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Elements of Accounting

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135 views

Elements of Accounting

accounting

Uploaded by

Brian
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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T.L.E.

10 - BASIC ACCOUTING

ELEMENTS OF
ACCOUNTING

DESIGNED AND PREPARED BY: Anna Lyn V. Olpindo


Processing Questions:
• What are the characteristics of the girl mention in the
song?
• Can you see the “good” in people beyond their outer
look?
• Imagine there is a mirror in front of you, tell us what
can you see? What are your inner and outer beauty that
you possessed? What is your best features?
ELEMENTS OF ACCOUNTING
SALARIES PAYABLE CASH ON HAND PROMISSORY
NOTES ISSUED BY
SERVICE REVENUE THE BUSINESS
PREPAID EXPENSE
PROMISSORY
NOTES FROM THE CASH ON BANK
DEBT OF THE
CUSTOMER
CUSTOMER SALARIES EXPENSE
TOOLS AND SUPPLIES
EQUIPMENT
SERVICE VEHICLE
LAND BUILDING
ELEMENTS OF ACCOUNTING

ASSET LIABILITY EQUITY


FINANCIAL POSITION
1. ASSETS
• ARE VALUABLE RESOURCES OWNED BY THE ENTITY.
• INCLUDES:
TANGIBLE ASSETS
INTANGIBALE ASSETS
TANGIBLE ASSETS
1. CURRENT ASSETS
• CASH
• NOTES RECEIVABLE
• ACCOUNTS RECEIVABLE
• SUPPLIES
• PREPAID EXPENSES
2. NON-CURRENT ASSET
LAND
BUILDING
MACHINES/EQUIPMENT
VEHICLE / TRUCK / DELIVERY VAN
FURNITURE AND FIXTURES
EXAMPLE of Business Transactions
1. Invested cash to start the business.
2. Purchase second hand service vehicle paying 50%
cash, balance to be paid next month.
3. Paid 3 months advance of the rent of the building.
4. Purchase supplies for cash.
5. Receive promissory note from clients on credit.
6. Receive cash for the services rendered.
Business Transactions
• is an activity or event that can be measured in terms of
money and which affects the financial position or
operations of the business entity.
• A business transaction has an effect on any of the
accounting elements – assets, liabilities, capital, income,
and expense
Activity:
You decided to start-up your Catering Service business.
You placed initial capital in the business of P350,000…
Give 10 business transactions that you think your
business will encountered during the first 30 days of its
operation.
INTANGIBLE ASSETS
These are identifiable, nonmonetary assets without
physical substance held for use in the production of
supply of goods or services, for rental of others or for
administrative purposes.
Examples: goodwill, patents, copyright, licenses,
franchises, trademarks, brand name.
LIABILITIES
• These are obligations of the business
• Obligations that arise during the course of its business
operations.

• Example:
Acquisition of equipment in credit
Due of utilities
ACCOUNTS UNDER LIABILITIES
Current Liabilities
1. Notes Payable
2. Accounts Payable
3. Unearned Revenues
4. Accrued Liabilities (salaries payable, rent payable,
utilities payable, interest payable)
Non-Current Liabilities
1. Bonds Payable
2. Mortgage Payable
Business Transaction
1. Purchased service vehicle paying 50% downpayment
cash, balance due in 60 days.
2. Received electric bill amounting to P6,500 due date
is on next week.
3. Customer paid in advance for the services to be
rendered next month.
Owner’s Equity
• Represents the owner’s investment in the business
• OE = Asset – Liabilities
• OE = Capital - Withdrawals
ACCOUNTS UNDER O.E.
1. Owner’s, Capital
2. Owner’s, Withdrawal (Personal Drawing)
Ex.
1. The owner invested cash in the business amounting
to P350,000.
2. The owner invested his personal equipment on the
business amounting to P67,000.
3. The owner withdraw cash for personal use, P13,900.
INCOME
• Money received or to be received from the service
rendered

Accounts Under Income


1. Service Income or Service Revenue
EXPENSE
• The cost of business operations
• Money spent by the business due to its undertakings

Accounts under expenses


1. Rent Expense 4. Interest Expense
2. Utilities Expense 5. Insurance Expense
3. Salaries Expense 6. Depreciation Expense
Ex. (business transactions)
1. Paid the rent of the building.
2. Received the electric bill for the month.
3. Paid the employees wages.
4. Paid the mayor’s permit and licenses.
5. Purchased on account gas and oil of the service
vehicle.
QUIZ:
• Give three accounts under:
• CURRENT ASSETS
• NON-CURRENT ASSETS
• CURRENT LIABILITIES
• NON-CURRENT LIABILITIES
• OWNER’S EQUITY

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