Accounting Equation

Accounting Equation


Business Transactions, its Analysis and Accounting Equation

Accounting Processing Cycle

Accounting Processing Cycle

Manufacturing operations

9.  Manufacturing operations

9.1   Nature of manufacturing business

9.2   Transactions related to the manufacturing process

9.3   Elements of manufacturing costs

9.4   Preparation of financial statements of a manufacturing enterprise

• statement of financial position formerly balance sheet, 

• income statement, 

• statement of cost of goods manufactured and sold

Recording transactions in special journals

8.  Recording transactions in special journals

8.1   Nature and use of control accounts and subsidiary ledgers

8.2   Types of Special Journals

• sales journal, 

• purchases journal, 

• cash receipts journal, 

• cash disbursements journal

8.3   Recording of financing, investing and operating transactions in the special journals and general journal

Recording merchandising business transactions

7.Recording merchandising business transactions

7.1   Merchandising operations (nature and operating cycle of a merchandising business, business documents)

7.2   Recording merchandising business transactions in a two-column general journal

• sales revenue, 

• sales returns and allowances, 

• sales discounts, 

• purchases of merchandise, 

• purchase returns and allowances, 

• purchase discounts, 

• transportation costs

7.3   Inventory systems

• perpetual inventory procedures

• periodic inventory procedures

7.4   Determination of merchandise inventory, costs of goods sold and gross margin

7.5   Worksheet preparation

7.6   Adjusting and closing process for a merchandising business

7.7   Financial statements of a merchandising business

7.8   Use of accounting information in decision making

Completing the accounting cycle

Note : To read the lectures and notes, click the topic/s.


6. Completing the accounting cycle

6.1   Overview of the accounting cycle  
        
6.2   Preparing an accounting worksheet

6.3   Using the worksheet

6.4   Preparing financial statements form the worksheet (income statement, owner’s equity statement, balance sheet, cash flow statement (simple cash receipts and disbursements statement)

6.5   Journalizing and posting adjusting entries

6.6   Journalizing and posting closing entries

6.7   Preparing the post-closing trial balance

6.8   Preparing the reversing entries

Measuring business income

5.   Measuring business income

5.1      Accrual-basis accounting vs Cash-basis accounting

5.2      Accounting period

5.3      Revenue principle

5.4      Matching principle

5.5      Time period concept

5.6      Overview of the adjusting process

5.7      Adjustments for 

• prepayments (deferrals), 

• accruals, 

• precollections, 

• uncollectible accounts receivable, 

• amortization 

• depreciation of property, plant and equipment

5.8      Preparation of the adjusted trial balance and financial statements

5.9      Use of accounting information for decision making      

Recording transactions of a service company (Sole Proprietorship)

Below is the outline provided by CMO3 S2007 in recording transactions of a service company of a sole proprietorship 

4.    Recording transactions of a service company (Sole Proprietorship)

4.1   Double-entry accounting and accounting systems:  Florentine vs Venetian approach to reporting, Savory and Napoleonic Commercial code, and Schmalenback

4.2   The account and T-account

4.3   Rules of debit and credit

4.4   Chart of accounts and normal balances of an account

4.5   Recording in two-column journal (initial investment by owner, changes in assets, liabilities and capital, changes in income and expenses, withdrawals of owners)

4.6   Posting to the ledger

4.7   Preparing the trial balance
====================

Though there's already an outline provided, again, I made my own re-grouping of topics.

Part 1 - Double-Entry Bookkeeping Concepts
Part 1 is basically an introduction of double-entry bookkeeping or accrual model bookkeeping.

• What is double-entry bookkeeping or accrual model bookkeeping?
• Double-Entry Bookkeeping Accounting Systems and its evolution.
• The General Journal, journalizing and journal entries 
• What is meant by account and account titles?
• What are the rules of debit and credit?
• What is meant by Chart of Accounts?  
• What are the normal balances of accounts?
• How to analyze and journalize business transactions and events
• The T-Account and the General Ledger

Part 2 - Service Business of a Sole Proprietorship

• Nature of a Service or Servicing Business
• Bookkeeping and Accounting a Service Business of a Sole Proprietorship

• Overview : Illustrative business transactions examples, and their transaction analysis, effects on accounting equation and the accounting entry in T-Accounts

• Information Needed in Starting Bookkeeping

• Business transactions of a Service Business and Journalizing the transactions in a two-column journal or general journal 

• Posting the General Journal entries to General Ledger and T-Account 

• Preparing the Trial Balance 

Analyzing and summarizing business transactions

Here's the CMO3 S2007 outline for analyzing and summarizing business transactions

3.  Analyzing and summarizing business transactions
3.1   Definitions of business transactions and source documents
3.2   Summary of business activities (financing, investing, operating)
3.3   The accounting equation
3.4   Analyzing and accounting for business transactions
3.5   Presentation of results of routine transactions by preparing the Basic Income Statement, Owner’s Equity Statement, Balance Sheet, and Statement of Cash Flows

=================
Economic Events 

The first objective of any accounting system is to identify the economic events that can be expressed in financial terms by the system. 

Economic Event – is any event that directly affects the financial position of the company. In other words, this means any business transaction or financial affair of the company...read more

Business transactions

A Business Transaction is exchanging of values between transacting persons/parties. 

Exchange of values means that one value is received in return or in exchange for another value parted with...read more 

Source Documents

Source Documents are the forms, invoices, receipts, legal papers, or other documents which underlie a business transaction.  These are the so-called evidential matter.   Existence of evidential matter supports and corroborates the objectivity of accounting records...read more

Varied Forms of Values

Again, a business transaction is an exchange of values. There's a give and take in a business transaction. There are two items that must be considered and analyzed in a business transaction, the value received and the value parted with...read more

Summary of business activities

• OPERATING

The Operating Activities are those business transactions which generates revenue for the organization. These include expenses incurred to produce revenues. 

The following are the transactions included under the operating activities...read more

• INVESTING

The main purpose of investing activities is to acquire assets in order to facilitate and expedite the operations of the business. 

The Investing Activities are those transactions which involve acquisition and disposal of assets other then inventory, which are necessary in the business operations...read more

• FINANCING

The Financing Activities are those transactions between the entity and its owners or creditors. 

The primary focus of financing activities is to raise working capital necessary to be used in business operations.  The owners invest to the entity and/or creditors lend capital to the entity...read more

The accounting equation

In the point of view of Financial Position, the accounting equation underlies the processes used to capture the effect of economic events.

This equation generally portrays the equality between the economic resources of entities and the claims to these resources.  Meaning, the resources of entities are provided by creditors and owners...read more 

Analyzing and accounting for business transactions

Analyzing and accounting for business transactions, one has to acquire ability to recognize the dual effects of each transaction has on the accounting equation...read more

Presentation of results of routine transactions by preparing the Basic Income Statement, Owner’s Equity Statement, Balance Sheet, and Statement of Cash Flows

Introduction to Accounting Information System

Overview of an accounting information system 

    DEFINITIONS of Accounting Information System 

• It consist all the functions and procedures for recognizing transactions and recording, processing, and reporting the data representing them...read more 

The three stages of data processing :  A comparison of computerized and manual accounting system

Features of an effective information system