the frist introduction to accounting bookkeeping

<div style="text-align: center;">the frist introduction to accounting bookkeeping</div><div style="text-align: center;">and the archive for our topics ( step by step )</div><div style="text-align: center;"><br /></div>Financial accounting involves identifying - measuring - <b>recording - </b>and communicating in dollar terms the economic events and status of an organization.<br />This information is summarized and presented in financial statements... the three most important being the <b>income statement</b> - <b>the balance sheet</b> - and <b>the statement of cash flows</b>. Because these statements communicate financial information about an organization, organizations must understand the basics of financial accounting because financial statements are the best way to summarize a business’s financial status and performance.<br />Our coverage of financial accounting extends over several Topics.<br />This topic begins with an introduction to basic financial accounting concepts and then explains how organizations report financial performance - specifically <b>revenues</b>, costs, and profits. In other topics, the discussion is extended to the reporting of financial status, which includes <b>assets - liabilities - and equity</b>.<br /><br />In addition, the reporting of <b>cash flows</b>. another topics, discusses <b>financial statements</b> - financial statement analysis can be better understood after learning more about the financial workings of a business.<br />Bookkeeping blog will provide you with a basic understanding of how financial statements are created and used to make judgments regarding the financial condition of an organization.<br /><br /><a href="http://bookkeeping-course.blogspot.com/2012/07/introduction-to-bookkeeping-historical.html"><b>Historical Foundations of Financial Accounting</b></a><br /><br /><a href="http://bookkeeping-course.blogspot.com/2012/07/introduction-to-bookkeeping-users-of.html"><b>The Users of Financial Accounting Information</b></a><br /><br /><b>Regulation and Standards in Financial Accounting</b><br />Financial Accounting Standards Board (FASB)<br />Generally accepted accounting principles (GAAP)<br />American Institute of Certified Public Accountants (AICPA)<b><br /></b><br /><br /><b>Basic Concepts of Financial Accounting</b><br />The preparation and presentation of financial accounting data is based ona set of principles, the most important of which are:<br />(1) accounting entity,(2) going concern, (3) accounting period,<br />(4) objectivity, (5) reliability,(6) monetary unit,<br />(7) relevance, (8) full disclosure, (9) materiality,<br />(10) conservatism, (11) consistency, and (12) comparability.<br /><br /><br /><a href="http://bookkeeping-course.blogspot.com/2012/06/introduction-to-bookkeeping-accounting.html"><b>The financial Accounting flowchart</b></a><br />This topic describes  the  financial accounting process.  It shows how  information about <a href="http://bookkeeping-course.blogspot.com/2012/06/accounting-transaction-double-entry.html">transactions</a> and events is accumulated to produce <b>the balance sheet</b> and <b>the income statement</b>. This early presentation is quite basic; subsequent chapters will present more complex issues. the cash flow effects of various transactions are addressed in another topic, the statement of cash flows is actually covered in detail in other topic, “<b>Statement of Cash Flows</b>.” <br /><br /><a href="http://bookkeeping-course.blogspot.com/2012/06/accounting-equation-and-basic-elements.html"><b>accounting equation</b></a> <br /><br /><br /><a href="http://bookkeeping-course.blogspot.com/2012/06/accounting-transaction-double-entry.html"><b>Recording and Compiling Accounting Data</b></a><br />explain the following terms used in the recording and compiling of accounting data:<br />• Transaction<br />• Account<br />• Posting<br />• Chart of accounts<br />• General ledger<br />• T account<br />• Double entry system<br /><br /><br />

the frist introduction to accounting bookkeeping

the frist introduction to accounting bookkeeping and the archive for our topics ( step by step ) Financial accounting involves identifying -...

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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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