Examples of revenue accounts are sales, interest income, tuit ion fee, and sales co mmissio n.
5. Expenses: are decreases in owner’s equit y in the process of earning revenue. For example, a hotel has
to pay salary to its workers for the services rendered to clients in order to get the inco me fro m customers
(revenue) the Hotel has pay salary to the emplo yees (expense).

Example of expenses: Salary, insurance, depreciation, supplies, utilit ies, rent etc.
Charts of Accounts
The number and name o f accounts used by an organizat ion depends on the nature of its operation. The list
of accounts used by an organizat ion and their codes is called the chart of accounts.

Asset Account number

Cash--------------------------------------------------------------------------11
Accounts Receivable------------------------------------------------------ 12
Supplies----------------------------------------------------------------------13
Prepaid Insurance-----------------------------------------------------------14
Equipment------------------------------------------------------------------- 15
Accumulated Depreciat ion –Equipment---------------------------------16
Truck--------------------------------------------------------------------------17
Accumulated depreciat ion – Truck----------------------------------------18

Liabilities
Accounts Payable-------------------------------------------------------------21
Notes Payable-----------------------------------------------------------------22
Owners Equity
Yimer Adem, Capital----------------------------------------------------------31
Yimer Adem Drawing-------------------------------------------------------32
Inco me Summary-------------------------------------------------------------33

Revenue
Service inco me----------------------------------------------------------------41

Expense
Salaries Expense --------------------------------------------------------------51
Rent Expense ------------------------------------------------------------------52
Utilit ies Expense---------------------------------------------------------------53
Supplies Expense--------------------------------------------------------------54
Insurance Expense-------------------------------------------------------------55
Maintenance Expense---------------------------------------------------------56
Depreciat ion Expense---------------------------------------------------------57
Truck Expense-----------------------------------------------------------------58
Miscellaneous expense-------------------------------------------------------59

In the chart of accounts, the asset accounts are listed according to their liquidit y. Liquidit y is the ease with
which an asset can be converted in to cash. Cash is the most liquid asset so it is listed first. Accounts
other than cash will be listed in their frequency of use or in alphabet ical order.
The account number is a code to ident ify accounts. The number could be a two digit, three digit or more
digits. In the above example a three – digit s code is used.
When the chart of accounts is prepared in an organizat ion we say the ledger is opened.
6.3 Rules of Debits and Credits
As shown above every account has three parts. These parts are discussed below:

Title – The name of the account. This is written at the top of the account.

Debit – is the left hand side of an account –Debit is abbreviated as ‘Dr.’ when an amount is entered on the
left side of an account we say the account is debited or charged.
Credit – is the right hand side of an account. Credit is abbreviated as Cr. An account is said to be
credited when an amount is entered on the right hand side of the account.

An account may increase or decrease on the debit side or on the credit side depending on the nature of the
account. In general, accounts appearing on the left hand side of the accounting equation increase on their
left side (Dr. side) and decrease on their right side (Cr. Side); whereas accounts on the right side of the
equation increase on their right side and decrease on their left side.
The above general rule will be expanded as fo llows

Debit Credit
-Increase in assets -Decrease in assets
-Increase in expenses -Decrease in expenses
-Decrease in capital -Increase in Liabilit ies
-Decrease in liabilit ies -Increase in liabilit ies
-Decrease in revenue -Increase in revenue.
The normal balance of an Account
Normal balance refers to the side of an account (Dr. or Cr.), which will have greater entries than the other.
The increasing side will be the normal balance for accounts.
Example: The normal balance of all asset accounts is debit.

6.3 Business Transactions and the Accounting Equation

Business transactions are economic events that should be recorded because they affect the financial
posit ion of the business enterprise. These businesses transactions are the raw materials o f account ing
reports, as cotton is a raw material for a textile factory.

