Anisul islam

CSE 33rd batch

Leading university,Sylhet
1
Anisul islam

Grateful to
All the credits of my accounting knowledge goes to my honourable teacher

Iehit Sharma
Lecturer of BBA department
Leading university
Sylhet , Bangladesh

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Basic theory
(1) What is Accounting ?
The systematic recording ,
representing and analysis of financial
transaction of a business.
(2) Accountant ?
The person in charge of accounting is
called an accountant.

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Remember
Luca pacioli is known as the father of modern
accounting.
He introduced and explained the double entry
system ( In every transaction one side will
increase then another side will decrease [
Debit & Credit ])
Accounting helps to represent and explain
income , profit loss , expenditure, liabilities
etc.
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Accounting cycle
1. Accounting Equation(A = L +C )

2. General Journal
3. General Ledger
4. Trial Balance
5. Adjusting journal
6. Income statement
Balance sheet
Equity statement

Cash Anisul
flowislam
statement

Accounting Cycle - 1
1. Accounting equation

2. General journal

3. General ledger

4. Trial Balance

5. Adjusting journal

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Accounting Cycle - 2
6. Worksheet

7. Income statement

8. Balance sheet

9. Equity statement

10. Cash flow

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Accounting equation
Asset

$ 150

Liability

$ 50

Capital

$ 100

In short , you can say : A = L + C , where A for Asset , L for liability

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And C for capital

Not a correct Accounting

equation
Asset

$ 150

Liability

$ 50

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Capital

$ 50

T-Format for Accounting Equation

Company name
Accounting Equation
Date

Asset =

Liability +

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Capital

Explanation

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A Sample Question for Accounting

Equation
Barones Repair shop was started on May 1 by Nancy Barone.
A summary of May Transactions is presented below

1. Invested $ 10,000 cash to start the repair shop.

2. Purchased equipment for $ 5,000 cash.
3. Unpaid $ 400 for May office rent.

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Sample answer for Accounting

Equation
Barones Repair shop
Accounting Equation
Date

Asset =

Liability +

Capital

Explanation

May 1

Cash $ 10,000

Barones
Capital
$10,000

Capital
Investment

May 2

Cash $ 5,000
Equipment
$ 5,000

Barones
Capital
$10,000

Purchased
Equipment

May 3

Cash $ 5,000
Equipment
$ 5,000

Office rent
payable
$ 400

Barones
Capital $9,600

office rent
On account

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Basic theory
There are some economic characteristics in
Accounting ...
1. Asset
2. Expense including withdraw
3. Liability
4. Capital
5. Revenue
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1. Asset

Asset are those things that help us to

generate revenue or which have market value.
Some Example of asset
Cash , Building , machines , Land , vehicle car
Accounts /Notes receivable
Equipment , Supplies ( pen , pencil etc )
Prepaid Insurance , Inventory

Land , Tree garden , crystal or coal etc.

Etc.
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2. Expense

The payment of asset for getting revenue

or maintaining the daily operations is called
Expense.
Some Example of Expense
Withdraw / drawing
Salaries expense , supplies expense , Rent expense ,
Travel expense Insurance expense , Advertising
expense, interest expense , Depreciation expense etc.

Utility bill / expense ( electric bill , gas bill etc. )

Etc.
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3. Liability

Liability means which has a claim against

the asset and the business must have to pay
that thing.

Identifying liabilities

On account / Accounts payable

On notes / Notes payable
On credit
Accrued
Outstanding
Due
Incurred
Etc.
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4. Capital

Anything which are invested by the

owner of the business is called capital . Capital
can be increased by the revenue and
decreased by the expense . Capital is also
called equity and proprietorship.

Identifying capital
Investment , Capital Etc.
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5. Revenue

By selling product or performing services

business get something from customer , that
is called Revenue .

Identifying Revenue
service revenue , rent
revenue , Admissions revenue
Etc.
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Now again back to the answer...

