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Accounting: Accounting Equation/ Balance Sheet

The document discusses key accounting concepts and processes. It explains that the accounting equation forms the basis for bookkeeping and uses the dual-aspect concept. Transactions are initially recorded through bookkeeping using either single- or double-entry systems, then recorded in journals as debit and credit entries. Journals provide a chronological record of transactions. Information from the journals is then posted or transferred to the general ledger, which contains all accounts, and subsidiary ledgers, which contain similar accounts.

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Dhea Angela A. Capuyan
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87 views

Accounting: Accounting Equation/ Balance Sheet

The document discusses key accounting concepts and processes. It explains that the accounting equation forms the basis for bookkeeping and uses the dual-aspect concept. Transactions are initially recorded through bookkeeping using either single- or double-entry systems, then recorded in journals as debit and credit entries. Journals provide a chronological record of transactions. Information from the journals is then posted or transferred to the general ledger, which contains all accounts, and subsidiary ledgers, which contain similar accounts.

Uploaded by

Dhea Angela A. Capuyan
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Accounting

Accounting Equation/ Balance Sheet


 Basis for today’s bookkeeping
 Basis for Dual Aspect Concept
o The dual aspect concept states that every business transaction requires recordation in two
different accounts
 Assets = Liabilities + Owner’s Equity
o Modern Accounting uses the Double Entry Bookkeeping System

Bookkeeping
 Is the initial entry of recording business transactions.
 This is the process done before accounting
 There are 2 methods
o Single Entry Bookkeeping System
o Double Entry Bookkeeping System

Single Entry Bookkeeping System


 No debit and credit
 Uses Cashbox
 Only Important details
Double Entry Bookkeeping System
 Uses the Dual Aspect Concept
 With Credit and Debit

Accounting Journal
 Are often called as book of first entry/ Initial/ Original Entry
 The Accounting record in which the economic transactions and events are initially recorded
 Provides a chronological record of transactions with explanations and clear references to their
supporting documents with corresponding debits and credits

Classification of Journal Books


 General Journal – Is a collection of all journal entries in an accounting system.
 Special Journal - Specialized lists of financial transaction records. It records transactions of a
specific type.

Journalizing
 Is the process of recording the effects of economic transactions in the journal

Journal Entry
 These are the first step to record all business transactions and events in the accounting system.

Type of Journal Entry


 Simple Journal Entry – One debit and Credit
 Compound Journal Entry – Many debit and Credit

Accounting Ledger
 Contains a listing of all general accounts in the accounting system’s chart of accounts.
 Book of the Final Entry
 Also called “modified T-account”
 Accounting book where related amounts are recorded periodically

Kinds of Ledger
 General Ledger – group of all accounts used in preparing the financial statements
o Called a controlling account because it reports in summarized form
 Subsidiary Ledger – group of like accounts that contains the independent data of a specific Ledger

Forms of a Ledger
 Two Money Column Ledger
 Three Money Column Ledger (a balance Column Ledger)
 Four Money Column Ledger (a balance Column Ledger)

Posting
 Transferring from Journal to Ledger
 Always follow ALORE
o Assets – Liabilities – Owner’s Equity – Revenues – Expenses

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