BASIC

ACCOUNTING
Chapter 1

@fallenraiinn
Debit and Credit Mechanism
Account Type Increase on Decrease on Normal

Assets Debit Credit Debit

Liability Credit Debit Credit

Equity Credit Debit Credit

Revenue Credit Debit Credit

Expense Debit Credit Debit

Assets
Current Assets
1. Cash 4. Account Receivables
2. Inventories 5. Supplies
3. Prepaid Expense 6. Short Term Investments (< 1 year)
a. Prepaid Insurance 7. Notes Receivables (< 1 year)
b. Prepaid Rent, etc

Property, Plant, and Equipments*

1. Land 4. Vehicle
2. Building 5. Equipments
3. Machine 6. Natural Resources
All property, plants and investments will be depreciated, except land.
Accumulated Depreciation normal is on debit

Intangible Assets* Financial Position

*
t
1. Patents 5. Trademarks
Goodwill t xxx
2. Copyrights 6. Tradenames Other Intagible Assets xxx
___
3. Franchise 7. Goodwill Total Intagibles xxx
4. Customer Lists

Two types of Intagible assets a. Limited life (Amortization)

b. Indefinite life (impairments)

Long Term Investments*

1. Tangible Assets (Land or property that bought for sale later on)
2. Securities (Bonds, Share Investments, Long Term Notes Receivables)
3. Special Funds (Sinking Fund, Pension Fund, Plant Expansion Fund)
4. Non Consolidated Subsidiaries (Associated companies’s)

Other Assets* Different for every company

1. Long Term Prepaid Expense (> 1 year) 3. Assets in special fund

2. Non-current Receivables 4. Restricted cash or securites
*Property, Plant, and Equipment, Intangible Assets, Long Term Investment,
is on a major group called Fixed Assets or Non-current Assets.

Liabilities
Current Liabilities
1. Accounts Payable 4. Unearned Revenue
2. Expense Payable 5. Warranty Liabilities (< 1 year)
a. Utilities Payable 6. Notes Payable (< 1 year)
b. Salaries Payable, etc. 7. Accrued Liabilities *
3. Income Tax Payable *Basically same with Expense Payable

Non Current Liabilities Long Term Debts (> 1 year)

1. Bank Loan 4. Bonds Payable
2. Pension Liability 5. Warranty Liabilities (> 1 year)
3. Obligation 6. Notes Payable (> 1 year)

Equity
Share Capital
1. Ordinary Shares 2. Preference Shares

Par = $2 Share Premium = $3

Share Premium Market = $5
The excess value paid by shareholders above the par value

Retain Earnings
Accumulated profits that are not distributed to Shares
Preference SharesPreference share holders

Accumulated Other Comphrensive Income

This account can be a gain or loss.

Normal account on debit, so it’s decreasing

Treasure Shares the equity.
Outstanding shares repurchased.

Non-controlling Interest
Part of the subsidiary company's equity and is not owned by the parent company.
Basic Chart of Account
Different for every company
Assets
No. Account Name Increase on Decrease on Normal

101 Cash Debit Credit Debit

102 Account Receivable Debit Credit Debit

103 Notes Receivable Debit Credit Debit

104 Supplies Debit Credit Debit

105 Prepaid Expense* Debit Credit Debit

106 Inventory Debit Credit Debit

The account name can be shuffled, but cash should always be the first one.
*Prepaid expense included rent, insurance, advertising, etc.
105 - Prepaid Rent 106 - Prepaid Insurance 107 - Prepaid Advertising

No. Account Name Increase on Decrease on Normal

111 Land Debit Credit Debit

112 Building Debit Credit Debit

112.1 Accumulated Depreciation - Building Credit Debit Credit

113 Equipment Debit Credit Debit

113.1 Accumulated Depreciation - Equipment Credit Debit Credit

114 Patent Debit Credit Debit

115 Copyrights Debit Credit Debit

Liabilities
No. Account Name Increase on Decrease on Normal

201 Account Payable Credit Debit Credit

202 Unearned Revenue Credit Debit Credit

203 Salaries Payable Credit Debit Credit

204 Expenses Payable* Credit Debit Credit

211 Bank Loan Credit Debit Credit

*Expenses Payable included salaries, utilities, interest, etc.

205 - Utilities Payable 206 - Interest Payable
 Equity
No. Account Name Increase on Decrease on Normal

301 Share Capital-Ordinary Credit Debit Credit

311 Retained Earnings Credit Debit Credit

321 Dividends Credit Debit Credit

Revenue
No. Account Name Increase on Decrease on Normal

401 Service or Sales Revenue Credit Debit Credit

401.1 Sales Discounts Debit Credit Debit

401.2 Sales Returns & Allowances Debit Credit Debit

Expenses
No. Account Name Increase on Decrease on Normal

501 Supplies Expense Debit Credit Debit

502 Salaries Expense Debit Credit Debit

503 Rent Expense Debit Credit Debit

504 Utilities Expense Debit Credit Debit

505 Depreciation Expense - Equipment Debit Credit Debit

506 Depreciation Expense - Vehicle Debit Credit Debit

507 Purchase Debit Credit Debit

507.1 Purchase Discounts Credit Debit Credit

507.2 Purchase Return & Allowances Credit Debit Credit

Service Company
Companies whose main activity is making intangible products in the form of
services to make a profit.
 General Journal
Media in the accounting process to accommodate transaction accounts
Daily records of company transactions

[Company Name]
General Journal
For the Month January 2024

Date Description ref Debit Credit

Debit Account Name Number Here

Credit Account Name Number Here

Transaction Date For account code Credit account

Transaction Debit account
HAVE TO BE BALANCED
General Ledger
A collection of accounts used to record and group similar transactions

[Company Name]
General Ledger
For the Month January 2024
Account Name Account Code
Balance
Date ref Description Debit Credit
Debit Credit

Transaction Date
In which account did Normal account on transaction
Transaction
the transaction occur?
Reference
On what journal this transaction would be found?