Barones Repair shop
Accounting Equation
Date

Asset =

Liability +

Capital

Explanation

May 1

Cash $ 10,000

Barones
Capital
$10,000

Capital
Investment

May 2

Cash $ 5,000
Equipment
$ 5,000

Barones
Capital
$10,000

Purchased
Equipment

May 3

Cash $ 5,000
Equipment
$ 5,000

Office rent
payable
$ 400

Barones
Capital $9,600

office rent
On account

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Test 1
Questions

[Classify each item based on its economic

characteristics.]
1. Cost of renting property
2. Truck purchased
3. Notes payable
4. Amount earned from providing service
5. Amounts owed to suppliers
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Test 1

Solution
1. Cost of renting property: Expense.
2. Truck purchased: Asset.
3. Notes payable: Liabilities.
4. Amount earned from providing service: Revenue.
5. Amounts owed to suppliers: Liabilities.

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Test - 2
Cash , Building , machines , Equipment , Supplies ,Prepaid Insurance ,
Inventory , Land ,Accounts /Notes receivable, Land , Tree garden , service
revenue , rent revenue , Admissions revenue On account / Accounts
payable, On notes / Notes payable, On credit, Accrued , Outstanding ,
Due, Incurred , Investment
Now put this account titles into the following table :
st

(1 one is done for you)

Asset

Liability

Capital

Cash

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Thats all from me. Thank you very much for

watching my video. If you find out any error
on my video then I do apologies for that. If
you have any comment about the related
topic then feel free to contact with me.
Contact details
Anisul islam
CSE 33rd batch
Leading university
01710444700
anisul2010s@yahoo.co.uk

Journal formula
When increase

Dr.

When decrease

Cr.

Dr.

Cr.

Asset

Liability

Liability

Asset

Expense

Capital/Revenue

Capital/Revenue

Expense

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Format for General Journal

Company name
General journal
Date

Account title
and
explanation

Ref

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Debit ($)

Credit ($)

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Sample for General Journal

Miller deliveries
General journal
Date

June 1,2008

Account titles
and
explanation

Ref

Cash

Debit ($)

$ 10,000

Millerss capital

Credit ($)

$ 10,000

( Capital
investment )
To be
continue......

.....................

......................

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.......................

....................

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Format for General Ledger

Date

explanation

Company name
General Ledger
cash
Ref
Debit ($)

Credit ($)

Balance ($)

Credit ($)

Balance ($)

capital
Date

To be
continue......

explanation

.....................

Ref

Debit ($)

......................
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.......................

....................
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Sample for General Ledger

Date

Miller deliveries
General Ledger
cash
Ref
Debit ($)

explanation

June 1,2008

June 2,2008

June 2,2008

June 2,2008

$ 10,000

Credit ($)

Balance ($)

$ 10,000

$ 2,000

$ 8,000

$ 500

$ 7,500

$ 1,250

$ 8,750

capital
Date

To be
continue......

explanation

Ref

.....................

Debit ($)

......................
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Credit ($)

.......................

Balance ($)

....................
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Format for Trial balance

Company name
Trial balance
Date
Serial no.

Account titles

Ref

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Debit ($)

Credit ($)

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Sample for Trial balance

Company name
Trial balance
Date
Serial no.

Account titles

Ref

Debit ($)

Credit ($)

Capital

22,500

Purchase

15,000

Accounts
receivable

8,000

To be
continue......

.....................

......................
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.......................

