Scribd
Upload
228 views2 pages

Chapter 3-4-5

The document outlines fundamental accounting principles, including the accounting equation, types of major accounts, and the double-entry system. It details the structure of journals and ledgers, emphasizing the importance of balance sheets and income statements in financial reporting. Additionally, it introduces concepts like contra-accounts and adjunct accounts that affect financial statement presentation.

Uploaded by

mendeskim17
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
228 views2 pages

Chapter 3-4-5

The document outlines fundamental accounting principles, including the accounting equation, types of major accounts, and the double-entry system. It details the structure of journals and ledgers, emphasizing the importance of balance sheets and income statements in financial reporting. Additionally, it introduces concepts like contra-accounts and adjunct accounts that affect financial statement presentation.

Uploaded by

mendeskim17
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

CHAPTER 3: THE ACCOUNTING EQUATION

CHAPTER 5: BOOK OF ACCOUNTS AND


ASSETS = LIABILITIES + EQUITY + INCOME – DOUBLE-ENTRY SYSTEM
EXPENSES
PROFIT OR LOSS = INCOME – EXPENSES JOURNAL – book of original entries
- Journal entries
CHAPTER 4: TYPES OF MAJOR ACCOUNTS - Journalizing
Account is the basic storage of information in TYPES OF JOURNALS
accounting 1. SPECIAL JOURNALS – transactions of
similar nature
T-ACCOUNT - SALES JOURNAL – sales on
- Account Title account
- Debit Side - PURCHASE JOURNAL – purchase
- Credit Side of inventory on account
- CASH RECEIPTS JOURNAL –
5 MAJOR ACCOUNTS record all transactions involving
 ASSETS – 1 receipts of cash
 LIABILITIES - 2 - CASH DISBURSEMENT JOURNAL
 EQUITY – 3 – all transactions involving
 INCOME – 4 payments of cash
- Revenue 2. GENERAL JOURNAL – all other
- Gains transaction that can’t be recorded in
 EXPENSES – 5 the special journals
- Expenses
- Losses LEDGER – systematic compilation of a group
of accounts
BALANCE SHEET ACCOUNTS (statement of - Used to classify the effect of
financial position) business transactions on the
accounts
1. Assets: These are what the company - Book of secondary entries
owns, such as cash, accounts - Book of final entries
receivable, inventory, property, and - Posting
equipment. KINDS OF LEDGER
2. Liabilities: These are the company’s 1. GENERAL LEDGER – all the accounts
obligations, including loans, accounts appearing in the trial balance
payable, and other debts.
2. SUBSIDIARY LEDGER – provides a
3. Owner’s Equity: Also known as
breakdown of the balances of
shareholders’ equity, this represents
the residual interest in the company controlling accounts
after deducting liabilities from assets. CONTROLLING ACCOUNT OR
CONTROL – consist of group of
accounts with similar nature
INCOME STATEMENT ACCOUNTS (statement
of profit or loss) Pg. 142 for reference
1. Income refers to the money received
by an organization or an individual. It DOUBLE-ENTRY SYSTEM
represents the inflow of funds. - balance all the time – debit and
2. Expenses refer to the money spent credit
by an organization or an individual. It a. concept of duality – two-fold effect
represents the outflow of funds. on values
b. concept of equilibrium – equal
CHART OF ACCOUNTS – list of all the debits and credits
accounts used by a business
Normal Balance – Increase
Abnormal Balance – Error

CONTRA-ACCOUNTS – presented in the


financial statements as deduction to their
real accounts
ADJUNCT ACCOUNTS - addition to their
related accounts

You might also like