TRIAL BALANCE
Makes it easier to prepare financial reports

[Company Name]
Trial Balance
For the Month Ended, 31st January 2024

Account Code Account Name Debit Credit

Q1 - OPEN YOUR CALCULATOR
Jan 1 On January 1, 2024, Aether invest 24,000 cash in the business in exchange for
24,000 of ordinary shares. The company name is Felis Catus

Jan 3 The company purchased 7,000 of office equipment on credit.

Jan 7 The company received 8,000 cash in exchange for services performed.

Jan 9 The company paid 850 for this month’s rent.

Jan 12 Felis Catus Co. performs 3,500 services for customers. The company received
cash of 1,500 from the customer, and the remainder was paid on credit.

Jan 22 Felis Catus Co. received 1,200 in cash from customers who had been billed for
services on January 12.

Jan 27 The company pays half of its office equipment bills.

Felis Catus Co.

General Journal
For the Month January 2024

Date Description ref Debit Credit

Jan 1 Cash 24000

Share Capital - Ordinary 24000

Jan 3 Equipment 7000

Account Payable 7000

Jan 7 Cash 8000

Service Revenue 8000

Jan 9 Rent Expense 850

Cash 850

Jan 12 Cash 1500

Account Receivable 2000

Service Revenue 3500

Jan 22 Cash 1200

Account Receivable 1200

Jan 27 Account Payable 3500

Cash 3500

Total 48050 48050

 Felis Catus Co.
General Ledger
For the Month January 2024
Cash 101

Balance
Date ref Description Debit Credit
Debit Credit

Jan 1 J1 24000 24000

Jan 7 J1 8000 32000

Jan 9 J1 850 31150

Jan 12 J1 1500 32650

Jan 22 J1 1200 33850

Jan 27 J1 3500 30350

General Journal Ending Balance

Because cash is an asset, therefore debit cash increases and credit decreases.
The Balance column is the accumulated account

General JOURNAL CONDITION AFTER ‘CASH’ LEDGER

Date Description ref Debit Credit

Jan 1 Cash 101 24000

Share Capital - Ordinary 24000

Jan 3 Equipment 7000

Account Payable 7000

Jan 7 Cash 101 8000

Service Revenue 8000

Jan 9 Rent Expense 850

Cash 101 850

Jan 12 Cash 101 1500

Account Receivable 2000

Service Revenue 3500

Jan 22 Cash 101 1200

Account Receivable 1200

Jan 27 Account Payable 3500

Cash 101 3500

Total 48050 48050

Account Receivable 102

Balance
Date ref Description Debit Credit
Debit Credit

Jan 12 J1 2000 2000

Jan 22 J1 1200 800

Equipment 111

Balance
Date ref Description Debit Credit
Debit Credit

Jan 3 J1 7000 7000

Account Payable 201

Balance
Date ref Description Debit Credit
Debit Credit

Jan 3 J1 7000 7000

Jan 27 J1 3500 3500

Share Capital - Ordinary 301

Balance
Date ref Description Debit Credit
Debit Credit

Jan 1 J1 24000 24000

Service Revenue 401

Balance
Date ref Description Debit Credit
Debit Credit

Jan 7 J1 8000 8000

Jan 12 J1 3500 11500

Rent Expense 501

Balance
Date ref Description Debit Credit
Debit Credit

Jan 9 J1 850 850

General JOURNAL CONDITION AFTER ALL LEDGER
Date Description ref Debit Credit

Jan 1 Cash 101 24000

Share Capital - Ordinary 301 24000

Jan 3 Equipment 111 7000

Account Payable 201 7000

Jan 7 Cash 101 8000

Service Revenue 401 8000

Jan 9 Rent Expense 501 850

Cash 101 850

Jan 12 Cash 101 1500

Account Receivable 102 2000

Service Revenue 401 3500

Jan 22 Cash 101 1200

Account Receivable 102 1200

Jan 27 Account Payable 201 3500

Cash 101 3500

Total 48050 48050

Felis Catus Co.

Trial Balance
For the Month Ended, 31st January 2024

Account Code Account Name Debit Credit

101 Cash 30350

102 Account Receivable 800

111 Equipment 7000

201 Account Payable 3500

301 Share Capital - Ordinary 24000

401 Service Revenue 11500

501 Rent Expense 850

Total 39000 39000

 UNCH ING A NEW
WE WILL LA OON!
CHAPTER S

TUNED!
STAY
 BASIC ACCOUNTING
WRITER’S INFORMATION AREA

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