hollyzed themes test: bookkeeping

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<li><a href="####"><span style="color: #38761d;">قسم رئيسي 1</span></a></li>
<li><a href="####"><span style="color: #38761d;">قسم رئيسي 2</span></a></li>
<li><a href="####"><span style="color: #38761d;">قسم رئيسي 3</span></a></li>
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<li class="relatedtopic"><a href="####"><span style="color: #38761d;">مقالة 1</span></a></li>
<li class="relatedtopic"><a href="####"><span style="color: #38761d;">مقالة 2</span></a></li>
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<i class="icon-topicappendix"></i>
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<li class="topicappendix"><a href="#6"><span style="color: #38761d;">فيديو / برنامج / صور</span></a> </li>
<li class="topicappendix"><a href="#6"><span style="color: #38761d;">فيديو / برنامج / صور</span></a> </li>
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<li><a href="#0"><span style="color: #38761d;">مقدمة الموضوع</span></a> </li>
<li><a href="#1"><span style="color: #38761d;">محتوى 1</span></a> </li>
<li><a href="#2"><span style="color: #38761d;">محتوى 2</span></a> </li>
<li><a href="#3"><span style="color: #38761d;">محتوى 3</span></a> </li>
<li><a href="#4"><span style="color: #38761d;">محتوى 4</span></a> </li>
<li><a href="#5"><span style="color: #38761d;">محتوى 5</span></a> </li>
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<h2><span class="link_open"><a name="0"><i id="dow2" class="icon-showpoint hide"></i><i id="up2" class="icon-hidepoint"></i> مقدمة الموضوع </a></span></h2>
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<div id="p2">محتوى الفقرة</div>

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<h2><span class="link_open" id="link_equation"><a name="1"><i id="dow1" class="icon-showpoint hide"></i><i id="up1" class="icon-hidepoint"></i> محتوى 1 </a></span></h2>
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<span>أسم الصورة هنا</span>
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<h3>نقطة فرعية h3</h3>

<ul>
<li class="h3-li"><h4>نقاط فرعية h4</h4></li>
<li class="h3-li"><h4>نقاط فرعية h4</h4></li>
<li class="h3-li"><h4>نقاط فرعية h4</h4></li>
<li class="h3-li"><h4>نقاط فرعية h4</h4></li>
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<h4 class="h4-point" style="border-bottom: 1px solid #A9A5A5;"><span class="fst-scd-point"><b>1 . </b></span> نقطة فرعية h4</h4>

<ul>
<li class="h4-li"><h5>نقاط فرعية h5</h5></li>
<li class="h4-li"><h5>نقاط فرعية h5</h5></li>
<li class="h4-li"><h5>نقاط فرعية h5</h5></li>
<li class="h4-li"><h5>نقاط فرعية h5</h5></li>
</ul>

<p>وإليك شرح النقاط الأربع .... <i id="dow1" class="icon-hand-down"></i></p>

<h4>1 . نقطة فرعية لـ اتش 3</h4>

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<p>شرح النقطة الفرعية لـ اتتش 3.. فقرة ثانية في الشرح - تجربة شكل الأسطر بمحاذاة الصورة الجانبية والفقرة الأولى.</p>

<p>شرح النقطة الفرعية رقم 1.. فقرة أولى في الشرح - تجربة شكل الأسطر بمحاذاة الصورة الجانبية.</p>

<p>شرح النقطة الفرعية رقم 1.. فقرة ثانية في الشرح - تجربة شكل الأسطر بمحاذاة الصورة الجانبية والفقرة الأولى.</p>

<p class="note">ملحوظة على شئ سبق شرحة <i class="icon-note"></i></p>

<div class="note"><p>ملحوظات : <i class="icon-note"></i></p>
<ul>
<li>ملحوظة متعددة النقاط</li>
<li>ملحوظة متعددة النقاط</li>
<li>ملحوظة متعددة النقاط</li>
</ul>
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<p class="note">تم الإنتهاء من النقطة هذه <i class="icon-check"></i></p>

<div class="note"><p>تم الإنتهاء من : <i class="icon-check"></i></p>
<ul>
<li>النقطات هذه</li>
<li>النقطات هذه</li>
<li>النقطات هذه</li>
</ul>
</div>

<p class="note">نصيحة أو يوصى بـ أو من المستحب <i class="icon-advice"></i></p>

<div class="note"><p>يوصى بـ : <i class="icon-advice"></i></p>
<ul>
<li>النقطات هذه</li>
<li>النقطات هذه</li>
<li>النقطات هذه</li>
</ul>
</div>

<p class="note">بهذا يكون أفضل أو نقطة التمام <i class="icon-ok"></i></p>

<div class="note"><p>نقاط التمام : <i class="icon-ok"></i></p>
<ul>
<li>النقطات هذه</li>
<li>النقطات هذه</li>
<li>النقطات هذه</li>
</ul>
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<h2><span class="link_open"><a name="2"><i id="dow2" class="icon-showpoint hide"></i><i id="up2" class="icon-hidepoint"></i> محتوى 2 </a></span></h2>
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<div id="p2">محتوى الفقرة</div>

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<h2><span class="link_open"><a name="3"><i id="dow3" class="icon-showpoint hide"></i><i id="up3" class="icon-hidepoint"></i> محتوى 3 </a></span></h2>
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<div id="p3">محتوى الفقرة</div>

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<h2><span class="link_open" id="link_equation"><a name="4"><i id="dow4" class="icon-showpoint hide"></i><i id="up4" class="icon-hidepoint"></i> محتوى 4 </a></span></h2>
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<div id="p4">محتوى الفقرة</div>

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<h2><span class="link_open"><a name="5"><i id="dow5" class="icon-showpoint hide"></i><i id="up5" class="icon-hidepoint"></i> محتوى 5 </a></span></h2>
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<div id="p5">محتوى الفقرة</div>

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قسم رئيسي 1 قسم رئيسي 2 قسم رئيسي 3 مقالة 1 مقالة 2 فيديو / برنامج / صور فيديو / ب...