....................
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Format for Adjusting Journal

Company name
Adjusting journal
Date
Date

Account title
and
explanation

Ref

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Debit ($)

Credit ($)

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Question for Adjusting journal

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Sample answer for Adjusting Journal

MASASI COMPANY
Adjusting journal
June 30,2008
Date
June 30,2008

Account titles and

explanation

Ref

Debit ($)

Credit ($)

Supplies expense

1,400

Supplies

Utilities expense

150

Utility payable

150

1,400

( supplies adjusted )
June 30,2008

( utility expense adjusted )

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June 30,2008

Insurance expense

250

Prepaid insurance

250

(Prepaid insurance
adjusted )
June 30,2008

Unearned service Revenue

Service revenue

2,500

2,500

(Service revenue
adjusted )
June 30,2008

Salaries expense

Salaries Payable

2,000

2,000

(salaries expense
adjusted )

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June 30,2008

Depreciation expense
office equipment

250

Accumulated Depreciation
office equipment

250

(Depreciation on office
equipment adjusted)
June 30,2008

Accounts Receivable

Service revenue

1,500

1,500

(Service revenue adjusted)

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Format for Worksheet

Company name
Worksheet
Date
Account
titles

Trial
Balance
DEBIT

CREDIT

Adjusted
Trial
Balance

Adjustment

DEBIT

CREDIT

DEBIT

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CREDIT

Income
statement
DEBIT

CREDIT

Balance
sheet
DEBIT

CREDIT

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Formula for Income statement

Income
Expense
Revenue

Dr.

Cr.

Expense

Revenue
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Formula for Balance sheet

Dr.

Cr.

Asset

Liability

Withdraw

capital

Accumulated
depreciation
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Question for Worksheet

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Sample for Worksheet

MASASI COMPANY
Worksheet
June 30,2008
S
N

Account titles

Trial
Balance

Adjusted
Trial
Income Balance
Adjustment
Balance statement sheet

DEBIT
($)

CREDIT
($)

DEBIT
($)

CREDIT DEBIT CREDI DEBIT CREDI DEBIT CREDI

($)
($)
T
($)
T
($)
T
($)
($)
($)

Cash

7,150

7,150

7,150

Accounts Receivable

6,000

1,000

7,000

7,000

Supplies

2,000

1,400

600

600

Prepaid Insurance

3,000

2,750

2,750

- islam 250
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S
Account titles Trial Balance
N
Dr.
($)

Adjustment

Adjusted
Trial
Balance

Income
stateme
nt

Balance
sheet

Cr.
($)

Dr.
($)

Cr.
($)

Dr.
($)

Cr.
($)

Dr.
($)

Cr.
($)

Dr.
($)

Cr.
($)

250

15,000
-

250

15,000
-

250

4,500

4,500

4,500

4,000

2,500

1,500

1,500

2,000

2,000

2,000

10 Utilities payable

150

150

150

11 T.Masasi , Capital

- 21,750

21,750

21,750

5
6

7
8
9

Office equipment
Accumulated
depreciation-office
equipment
Accounts payable
Unearned service
revenue
Salaries payable

15,000
-

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S
N

Account titles

Trial
Balance

Adjusted
Trial
Income
Adjustment Balance statement Balance
sheet

DEBIT
($)

CREDIT
($)

DEBIT
($)

CREDI
T
($)

DEBIT
($)

CREDI
T
($)

DEBIT
($)

CREDIT
($)

DEBI
T
($)

CREDI
T
($)

12 Service revenue

7,900

2500+
1000

11,400

11,400

13 Supplies expense

1,400

1,400

1,400

250

250

250

250

14 Depreciation expense

250

250

16 Salaries expense

4,000

2,000

6,000

6,000

17 Rent expense

1,000

1,000

1,000

15 Insurance expense

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S
N

Account titles

Trial
Balance

Adjusted
Trial
Income
Adjustment Balance statement Balance
sheet

DEBIT
($)

CREDIT
($)

DEBIT
($)

CREDIT
($)

DEBIT
($)

CREDI
T
($)

DEBIT
($)

CREDI
T
($)

DEBIT
($)

CREDI
T
($)

150

150

150

38,150

38,150

9,050

11,400

32,500

30,150

20 Net Income

2,350

2,350

Totals

38,150

38,150

7,550

7,550

41,550

41,550

11,400

11,400

32,500

32,500

18 Utilities expense
19 Total

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Format for Income statement-1

