Notesale: Turn your study into money

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Business Accounting - P1 : Accounting Basics
Definition
Online Accounting Classes
Accounting is the business of recording a company's transactions and
communicating that information to interested parties
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Financial accounting
caters for external users and managerial accounting deals with internal users
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Internal auditing is like a watchdog which sniffs
around and checks the company's books and activities
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Accounts receivable is an asset it represents future money to be obtained from a
customer
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Revenue is not an asset because it
relates to current benefits of a business
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This increases the liability of the
company, as it now owes money to the bank
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The company pays part of the loan,
increasing the liability
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Equit y
is the owner's contribution to a business
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This very important
formula you'll need for the rest of this course - is equal to net worth, or assets
less liabilities
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Cost of
goods sold is the cost of the goods you bought
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Profit goes into retained earnings
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Revenue has a positive
impact on equity
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Accounts receivable
is an asset, not equity
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This module was designed to help students understand what assets, liabilities,
revenues, and expenses are
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If you are
not comfortable with these concepts, you can move on to Module 2
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Accounting as we know it today was actually started by a person called Luca
Pacioli around 1492
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All three
components of accounting are really the same, they're just different ways of

writing the accounting equation
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Suppose management
purchased a fleet of cars, paying thirty thousand in cash and getting a loan for
the remainder
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So equity goes down by fifty
thousand dollars
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The net
result now is assets 720 liabilities 620 equity one hundred thousand, and the
accounting equation still holds true
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The accounting equation is
impacted because: -The liability (725) is now greater than the equity (95,000)
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Financial Statements And Recording Accounting
Transactions
In accounting, a balance sheet shows an organization's assets, liabilities,
and owner's equity
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I would like you to print out these two slides and we
will do the problem together
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After recording all the transactions, prepare an income statement
statement of owner's equity and balance sheet for the double surprise
travel agency
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Then,
we will do this as a team
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Show the different types of assets under
liabilities show the different types of liabilities
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Revenue is a good fire query or bad for equity, it is good so under the
owner's equity it is plus fifty nine five cash asset plus forty accounts
receivable and of the asset plus nineteen five
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The sixth is the most difficult: take your
time
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The beauty of the
accounting equation is if you made one mistake just one it won't
balance now
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Double Entry Accounting System - Debits and Credits
The system that is universally followed worldwide was set up in 1492 by
a priest by the name of Luca Pacioli
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This is called debit debit debit,
meaning left side in the language of Luca Tashera
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Then open accounts for bank loan, motor vehicle, and
furniture
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It's imperative that you write this down
explaining what's the lefthand tree which is debit and what's the right
entry which is credit; this is done in a book called a journal, hence it's
known as a journal entry
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The text is about a business that uses a system where the left is always
equal to the right
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They provided services for 59507 dollars,
fifty nine thousand five collected cash, forty thousand, so how much
money do customers owe them 19500? What do you call customers
who owe you money? Accounts receivable
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The company received
10,000 cash from customers previously, so what two accounts would be
impacted cash? Accounts receivable because you got money and who
paid you the customer? That is accounts receivable
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In this module, I wanted to show you how
to record transactions using t accounts and how to prepare a trial
balance
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So you
did everything perfectly now from the trial balance you do an income
statement of owner's equity and balance sheet

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