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introduction to bookkeeping: The Users of Financial Accounting Information

<div style="text-align: center;"><b>The Users of Financial Accounting Information</b></div><div style="text-align: center;">Decision Makers</div><div style="text-align: center;"><br /></div><div style="text-align: left;"><br /></div><div style="text-align: left;">Recall that the primary goal of financial accounting is to provide decision makers with useful information. This topic  identifies the major users of financial statements and describes the <b>decisions</b> they make.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">The predominant users of ﬁnancial accounting information are those parties who have a ﬁnancial interest in the organization and hence are concerned with its economic status. All organizations, whether not-for-proﬁt or investor owned, have stakeholders who have an interest in the business. In a not-for-proﬁt organization, such as a community hospital, the stakeholders include managers - staff physicians - employees - suppliers - creditors - patients - and even the community at large. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">Investor-owned organizations have essentially the same set of stakeholders - plus owners. Because all stakeholders, by deﬁnition, have an interest in the organization, all stakeholders have an interest in its<br />ﬁnancial condition.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">Of all the outside stakeholders, investors - who supply the capital (funds) needed by businesses - Investors fall into two categories: <b>(1) owners</b> (often stockholders )  <b>(2) creditors</b> (or lenders) </div><div style="text-align: left;"><br /></div><div style="text-align: left;"><b>1- Owners :</b></div><div style="text-align: left;"> Owners Present and potential owners (investors) are prime users of  financial statements. They continually assess and compare the prospects of alternative investments. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">The assessment of each investment is often based on two variables: <b>expected return</b> and <b>risk</b>. </div><div style="text-align: left;"><br /></div><div style="text-align: left;"><b>Expected return</b> refers to the increase in the investor’s wealth that is expected over the investment’s time horizon. This wealth increase is comprised of two parts: </div><div style="text-align: left;">(1) increases in the market value of the investment</div><div style="text-align: left;">(2) dividends (periodic cash distributions from the firm to its owners). </div><div style="text-align: left;"><br /></div><div style="text-align: left;">Both of these sources of wealth depend on the firm’s ability to generate cash. Accordingly, financial statements can improve decision making by providing information that helps current and potential investors estimate a firm’s future cash flows. </div><div style="text-align: left;"><b><br /></b></div><div style="text-align: left;"><b>Risk</b> refers to the uncertainty surrounding estimates of expected return. The term expected implies that the return is not guaranteed. For most investments, numerous alternative  future  returns are possible. For example, an  investor may project  that a firm’s most likely return for the upcoming year is $100,000. However, the investor recognizes that this is not the only possibility. There is some chance that the firm might<br />generate returns of $95,000 or $115,000. Still other possibilities might be $85,000 and $125,000. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">The greater the difference among these estimates, the greater the risk. Financial statements help investors assess risk by providing information about the <a href="http://bookkeeping-course.blogspot.com/2012/07/introduction-to-bookkeeping-historical.html">historical</a> pattern of past income and cash flows.</div><div style="text-align: left;"><br />Investment selection  involves a trade-off between expected return and risk. Investments with high expected returns generally have a high risk. Each investor must assess whether  <b>investments with greater  risk offer  sufficiently higher expected  returns</b>.</div><div style="text-align: left;"><br /></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><b>2- Creditors :</b></div><div style="text-align: left;"> The lending decision involves two issues: whether or not credit should be extended - and  the specification of a  loan’s  terms. For example, consider a bank loan officer evaluating a loan application. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">The officer must make decisions about the amount of the loan (if any)- interest rate - payment schedule - and collateral. Because repayment of the loan and interest will rest on the applicant’s ability to generate cash, lenders need to estimate a firm’s future cash flows and the uncertainty surrounding those flows. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">Although investors generally take a long-term view of a firm’s cash generating ability, creditors are concerned about this ability only during the loan period.</div><div style="text-align: left;"><br />Lenders are not the only creditors who find financial statements useful. Suppliers often sell on credit - and  they must decide which customers will or will not honor their obligations.</div><div style="text-align: left;"><br /></div><div style="text-align: left;"><b>Other Users</b> : </div><div style="text-align: left;">A variety of other decision makers find financial statements helpful. Some of these decision makers and their decisions include the following:<br />1. Financial analysts and advisors. Many investors and creditors seek expert advice when making their investment and lending decisions. These experts use financial statements as a basis for their recommendations.</div><div style="text-align: left;"><br />2. Customers. The customers of a business are interested in a stable source of supply. They  can use  financial  statements  to  identify  suppliers  that  are  financially sound.</div><div style="text-align: left;"><br />3. Employees and labor unions. These groups have an interest in the viability and profitability of firms that employ them or their members - As described in Reality Check 1-1 - unions in the airline industry have recently made several important decisions based - in part - on financial statements.