Accounting equation
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The document discusses the accounting equation which states that for any business, assets must equal the sum of liabilities and owner's equity. Assets are economic resources owned by the business. Liabilities are amounts owed by the business. Owner's equity represents the owner's claim on the assets of the business. The accounting equation - assets = liabilities + owner's equity - must always balance as transactions occur. Several examples of how the equation is affected by common business transactions like purchases, sales, and payments are provided.
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Accounting involves identifying, measuring, and communicating financial information about economic events to allow for informed judgments and decisions by users. The key functions of accounting are recording transactions, classifying financial events, summarizing data in financial statements, and communicating results. Users of accounting information include internal parties like management and owners as well as external parties like investors, lenders, suppliers, and regulators.
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The document discusses key accounting principles including the four main financial statements, the basic accounting equation, and different types of accounts. It also covers topics like accrual versus cash accounting, depreciation, financial analysis methods, and financial ratios used to evaluate business performance and health. The document is intended to provide an overview of basic accounting concepts.
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This document provides an overview of accounting concepts including:
1) Accounting is defined as the systematic recording, analysis, and reporting of financial transactions pertaining to a business. It involves recording revenues, expenses, assets, liabilities, and equity over time.
2) Accounting rules include debiting assets and expenses, and crediting liabilities, equity, revenues, and gains. Personal accounts are either debited as receivers or credited as givers.
3) Owner's equity represents the owners' ownership stake in a business and is calculated as total assets minus total liabilities. It increases through owner investments or business profits retained over time.
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This document discusses key accounting concepts and principles:
- The business entity concept treats the business and its owners as separate entities.
- The historical cost principle records assets at their original cost rather than current value.
- The matching principle recognizes revenues when earned and expenses when incurred to match revenues with related expenses over the same period.
- The materiality concept means that only significant items are disclosed separately in financial statements.
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Business transactions involve the exchange of value, such as goods or services for money, between two or more entities. There are two main types of transactions: cash transactions involving an exchange of cash, and credit transactions where payment is promised at a future date. Capital refers to the value invested in a business by its owner, while drawings refer to amounts withdrawn by the owner. Assets are items owned by a business that have value, and liabilities are amounts owed to outside parties. Revenue is the income generated from sales or services, while expenses are costs incurred to generate that revenue.
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3) Owner's equity represents the owners' ownership stake in a business and is calculated as total assets minus total liabilities. It increases through owner investments or business profits retained over time.
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This document discusses key accounting concepts and principles:
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- The materiality concept means that only significant items are disclosed separately in financial statements.
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The accounting equation states that capital is equal to assets minus liabilities. It forms the basis of financial accounting. Capital represents the owner's equity and net worth, consisting of funds invested by the owner plus retained profits less any profits paid out. Assets are resources owned by a business, including current assets used within a year and non-current assets used for multiple years. Liabilities are amounts owed, including current liabilities due within a year and non-current liabilities due after one year. The accounting equation ensures the relationship between these elements is always in balance.
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The accounting equation states that assets must always equal the sum of capital and liabilities. It is the fundamental concept in accounting that the resources (assets) of a business are supplied by either its owners (capital) or others it owes (liabilities). Assets represent the resources owned, capital represents the owners' claim to assets, and liabilities represent amounts owed to non-owners. The equation must always balance, as it reflects two ways of looking at the same financial position of a business. Examples are given to illustrate how transactions affect the components of the equation while maintaining the balance.
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The accounting equation shows that assets and liabilities of a company are equal. It is based on the dual concept that every transaction has two effects - a debit and a credit. Assets are possessions that result in economic resources flowing into the business, while liabilities are debts that result in outflows. Owners' equity represents the owners' claim on assets. To prepare an accounting equation, transactions are analyzed in terms of their impact on assets, liabilities, expenses and owners' equity, and the relevant accounts are adjusted. An example shows a business owner investing cash, increasing both the asset and owners' equity accounts by the same amount.
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The accounting equation states that assets are equal to liabilities plus capital. Assets are resources owned by a business that are measured in monetary terms and increase with debits and decrease with credits. Liabilities are financial obligations that increase with credits and decrease with debits. Capital accounts relate to the owners' equity and increase with credits and decrease with debits. In every transaction, the total debits must equal the total credits.
