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CORE PRINCIPLE ‘laBumes BUSINESS = BUSINESS ERSTE aaa BUSINESS = BUSINESS eset QWNS OWES occ 2 en PR DEDUCTING AL ITS UASLITES OS NVESTED INTO A BUSINESS HAO Pa ASSETS = LIABILITIES + EQUITY ~~. ‘See CAPITAL , RETAINED Bo " CONTRIBUTIONS * EARNINGS Ose roo SOME STATEME ey ee nA BRMULATED - WITHDRAWALS "5 REVENUE 8 1 Se OF sues \ é Stem aenees -REVENUE - EXPENSES 2 i OPERATING PROF.) ; Seen Stace _ Tapoae ea mercer NET PROFIT/(LOSS) A SPST OF A BUSHES! asa, BALANCE SHEET “a 2S At MMNOD-YYTY ASSETS $ LIABILITIES AND EQUITY $ cuggen assers uasumes x (CURRENT UAB TEs scrouss RECEVABLE x ACCOUNTS PAYABLE x INVENTORY x SALARIES PAYABLE x Prefab epenses x TANS BASLE 5 SHORT-TERM INVESTMENTS, Zs es x TOTAL CURRENT ASSETS x TOTAL CURRENT LASILITIS x NON CURRENT ASSETS NON-CURRENT LIABLITIES LONG TERM INVEST x TONG TERM LOANS x Proraneunrezooever TOTAL NON-CURRENT LIABILITIES x TOTAL NON-CURRENT ASSETS. x ces TOTAL LIABILTES X _ TOTAL ASSETS x => cour, ‘OWNERS EQUITY x ‘ RETANED EARNINGS x anny TOTAL ASSETS ARE ALWAYS EQUAL, a TO TOTAL UABLUTES AND EQUTY TOTAL EQUITY x ‘TOTAL LIABLITES AND EQUITY x DOUBLE-ENTRY BOOKKEEPING EVERY ACCOUNTING ENTRY HAS AN ‘OPPOSITE CORRESPONDING ENTRY INA DIFFERENT ACCOUNT MSCONCEPTONS #-—--- | DEBTS an creas ane REWER COS Roe Bt AND CREDITS ARE NOT THE SADONG ORSUBINACTING ~~~» DEBITS AND CREDITS: ate WORDS USED TOALECT Ti Sua OFCOLRLE SBED NATURE OA SHARC TRANSACTION eononesoere JO.CONTRBUTE EITHER eed its FINANCIAL TRANSACTIONS INVOLVE A FLOW OF ECONOMIC BENEFIT ~~~ FROM A SOURCE TO A DESTINATION DEALER. AND HERE IS THE PROOF... THE ACCOUNTING EQUATION STATES THAT BUT EQUITY Ib MADE UP OF AND SINCE RETAINED EARNINGS ARE"PROFTIS HELD FOR FUTURE USE SO EQUITY EXPANDED I {AND FF WE DROP THS INTO THE ACCOUNTING EQUATION WE GET ‘WHICH CAN BE REARRANGED AS D — A u E R =| © mroaccounmeeg sur wilt CNRS UFECO 000 FINANCIAL ACCOUNTING ‘THE PROCESS OF IDENTIFYING, RECORDING, SUWMARZING & ANALYZNG. AN ENTITY'S FINANCIAL TRANSACTIONS AND REPORTING THEM mnemne sexmnus nel ENTRY NAIUNCALSTATOUNTSYORSDISINGE POTENTIAL” gels guznute axe "coun os cae, NYBTORS LBS vO CREDTORS OWNS" OWES a | / EB vce . casconmcoume | aaa coy emxmeeeyaas ASSETS; UABLITES EQUTY, | Rees “RIES ARE uu tees: | MARR etpaey OAR A PERIOD OF TIME “OVER A PEROD OF Te JOURNAL NUMER it verry \ f DATE ACCOUNT * ein SEE STEPS ‘STEP ioc er Bi 5 CLOSNG ENTRES, TRANEACTIONS Agursror or acusresss ' f COOLING REPORTS THAT JOURNAL VTS wT TRANSFER Mateer/ / ATEN. yumm | CR erates 1/ RR re ee ee eee ie Rare ? ay = a oes FINANCIAL STATEMENTS PNANGAL TRARSACTONG ACCOUNTING CYCLE secon Por STEP 3 sommene duane atures oe srresce account othe sont eS bene GENERAL LEDGER vee: uae Jaga ges