-is a service activity. It forms function to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decision. In general sense, accounting is an information system that provides reports to stakeholders about economic activities a condition of a business.
Debit(Dr) - Normal Account
- Value received
- Accounts Receivable (A/R)
- Expenses: rent, service
- Supplies / Equipment
Credit (Cr) - Normal Account
- Value given away
- Accounts Payable (A/P)
- Investment / Capital
- Income (-) Drawings
CAREER OPPORTUNITIES IN ACCOUNTING
1. ACCOUNTING CLERK – one who records, sort and file accounting information. An accounting clerk may specialized in cash, payroll, accounts payable (A/P) , inventory and purchase.
SORTING – CLASSIFICATION
c. Records / Books:
*Church Register (Journal Entries)
*Voucher register (OR’s & other reference proofs of expenses
-Cash Reimbursement Journal
-Cash Voucher Register
2. BOOK KEEPER- one who generally supervises the work of accounting clerk help with daily accounting work and summarizes accounting.
3. ACCOUNTANT – works on the financial statements; one who designs the accounting information system & focusing / analyzing & interpreting
-In small business, one person is normally hired as bookkeeper.
-In large firms, bookkeeper focuses on processing & in accounting data.
BASIC ELEMENTS OF ACCOUNTING
A. BALANCE SHEET:
1. ASSETS – economic resources of value owned by a business
Example: Cash, inventory, receivable, land, building, machinery & furniture
*Inventory – stocks that you will count at the end of the year
*Calendar Year – start January 1 – December 31
*Fiscal Year – depends on your anniversary
*Non- calendar Year- ex. March 3 & then after 1 month
2. LIABILITIES- economic / legal obligations that a business owes to other business / other individuals. Ex. AP, note payables to government & unpaid expense
3. OWNER’S EQUITY / CAPITAL – is the owner’s interest in , or claimed to the assets of business. It is the difference between the amount of assets an the amount of liabilities.
B. INCOME STATEMENT – result of operations
1. Revenues – in flows of assets resulting from the sale of goods/services. Increase in assets, result in positive cash flow.
2. Expenses- out flows of assets resulting from cash spent on liability incurred in order to produce revenue. Decrease owner’s equity. Decrease in assets, result in negative cash flow.
3. Net Income- the excess of revenue over expenses for an accounting period. Increases owner’s equity.
4. Net Loss- the difect resulting from more expenses over revenue.
1. IDENTIFICATION - those events that are financial in nature that should be recognized or recorded.
2. RECORDING - transactions may be recorded manually with the use of the mechanical devices/ computers.
3. CLASSIFYING- is the grouping of the similar items together in order to make the recording of many different events and transactions more efficiently. (sorting)
4. SUMMARIZING- stating of groups of data in concise form. ( more on T-accounts)
5. INTERPRETING- provides explanations and develop relationships that give meaning to the information. Given the finish financial reports.
ACCOUNTING EQUATION EXPANDED
- The relationship between the three basic accounting elements of the balance sheet.
- 2 formula: 1. Asset= liability + capital (OE) / A= L+C
2. Asset- liability = capital / A-L=C
* All expenses are deducted from capital.
1. Cruz invested Php. 500,000.00 to start a carwash business.
Cruz Capital 500,000.00
-To record the capital invested by Cruz.
2. Gregorio invested however Php. 350,000 as initial investment.
Greg’s Capital 350,000.00
-To record the capital invested by Gregorio.
3. Gregorio purchased carwash machine and equipment on credit Php. 100,000.00.
Machine & Equipment 100,000.00
Accounts Payable 100,000.00
-To record the carwash equipment on credit.
4. Cruz purchased office supplies for cash Php. 62,000.00
Office Supplies 62,000.00
-To record the purchase of office supplies for cash.
5. The company paid partial on carwash equipment on account Php. 50,000
Accounts Payable 50,000.00
-To record the partial payment of carwash equipment purchased on account.
6. Repair services rendered Php. 50,000.00
Accounts receivable 50,000.00
Services Income 50,000.00
-To record services rendered on account.
7. Paid a month’s rent Php. 20,000.00
Rent expense 20,000.00
- To record the monthly rent expense.
8. Company pays the salaries & wages of laborers Php. 15,000.00
Salaries expenses 15,000.00
-To record the payment of salaries in cash.
9. Company billed a customer Php. 6,000.00. They paid Php. 2,000.00 balance on account.
Services income 6,000.00
-To record the carwash services paid in cash and a balance on account.
10. The company collects partial from customer’s account, Php.25,000.00
-To record the collected amount of money from services rendered.
11. Greg withdrew Php.20,000.00 for his personal use.
Greg’s drawing 20,000.00
-To record owner’s cash withdrawal.
12. Office Supplies used Php. 18,000.00
Supplies expense 18,000.00
Office supplies 18,000.00
-To record office supplies expense.
13. Cruz withdrew Php. 15,000.00
Cruz’s drawing 15,000.00
-To record cash withdrawals of Cruz.
ASSETS = LIABILITIES + CAPITAL
Cash+ A/R +Supplies + Equipment
+ Furniture & Fixture = Accounts Payable + Capital + Income +
Bank Loan- Expenses
ACCOUNTING EQUATION EXPANDED
ASSETS = LIABILITY + CAPITAL/ OE
Cash + A/R + Supplies + Equip.’s = A/P + Capital + Income -Expenses
Php. 500,00.00 Php.500,000.00
2,000.00 4,000.00 6,000.00
695,000.00+ 29,000.00+ 44,000.00+ 100,000.00= 50,000.00+ 815,000.00+ 56,000.00 -53,000.00
Php. 868,000.00 = Php. 868,000.00
Cash A/R Office Supplies Equipments
Php. 500,000.00 Php. 62,000.00 Php. 50,000.00 Php. 25,000.00 Php.62, 000.00 Php. 18,000.00 Php. 100,000.00
350,000.00 50,000.00 4,000.00
2,000.00 20,000.00 54,000.00 25,000.00 Php. 44,000.00
20,000.00 Php. 29,000.00
877,000.00 18, 000.00
TOTAL ASSETS = Php. 868,000.00
A / P Capital Income
Php. 50,000.00 Php.100, 000.00 Php. 20,000.00 Php. 500,000.00 Php. 50,000.00
15,000.00 350,000.00 6,000.00
Php. 50, 000.00 -35,000.00 850,000.00 Php.56, 000.00
Php. 53,000.00 TOTAL LIABILITIES & OWNER’S EQUITY=Php. 868,000.00
Pugo-Pugak Carwash Trial Balance
Account Titles Debits Credits
Cash Php. 695,000.00
A / R 29,000.00
Office Supplies 44,000.00
A / P Php. 50,000.00
Php. 921,000.00 = Php. 921,000.00
- Posts : 3
Join date : 2011-07-20