Daffodil International University

Department of Business Administration

BBA Program
Sec: A
Course Code: ACT-101
Course Name: Principles of Accounting

Submitted By-
Name: Ikbal Hossain
ID: 211-11-6616
Submitted To-
Teacher’s Name: Mr. Sayed Farrukh Ahmed
Teacher’s Designation: Assistant Professor
 Chapter 1 (Accounting in Action)

January 13, 2021

(a) The system of recording and summarizing business and

financial transactions and analyzing, verifying, and reporting the
results. Also the principles and procedures of this system.

(b) I have learned many things from this chapter. Among them
are economic activities, identification, recording and
communication of economics activities, internal users and
external users of accounting. And much more.

20 January, 2021

Accounting Equation....

Assets = Liabilities + Owner’s Equity (Owner’s Capital −

Owner’s Drawings + Revenues − Expenses)

There is 4 Assumption of Accounting:

1.Economic Entity Assumption (The economic entity

assumption is an accounting principle that separates the
transactions carried out by the business from its owner and
other business principles. owner should keep their business
transactions separate from their transaction. He can only record
business transactions)
2. Time Period Assumption (The time period Assumption is an
accounting principle which states that a business should report
their financial statements appropriate to a specific time period
like daily, monthly, or yearly)

3. Monetary Unit Assumption (The monetary unit Assumption

is that all transactions or economic events recorded in the
accounts of a business can be expressed and measured in
monetary terms by a currency)

4. Going Concern Assumption (Going Concern Assumption

assumes that during and beyond the next fiscal period a
company will complete its current plans, use its existing assets,
and continue to meet its financial obligations)

26 January, 2021

Today I am learned, how to prepare a tabular summary of the

transactions. Today I am also learned how to prepare an
income statement & owner's equity statement. Thank you sir, to
explain us with so much carefully.
 Chapter 2 (The Recording Process)

21 February, 2021

a) Account: An account is a place where any transaction in

dollar or monetary value takes place or gets recorded.

b) In the previous classes, three things that I learned from this

chapter are:

1. Two type of entries, Compound entries and single entry.

2. I learned about how to do journal entry and ledger account. A

journal entry is an act of keeping and making records of any
transactions. A ledger is a book in which the information of a
journal is collected in a concise form.

3. Difference between debit side & credit side of an account.

There are 3 types of it >> debit balance, credit balance, zero
balance.
22 February, 2021

I learned lot of thing from this chapter,

Basic Rules:
If any assets increase=Debit

If any assets decrease = Credit

If any liability increase= Credit

If any liability decrease= Debit

Capital increase= Credit

Drawing increase= Debit

Revenue increase= Credit

Expense increase= Debit

Types of adjusting entries:

Deferrals:
1. Prepaid expenses: Expenses paid in cash before they are
used or consumed.
2. Unearned revenues: Cash received before services are
performed.

Accruals:
1. Accrued revenues: Revenues for services performed but not
yet received in cash or recorded.
2. Accrued expenses: Expenses incurred but not yet paid in
cash or recorded.

1 March, 2021

Ledger: A ledger is a book containing accounts in which the

classified and summarized information from the journals is
posted as debits and credits. It is also called the second book
of entry.

The ledger contains the information that is required to prepare

financial statements. It includes accounts for assets, liabilities,
owners’ equity, revenues and expenses. This complete list of
accounts is known as the chart of accounts. The ledger
represents every active account on the list.
Journal: An accounting journal is a detailed account of all the
financial transactions of a business. It’s also known as the book
of original entry as it’s the first place where transactions are
recorded. The entries in an accounting journal are used to
create the general ledger which is then used to create the
financial statements of a business.

Before computerized bookkeeping and accounting, the

transactions were entered manually into a journal and then
posted to the general ledger. Apart from the general journal,
accountants maintained various other journals including
purchases and sales journal, cash receipts journal and cash
disbursements journal. With accounting software, today you’re
likely to find only a general journal in which adjusting entries
and unique financial transactions are entered.

07 March, 2021

Principles of accounting:

1. Revenue recognition principle

2. Matching principle/expense recognition
3. Full disclosure principle
4. Cost principle
Types of adjusting entries:

Deferrals:
1. Prepaid expenses: Expenses paid in cash before they are
used or consumed.
2. Unearned revenues: Cash received before services are
performed.

Accruals:
1. Accrued revenues: Revenues for services performed but not
yet received in cash or recorded.
2. Accrued expenses: Expenses incurred but not yet paid in
cash or recorded.

13 March, 2021

THE RECORDING PROCESS:

1. Analyze each transaction
2. Enter a transaction in a journal,
3. Transfer journal information to ledger accounts and
4. Transfer ledger information to trial balance.
We have also learned about two types of transactions.

 Simple Entry: The entry that consists of only 2 accounts.

 Compound Entry: The entry that consists of more than 2
accounts.

At the same time, we have learned about three types of

balance as well.

