Accounting Process and Bookkeeping Notes
Introduction to Accounting Process and
Bookkeeping
Definition and Explanation of Expenses
Expenses are the costs incurred by a business in
its operations.
Examples: salaries, rent, utilities, supplies.
Understanding Equity and Liability
Equity: the residual interest in the assets of the
entity after deducting liabilities.
Liability: a legal obligation of the entity to transfer
assets or provide services to another entity in the
future.
Asset, Expense, Liability, Equity, and
Revenue Balances
Assets: resources controlled by the entity as a
result of past events and from which future
economic benefits are expected to flow to the
entity.
Expenses: decrease in equity due to the
consumption of assets or incurring of liabilities.
Liabilities: present obligations of the entity to
transfer assets or provide services to other
entities in the future.
, Equity: residual interest in the assets of the entity
after deducting liabilities.
Revenue: inflow of assets or settlement of
liabilities due to the sale of goods or the
rendering of services.
Definition and Explanation of Equity and
Revenue
Equity: the residual interest in the assets of the
entity after deducting liabilities.
Revenue: inflow of assets or settlement of
liabilities due to the sale of goods or the
rendering of services.
Duality Principle of Accounting
Every financial transaction has two aspects: a
debit and a credit.
The total debits must equal the total credits for
each transaction.
Modern Equation of Accounting
Assets = Liabilities + Equity
This equation demonstrates that the total value of
assets must always equal the total of liabilities
and equity.
Debit and Credit in Accounting
Transactions
Debit: a record of an increase in an asset or
expense account or a decrease in a liability or
equity account.
Introduction to Accounting Process and
Bookkeeping
Definition and Explanation of Expenses
Expenses are the costs incurred by a business in
its operations.
Examples: salaries, rent, utilities, supplies.
Understanding Equity and Liability
Equity: the residual interest in the assets of the
entity after deducting liabilities.
Liability: a legal obligation of the entity to transfer
assets or provide services to another entity in the
future.
Asset, Expense, Liability, Equity, and
Revenue Balances
Assets: resources controlled by the entity as a
result of past events and from which future
economic benefits are expected to flow to the
entity.
Expenses: decrease in equity due to the
consumption of assets or incurring of liabilities.
Liabilities: present obligations of the entity to
transfer assets or provide services to other
entities in the future.
, Equity: residual interest in the assets of the entity
after deducting liabilities.
Revenue: inflow of assets or settlement of
liabilities due to the sale of goods or the
rendering of services.
Definition and Explanation of Equity and
Revenue
Equity: the residual interest in the assets of the
entity after deducting liabilities.
Revenue: inflow of assets or settlement of
liabilities due to the sale of goods or the
rendering of services.
Duality Principle of Accounting
Every financial transaction has two aspects: a
debit and a credit.
The total debits must equal the total credits for
each transaction.
Modern Equation of Accounting
Assets = Liabilities + Equity
This equation demonstrates that the total value of
assets must always equal the total of liabilities
and equity.
Debit and Credit in Accounting
Transactions
Debit: a record of an increase in an asset or
expense account or a decrease in a liability or
equity account.