A transact ion can be an exchange (such as the purchase or sale o f property, payment or collect ion of a loan
etc.) between two or more parties. A transact ion can also be an event that has the same effect as an
exchange transact ion but doesn’t invo lve an exchange transact ion. Some examples of “non exchange”
transactions are losses fro m fire, flood; physical wear and tear on equipment; donat ion of property and so
forth.
For a given transact ion to qualify to be recorded it has:
 1. To be related to the business enterprise
2. To be measurable in terms of mo ney
3. To be completed / happened/ act ion.
(I.it should not be a mere promise or intention; it must be at least partially co mpleted to be recorded)

Assets, Liabilities and Owner’s Equity

If you have noticed, in any organizat ion you will find properties such as a building, furniture, land,
vehicles and the like. Such properties owned by business enterprises are referred to as Assets. To buy
these assets, businesses get money fro m two sources: invest ments made by owners or amounts borrowed
fro m creditors. Therefore, both owners and creditors have a claim over the assets of the business
enterprise. The claims or rights of owners are referred to as Equities. If the assets owned by a business
amount to Birr 50,000 the equit ies in the assets must also amount to Birr 50,000. The relat ionship
between the two may be stated in the form of an equation, as fo llows:

Economic Resources = claims over the resources

Assets =Equit ies.

Equit y may be subdivided in to two principal types: the rights of creditors and the rights of owners. The
rights of creditors represent debts of the business and are called Liabilities. The rights of owners are called
Owners’ Equity (capital).

Assets=equit ies
Equit ies = Liabilit y + Owner’s equit y
This equat ion can be written as:
Assets= liabilit y + Owner’s Equit y

It is customary to place “liabilit ies “before “Owners’ equit y” in the accounting equation because creditors
have priorit y (preferent ial) rights to the assets. Because o f this, the owners have a residual claim over the
assets.
Debits and Credits in Common Accounting Transactions
The following bullet points note the use of debits and credits in the more common business transactions:
 Sale for cash- Debit the cash account and Credit the revenue account
Cash ----------- xxx.
Sales -----------------------------xxx
 Sale on credit- Debit the accounts receivable account and Credit the revenue account
Accounts Payable ----------- xxx.
 Sales Revenue -----------------------------xxx
 Receive cash in payment of an account receivable - Debit the cash Account and Credit the
accounts receivable account.
Cash ------------------xxx
Accounts Receivable ----------- xxx.
 Purchase supplies from supplier for cash - Debit the supplies account and Credit the cash
account.
Supplies ------------xxx
Cash-------------------xxx
 Purchase supplies from supplier on credit - Debit the supplies account and Credit the accounts
payable account.
Supplies -----------------------xxx
Accounts Payable ----------------------xxx

 Purchase inventory from supplier for cash - Debit the inventory account and Credit the cash
account.
Merchandise Inventory ---------xxx
Cash--------------------------------xxx

 Purchase inventory from supplier on credit - Debit the inventory account and Credit the
accounts payable account.
Merchandise Inventory --------- xxx
Accounts Payable -----------------xxx
 Pay employees - Debit the wages expense and payroll tax accounts and Credit the cash
account
Wages Expense ----------xxx
Cash ------------------------xxx
 Take out a loans - Debit cash account and Credit loans payable account
Cash------------------------xxx
Loan Payable ----------------xxx
 Repay a loan- Debit loans payable account and Credit cash account.
Loan Payable -----------xxx
Cash---------------------xxx
Example – Transactions
1. On Jan3, 2020 ABC Company sells a product to a customer for 20,000 in cash.
2. On Jan 5, 2020, the Company sells anther product to a customer for 10,000 on credit.
3. On Jan 10, 2020 Purchases equipment for 15,000 0n credit or on account.
4. On Jan 15, 2020 Purchases supplies for 5,000 in cash.
5. On Jan 20,2020 Received $6,000 cash from a customer services rendered
6. On Jan22, 2020 Received $4,000 cash from the customer on the Jan5, 2020 transaction.
7. On Jan25, 2020, paid $8,000 cash to creditor, for the purchase equipment of Jan 10, 2020.
8. On Jan 26, 2020, Paid $3,000 cash in Wages expense to employees
 9. On Jan28, 2020, distributed $500 cash in dividends to stockholders’.
10. On Jan 31, 2020 withdraw $1,000 cash for personal Use.

General Journal
1. Jan3/ Cash --------------------- 20,000

Sales Revenue ----------------------------20,000

2. Jan5/ Accounts Receivable ----10,000

Sales Revenue-----------------------------10,000
3. Jan10/ Equipment ---------------15,000

Accounts Payable---------------------------15,000
4. Jan 15/ Supplies ------------------ 5,000

Cash -----------------------------------------5,000
5. Jan 20/ Cash ---------------------- 6,000

Service Revenue --------------------------- 6,000

6. Jan22/ Cash ------------------------4,000

Accounts Receivable ------------------------ 4,000

7. Jan 25/ Accounts Payable ----------8,000

Cash ----------------------------------------- 8,000

8. Jan 26/ Wages Expense -----------3,000

Cash ----------------------------------------- 3,000

9. Jan28/ Dividends -------------------- 500

Cash------------------------------------------ 500
10. Jan 31/ Withdrawal -----------------1,000