</div><div style="text-align: left;"><br /></div><div style="background-color: #eeeeee; text-align: center;"><b>REALITY CHECK 1-1  </b></div><div style="text-align: left;"><span style="background-color: #eeeeee;">United Airlines: Employees of United Airlines gained  controlling ownership of United’s parent, UAL Corporation, by agreeing to billions of dollars in wage and benefit concessions. The employees needed to estimate the value of UAL so that they could determine the extent of the wages and benefits to sacrifice. Financial statements are frequently used in valuing businesses.</span><br style="background-color: #eeeeee;" /><span style="background-color: #eeeeee;">Northwest Airlines: In 1993, Northwest asked its pilots to forgo $886 million in wages and benefits over three years. Northwest’s  reported 1993  loss of $115 million played a  role  in  securing  the pilots’ agreement. However,  in 1997, Northwest reported a profit of $597 million. As you might imagine, the pilots became much more assertive in their bargaining, asking for wage increases, profit sharing, and bonuses.</span><br /></div><div style="text-align: left;"><br />4. Regulatory authorities. Federal and state governments regulate a large array of business activities. The Securities and Exchange Commission (SEC) is a prominent example. Its responsibility is to ensure that capital markets, such as the New York Stock Exchange, operate smoothly. To help achieve this, corporations are required to make full and fair financial disclosures. The SEC regularly reviews firms’ financial statements to evaluate the adequacy of their disclosures. Reality Check 1-2 describes another regulatory use of accounting information.</div><div style="text-align: left;"><br /></div><div style="background-color: #eeeeee; text-align: center;">REALITY CHECK 1-2</div><div style="text-align: left;"><span style="background-color: #eeeeee;">California has perhaps the country’s toughest standards for vehicle emissions. One aspect of its program requires the major automakers to generate 10% of their California sales from electric vehicles by 2003. Compliance with this regulation will be assessed from financial accounting information.</span><br style="background-color: #eeeeee;" /></div><div style="text-align: left;"><br /></div><div style="text-align: left;">In general, there is only one category of owners. However, creditors constitute a diverse group of investors including banks, suppliers granting trade credit, and bondholders. </div><div style="text-align: left;"><br /></div><div style="text-align: left;"><b>Investors</b> are the primary <b>outside users</b> of ﬁnancial accounting information. They use the information to make judgments pertaining to whether or not to make a particular investment, as well as to set the return required on the investment.</div><div style="text-align: left;"><br /></div><div style="text-align: left;"><br /></div><div style="text-align: left;">Although ﬁnancial accounting developed primarily to meet the information needs of outside parties, the managers of an organization, including its board of directors (trustees), also are important users of the information. After all, managers are charged with ensuring that the organization has the ﬁnancial strength to accomplish its mission, whether that mission is to maximize the wealth of its owners or to provide healthcare services to the community at large. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">Thus, an organization’s managers are not only involved with creating ﬁnancial statements - but they are also important users of the statements, both to assess current ﬁnancial condition and to formulate plans to ensure that the future ﬁnancial condition of the organization will support its goals.</div><div style="text-align: left;"><br />In summary, <b>investors and managers</b> <b>are</b> <b>the predominant users</b> of ﬁnancial accounting information as a result of their direct ﬁnancial interest in the organization. Furthermore, investors are not merely passive users of ﬁnancial accounting information - they do more than just read and interpret the statements. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">Often, they create ﬁnancial targets based on the numbers reported in ﬁnancial statements that managers must attain or suffer some undesirable consequence. For example,many debt agreements require borrowers tomaintain stated ﬁnancial standards - such as a minimum earnings level - to keep the debt in force. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">If the standards are not met - the lender can demand that the<br />business immediately repay the full amount of the loan - If the business fails to do so, it may be forced into bankruptcy.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">The accounting profession views financial statements as being general purpose. They are intended to meet the common information needs of a wide variety of users - such as those in the preceding list.</div><div style="text-align: center;">-------------------------------------------------------------------------------------</div><div style="text-align: left;"><br /></div><div style="text-align: center;">go to <a class="GHJ45FFBPB" href="http://bookkeeping-course.blogspot.com/2012/07/frist-introduction-to-accounting.html" kind="edit" title="Edit post">the frist introduction to accounting bookkeeping</a></div><div style="text-align: center;"><a class="GHJ45FFBPB" href="http://bookkeeping-course.blogspot.com/2012/07/introduction-to-bookkeeping-historical.html" kind="edit" title="Edit post">introduction to bookkeeping: Historical of Financial accounting</a> </div><div style="text-align: center;"><a class="GHJ45FFBPB" href="http://bookkeeping-course.blogspot.com/2012/06/introduction-to-bookkeeping-accounting.html" kind="edit" title="Edit post">Introduction to bookkeeping: Accounting flowchart  </a></div><div style="text-align: center;"><a href="http://bookkeeping-course.blogspot.com/2012/06/accounting-transaction-double-entry.html">Accounting Transaction: double-entry Bookkeeping system</a></div><div style="text-align: left;"><br /></div>

