ACCOUNTING SYSTEM IN DANGANA TRADING COMPANY LTD


MAIDUGURI NIGERIA








BEING A CASE STUDY PRESENTED TO STUDENT SERVICE


ON


COMPLETION OF THE COURSE


“FUNDAMENTAL OF ACCOUNTING”


ACCT 201
































DEPARTMENT OF BUSINESS ADMINISTRATION





U.S.A.





JULY, 2004


TABLE OF CONTENTS


CONTENTS PAGE


Title I


Table OF Content II


Abstract III


CHAPTER ONE – INTRODUCTION


1.1 Aim and objective of the study 1


1.2 Scope and Limitation of the Study 3


1.3 Methodology 4


1.4 A Brief History of the Company 5


1.5 Meaning of Accounting System 8


CHAPTER TWO – PURCHASE PROCEDURE


2.1 Ordering of Materials and Services 13


2.2 Receipt of Materials 15


2.3 Issue of Materials out of the stores 16


2.4 Receipts and Posting on Invoices 17


2.5 Payments of Accounts 18


2.6 Control of Purchase 22


CHAPTER THREE – SALE PROCEDURE


3.1 Customers Orders 25


3.2 Sales Invoice 26


3.3 Control of Sales 27


CHAPTER FOUR


4.1 Budget and Budgetary Control 29


4.2 Accounting for Fixed Assets 38


4.3 Accounting for Debtors 41


4.4 Payroll Accounting 44


4.5 Banking Operations and Cash Book 46


4.6 Preparation of Accounts 49


4.7 Internal Control System and Auditing 50


CHAPTER FIVE – CONCLUSION


5.1 Summary and Conclusion 55


5.2 Weakness and Recommendation 61


5.3 Bibliography 69


Appendix



ABSTRACT:


This essay is devoted to the study of the accounting system in Dangana Trading Company Ltd. It concentrates on the system and procedures adopted by the company. It has to be noted that it is not directed at the study of accounting system in broad terms but is restricted to the system and procedures adopted by the company. Thus, everything was based on the information and data that were available.


The company which was incorporated in 1982 with the main object of trading Polybags and other related lines of business as provided in the memorandum and article of association started production in May 1984.


For the purpose of achieving efficiency, the accounts department has designed a proper method for purchases and sales which this essay has considered in some details. This essay has also given consideration to the budget and budgetary control system. Other areas considered are accounting for fixed assets, payroll accounting, Bank and cash book operations. Internal control and auditing which is yet another vital aspect of good accounting system has also been studied.


Finally the essay has provided suggestions for improving the areas where weaknesses were identified. These mostly concerns the growth, future expectations, maintenance of certain records not being maintained as at now for the purpose of achieving affectiveness and efficiency in the operations of the company.



CHAPTER ONE – INTRODUCTION


AN INTRODUCTION


This piece of work attempts to look at the field accounting system in the Dangana Trading Company Ltd. Maiduguri, the system in use and how the books of accounts are being maintained.


1.1 AIM AND OBJECTIVE OF THE STUDY


The aims and objectives of this study are to analyse the effectiveness of the Accounting system in the Dangana Trading Company Ltd. and make necessary recommendations on the weakness discovered during the course of the study.


Accounting system is an information system. It can be referred to as a formal communication network which supplies data to assists management to attain management function and objectives. To attain such objectives and goals of an entity, the management of an organisation requires complete and accurate accounting information in:-


(i) Planning and controlling the business.


(ii) Safeguarding the assets.


(iii) Complying with legal requirements.


(iv) Preparing accounting statements.


(v) Summarising and analysing the activities of the organisation.


(vi) Providing an information system within the organisation.


It provides the currently assembly of the accounting statements. The systematic recording of the accounting information is the prerequisite of any accounting system. Hence to comply with this requirement is to code all records through the use of numerical and alphabetical symbols in place of long descriptions.


Dangana Trading Company Ltd. makes use of the numerical and alphabetical symbols. This has the effect of reducing work load and eliminating errors and ultimately simplifying the accounting operations. Accounting system in Dangana Trading Company ltd. is principally built on the system of double entry book-keeping. The company also recognises the chances of expansion in the future and has made provision especially in internal control and accounting operation of the company by the management.


Normally a good accounting system should provide management with accurate and timely accounting data and reports made daily, weekly, monthly, quarterly and annually and whenever is required by the management.