1. Debit Balance= Debit Balance > Credit Balance

2. Credit Balance= Debit Balance < Credit Balance
3. Zero Balance= Debit Balance = Credit Balance

17 March, 2021

Every company has the most basic form of journal, a general

journal. Typically, a general journal has spaces for dates,
account titles and explanations, references, and two amount
columns.
Entering transaction data in the journal is known as
journalizing.

Simple entry: The entry that consists of only 2 accounts.

Compound entry: The entry that consists of more than 2
accounts.
 Chapter 3 (Adjusting the Accounts)

19 March, 2021

Accrual accounting is an accounting method where revenue or

expenses are recorded when a transaction occurs rather than
when payment is received or made. The method follows the
matching principle, which says that revenues and expenses
should be recognized in the same period.

21 March, 2021

Today our course teacher accounting

Records in discussed journal tow topics tow issues such as

1. Simple entry: The entry that consists of only 2 account

2. Compound: The entry that consists of more than 2

accounts.
23 March, 2021

Accrual- versus Cash-Basis Accounting:

Accrual basis is a method of recording accounting transactions

for revenue when earned and expenses when incurred. The
accrual basis requires the use of allowances for sales returns,
bad debts, and inventory obsolescence, which are in advance
of such items actually occurring.

Cash basis refers to a major accounting method that

recognizes revenues and expenses at the time cash is received
or paid out. This contrasts accrual accounting, which
recognizes income at the time the revenue is earned and
records expenses when liabilities are incurred regardless of
when cash is received or paid.

Fiscal and Calendar Years:

A calendar year is always from January 1 to December 31. A
fiscal year, by contrast, can start and end at any point during
the year, as long as it comprises a full 12 months. A company
that starts its fiscal year on January 1 and ends it on December
31 operates on a calendar year basis.
27 March, 2021

Adjusting Entries for Deferrals: To defer means to postpone or

delay. Deferrals are expenses or revenues that are recognized
at a date later than the point when cash was originally
exchanged. The two types of deferrals are prepaid expenses
and unearned revenues.

Adjusting Entries for Accruals: Prior to an accrual adjustment,

the revenue account (and the related asset account) or the
expense account (and the related liability account) are
understated. Thus, the adjusting entry for accruals will increase
both a balance sheet and an income statement account.

Depreciation: The process of allocating the cost of an asset to

expense over its useful life.
 Chapter 4 (Completing the Accounting cycle)

28 March, 2021

A worksheet is a multiple-column from used in the adjustment

process and in preparing financial statements. As its name
suggests, the worksheet is a working tool. It is not a permanent
accounting record. It is neither a journal nor a part of general
ledger. The worksheet is merely a device used in preparing
adjusting entries and financial statements.

1. The first step in preparing a worksheet is to enter all ledger

accounts with balances in the account titles column and then
enter debit and credit amounts from the ledger in the trial
balance columns.

2. The second step when using a worksheet is to enter all

adjustments in the adjustments columns.

3. Third step, the amount in the adjusted trial balance columns

is the balance that will appear in the ledger after journalizing
and posting the adjusting entries.

4. The fourth step is to extend all revenues and expenses

account balances to the income statement columns.

5. When the income statement is prepared from the income

statement columns the owner's equity statement and the
statement of financial position are prepared from the statement
of financial position columns.

30 March, 2021

An accounting worksheet is a spreadsheet used to prepare

accounting information and reports. Accounting worksheets are
most often used in the accounting cycle process to draft an
unadjusted trial balance, adjusting journal entries, adjusted trial
balance, and financial statement.

Three things I've learned:

1. Assets from adjusted trail balance moves to Balance sheet.
2. Liabilities to CR side of Balance Sheet.
3. Revenue and expenses to Income statement.

30 March, 2021

A worksheet is a multiple-column form used in the adjustment

process and in preparing financial statements.

A company enters the adjustments in the worksheet columns

and then journalizes and posts the adjustments after it has
prepared the financial statements. Thus, worksheets make it
possible to provide the financial statements to management
and other interested parties at an earlier date.
 Chapter 5 (Accounting for Merchandise Operations)

07 April, 2021

1. Inventory
2. Sales Revenue
3. Cost of goods sold
4. Wholesalers
5. Retailers
6. Consumers
7. Customers

There are 2 types of merchandising companies. Wholesale

merchandising companies don't produce any products rather
they buy finished goods from manufacturers and sell them to
consumers, retailers or other wholesalers. Retail merchandising
companies directly sell to the consumers.

A merchandising company includes 2 types of expense and

they are 'Cost of goods sold' & 'operating expenses'.
08 April, 2021

A merchandising company buys and sells goods to earn a

profit.

1) Wholesalers sell to retailers

2) Retailers sell to consumers

Expenses for a merchandiser are divided into two categories:

1) Cost of goods sold–The total cost of merchandise sold

during the period,
2) Operating expenses sales revenue - costs of goods sold =
gross profit
Gross profit- operating expense = net income/loss

Balance Sheet Columns- The major difference between the

balance sheets of a service company and a merchandising
company is inventory.