Cash ------------------------------------------ 1,000

Total Balance 72,500 = 72,500

Self-check six
Part I: Multiple choice questions
Instruction: Choose the best answer and write the capital letter of your best choice in the space provided
before each question number1. The debit side of any asset account is
A. Decrease side B. Balance side C. Right hand side
2. The credit side of any account is the
A. Increase side B. Decrease side C. Right hand side
3. All increases in any account are recorded on
A. Debit side B. Credit side C. Balance side
4. The increase side of any liability account is the
A. Debit side B. Lift hand side C. The Balance side
5. The credit side of any capital account is
A. Decrease side B. Increase side C. Debit side
6. The debit side of any revenue account is the
A. Credit side B. Increase side C. Decrease side
7. The balance side of any expense account is the
A. Right hand side B. Debit side C. Credit side
Part II:-Give short answers to the following questions .
1. ___________________ represents the claim of owner’s against assets of the business enterprise.
2. Assume total asset of Br 60,000, and owner’s equit y o f Br 45,000. Determine the amount of liabilit y.
3. What do we mean when we say “owners have a residual claim over the assets of the business
enterprise”?
4. ____________ are assets used or consumed in the process of generat ing revenue.
5. Drawings are assets taken out of the business for the owner’s personal benefit. Do you advise
owners to withdraw cash or in kind (i.e. furniture, automobile..)
6. What are the four financial statements?
7. Every financial statement has three lines as a heading,
1st line____________________________
2nd line___________________________
3rd line _________________________

Answer sheet for writing parts

1__________________________________________
2.____________________________________________________________________________________
________________________________________________________________
3.____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________
4.____________________________________________________________________________________
_____________________________________________________________________________________
___________________________________________________
5.________________________________________________________________________
6_________________________________________________________________________
7._________________________________________________________________________
UNIT- SEVEN ACCOUNTING TRANSACTION IN FOR SERVICE BUSINESS
This unit to provide you the necessary information regarding the following content coverage
and topics:
 Analyzing and recording of accounting transaction
 Measurement of accounting financial transaction
 Practical aspects financial transaction
This guide will also assist you to attain the learning outcomes stated in the cover page.
Specifically, upon completion of this learning guide, you will be able to:
 assess analyzing and recording of accounting transaction
 convert theoretical aspects in practical
 Computing of financial transaction

7.1. Analyzing and recording of accounting transaction

Record; is the event that happen due to occurrence of business transaction the event that may
happen and critical understanding called analyzing business transaction
Example: The transactions were completed by AB Transport in the month of January 2003.
January 1. Ato yimer took Birr 450,000 from his personal savings and deposited it in the name of Bat i
transport.
January 2. AB Transport purchased two used trucks for Birr 150,000 each, on cash.
January 4. AB Transport received a check for Birr 650 for services given to Alem
Trading.
January 4. Received an invo ice for truck expenses Birr 90.
January 11. Paid Birr 600 for Awash Insurance Company to buy an insurance policy for its trucks.
January 16. Ato Yimer issued a check for Birr 9,400 to the workers as a salary for two weeks.
January 20. AB trading Billed Muradu Supermarket for goods transported from
Djibout i to Gondar Birr 2,650
January 21. Ato Yimer wrote a check for birr 450 to have one of the trucks repainted
January 21. AB trading purchased stationary materials and other supplies of Birr 740 on
Account
January 22. Office equipment of Birr 11,600 is bought on account.
January 23. Purchased an addit ional truck for Birr 250,000 paying birr 100,000 in cash
And issuing a note for the difference.
January 23. Recorded services billed to customers on account birr 14,600.
January 25. Received cash from customers on account Birr 15,000.
January 27. The owner withdrew Birr 500 in cash for his personal use.
January 28. Paid Birr 9,400 to workers as a salary for the last two weeks of the month.
January 30. Paid telephone expense of Birr 95 and electric expenses of Birr 125 for the
 month.
January 30. Paid other miscellaneous expenses Birr 50.
January 31. Paid Birr 4,000 as a rent for a building used for office space.

