5. • Double-entry system
• Each transaction must affect two or more accounts
• Recording done by debiting at least one account
and crediting at least one other account.
• DEBITS must equal CREDITS
JOURNAL ENTRY
9. • It is a list of accounts and their balances at a
given time.
• It proves the mathematical equality of debits and
credits after posting.
TRIAL BALANCE
10. •Companies prepare five financial statements
1. Income statement
2. Retained earnings statement
3. Statement of financial position
4. Statement of Cash Flows
5. Comprehensive income statement.
FINANCIAL STATEMENT
11. •On October 1, Ahmad invests 500,000 SR
cash in KPMG Accounting Firm.
PRACTICE
12. • On October 1, Ahmad invests 500,000 SR cash in KPMG Accounting Firm.
01/10/19 Cash 500,000
Shares Capital 500,000
Investment by Ahmad
PRACTICE
Cash
1/10/19 Shares Capital
500,000
Shares Capital
1/10/19 Cash
500,000
13. •On October 2, KPMG Accounting Firm
purchases computer equipment costing
150,000 SR cash.
PRACTICE
14. • On October 2, KPMG Accounting Firm purchases computer equipment
costing 150,000 SR cash.
02/10/19 Computer Equipment 150,000
Cash 150,000
Computer equipment purchases
PRACTICE
Cash
1/10/19 Shares Capital 500,000 2/10/19 Computer Equipment
150,000
Balance 350,000
Computer Equipment
2/10/19 Cash 150,000
15. •On October 3, KPMG Accounting Firm
purchases office supplies for 70,500 SR
on account.
PRACTICE
16. • On October 3, KPMG Accounting Firm purchases office supplies for 70,500
SR on account.
03/10/19 Office Supplies 70,500
Accounts payable 70,500
Purchasing office supplies
PRACTICE
Office Supplies
3/10/19 Accounts payable 70,500
Accounts payable
3/10/19 Office Supplies
70,500
17. •On October 4, KPMG Accounting Firm
pays the annual rent 60,000 SR cash.
PRACTICE
18. • On October 4, KPMG Accounting Firm pays the annual rent 60,000 SR cash.
04/10/19 Rent Expenses 60,000
Cash 60,000
Payment of rent expenses
PRACTICE
Cash
1/10/19 SC 500,000 2/10/19 CE
150,000
4/10/19 Rent Expense
60,000
Balance
290,000
Rent Expenses
2/10/19 Cash
60,000
19. •On October 5, KPMG Accounting Firm
billed a client 80,000 SR for auditing
services. The client paid half of the due
amount.
PRACTICE
20. • On October 5, KPMG Accounting Firm billed a client 80,000 SR for auditing
services. The client paid half of the due amount.
05/10/19 Accounts Receivable 40,000
Cash 40,000
Services Revenue 80,000
Computer equipment purchases
PRACTICE