introduction to bookkeeping: The Users of Financial Accounting Information

The Users of Financial Accounting Information Decision Makers Recall that the primary goal of financial accounting is to provide decision ma...

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Bookkeeping : Posting of closing entries

<b>POSTING</b>   <br /><br />The process of transferring information from the journal to the ledger for the purpose of summarizing is called posting. Primarily a clerical task, posting is ordinarily carried out in <b>the following steps:</b><br /><br />1.  Record the amount and date.  The date and the amounts of the debits and credits <br />are entered in the appropriate accounts. <br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhnxhHffKNFI53gf0DwBegFJ6zwOidYBjb_oNNEFOycwzJc2c4j8EJ-cpvF7EoG2KrL6GK8QYJLDD0Ny2_zELw4g3ghZpQEzCtr4QmnNzmVr4MT3okT-3ID6zWyARQPtu9Rnruc2MlDP6c/s1600/General+Journal-posting.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="282" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhnxhHffKNFI53gf0DwBegFJ6zwOidYBjb_oNNEFOycwzJc2c4j8EJ-cpvF7EoG2KrL6GK8QYJLDD0Ny2_zELw4g3ghZpQEzCtr4QmnNzmVr4MT3okT-3ID6zWyARQPtu9Rnruc2MlDP6c/s640/General+Journal-posting.JPG" width="640" /></a></div><br />2.  Record the posting reference in the account.  The number of the journal page is entered in the account. <br /><br />3.  Record the posting in the journal.  For cross-referencing, the code number of the account is now entered in the P.R. column of the journal (solid line). <br /><br /><br /><b>Preparing closing Entries</b> <br /><br />  At the end of the accounting fiscal year, the balances of the nominal accounts are to be transferred from the trial balance to the profit and loss account through closing entries, these entries produce a zero balance in each nominal account. <br /><br />Journalizing and posting closing entries is an essential step in the accounting cycle. <br /><br />Separate closing entries could be prepared for each nominal account, but the following two <br />entries satisfy the desired result: <br /><br />1.  Debit each revenue account for its balance and credit profit and loss account for total revenues. <br /><br />2.  Debit profit and loss account for total expenses and credit each expense account for its balance. <br /><br />Below, is closing entries illustration: <br /><br />To illustrate the journalizing and posting of  closing entries, we will assume that  Banana, lawyer closes his books monthly.  The closing entries at December  ٣١ are shown in the following illustration. <br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhMgGV_cy03MusKyh50Xorssuwo-P-ANszAg2o9H9CzytJYVF2gQoQMasvaXHVvOytjLVhgXpIJnaMSntZD-j5o1GHDU72vEjyuAKCp4x7OVad2azbGfA4ixEudWxl2QA_m_AGZe3MqPkI/s1600/General+Journal-2.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="268" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhMgGV_cy03MusKyh50Xorssuwo-P-ANszAg2o9H9CzytJYVF2gQoQMasvaXHVvOytjLVhgXpIJnaMSntZD-j5o1GHDU72vEjyuAKCp4x7OVad2azbGfA4ixEudWxl2QA_m_AGZe3MqPkI/s640/General+Journal-2.JPG" width="640" /></a></div><b>Posting of closing entries </b><br /><br />  The posting of the closing entries are  shown in the following accounts, all the nominal accounts have zero balances. <br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgNJ1hC6FGTN3TZsdGn4PMfPuZQntpsSVjU0mDm21spQEWUBD1snJEVQPDst0nRJ1p3bW60ZD7AlAxv1ZWYXt3RmJd4gRrDU_etFHoVibK3vUxyekmOapqLXHAMKocGfDstOfTekpQE_lE/s1600/T+account-closing+entries.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgNJ1hC6FGTN3TZsdGn4PMfPuZQntpsSVjU0mDm21spQEWUBD1snJEVQPDst0nRJ1p3bW60ZD7AlAxv1ZWYXt3RmJd4gRrDU_etFHoVibK3vUxyekmOapqLXHAMKocGfDstOfTekpQE_lE/s1600/T+account-closing+entries.JPG" /></a></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj3QJjC741xxjm7GZmbqcWSjKBma5fdKWDVP6uLfAUub0kQWjAGOBrVx29X9UpKb4s5tpjbcLgDBnEuI4w07WOfA5Z4g276xGoee9OOz8ssV69CF8fxWdZBlrvMBxqIvMWMPjdIyT4u4MY/s1600/T+account-closing+entries+2.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj3QJjC741xxjm7GZmbqcWSjKBma5fdKWDVP6uLfAUub0kQWjAGOBrVx29X9UpKb4s5tpjbcLgDBnEuI4w07WOfA5Z4g276xGoee9OOz8ssV69CF8fxWdZBlrvMBxqIvMWMPjdIyT4u4MY/s1600/T+account-closing+entries+2.JPG" /></a></div><div style="text-align: left;">*   Note that profit and loss account is used only in closing.  No entries are journalized and posted to this account during the year. <br /> </div><div style="text-align: left;"><b>Preparation of income statement </b><br /><br />  The income statement is designed the  report the results of earning activities <br />(operations) for a specific time period such as a month, quarter, or year. <br /><br /><b>Net income</b> for the period is the excess of revenues over expenses for that time. <br /><br />The heading of the income statement indicates the name of the business, the name of the statement, and the time period covered by the statement.   Below an illustration of  Banana lawyer income statement for the month of December 2011.</div><div style="text-align: left;"><br /></div><div style="text-align: center;"><b>Banana,  Lawyer <br />Income Statement <br />For the month of December 2011</b></div><div style="text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh4Wkv_do8sDS7mKB-qsfWMACSlu6brS8gfhpKEB5qDwaf-ux60l0o0OW_lIaE2LUKlm2mG4Aecjv1aEhkYTbMv_Kv05Sx4bm1VYm7wlVvolshe0D7xas_rOARmvvQBnvfHNfD5WB7TMPw/s1600/Income+Statement.