CORE PRINCIPLE ‘laBumes BUSINESS = BUSINESS ERSTE aaa BUSINESS = BUSINESS esate, 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 I5 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 a | / BEB ccs . casconmcoure | 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 7 TRANSFER Mnteer | ATEN, yumm | CR erate 1/ SR re ee eae 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: vanes Jaga ges rom a ne 0 0F pwns numero “es mesiscnuewmine | ACKRTPRBE RL eee encbor esooms 3 ADJUSTING ENTRY a if Joururnwebe tue ‘ACCOUNT STEPS Step 4 secount Sona ieee Fost + Waste — SNe ADJUSTING ENTRES = TAL BALANCE ace ese ecirion F 5b SOE a TRIALBALANCE NPE ASAD 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 SSE DEA LER “Go SBE TE ry ooo a INCREASE WHEN CREE + ORCREASE WHEN Oss EASE WHEN DEBITED. BEE ORE, eal Tome ATTEREONNOG Buel 4 ‘CASH ACCOUNT CASH ACCOUNT “OPENING BALANCE 100 CREING EHANCE 00] BILL PAYMENT (40) BILL PAYMENT 40 INEW SUPPLIES (25) NEW SUPPLIES. B /-+ClORNG 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 ACER INVENTORY et ‘SEGUEMENT % xT x x x . 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OF FINANCIAL STATEMENTS, INCOME STATEMENT (\/S) ‘AE DSING RD POTENT Bers FINANCIAL STATEMENT SUMMARLING A Weooee: ee ie ‘BUSINESS'S REVENUES AND EXPENSES. ‘OVER & PERIOD OF TIME TENSHRPS neapmns ote FOmANCE A NESS PRT PROOCE Tw TH COULD BE A WEEK. MONT, "QUARTER OR A FULL YEAR * INCOME STATEMENT ‘AKA, PROFIT & LOSS STATEMENT (P61) FOR THE PERIOD ENDED MMMEOD-YY s REVENUE x _- BPENSES 0 PO promt wien REVENUE > BOENSES PROFTILOSS) 0 Toss wie ENPOES > REVENUE pphon RECT costs EXPENSES WHICH CANE ORECTYY TRACED FROUGH TO GOODS SO.D ‘OR SERVICES PROMIED INCOME STATEMENT FOR THE PEROD ENDED MVM-OD-YYYY TERNS CHANGE WHEN. suns cooes : $ RODLICTS SOLD x BREE co ous — RevouE 4 aos aor 0 omect wana -~*"* COST OF SALES eo NORECT varisie ~~», ROSS PROFIT/(LOSS) XA) eRe Bes e = OVERHEAD EXPENSES ®) suspen x INDIRECT FIXED. 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