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The accounting equation states that assets must always equal the sum of capital and liabilities. It is the fundamental concept in accounting that the resources (assets) of a business are supplied by either its owners (capital) or others it owes (liabilities). Assets represent the resources owned, capital represents the owners' claim to assets, and liabilities represent amounts owed to non-owners. The equation must always balance, as it reflects two ways of looking at the same financial position of a business. Examples are given to illustrate how transactions affect the components of the equation while maintaining the balance.
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A trial balance is a financial statement that lists the debit and credit balances of all accounts in the general ledger. It is prepared to check the arithmetic accuracy of the ledger accounts and help detect errors. The trial balance is not a conclusive proof of accuracy as certain errors may remain undetected even if the debit and credit totals match. Common errors include omissions, incorrect postings, or wrong account balances. If errors cannot be found, a suspense account is used to temporarily balance the trial balance.
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- There are three main fields: management, financial, and public sector accounting. Standards are set by groups like FASB, SEC, and AICPA.
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This document provides an overview of accounting as an information system. It discusses key topics such as the definitions of accounting and information systems, the differences between financial and management accounting, the users of accounting information, and the accounting cycle. It also covers accounting principles, concepts, and conventions like accrual, going concern, consistency and conservatism. The purpose of accounting is to provide quantitative financial information to help users make informed economic decisions. Accounting acts as an information system that collects, processes, and communicates useful data to both internal and external parties.
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Topic 8 trial balance
Know the Meaning, Objectives of Trial Balance.
Know the format of Trial Balance.
Preparation of Trial Balance.
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The accounting equation shows that assets and liabilities of a company are equal. It is based on the dual concept that every transaction has two effects - a debit and a credit. Assets are possessions that result in economic resources flowing into the business, while liabilities are debts that result in outflows. Owners' equity represents the owners' claim on assets. To prepare an accounting equation, transactions are analyzed in terms of their impact on assets, liabilities, expenses and owners' equity, and the relevant accounts are adjusted. An example shows a business owner investing cash, increasing both the asset and owners' equity accounts by the same amount.
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I am presenting my further written-in book ''The System of Accounting" Level II; transactions affect on business for which i tried my best to close up every aspect on the point. I think it will be proved helpful to students and fruitful to readers.
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BÀI TẬP DẠY THÊM TIẾNG ANH LỚP 7 CẢ NĂM FRIENDS PLUS SÁCH CHÂN TRỜI SÁNG TẠO ...Nguyen Thanh Tu Collection
https://app.box.com/s/qhtvq32h4ybf9t49ku85x0n3xl4jhr15Wound healing PPT
This document provides an overview of wound healing, its functions, stages, mechanisms, factors affecting it, and complications.
A wound is a break in the integrity of the skin or tissues, which may be associated with disruption of the structure and function.
Healing is the body’s response to injury in an attempt to restore normal structure and functions.
Healing can occur in two ways: Regeneration and Repair
There are 4 phases of wound healing: hemostasis, inflammation, proliferation, and remodeling. This document also describes the mechanism of wound healing. Factors that affect healing include infection, uncontrolled diabetes, poor nutrition, age, anemia, the presence of foreign bodies, etc.
Complications of wound healing like infection, hyperpigmentation of scar, contractures, and keloid formation.
Gender and Mental Health - Counselling and Family Therapy Applications and In...
A proprietary approach developed by bringing together the best of learning theories from Psychology, design principles from the world of visualization, and pedagogical methods from over a decade of training experience, that enables you to: Learn better, faster!
Advanced Java[Extra Concepts, Not Difficult].docx
This is part 2 of my Java Learning Journey. This contains Hashing, ArrayList, LinkedList, Date and Time Classes, Calendar Class and more.
ISO/IEC 27001, ISO/IEC 42001, and GDPR: Best Practices for Implementation and...
Denis is a dynamic and results-driven Chief Information Officer (CIO) with a distinguished career spanning information systems analysis and technical project management. With a proven track record of spearheading the design and delivery of cutting-edge Information Management solutions, he has consistently elevated business operations, streamlined reporting functions, and maximized process efficiency.