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh4Wkv_do8sDS7mKB-qsfWMACSlu6brS8gfhpKEB5qDwaf-ux60l0o0OW_lIaE2LUKlm2mG4Aecjv1aEhkYTbMv_Kv05Sx4bm1VYm7wlVvolshe0D7xas_rOARmvvQBnvfHNfD5WB7TMPw/s1600/Income+Statement.JPG" /></a></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><b style="color: red;">Note : </b><br /><br />1.  Revenues are defined as in flows of assets either from the sale of goods or the performance of services. <br />2.  Expenses are defined as out flows or other uses of assets to produce revenue.</div><div style="text-align: left;">٣.  Net income is defined as the excess of revenues over expenses, and will be transferred to the balance sheet as either profit or loss. </div><div style="color: #666666; text-align: left;"><br /></div><div style="color: #666666; text-align: left;">----------------------------------------------------------------------------------------------------------</div><div style="text-align: center;"><a href="http://bookkeeping-course.blogspot.com/"><span style="color: #666666;">Bookkeeping course</span></a></div>

Bookkeeping : Posting of closing entries

POSTING The process of transferring information from the journal to the ledger for the purpose of summarizing is called posting. Primaril...

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Accounting Transaction: General Journal

In the <a href="http://bookkeeping-course.blogspot.com/">Bookkeeping course</a> we showed the <a href="http://bookkeeping-course.blogspot.com/2012/06/accounting-transaction-double-entry.html"><b>effects of transactions by making entries in T accounts</b></a>. However- these entries do not provide the necessary data for a particular transaction - nor do they provide a chronological record of transactions. <br /><br />The missing information is furnished by the use of an accounting form known as <b>the journal</b>.<br /><br /><b>General Journal </b><br />The  journal, or day book, is the book of original entry for accounting data. <br />-  It is the first book to record financial transaction in chronological order. <br />-  It has spaces for date, accounts titles & explanations, references, and two money columns, as illustrated below: <br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiwS9TQPEDjU0SGLLt1EhydgmhEUDh44DzKh6SwK8lj5_viJngilpPIxu7auj0p7Jq0lICh6asKG7niI0_0umGdX7wGFzBSHfuvG5OPaLQKxF-vo8uFAlUhbJ5ySyBIWyebt6ly_cFDQos/s1600/General+Journal.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="258" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiwS9TQPEDjU0SGLLt1EhydgmhEUDh44DzKh6SwK8lj5_viJngilpPIxu7auj0p7Jq0lICh6asKG7niI0_0umGdX7wGFzBSHfuvG5OPaLQKxF-vo8uFAlUhbJ5ySyBIWyebt6ly_cFDQos/s640/General+Journal.JPG" width="640" /></a></div><br />Afterward - the data is transferred or posted to the ledger, the book of subsequent or secondary entry. The various transactions are evidenced by sales tickets, purchase invoices, check stubs, and so on. On the basis of this evidence, the transactions are entered in chronological order in the journal. The process is called journalizing. A number of different journals may be used in a business. For our purposes, they may be grouped into general journals and specialized journals.<br />The latter type - which are used in businesses with a large number of repetitive transactions, are described in Chapter 6. To illustrate<b> journalizing -</b> we here use the general journal, whose standard form is shown be<br />low. <br /><br /><b>Journalizing </b><br /><br />Entering transaction data into Journal is known as Journalizing. <br /><br />Steps for journalizing a transaction <br />-  Analyze the transaction to determine which accounts are affected. <br />-  Analyze the accounts to determine which account is the debit part and which one is the credit part. <br />-  Record the transaction following the example illustrated below. <br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgwzieJfyhZ3wlirrHhZ8lynHcy2kBC_7dppPAMDh4rTOlLt2R45qre38wsamrDQjTID3uXZucTaDnHnyIliQJo_0dIi3ah56DrnuiMgQVkdhmsAVAIp0hiXVbIcga7H3nxPlD6G-dpIdI/s1600/General+Journal-Journalizing.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="260" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgwzieJfyhZ3wlirrHhZ8lynHcy2kBC_7dppPAMDh4rTOlLt2R45qre38wsamrDQjTID3uXZucTaDnHnyIliQJo_0dIi3ah56DrnuiMgQVkdhmsAVAIp0hiXVbIcga7H3nxPlD6G-dpIdI/s640/General+Journal-Journalizing.JPG" width="640" /></a></div><br /><b style="color: red;">Note:</b>   The date should be entered in the date column. <br />-  The year and the month are not repeated until the start of a new page or a new month.<br /><br />-  The title of the account to be debited is entered against the left margin of the title & explanation column.<br /><br />-  The amount to be debited to each account is entered in the debit column on the same line as the account title. ( The debit amount for each account is entered in this column.  Generally, there is only one item, but there could be two or more  separate items.) <br /><br />-  The account to be credited follows the same steps except being in the credit side. <br />( The credit amount for each account is entered in this column. Here again, there is generally only one account, but there could be two or more accounts involved with different amounts. )<br /><br />-  An explanation of the transaction may be entered on the next line below the journal entry. <br /><br />-  The posting reference column is left blank till the transaction is being posted.<br /><br /><div style="text-align: center;">  <b>The Next : Posting</b></div>