Company name
Income statement
date
Particulars

Amount($)

Sales
(-)Sales returns
(-)Sales discounts
(-)Sales allowances
(-)Sales commissions
(-)Freight out
=Total sales Revenue(a)
Opening /Merchandise Inventory(b)
Purchases
(-)Purchases returns
(-)Purchases discounts
(-)Purchases allowances
(-)Purchase commissions
(+)Freight in
=Total purchases(c)

=Goods available for sale(d=b+c)

(-)Closing /Merchandise inventory
=Cost of goods sold(e)
Gross profit / loss
(f=a-e)

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Format for Income statement-2

Administrative expense

Amount($)

Here all the Administrative expense will

be entered

=total(g)
Selling expense

Amount($)

Here all the selling expense will be

entered
=total(h)
Gross profit / loss(f)

(-)Total operating Expense(g+h)

(-)Interest expense
(+)Interest revenue
= Net Profit /Loss

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Sample answer Income statement-1

Metro Departmental store
Income statement
November 30,1996

Particulars

Amount($)

Sales
(-)Sales returns & allowances

860,000
(10,000)

=Total sales Revenue(a)

850,000

Opening /Merchandise Inventory(b)

34,360

Purchases
(-)Purchases returns & allowances
(-)Purchase Discounts
(+)Freight in

640,000
(3,000)
(7,000)
5,060

=Total purchases(c)

635,060

=Goods available for sale(d=b+c)

(-)Closing /Merchandise inventory

669,420
36,200
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Sample answer Income statement-2

Administrative expense

Amount($)

Salaries expense
Insurance expense
Rent expense
Utilities expense
Property tax expense
Depreciation expense-store equipment

84,000
4,500
19,000
10,600
3,500
9,500

=total(g)

131,100

Selling expense

Amount($)

Salaries expense
Insurance expense
Delivery expense
Depreciation expense-delivery
equipment
Sales commission expense

36,000
4,500
8,200
4,000

=total(h)

14,000

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66,700

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Sample answer Income statement-3

Gross profit / loss(f)

216,780

(-)Total operating Expense(g+h)

(197,800)

(-)Interest expense

(8,000)

(+)Interest revenue

5,000

= Net Profit /Loss

15,980

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Format for Balance sheet

Company name
Balance sheet
Date
Asset
Short term asset
cash
Accounts receivable
notes receivable
Closing inventory

Amount($)

Liability & capital

Short term liability
*payable
Unearned revenue
others
Total short term liability(a)

Prepaid *expense
supply
others
Total short term asset(a)

Long term liability

Mortgage loan
others
Total long term liability(b)

Long term asset

land
equipment
Less: Accumulated depreciation

Total liability ( c = a + b )
Equity
Capital
Less : withdraw

others

Add : profit or
Less : loss
Total capital(d)
Total liability and capital
(c +d)

Total long term asset(b)

Total asset ( c = a + b )
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Amount

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Sample answer for Balance sheet

Asset
Short term asset
cash
Accounts receivable
Closing inventory
Prepaid Insurance
= Total short term asset(a)
Long term asset
Delivery Equipment(57,000)
(-)Accumulated depreciation on delivery
equipment(19,680)
Store Equipment(125,000)
(-)Accumulated depreciation on delivery
equipment(41,800)
= Total long term asset(b)

Total asset ( c = a + b )

Metro Department store

Balance sheet
November 30,1996
Amount($)
Liability & capital
8,000
11,770
36,200
4,500
60,470

Short term liability

Accounts payable
Notes payable
Property taxes payable
Sales commissions payable
= Total short term liability(a)
Long term liability

Amount($)
37,310
46,000
3,500
6,000
92.810

37,320
83,200

120,520

= Total long term liability(b)

= Total liability ( c = a + b )

Capital(84,200)
(-)withdraw(12,000)
profit
Total capital(d)
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180,990
Total liability and capital
(c +d)

0
92,810
72,200
15,980
88,180
180,990

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