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Lecture 1_08edcdd5fa217a23d6ca9e701f0dcba9

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27 views16 pages

Lecture 1_08edcdd5fa217a23d6ca9e701f0dcba9

Uploaded by

menaashraf2005
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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• Dr.

Sherif Nagy Lecturer


• Dr. AbdElRahman Omar Lecturer
• Dr. Israa Samy Assistant
Lecturer
• Dr. Doaa Mahmoud Assistant Lecturer

Activity Score
Final 50%
Mid-term 25%
Quizzes 7.5%
Assignment 5%
Participation 5%
Attendance 7.5%
1–2
Accounting Process
Select economic events Record classify, and
(transactions) Review
summarize

Recording Posting Prepare


Identification or
Ledger Trial Balance
Analyzing Journal

Prepare
accounting reports Adjusting
Financial Statements Entries
Steps In The Accounting Cycle
1. Analyse
8. Closing transactions
entries 2. Journalize the
transactions

7. Prepare
financial 3. Post to ledger
statements accounts

4. Prepare a
6. Prepare an trial balance
adjusted trial
balance 5. Journalize
and post
adjusting
entries
The Basic Accounting Equation
Assets = Liabilities + Owners’ Equity + Revenue - Expense

Assets = Owner’s Equity + Liabilities

Question (3):
Presented below is the basic accounting equation determine
the missing amounts.
Assets = Liabilities + Owner’s Equity
a) $90,000 = $50,000 + ?
b) ? = $40,000 + $70,000
c) $94,000 = ? + $53,000
Assets = Liabilities+ Owners’ Equity + Revenue
Question (4): Use the expanded
- Expense accounting equation to answer each of
the following questions:
(a) The liabilities of Falk Company are
$ 90,000. Owner’s capital account is
$150,000; drawings are $40,000;
revenues $450,000 and expenses
$320,000. What is the amount of Falk
Company’s total assets?
(b) The total assets of Pierogi
Company are $57,000. Owner’s capital
account is $25,000 drawings are $7,000
revenues $52,000 and expenses
$35,000. What is the amount of the
company’s total liabilities?
Increases and Decreases in Owner’s Equity
INCREASES DECREASES
Investments Withdrawals
by Owner by Owner
Owner’s
Equity
Revenues Expenses
• On September 1, Mike invested $15,000 cash in his own business, Softbyte Solutions.
• Performed services for Magic Company for L.E 2,500 cash.
• Softbyte purchased a computer for $7,000 cash.
• Softbyte purchased copying papers and supplies from Chuah Supply Company for $1,600 on account.
• Softbyte received $1,200 cash from customers for programming services provided.
• Softbyte received a bill for $250 for advertising to be paid later.

Assets Liabilities Owner's Equity


Transaction
2- When the owner invest cash in the business, the effect 4- When services are performed on account, the effect
will be : will be :
a. Liabilities increase and owner’s equity increases. a. Both cash and owner's capital decrease.
b. Both assets and liabilities increase. b. Both cash and owner's capital increase.
c. Both assets and owners’ equity increase. c. Both accounts receivable and owner's capital increase.
d. None of the above d. Accounts payable increases and owner's capital
decreases.
5- Collection of a L.E1000 Accounts Receivable 6- When expenses are paid in cash, the effect will be :
a. increases an asset L.E1000; decreases an asset L.E1000. a. owner's equity will increase.
b. increases an asset L.E1000; decreases a liability L.E1000. b. liabilities will decrease.
c. decreases a liability L.E1000; increases owner's equity
c. assets will increase
L.E1000.
d. decreases an asset L.E1000; decreases a liability L.E1000. d. assets will decrease

7- Ahmed Company buys a L.E 5000 machine on credit. This transaction will affect the
a. Income statement only.
b. Balance sheet only.
c. Income statement and owner's equity statement only.
d. Income statement and balance sheet.
Activity
Example(2)
Ahmed opened his own company on January 1,2019. During the first month of
operations, the following transaction occurred:
1.Ahmed invested L.E 200,000 in the business
2.Paid L.E 3,000 cash for rent on storage space.
3. Purchased equipment for L.E 15,000 from Al-shark company on account.
4. Performed services for Magic Company for L.E 2,500 cash.
5. Received a bill for L.E 1000 from Al-Akhbar for advertising expense.
6. Paid Al-shark company for the equipment purchased in (3) above.
7. Purchased supplies for L.E 500 cash.
8. Paid monthly expenses: salaries L.E 5000and utilities L.E 400.
9.Performed services for customer for L.E 1200 on account.
10. Ahmed withdrew L.E 1000 cash for personal use.
Instructions:
Journalize the previous transactions, Post them to ledger.
Service Companies

Examples of service firms: Accounting firms, law firms


and plumbing services

These companies all sell different services. They do not sell


inventory. The income statements of a service organization
consist of revenues minus expenses to arrive at net income.
Merchandising Companies
Merchandising Companies Buy and Sell Goods

The primary source of revenues is referred to as sales revenue


or sales.
Merchandising companies sell inventory in the wholesale market or
to consumers in the retail market.
A wholesaler is an intermediary that buys products from
manufacturers or other wholesalers and sells them to retailers or
other wholesalers.
A retailer is an intermediary that buys products from
manufacturers or wholesalers and sells them to consumers.

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