Accounting Transaction: General Journal

In the Bookkeeping course we showed the effects of transactions by making entries in T accounts . However- these entries do not provide the...

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Accounting Transaction: double-entry Bookkeeping system

<br /><div style="text-align: center;"><b>double entry Bookkeeping system</b></div><div style="text-align: -webkit-auto;"></div><h3 class="r" style="background-color: white; color: #222222; font-family: arial, sans-serif; margin: 0px; overflow: hidden; padding: 0px; text-align: center; text-overflow: ellipsis; white-space: nowrap;">       <span style="font-size: small; font-weight: normal;"><i style="font-style: normal;">For the Accounting Transaction</i> Posting</span></h3><br /><div style="text-align: center;"><b><br /></b><br /><br /><div style="text-align: left;">Preparing a new equation A = L + C after each transaction - would be cumbersome and costly especially </div><span style="text-align: center;"></span><br /><div style="display: inline !important; text-align: left;"><span style="text-align: center;">when there are a great many accounting transactions in an ac</span>counting period. and Also, information for a speciﬁc item - <span style="text-align: center;">such as cash would be lost as successive transactions were recorded.</span></div><br /><div style="text-align: left;"><br /></div><div style="text-align: left;">This information could be obtained by going back and summarizing the transactions, but that would be very time-consuming. Thus we begin with the account - <span style="background-color: white; color: #333333; font-family: Tahoma; font-size: 13px; line-height: 20px; text-align: justify;">Account which records the </span>accounting transactions<span style="background-color: white; color: #333333; font-family: Tahoma; font-size: 13px; line-height: 20px; text-align: justify;"> so you must know what the accounting transactions and how to post accounting transaction.</span></div><br /><b><br /></b></div><b>Financial Accounting Transaction : </b><br />What is the Accounting Transaction ? <br />The processing of accounting data begins with an economic transaction, where two or more parties engage in an exchange  of goods or services for some form of consideration.<br />Evidence of this happening is the receipt  of some form of a source document. Common examples of such a source document include: <br /><br />•  A sales receipt - this can be in a variety of forms. <br />•  A purchase invoice. <br />•  A debit/credit memorandum. <br />•  A copy of a contract entered into. <br />•  A billing statement. <br />•  A remittance statement. <br /><br />There are a multitude of source documents, in type, shapes, and format used to record<br />the significant data. It is these documents, which become the basis for data input to the<br />accounting processing. But, prior to the actual data entry, the documents must be<br />subjected to a series of analysis and classification.<br /><br /><br /><b>Now let's know the Basis for Post the accounting Transaction : </b>basis of <i style="background-color: white; font-family: arial, sans-serif; font-style: normal; line-height: 16px;">accounting treatment</i><span style="background-color: white; color: #222222; font-family: arial,sans-serif; line-height: 16px;"> </span><span style="background-color: white; color: #222222; font-family: arial,sans-serif; line-height: 16px;">for the</span><span style="background-color: white; color: #222222; font-family: arial,sans-serif; line-height: 16px;"> </span><i style="background-color: white; font-family: arial, sans-serif; font-style: normal; line-height: 16px;">transaction</i><br /><b><br /></b><br /><b>1- Debits and Credits</b><br /><br />The terms debit and credit mean left and right, respectively, the abbreviation of<br />these two words as follows:<br /><div style="font-weight: bold;"><br /></div><div style="font-weight: bold; text-align: center;">               * Debit   Dr.              * Credit  Cr. </div><div style="font-weight: bold;"><br /></div><div style="font-weight: bold;"><span style="background-color: #eeeeee;">* These abbreviations come from the Latin words debere (Dr.) and credere (Cr.).             </span></div><br />When an amount is entered on the left side of <b>an account ( </b><span style="color: red;">In Base No. 2 will explain what is the account</span><b> )</b>, it is a debit, and<br /><div style="display: inline !important;">the account is said to be debited. When an amount is entered on the right </div><div style="display: inline !important;">side, it is a credit, and the account is said to be credited. The abbrevia</div><span style="font-weight: bold;"></span><br /><div style="display: inline !important;"><span style="font-weight: bold;"><span style="font-weight: normal;">tions for debit and credit are Dr. and Cr., respectively.</span> </span></div><span style="font-weight: bold;"></span><br /><div style="font-weight: bold;"><br /></div>Whether an increase in a given item is credited or debited depends on the category of the item. By convention, asset and expense increases are recorded as debits, whereas liability, capital, and income increases are recorded as credits. Asset and expenses decreases are recorded as credits, whereas liability, capital, and income decreases are recorded as debits. The following tables summarize the rule.<br /><br /><b>2- The Account </b><br />An account may be deﬁned as a record of the increases, decreases, and balances in an individual item of asset, liability, capital, income (revenue), or expense.<br /><b><br /></b><br />The simplest form of the account is known as the “T” account because it resembles the letter “T.”A ┬ Account has a left side and a right side, thus, an account is debited when an amount is entered on the left side and credited when an amount is entered on the right side.<br /><br /><br />The account has three parts:<br />1. the name of the account and the account number<br />2. the debit side (left side)<br />3. the credit side (right side).<br /><br /><br />Whether a debit or credit is an increase or decrease to the account balance depends on the account<br />classification as illustrated below:<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjhWMMTckmag54C8UdG1iWoELpKTUSRuagn9mZp00A6YPURsz_qwp8BpTR_Sfwh55yNZJK-i-RRr6vBMu3DX5CNQv0LhHZ3dNh1gNUHY7fD7rAMnIOeu9dONM0_uGWZbul1GRi4fCaYR2Q/s1600/T-account.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="275" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjhWMMTckmag54C8UdG1iWoELpKTUSRuagn9mZp00A6YPURsz_qwp8BpTR_Sfwh55yNZJK-i-RRr6vBMu3DX5CNQv0LhHZ3dNh1gNUHY7fD7rAMnIOeu9dONM0_uGWZbul1GRi4fCaYR2Q/s400/T-account.png" width="400" /></a></div><div style="text-align: center;"><br /></div><br />The increases are entered on one side, the decreases on the other. The balance (the excess of the total of one side over the total of the other) is inserted near the last ﬁgure on the side with the larger amount.<br /><br />every recorded transaction affects at least two accounts ( for Ex. account on the right and other on the left side or 2 on this side)<br /><br /><br />An account has a debit balance when the sum of its debits exceeds the sum of its credits; it has a credit balance when the sum of the credits is the greater.<br /><br />What are made in Base No. 1 and No. 2, called <b>double-entry transaction recording</b><br /><b><br /></b><br />In <b>double-entry accounting</b>, which is in almost universal use, there are equal debit and credit entries for every transaction. Where only two accounts are affected, the debit and credit amounts are equal. If more than two accounts are affected, the total of the debit entries must equal the total of the credit entries.<br /><br />Therefore, it is important to know : For every <b>transaction</b> <b>entry</b>, debits must equal credits<br /><br /><br /><b>Note,</b> however, that the term “double entry” does not mean that a transaction must  affect each side of the transaction, it may effects one.<br /><br /><br /><b>Example:</b> Accounting Transaction<br />purchase of equipment for cheque – Tom purchased a computer for 2000$  paid by cheque. <br /><br /><b>This transaction results in an </b><br />equal increase and decrease in  total assets, though the composition of assets is changed: <br />Bank is decreased by 2000$ and the assets Equipment is increased by 2000$<br /><br /><br />we discussed the nature of business transactions and the manner in which they are <a href="http://bookkeeping-course.blogspot.com/2012/06/introduction-to-bookkeeping-accounting.html"><b>analyzed and classiﬁed</b></a>. The primary emphasis was the “why” rather than the “how” of accounting operations - we aimed at an understanding of the reason for making <a href="http://bookkeeping-course.blogspot.com/2012/06/accounting-transaction-double-entry.html"><b>the entry</b></a> in a particular way. We showed the <a href="http://bookkeeping-course.blogspot.com/2012/06/accounting-equation-and-basic-elements.html"><b>effects of transactions</b></a> by making entries in <a href="http://bookkeeping-course.blogspot.com/2012/06/accounting-transaction-double-entry.html"><b>T accounts</b></a>. However, these entries do not provide the necessary data for a particular transaction, nor do they provide a chronological record of transactions.<br /><br />The missing information is furnished by the use of an accounting form known as <a href="http://bookkeeping-course.blogspot.com/2012/06/accounting-transaction-general-journal.html"><b>the journal</b></a>.  <br /><br /><br /><div style="text-align: center;">----------------------------------------------------------------------------------</div><div style="text-align: left;"><b>Quiz -Tested yourself</b></div><div style="text-align: left;"><br /></div>1. To classify and summarize a single item of an account group, we<br />use a form called an _______.<br /><br />2. The left side of the account is known as the _______, while the<br />right side of the account is known as the _________.<br /><br />3.  What do the term debit and credit mean?<br /><br />4.  What does double entry mean? <br /><br />5. The left side of the account is known as the ________, where as the right side<br />is the ___________.<br /><br /><br /><br />Answers: 1. account;  2. debit, credit; 3. do it by yourself;   4.  do it by yourself ;  6.  do it by yourself ,<br /><br /><br /><br /><br /><br />

Accounting Transaction: double-entry Bookkeeping system

double entry Bookkeeping system For the Accounting Transaction Posting Preparing a new equation A = L + C after each transaction - ...

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accounting equation and Basic Elements of Financial Position