rom a ne 0 0F puns numero “es sBmesiscnuewmine | AShETPRIBE RL eee enceor essa 3 ADJUSTING ENTRY a if Joururnuebe tue ‘ACCOUNT STEPS Step 4 secount Sonny ieee Fost + Waste — SNe ADJUSTING ENTRES = TAL BALANCE ace ese ecirion F sb SEE a TRIALBALANCE FET ARAN ORO OF HE ACCIUAL METHCD OF ACCOUNTING ACCOUNT AO pest creo Renee Saecocnc ars exe CE rcaechon ¥ ont MERESMD METAR ass : ame x Iuieuion Gaenay i BORED Sep i Foor, Lek Kine x Fours Pasch x : (C1 METHOD OF ACEOUNING i account BEDE ocesom wen casts er — iahuiaemei ES RE RTE eer SER © agp acrounmnc sur SPACERS TaeSSUIRESTOR CO 000 ACCOUNT “ THIS IS THE PLACE WHERE WE RECORD, SORT AND STORE. ALL FINANCIAL TRANSACTIONS THAT [AFFECT A GROUP OF RELATED ITEMS THSIS THE Lace wR algnese otek Coweie coor AL iS Nan AL TRANSACTIONS ANB ACCOUNTS sweaxe T-ACCOUNT Paws HED YOU REEER THS IS A VISUAL REPRESENTATION OF AN ACCOUNT Noma DEBT ACCOUNTS YNOPWAL CREDT ACCOUNTS ‘pypps BSE DEA LER “Go SBE TE ry ooo a INCREASE WHEN CREE + ORCREASE WHEN Oss EASE WHEN DEBITED. -- BEE OREN, eal Tome ATTEREONG Buel 4 ‘CASH ACCOUNT CASH ACCOUNT “OPENING BALANCE 100 CREING EHANCE 00] BILL PAYMENT (40) BILL PAYMENT 40 INEW SUPPLIES (25) NEW SUPPLIES. B /-+CIORNG BALANCE “35 “CORSE BP TOTAL AT THE END | ‘DOUBLE ENTRY BOOKKEEPING’ * “ese Noman ore FEET RAPER naan MNS RE, i TORAL AT A POINT IN TIME ‘BETWEEN THE DEBITS AND CREDITS m eR unc, RNsICTON © zen accountng stu WMT ACESUNTINOSTOFECO 000 BOOKKEEPING THE SYSTEMATIC PROCESS OF POSING OME RECORDING, SORTING AND STORNG DEBTS AnD CREDITS ‘THEQATE THE JOURNAL IS POSTED ‘A BUSINESS'S FINANCIAL TRANSACTIONS TRS USED TO REFLECT BME GEER Lede Batic tueaeate PRINCAL TRANSACTIONS AFFECTS THE ACCOUNTING PERIOD THE TRANSACTION APPEARS IN ESE ARE semARaTED Rio TWO COUMNS f JOURNAL ENTRY (JE) ‘A RECORD OF A FINANCIAL TRANSACTION JOURNAL NUMBER AG ERNE BE reco ecenans , JOURNAL NUMBER: DATE ACCOUNT TOINL DEBTS = TOTAL CREDTS “OLRNAL DESCRETON ‘AR DcaPTON BPRS ‘DOUBLE ENTRY BOOKKEEPING" “HE PURER OP THE SOON eee ACCOUNTING ENTRY Has ans Bese comesranonc iat ACCOUNT TRA DFFERENT ACKOUNT ‘THE PLACE WHERE WE $0. RECORD, SORT AND STORE JOURNAL MUST ASFECT ‘ALL FINANCIAL TRANSACTIONS THAT ARS NOON AFFECT A RELATED GROUP OF ITEMS oR (CASH a@ oR OWNER’S EQUITY a INTIAL INVESTMENT 100 . INTIALINVESTVENT 100) jae pea nace GENERAL LEDGER ARE VISUAL REPRESENTATIONS: ‘THE DATABASE THAT STORES Sele aroutonms A covptet RECORD OF AU Sencent nue accounts OUR ETRES a a ll =| © 2p Acco sTUF recbeb Soar se pasa fear e ar AFFECT R RAD GROUP TS pseu neces SEES Stora ad Reiees IDENTIFY TRANSACTIONS THESE ARE EVENTS THAT HAVE AN IMPACT ‘ON A BUSINESS’ FINANCIAL STATEMENTS | JOURNAL ENTRY JOURNAL NUMER pee" account esit_ crepe , Maas AON . SCRPTON PREPARE JOURNAL ENTRIES “A JOURNAL ENTRY B 3 __ RECORD OF FINANCIAL TRANSACTION a {ma etandliny 6 Oren \ GENERAL LEDGER [AMASTER DATABASE THAT STORES & COMPLETE RECORD iG ESAT SURED san te roe SEE SSR e (OF ALL ACCOUNTS AND JOURNAL ENTRES. * scours PRED, PROpERTY PLANT casi AEC INVENTORY et ‘SEGUEENT % xT x x x . 