These transact ions are journalized as fo llows:

Date Descript ion Debit Credit

2003 Cash 450,000
Jan.1 Yimer Capital 450,000
To record investment by owner
2 Truck 300,000
Cash 300,000
Purchase of trucks
4 Cash 650
Service Inco me 650
Cash received from customers
4 Truck Expenses 90
Accounts Payable 90
Service received in advance
11 Prepaid Insurance 600
Cash 600
Purchase o f insurance policy
16 Salary Expense 9,400
Cash 9,400
Payment of salary
20 Accounts Receivable 2,650
Service Inco me 2,650
Provisio n of service
21 Truck Expense 450
Cash 450
Cash paid to repaint truck
21 Supplies 740
Accounts Payable 740
Purchase of supplies o f account
22 Office Equipment 11,600
Accounts Payable 11,600
 Purchase o f equipment
23 Truck 250,000
Cash 100,000
Notes Payable 150,000
Purchase of truck
23 Accounts Receivable 14,600
Service Inco me 14,600
Provisio n of service on account
25 Cash 15,000
Accounts Receivable 15,000
Collect ion of cash
27 Drawings 500
Cash 500
Owner withdrawals
28 Salary Expense 9,400
Cash 9,400
Payment of salary
30 Utilit ies Expense 220
Cash 220
Payment for telephone, electricit y
30 Miscellaneous Expenses 50
Cash 50
Payment for various expenses
31 Rent Expense 4,000
Cash 4,000
Payment of Rent

7.1.2 Posting
After the information about a business transact ion has been journalized, that informat ion is transferred to
the specific accounts affected by each transact ion. This process of transferring the informat ion is called
posting.
An account could be o f two types; the two-column account and the four-column account. We will use the
four-column account for our illustration. The two forms of accounts are given below.
The two-column account:
Account Account number
Date Item P.R Debit Date Item P.R Credit

The four-column account:

Account Account number
Date Item P.R Debit Credit Balance
Debit Credit

The steps in posting are given below:

1. Record the date and amount of Dr. and Cr. Entry to the account
2. Insert the Journal page number in the P.R (Post Reference) column of the account.
3. Insert the account number in the P.R column of the journal.
Note. The P.R Column is used for reference purposes. The P.R column o f the journal shows whether the
entry is posted and the account to which it is posted. In the account, the P.R Column shows the Journa l
page number from which the entry was brought.
Illustration. As ment ioned above, to illustrate the posting process the four column account is used and the
entries to the cash account are posted as follows.

Account Cash Account Number

Balance
Date Item P. R Debit Credit Debit Credit
2003 450,000 00 450,000 00
Jan 1
2 300,000 00 150,000 00
4 650 00 150,650 00
11 600 00 150050 00
16 9,400 00 140650 00
21 450 00 140200 00
23 100,000 00 40200 00
25 15,000 00 55200 00
27 500 00 54200 00
 28 9,400 00 45300 00
30 220 00 45,080 00
30 50 00 45,030 00
31 4,000 00 41,030 00

Note. The item column is usually left blank. In some cases the word balance is written when the account
is carried forward to a new page.

7.1.3The Trial Balance

After the posting phase is co mpleted, we have to verify the equalit y of the debit and credit balances. This
is done through the use of the ‘Trial Balance’. A trial balance is a two column list ing of the accounts in the
ledger and their balance to make sure that the total of debit balances equals the total of credit balances.

The trial balance for our illustration, AB Transport is presented bellow. The amounts are taken from the
balances of the accounts after all the transact ions have been posted. Therefore, after posting the above
transactions, you should get the final balances shown on the trial balance.
AB Transport
Trial Balance
January 31, 2003

Cash 41,030
Accounts Receivable 2,250 00
Supplies 740 00
Prepaid Insurance 600 00
Office equipment 11,600 00
Truck 550,000 00
Accounts payable 12,430 00
Notes payable 150,000 00
Yimer capital 450,000 00
Yimer drawing 500 00
Service inco me 17,900 00
Salary expense 18,800 00
Rent expense 4,000 00
Utilit ies expense 220 00
Maintenance expense 450 00
Truuck expense 90 00
 Miscellaneous expense 50 00
Total 630,330 00 630,330 00

Self-check seven
Part I: Multiple Choice Questions
Choose the best answer and write the capital letter of your best choice in the space provided before each
question number
1. Which one of the following types of accounting is providing financial information for lender and creditors?
A. Cost accounting C. Financial accounting
B. Management accounting D. Audit accounting
2. Which one of the following is optional accounting cycle?
A. Journal C. Unadjusted trial balance E. Post-closing trial balance
B. Posting D. Worksheet F. D&E
3. the gross profit in company in year four years is 75,000 cost of goods sold manufacturing was 320,000 the
beginning inventories of finished goods and working process inventory 22,000 and 25,000 respectively and
ending inventories process and finished goods are 30,000 and 32,000respectivly the sale made by the company.
A. Br378 ,000 C.Br388, 000
B.Br385,000 D.none

