The whole of financial accounting is based upon accounting Equation

1. THE ACCOUNTING
EQUATION
MUDASSIR RAZA

2. THE ACCOUNTING EQUATION
P A G E 0 5
CAPITAL= ASSETS - LIABILITIES
THE WHOLE OF FINANCIAL ACCOUNTING IS BASED UPON
ACCOUNTING EQUATION

3. CAPITAL
The amount of the resources supplied by the owner is called capital.
The capital will always equal the assets of the business minus the liabilities.
Capital is often called the owner's equity or net worth.
It comprises the funds invested in the business by the owner plus any profits
retained for use use in the business less any share of profits paid out of the
business to the owner.
It is the money invested in business assets by the business owners from their
own funds.

4. ASSETS
Resources owned by a business.
Current Assets
Current assets are used up quite
quickly in business.
Non-Current Assets
Non-current assets remain productive
for several years and can be used over
and over again in day to day operations
to the benefits of the business.

5. ASSETS
Assets are the things a company owns—or things owed to the company
Inventory
Account Receivables
Cash at Bank
Current Assets
Business premises
Machinery
Equipment
Furniture
Vehicles
Non-Current Assets

6. LIABILITIES
Total of funds owed for assets supplied to a business or expenses
incurred not yet paid.
Current Liabilities
Current liabilities are a company's
short-term financial obligations that are
due within one year or within a normal
operating cycle.
Non-Current Liabilities
Non-Current liabilities are the
company's long-term financial debts or
liabilities that are not due within a year.

7. LIABILITIES
Total of funds owed for assets supplied to a business or expenses
incurred not yet paid.
Account Payables
Current Liabilities
long-term loans
Non-Current Liabilities

8. THANK YOU!