<br /><div style="text-align: center;"><b><span style="font-size: large;">Classification of accounts</span></b></div><div style="text-align: center;"><b><span style="font-size: large;">( Basic Elements of Financial Position )</span></b></div><div style="text-align: center;"><a href="http://bookkeeping-course.blogspot.com/search/label/Basic%20Concepts">Basic Concepts</a> of  Financial Accounting<br /><br /></div><div style="text-align: left;"><b>Two types of accounts: </b><b><span style="color: #666666;">The ﬁnancial condition or position of a business enterprise is represent</span></b><b><span style="color: #666666;">ed by the relationship of assets to liabilities and capital.</span>  </b></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><b><span style="color: red;">First:</span></b> Accounts belong to the <b>Balance Sheet</b> and represent the basic accounting equation. </div>These accounts are:<br /><br /><br /><div style="text-align: center;">1. Assets       2. Liabilities          3.Owners Equity </div><div style="text-align: center;"><br /></div><div style="text-align: left;"><b></b></div><b>These three basic elements are connected by a fundamental rela</b><b><b><b>tionship called  the accounting equation. This equation expresses the </b></b></b><b><b><b>equality of the assets on one side with the claims of the creditors and </b></b></b><b><b><b>owners on the other side: </b></b></b><br /><b><b><b></b></b><br /></b><br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgW7Gq9RibZ0KcJzaP2F_-9CMyE8QQfapTGzndYovPoivpLfpPEskJhxENnpf0quW6TAufHtx-FmK3wpV33OLKc7fPLkQMgqFRmEQ-Ow-3zQrsUyZlrmZ6CUU6txMjtfbSj9XwrFkA7Lfo/s1600/Accounting+Equation.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="110" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgW7Gq9RibZ0KcJzaP2F_-9CMyE8QQfapTGzndYovPoivpLfpPEskJhxENnpf0quW6TAufHtx-FmK3wpV33OLKc7fPLkQMgqFRmEQ-Ow-3zQrsUyZlrmZ6CUU6txMjtfbSj9XwrFkA7Lfo/s400/Accounting+Equation.JPG" width="400" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div style="text-align: center;">( <b>Remember</b> <b>:</b> Assets must be equal to the sum of Liabilities and Owners equity) </div><div style="text-align: center;">It should balance after every <a href="http://bookkeeping-course.blogspot.com/2012/06/accounting-transaction-double-entry.html">transaction</a>. </div><div style="text-align: center;"><br /><div style="text-align: left;">This relationship - which is called the accounting identity or basic accounting equation, is expressed in equation form as:</div><br /><b>A = L + E</b><br /><b>A<span style="color: #444444;">ssets</span> = L<span style="color: #444444;">iabilities</span> + <span style="color: #444444;">Owners</span> E<span style="color: #444444;">quity</span></b><br /><b><span style="color: #444444;"> </span> </b><br /><div style="text-align: left;">where A = Total assets, L = Total liabilities, and E = Equity. Because creditor claims are paid before equity claims if a healthcare organization is liquidated - liabilities are shown before equity both on the balance sheet and in the basic accounting equation.</div><br /><span style="color: red;">Note</span> that the accounting identity can be rearranged as follows:<br /><br /><b>E = A − L</b><br /><div style="text-align: left;">This format reinforces the concept that equity represents a residual claim against the total assets of the business and the fact that equity can be negative.<br />If a business writes down (decreases) the value of its assets, its liabilities are unaffected because these amounts are still owed to creditors and others. If total assets are written down so much that their value drops below that of total liabilities - then the equity reported on the balance sheet becomes a negative<br />amount.</div><br /><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZChZMpIeB3YRt_snPo-NRRmLMZgPcD-OZoK6GGo8g88YCCgPDjF1ghArWdljR20V2KGxAvl0UR9oy-ds_UcpUhbxQBKsmbUjsYaox_kJEETzzNuom0YQM52-34C6Hd1WrqFvPVDKfMgo/s1600/Accounting+Equation2.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="285" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZChZMpIeB3YRt_snPo-NRRmLMZgPcD-OZoK6GGo8g88YCCgPDjF1ghArWdljR20V2KGxAvl0UR9oy-ds_UcpUhbxQBKsmbUjsYaox_kJEETzzNuom0YQM52-34C6Hd1WrqFvPVDKfMgo/s320/Accounting+Equation2.JPG" width="320" /></a></div><div style="text-align: center;">The basic accounting equation is simply an algebraic form of the balance sheet.</div><b><br /></b><br /><b>1. Assets</b> <br />  Assets are the cash and non cash resources owned by a business and have economic value, and<br />  used in carrying out future services or benefits to the entity using them. <br /><br /><b>Classification of assets:</b><br />-  <b>Current assets</b><br />   Current assets are cash and other types of assets that are reasonably expected<br />   to be converted into cash, sold, or used up during the normal operating year. <br /><br />Examples of current assets include:<br />  Cash, Bank, Goods, Accounts Receivable, Prepaid expenses, Inventory and<br />  Marketable securities etc.<br /><br />-  <b>Fixed assets</b><br />   Fixed assets are those assets that are used in the normal operations of the<br />  entity to produce and sell goods or perform services for customers.  Fixed assets<br />  are expected to service for a number of years are not for re-sell. <br /><br />Examples of fixed assets include:<br />  Lands, cars, buildings, equipments, and furniture etc.<br /><br />-  <b>Intangible assets</b><br /><br />  Intangible assets are those assets that have no physical substance but they<br />  are expected to provide benefits to the entity for several years. <br /><br />Examples of intangible assets include:<br />  Patents, trade marks, copyrights, goodwill, franchise fees, and trade name.<br /><br /><br /><br /><br /><b>2.  Liabilities  </b><br />Liabilities are claims against assets, Amounts owed to outsiders, such as notes payable, accounts<br />payable, bonds payable.<br />  <br /><b>Classification of Liabilities: </b><br /><b>-  Short-term Liabilities   </b><br />   Short-term liabilities are obligations of the entity that are reasonably<br />   expected to be paid or settled in the next year or the normal operating cycle. <br /><br />Examples of short-term liabilities include:<br />  Short-term notes payable, accounts payable, salaries and wages payable and<br />  other types of accrued liabilities for services received but not yet paid for.<br /><br /><b>-  Long-term Liabilities </b><br />   Long-term liabilities are those obligations that do not require payment within<br />   the next year or the normal operating cycle.  In other words, liabilities not classified<br />   as short-term are reported in the Long-term liabilities section of the balance sheet. <br /><br />Examples of long-term liabilities include: <br />  Loan, bonds, and any other obligation that mature in a period more than one<br />  year beyond the balance sheet date is reported as long-term.<br /><br /><br /><b>3.  Owner’s Equity </b><br />  Owner’s equity represents the owner’s interest in the assets of the entity. <br />  It is equal to total assets minus total liabilities, also known as Capital.<br /><br />There are two main sources of owner’s equity:<br />(١)  Amounts contributed by  the owner (Capital)<br />(٢) Amount earned by the entity but not yet taken by the owner.<br /><br /><br /><b><span style="color: red;">Second:</span></b>  Accounts belong to the Income Statement and involve in the determination of<br />net income or net loss of a business entity for a specific period of time. These accounts<br />are:<br /><div style="text-align: center;">1. Expenses                         2. Revenues<br /><br /><div style="text-align: left;"><b>1.  