4. Suppose XYZ company is in present value 4,000,000 birr asset but in some case fair value measurement the
asset value is 6,000,000 birr, then, which conceptual frame work is reflected by the above case
A. Feedback value
B. Predictive value
C. Time line
D. None
5. Which one of the following is not true about financial accounting?
A. Provide accounting information for external user
B. Provide accounting information for labor union
C. It used past data
D. It is not guide by like GAAP and IFRS
6. The monitory unit assumption:
A. provides that the unit of measure fluctuate over time
B. it is unimportant in applying the cost principle
C. only used for financial statement bank
D. requires that only transaction date capable of being expressed in terms of money be
included in the Accounting record of the economic entity.
7. Which one of the following IFRS principle is violated if business report bankruptcy?
A. Going concern B. prudence principle C. historical principle D. monitory unit
assumption
8. Revenue and expenses accounts are closed by;
A. income summary B. capital accounts C. both income summary and capital
Part II: Work out question
1. Indicate whether each of the following items below is an asset, liability, revenue, expense,
gain or loss account and whether it appears in the balance sheet or income statement.
a) Office furniture
b) Income from services
c) Salaries paid to workers
d) Supplies on hand
e) Salary payable to workers
f) Cash
g) Income from sale of a used truck
h) Goods damaged by fire in the store
2. Given below is a list of selected transactions performed by John Décor during the
month of September 2002, the first month of operation.
a) Record the transactions in General Journal
b) Post each entry to the perspective account. Use the four – column account.
c) Prepare a trial balance
d) Prepare a worksheet. Assume the following adjustment for the accounts and journalize
them.
e) Prepare a Balance sheet, Income statement and statement of owner’s equity
f) Close the temporary accounts.
Sept. 10 Mr. John transferred cash from his personal account to be used in the business,
Birr 10,000.
“ 10 Paid rent for the month, Birr 500
“ 11 Purchased a truck for Birr 12,000 by paying Birr 3,000 Cash and giving a notes
payable for the difference
“ 12 Purchased equipment on account Birr 1,460
“ 13 Purchased supplies on account Birr 240
“ 14 Paid insurance premiums of Birr 170 (Dr. prepaid insurance)
“ 15 Received cash for services completed Birr 360.
“ 16 Purchased Supplies on account Birr 240.
“ 18 Paid salaries of Birr 900
“ 21 Paid its liabilities for the purchase of equipment
“ 24 Recorded sales on account Birr 2,080
“ 26 Received an invoice for truck expense Birr 115
“ 27 Paid utilities expense Birr 205.
“ 27 Paid miscellaneous expenses Birr 73
“ 28 Received cash from customers on account birr 1,420
“ 30 Paid salaries to employees Birr 950
“ 30. the owner withdrew Birr 1, 750 for personal use.
 REFERENCES
1. Fees and Warren, Principles of Accounting, 23th Edition
2. Robert, L., Burton S., Michael, D. (2001). College Accounting, New Delhi, A.I.T.B.S
Publishers & Distributors.
3.Shekhar, K. C. and Lekshmy Shekhar, Banking Theory and Practice (Incorporating
Banking Law and Foreign Exchange) Vikas Publishing House Pvt. Ltd. Eighteenth
Edit. 2004.
Developers’ profile
No Name Qualificatio Field of Organizati Mobile E-mail
n (Level) Study on/ number
Institution
1 Lammi MBA In Accounting Ambo TVT 091372339 Lammidhuguma@gmail
Dhugum finance & finance 3 .com
a
2 Ejigu MA Accounting Barayu PT 091344047 [email protected]
Tarafe & finance 8 m

3 Asnake MSc Accounting Adama 091222444 Asnakeabay142@

Abay & finance RVUTc 2 gmail.com

4 Kasa BA Accounting A.A 091278025 [email protected]

Tarafe & finance KMCTVT 9

5 Tilahun BA Accounting Afar 094281707 Telegram

Walde & finance Adadle PT 5

6 Mokanan MSc Accounting 097510582 Telegram

t Mulu & finance 3