Certified as an ISO/IEC 27001: Information Security Management Systems (ISMS) Lead Implementer, Data Protection Officer, and Cyber Risks Analyst, Denis brings a heightened focus on data security, privacy, and cyber resilience to every endeavor.
His expertise extends across a diverse spectrum of reporting, database, and web development applications, underpinned by an exceptional grasp of data storage and virtualization technologies. His proficiency in application testing, database administration, and data cleansing ensures seamless execution of complex projects.
What sets Denis apart is his comprehensive understanding of Business and Systems Analysis technologies, honed through involvement in all phases of the Software Development Lifecycle (SDLC). From meticulous requirements gathering to precise analysis, innovative design, rigorous development, thorough testing, and successful implementation, he has consistently delivered exceptional results.
Throughout his career, he has taken on multifaceted roles, from leading technical project management teams to owning solutions that drive operational excellence. His conscientious and proactive approach is unwavering, whether he is working independently or collaboratively within a team. His ability to connect with colleagues on a personal level underscores his commitment to fostering a harmonious and productive workplace environment.
Date: May 29, 2024
Tags: Information Security, ISO/IEC 27001, ISO/IEC 42001, Artificial Intelligence, GDPR
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Temple of Asclepius in Thrace. Excavation results
The temple and the sanctuary around were dedicated to Asklepios Zmidrenus. This name has been known since 1875 when an inscription dedicated to him was discovered in Rome. The inscription is dated in 227 AD and was left by soldiers originating from the city of Philippopolis (modern Plovdiv).
How to Make a Field Mandatory in Odoo 17
In Odoo, making a field required can be done through both Python code and XML views. When you set the required attribute to True in Python code, it makes the field required across all views where it's used. Conversely, when you set the required attribute in XML views, it makes the field required only in the context of that particular view.
Walmart Business+ and Spark Good for Nonprofits.pdf
"Learn about all the ways Walmart supports nonprofit organizations.
You will hear from Liz Willett, the Head of Nonprofits, and hear about what Walmart is doing to help nonprofits, including Walmart Business and Spark Good. Walmart Business+ is a new offer for nonprofits that offers discounts and also streamlines nonprofits order and expense tracking, saving time and money.
The webinar may also give some examples on how nonprofits can best leverage Walmart Business+.
The event will cover the following::
Walmart Business + (https://business.walmart.com/plus) is a new shopping experience for nonprofits, schools, and local business customers that connects an exclusive online shopping experience to stores. Benefits include free delivery and shipping, a 'Spend Analytics” feature, special discounts, deals and tax-exempt shopping.
Special TechSoup offer for a free 180 days membership, and up to $150 in discounts on eligible orders.
Spark Good (walmart.com/sparkgood) is a charitable platform that enables nonprofits to receive donations directly from customers and associates.
Answers about how you can do more with Walmart!"
LAND USE LAND COVER AND NDVI OF MIRZAPUR DISTRICT, UP
This Dissertation explores the particular circumstances of Mirzapur, a region located in the
core of India. Mirzapur, with its varied terrains and abundant biodiversity, offers an optimal
environment for investigating the changes in vegetation cover dynamics. Our study utilizes
advanced technologies such as GIS (Geographic Information Systems) and Remote sensing to
analyze the transformations that have taken place over the course of a decade.
The complex relationship between human activities and the environment has been the focus
of extensive research and worry. As the global community grapples with swift urbanization,
population expansion, and economic progress, the effects on natural ecosystems are becoming
more evident. A crucial element of this impact is the alteration of vegetation cover, which plays a
significant role in maintaining the ecological equilibrium of our planet.Land serves as the foundation for all human activities and provides the necessary materials for
these activities. As the most crucial natural resource, its utilization by humans results in different
'Land uses,' which are determined by both human activities and the physical characteristics of the
land.
The utilization of land is impacted by human needs and environmental factors. In countries
like India, rapid population growth and the emphasis on extensive resource exploitation can lead
to significant land degradation, adversely affecting the region's land cover.