Expenses </b><br />  Expenses are the cost of assets consumed or services used in the process of earning revenue in other words; expenses are outflows or other uses of assets resulting from the sale or delivery of goods or the provision of services by the entity during specific time period.   <br /><br />Examples of expenses include:   <br />Utility expenses (electric and water), telephone bill expense, rent expense, wages and salaries expense and depreciation expense etc.  </div></div><br /><b>2.  Revenues </b><br />  Revenues are cash in-flow result from the sale of goods or the rendered of services. <br /><br />To illustrate the affect (increase & decrease) of a financial transaction on the above classified accounts, study the following chart: <br />  <br /><br /><b>Basic Accounting Equation </b><br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiaHnuDm9OEzeCsO-a8bxhhseW_Q8Flyh_UFQGczbXHPSdeU25bTVXRL8XTMnLmo4TMquJUlzeAjTGjz2puUi0_9jhBLtejRS-7xqbGr2Peek-OXb5VkOVvkwG45qBxzt-fyi8qRlNl1Zw/s1600/Basic+Accounting+Equation.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="226" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiaHnuDm9OEzeCsO-a8bxhhseW_Q8Flyh_UFQGczbXHPSdeU25bTVXRL8XTMnLmo4TMquJUlzeAjTGjz2puUi0_9jhBLtejRS-7xqbGr2Peek-OXb5VkOVvkwG45qBxzt-fyi8qRlNl1Zw/s640/Basic+Accounting+Equation.JPG" width="640" /></a></div><br />  You have already learned the basic accounting equation. However, in the above illustration note the expansion of the basic accounting equation to show the accounts that comprise owner’s equity besides expenses and revenues with their effect (increase, decrease) of the <a href="http://bookkeeping-course.blogspot.com/2012/06/accounting-transaction-double-entry.html"><b>debit /credit</b></a> rules on each type of account. <br /><br /><br /><b style="color: red;">To student </b><br />  Please study the above diagram carefully; it will help you understand the fundamentals of the <a href="http://bookkeeping-course.blogspot.com/2012/06/accounting-transaction-double-entry.html"><b>double-entry system</b></a>. <br /><br /><br /><div style="text-align: center;"><b>------------------------------- Example -------------------------------</b></div><div style="text-align: center;"><br /></div><br /><br />During the month of January, Mr. Tom Banana, lawyer,<br />1.  Invested $6,000 to open his law practice.<br />2.  Bought ofﬁce supplies on account, $500.<br />3.  Received $3,000 in fees earned during the month.<br />4.  Paid $100 on the account for the ofﬁce supplies.<br />5.  Withdrew $500 for personal use.<br /><br /><div style="text-align: center;">These <a href="http://bookkeeping-course.blogspot.com/2012/06/accounting-transaction-double-entry.html">transactions</a> could be analyzed and recorded as follows: </div><div style="text-align: center;"><br /></div><div style="text-align: center;"></div><div style="text-align: left;">                                  Assets  =        Liabilities         +           Capital </div><div style="text-align: left;"><br /></div><div style="text-align: left;">                                   Cash<span class="Apple-tab-span" style="white-space: pre;"> </span>                                             Tom, Capital </div><div style="text-align: left;">                        1.  + $6,000  =<span class="Apple-tab-span" style="white-space: pre;"> </span>                                             + $6,000</div><div style="text-align: left;"><br /></div><div style="text-align: left;">                               Supplies         Accounts Payable </div><div style="text-align: left;">                        2.  + $500     =          + $500 </div><div style="text-align: left;"><br /></div><div style="text-align: left;">                                  Cash </div><div style="text-align: left;">                       3.   + $3,000  =                                              Fees Income </div><div style="text-align: left;">                                                                                              + $3,000 </div><div style="text-align: left;"><br /></div><div style="text-align: left;">                                  Cash</div><div style="text-align: left;">                       4.    − $100     =  Accounts Payable </div><div style="text-align: left;">                                                       − $100</div><div style="text-align: left;"><br /></div><div style="text-align: left;">                                  Cash </div><div style="text-align: left;">                       5.    − $500     =                                               Tom, Capital </div><div style="text-align: left;">                                                                                                − $500 </div><br /><div style="text-align: center;"><br /></div><br /><b>Notice</b> that for every transaction, <a href="http://bookkeeping-course.blogspot.com/2012/06/accounting-transaction-double-entry.html">two entries are made</a>. After every <a href="http://bookkeeping-course.blogspot.com/2012/06/accounting-transaction-double-entry.html">transaction</a>, the accounting equation remains balanced.<br /><br /><br /><b>Notice</b> that for Preparing a new equation A = L + C after each transaction would be cumbersome and costly, especially when there are a great many transactions in an accounting period. Also, information for a speciﬁc item such as cash would be lost as successive transactions were recorded. This information could be obtained by going back and summarizing the transactions, but that would be very time-consuming. Thus we begin with the account, Account which records the <a href="http://bookkeeping-course.blogspot.com/2012/06/accounting-transaction-double-entry.html">accounting transactions</a> so you must know what the accounting transactions and how to post accounting transaction (<a href="http://bookkeeping-course.blogspot.com/2012/06/accounting-transaction-double-entry.html">Double-entry bookkeeping system</a>)<br /><br /><br /><b>Quiz -Tested yourself</b><br /><br />1.  The accounting equation is _______ = ________ + ________.<br />2.  Items owned by a business that have monetary value are ______.<br />3.  _________ is the interest of the owners in a business.<br />4.  Money owed to an outsider is a(n) _________.<br />5.  The difference between assets and liabilities is ___________.<br />6.  An investment in the business increases _______ and ________.<br />7.  To purchase “on account” is to create a ___________.<br /><br /><br /><br />Answers: 1. Assets, liabilities, capital; 2. Assets; 3. Capital; 4. Liability;<br />5. Capital; 6. Assets, capital; 7. Liability<br /><br /><br /><br /><br /><br /><div style="text-align: center;"><br /></div><div style="text-align: center;">------------------------------------------------------------------------------------------------------</div><div style="text-align: center;"><span style="color: #666666; font-size: x-small;">bookkeeping and financial accounting training</span><span style="color: #666666; font-size: x-small;"> course</span></div><br /><br /><br />

accounting equation and Basic Elements of Financial Position

Classification of accounts ( Basic Elements of Financial Position ) Basic Concepts of Financial Accounting Two types of accounts: The ﬁna...

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