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ACCOUNTING - Is An Art of Recording, Classifying, Summarizing, Transaction and Events of A Financial

Accounting is the process of recording, classifying, and summarizing financial transactions and interpreting the results. The key aspects of accounting include recording transactions in journals, classifying entries by posting them to accounts, summarizing entries through a trial balance and financial statements, and interpreting the financial health of a company. The accounting equation, which must be balanced, is Assets = Liabilities + Owner's Equity. A chart of accounts lists common account types used in a balance sheet, including assets, liabilities, and equity accounts, as well as income statement accounts for revenues, expenses, and cost of goods sold.

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202 views

ACCOUNTING - Is An Art of Recording, Classifying, Summarizing, Transaction and Events of A Financial

Accounting is the process of recording, classifying, and summarizing financial transactions and interpreting the results. The key aspects of accounting include recording transactions in journals, classifying entries by posting them to accounts, summarizing entries through a trial balance and financial statements, and interpreting the financial health of a company. The accounting equation, which must be balanced, is Assets = Liabilities + Owner's Equity. A chart of accounts lists common account types used in a balance sheet, including assets, liabilities, and equity accounts, as well as income statement accounts for revenues, expenses, and cost of goods sold.

Uploaded by

Ishiangreat
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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ACCOUNTING – is an art of recording, classifying, summarizing, transaction and events of a financial

character and interpreting the results thereof.

Nature of accounting:

a. Recording – journalizing
b. Classifying – posting
c. Summarizing – preparing trial balance and financial statements
d. Interpreting – preparing financial analysis

DEBIT (DR) – value received


- left side of an account
CREDIT (CR) – value parted with/given away
-right side of an account

THE T-ACCOUNT

ACCOUNT

debitside credit side

ACCOUNTING EQUATION (memorize)

Basic Equation

ASSETS = LIABILITITES + OWNER’S EQUITY


DEBIT = CREDIT + CREDIT

Long Form Accounting Equation

ASSETS = LIABILITIES + OWNER’S EQUITY (+ CAPITAL –WITHDRAWAL + REVENUE – EXPENSES)


DR CR CRCR DR CR DR

CHART OF ACCOUNTS (memorize)


BALANCE SHEET ACCOUNTS – Real accounts
A. ASSETS – normal DEBIT
CURRENT ACCOUNTS – convertible to cash within one year
1. Cash
2. Cash equivalents – short-term investments (maximum of 3 months)
3. Accounts Receivable – pautang
4. Allowance for Uncollectible Accounts – contra-asset account /CREDIT
Entry: Uncollectible Accounts (Debit)
Allowance for Uncollectible Accounts (Credit)
5. Notes Receivable – pautang with note
6. Inventories – goods left at the end of a period
7. Prepaid Expenses – expenses paid but yet incurred or used
Ex. Unused supplies, prepaid rent, prepaid insurance
NON-CURRENT ASSETS – long-term assets
1. Property, Plant and Equipment
a. Building
b. Machineries and Equipment
c. Furniture and fixtures
d. Vehicle
e. Transportation Equipment/Delivery Equipment
f. Leasehold Improvement – improvement made on a leased property
2. Accumulated Depreciation – contra-asset account /CREDIT
Depreciation – wear and tear of an asset

Entry : Depreciation Expense (debit)


Accumulated Depreciation (credit)

COST OF AN ASSET – ACCUMULATED DEPRTECIATION = BOOK VALUE/CARRYING VALUE


3. Intangible assets – assets which can not be seen or touched
Ex. Trademark, copyright, franchise

B. LIABILITITES –normal CREDIT


CURRENT ASSETS – obligations which are payable in one year
a. Accounts Payable – utang
b. Noted Payable – utang with a note
c. Accrued Liabilities/Accrued Expenses – expenses incurred but not yet paid

NON-CURRENT LIABILITITES
a. Mortgage Payable
b. Bonds Payable
c. Loans Payable

C. OWNER’S EQUITY – normal CREDIT


a. Capital credit
b. Withdrawal – debit

INCOME STATEMENT ACCOUNTS – nominal accounts

A. INCOME/REVENUE – normal CREDIT


a. Service Income – for services
b. Sales – for merchandizing business

B. COST OF SALES
a. Purchases – normal DEBIT
– goods bought for sale
C. EXPENSES – normal DEBIT
a. Salaries and Wages
b. Rent
c. Utilities
d. Advertising
e. Insurance
f. Communications/Telephone
g. Light and Water
h. Transportation
i. Gas and Oil
j. Repairs and Maintenance
k. Representation and Entertainment – to entertain visitors and prospective clients
l. Supplies
m. Depreciation
n. Uncollectible Accounts/Doubtful Accounts/Bad Debts – it depends on the business on what
account they wanted to use.
o. Miscellaneous – expense not classifiable above

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