Therefore, human intervention has significantly influenced land use patterns over many
centuries, evolving its structure over time and space. In the present era, these changes have
accelerated due to factors such as agriculture and urbanization. Information regarding land use and
cover is essential for various planning and management tasks related to the Earth's surface,
providing crucial environmental data for scientific, resource management, policy purposes, and
diverse human activities.
Accurate understanding of land use and cover is imperative for the development planning
of any area. Consequently, a wide range of professionals, including earth system scientists, land
and water managers, and urban planners, are interested in obtaining data on land use and cover
changes, conversion trends, and other related patterns. The spatial dimensions of land use and
cover support policymakers and scientists in making well-informed decisions, as alterations in
these patterns indicate shifts in economic and social conditions. Monitoring such changes with the
help of Advanced technologies like Remote Sensing and Geographic Information Systems is
crucial for coordinated efforts across different administrative levels. Advanced technologies like
Remote Sensing and Geographic Information Systems
9
Changes in vegetation cover refer to variations in the distribution, composition, and overall
structure of plant communities across different temporal and spatial scales. These changes can
occur natural.
Constructing Your Course Container for Effective Communication
Communicating effectively and consistently with students can help them feel at ease during their learning experience and provide the instructor with a communication trail to track the course's progress. This workshop will take you through constructing an engaging course container to facilitate effective communication.
Beyond Degrees - Empowering the Workforce in the Context of Skills-First.pptx
Iván Bornacelly, Policy Analyst at the OECD Centre for Skills, OECD, presents at the webinar 'Tackling job market gaps with a skills-first approach' on 12 June 2024
BÀI TẬP BỔ TRỢ TIẾNG ANH LỚP 9 CẢ NĂM - GLOBAL SUCCESS - NĂM HỌC 2024-2025 - ...
BÀI TẬP BỔ TRỢ TIẾNG ANH LỚP 9 CẢ NĂM - GLOBAL SUCCESS - NĂM HỌC 2024-2025 - ...Nguyen Thanh Tu Collection
https://app.box.com/s/tacvl9ekroe9hqupdnjruiypvm9rdaneRecently uploaded (20)
Your Skill Boost Masterclass: Strategies for Effective Upskilling
Your Skill Boost Masterclass: Strategies for Effective Upskilling
BÀI TẬP BỔ TRỢ TIẾNG ANH 8 CẢ NĂM - GLOBAL SUCCESS - NĂM HỌC 2023-2024 (CÓ FI...
BÀI TẬP BỔ TRỢ TIẾNG ANH 8 CẢ NĂM - GLOBAL SUCCESS - NĂM HỌC 2023-2024 (CÓ FI...
BÀI TẬP DẠY THÊM TIẾNG ANH LỚP 7 CẢ NĂM FRIENDS PLUS SÁCH CHÂN TRỜI SÁNG TẠO ...
BÀI TẬP DẠY THÊM TIẾNG ANH LỚP 7 CẢ NĂM FRIENDS PLUS SÁCH CHÂN TRỜI SÁNG TẠO ...
IGCSE Biology Chapter 14- Reproduction in Plants.pdf
IGCSE Biology Chapter 14- Reproduction in Plants.pdf
Gender and Mental Health - Counselling and Family Therapy Applications and In...
Gender and Mental Health - Counselling and Family Therapy Applications and In...
ISO/IEC 27001, ISO/IEC 42001, and GDPR: Best Practices for Implementation and...
ISO/IEC 27001, ISO/IEC 42001, and GDPR: Best Practices for Implementation and...
Walmart Business+ and Spark Good for Nonprofits.pdf
Walmart Business+ and Spark Good for Nonprofits.pdf
LAND USE LAND COVER AND NDVI OF MIRZAPUR DISTRICT, UP
LAND USE LAND COVER AND NDVI OF MIRZAPUR DISTRICT, UP
Constructing Your Course Container for Effective Communication
Constructing Your Course Container for Effective Communication
Beyond Degrees - Empowering the Workforce in the Context of Skills-First.pptx
Beyond Degrees - Empowering the Workforce in the Context of Skills-First.pptx
BÀI TẬP BỔ TRỢ TIẾNG ANH LỚP 9 CẢ NĂM - GLOBAL SUCCESS - NĂM HỌC 2024-2025 - ...
