The document discusses accounting principles and concepts. It explains that all accounting functions like recording, classifying, summarizing and interpreting transactions cannot be performed without following the basic accounting equation. It then defines the accounting equation as the relationship between assets, liabilities and owner's equity that is represented in a business's balance sheet. It also notes that the accounting equation forms the foundation of double-entry bookkeeping.

2. In accounting system,
business transaction should be
recorded, classified and summarized
and interpreted. All of these
functions of accounting cannot be
made unless you follow the basic
accounting equations.

3. Business transactions affect the assets, liabilities and
proprietorship of the business. These effects can be
expressed in the accounting equation. Accounting
equation can be defined as:
It is also known as the balance sheet equation,
because it represents the relationship of three
elements such as assets, liabilities and owners equity.
It is the foundation of double entry bookkeeping
system. Double entry bookkeeping system is recording
of transaction that requires equal balance of the total
amount both debit and credits.

5. Current Assets
Cash- is any medium of exchange that a bank will accept at face value
Accounts receivables- are claims against debtors, customers or clients, arising
from services rendered on account and the sale of merchandise
Notes receivables- are claims against debtors, customers for the services
rendered evidenced by written promise to pay issued by the debtor.
Merchandise inventories- are goods on hand available for sale.
Supplies- are consumable goods used in the course of business
Prepaid expenses- are expenses paid in advance
Non- Current Assets
Property, Plant & Equipment-these are tangibles assets held by an enterprise for
use in the production or supply of goods and service.
Equipment- are tangible assets which are tools or instrument used in the
operation of business
Furniture and fixture- are properties owned by the business which are not part
of the building property

6. Accounts payable – are the amount due to creditors
for assets acquired to account.
Notes payable- are the amount due to creditors
supported by the promissory note.
Salaries payable- are unpaid salaries to the
employees at the end of the accounting period.
Tax payable- is present obligation due to the
government.
Interest payable- is interest incurred on the loan but
they are not yet paid at the end of the period.

7. Owner’s capital-is the account that represents the
equity or claims of the owner on the assets of the
business.
Owners drawing- account charged to the owners
drawing are cash or other assets withdrawn or taken
by the owner form the business for personal use.

8. Sales- are total sales of merchandise sold
Professional fee income- is an income earned after
rendering professional services such as CPA’s doctors,
lawyers
Rent income- is the amount of lease/rental earned
for the period.
Service income- is the amount of income earned
from services rendered from service concerned
business
Interest income- is the amount earned for lending
money.

9. Cost of sales- is the cost of goods purchased and sold
merchandises or sold manufactured and sold.
Advertising expense- are expenses incurred to
promote the product of the business
Salaries- are the compensation given to the employee
Utilities expense- are expenses incurred for light and
water consumed during the operation of the business.

11. General Journal of Sassy Mo. Beauty Salon GJ1
2012 Date Particulars with Explanation F Debit Credit
Jan 1 Cash 111 100,000 - 100,000 -
Mo, Capital 311
To record investment capital of the
owner
General Ledger of Sassy Mo. Beauty Salon
CASH Acct No. 111
Date Particulars F Debit Date Particulars F Credit
2012
Jan 1 GJ1 100,000 Jan 2 GJ1 36,000
13 GJ1 28,500 3 GJ1 60,000
18 GJ1 32,900 13 GJ1 17,600
23 GJ1 15,100 14 GJ1 19,100
25 GJ2 4,000 28 GJ2 19,100
180,500 151,800
Bal 28,700
General Ledger of Sassy Mo. Beauty Salon
MO, CAPITAL Acct No. 311
Date Particulars F Debit Date Particulars F Credit
2012
Jan 1 GJ1 100,000 Jan 2
Posting of General Journal to General Ledger

12. This are the claims against the debtors, customer
for the services rendered evidence by written
promise to pay issued by the debtor?
Supplies
Prepaid Expenses
Cash
Notes Receivables

13. A present obligation due to the government?
Interest Payable
Tax payable
Mortgage
Notes Receivables

14. This is the account charged to the owner or any
other assets withdrawn or taken by the owner
form of business for personal use?
Cash
Accounts Payable
Drawing
Notes Receivables

15. This are the total sales of merchandise sold?
Utilities
Cash
Interest income
Sales

16. This are the compensation given to the employee?
Utilities
Salaries
Incentives
Bonus