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ACCRUALS: puven Benes" Seee" AMET + + + + PST BREST FUTURE AST pRESDAT FUTURE vow AK Uses seve PREPAID EXPENSE DEFERRED REVENUE ACCRUED EXPENSE ACCRUED REVENUE AFUTURE EXPENSE THE PAYMENTS THAT A BUSINESS ‘A PAST EXPENSE REVENUE THAT HAS WHICH HaS BEEN RECEIVES IN ADVANCE WHICH HASNT BEEN, ‘BEEN EARNED BUT PAIDFORIN ADVANCE FOR GOODS OR SERVICES, RECORDED OR NOT INVOICED YET THAT HAVENT YET BEEN AID FOR YET DELIVERED OR PROVIDED ASSET LIABILITY / BUYER BuYgRRECEVES SALER SELLER RAKES purer sece sau a Roce. proves ‘Huber Se Nae cooper Recaves Gooms G8 COORG oR MAKES Boose "Heres amas “Sree mich “See oe ee See ae > « > « + « PAST PRESENT FUTURE PAST PRESENT FUTURE PAST. PRESENT FUTURE PAST. PRESENT FUTURE =| mo accounts sIUF igen WuWACESUNTINGSTUFECO 000 # TRIAL BALANCE (TB) ast {AN ACCOUNTING REPORT SHOWING reson IT was UD TO.CHECK TAT. 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WEAR AND TEAR THE NSIS OF THE, ON OBSCLESCENCE | ssen oestrone vescaenon”) oe ee GEPRECITONMETHOD. sL/0DUSYOUGe may xT ~~ see core a oi FESDUML AWE Be {ess USEFUL Ure: NEMS a es SERRECATON RATE mow neone Sure. sunteser r DEPRECIATION SCHEDULE | OPENING DEPRECIATION | ACCUMULATED, CLOSING, YEAR BOOK VALUE (S) EXPENSE (5) — (5) BOOK VALUE ($) 20K By, BP ca sw2-) 3x9 Sey, BP. fa a, Re ow. a. nee oy sr 20KN AK cM ACE EAP EXP + XD, + EXD CB = OV = XP + DOUBLE-DECLINING BALANCE AN ACCELERATED VARIABLE COST DEPRECIATION METHOD ‘WHERE THE EXPENSE IS HGHER IN EARLY YEARS STRAIGHT LINE «--—--—~ ‘A FIXED COST DEPRECIATION METHOD WHERE THE {EXPENSE'S SPREAD EVENLY OVER ITS USEFUL UFE DERRECIATION STRAIGHT LINE (PENSE * DEPRECIATION RATE * DEPRECIABLE COST DEPRECIATION STRAIGHT UNE, BOOK: ex . BR +2 (OPENNG BOOK VALLE DEPRECIATION RATE T+ were / OS = wR re . Toe ‘SUM OF THE YEAR'S DIGITS (SYD) * _.* UNITS OF PRODUCTION AN ACCELERATED VARMBLE COST DEPRECIATION METHCO ‘A VARIABLE COST DEPRECIATION METHOD WHERE THE “WHERE THE EXPENSE IS HGHER IN EARLY YEARS EXPENSES MRROR ACTUAL PHYSICAL USE OF ASSET DEPRECIATION . x DEPRECIATION. : RECIATION 57 DEPRECIATION RATE X DEPRECIABLE COST RECIATION - epRECIATION PER UNT x UNT PRODUCED EL See _[pepREgasie cost! ee D cost NAIDE UNTS “Gy = USEFULL x (USEFUL UFE + ) i ASSET RESIDUAL ‘yp = USEFULLFE x (USEFUL UFE +) ‘DePRECIABLE cost ASSET - REGDMA © pro accounmisG STUFF REA RES wuAVAECQUNTINGSTUFECO oO

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