BÀI TẬP BỔ TRỢ TIẾNG ANH LỚP 9 CẢ NĂM - GLOBAL SUCCESS - NĂM HỌC 2024-2025 - ...
Accounting equation
- 1. ACCOUNTING EQUATION GROUP MEMBERS AFTAB AHMAD ARSHAD FIDA HUSSAIN ADNAN ZAFFAR JALEEL UR REHMAN AROOSA ZAHID SAMAN DAVID RIDA ALI KHAN SAQIB HUSSAIN
- 2. ANY BUSINESS HAVE THREE FINANCIAL MAKEUPS • ASSETS • Any economic resource whose benefit would be achieved in future. • LIABILITIES • Anything which is the responsibility of business to pay. • OWNER’S EQUITY • Right of owner to the assets of business.
- 3. These three parts always same relationship to each other. This relationship is called ACCOUNTING EQUATION ASSETS = LIABILITIES + OWNER’S EQUITY
- 4. ASSETS ARE THE RESOURCES OF BUSINESS. • Here are some Assets • Cash • Accounts Receivable • Notes Receivable • Land and Building • Equipment • Supplies • Machinery
- 5. LIABILITIES ARE THE CREDITOR’S CLAIM ON BUSINESS. • Here are some Liabilities of Business • Notes Payable • Accounts Payable
- 6. EQUITY IS THE OWNER’S CLAIM ON BUSINESS Effect on Owner’s Equity • Capital • What owner put in Business • Drawings • What owner take out from Business • Revenue • What comes from sales • Expenses • What paid for generation Revenue
- 7. WHEN MORE ITEMS IN ACCOUNTING EQUATION • EXPANSION • ASSET CASH, ACCOUNTS RECEIVABLE, NOTES RECEIVABLE, LAND AND BUILDING ETC… • LIABILITIES NOTES PAYABLE, ACCOUNTS PAYABLE, SALARIES PAYABLE ETC… • OWNERS EQUITY CAPITAL, DRAWINGS, REVENUE, EXPENSES
- 8. EXAMPLE • Accounting Equation can be applied in an individual’s life When a person purchased a car of Rs. 10,00,000/- and paid Rs. 2,00,000/- from his own pocket and Rs. 8,00,000 take loan from his friend. Asset = Liability + Owner’s Equity Car Value = Friend’s Money + Capital 1000000 = 800000 + 200000
- 9. BALANCE • Accounting Equations is always balance because all of the assets comes from Owner or Creditors.
- 10. EFFECT OF TRANSACTIONS • Owner invested in business Rs. 100000/- • Cash => Asset => Increase • Capital => Owner’s Equity => Increase • Owner withdrew cash from business Rs. 1000/- • Cash => Asset => Decrease • Capital => Owner’s Equity => Decrease • Utility bills paid Rs. 500/- • Cash => Asset => Decrease • Bills => Owner’s Equity => Decrease
- 11. • Goods purchased for Rs. 50000/- • Stock => Asset => Increase • Cash => Asset => Decrease • Goods sold of Rs. 5000/- in Rs. 6000/-. • Stock => Asset => Decrease • Cash => Asset => Increase • Profit => Owner’s Equity => Increase • Goods sold of Rs. 2000/- in Rs. 1500/- • Cash => Asset => Increase • Stock => Asset => Decrease • Loss => Owner’s Equity => Decrease
- 12. • Machinery purchased on credit of Rs. 10000/- • A/C Payable => Liability => Increase • Machinery => Asset => Increase • Land purchased for Rs. 20000/- • Cash => Asset => Decrease • Land => Asset => Increase • Sales on credit Rs. 20000/- • A/C Receivable => Asset => Increase • Stock => Asset => Decrease
- 13. • Paid amount of machinery. • Cash => Asset => Decrease • A/C Payable => Liability => Decrease • Received from accounts receivable Rs. 10000/- • Cash => Asset => Increase • A/R => Asset => Decrease