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  • Accounting Mechanics: DR Amit Kumar Sinha

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    Amit Sinha
    16 Ansichten11 Seiten
    This document discusses accounting principles including: 1) The accounting equation that assets equal liabilities plus equity. 2) The double-entry system where every transaction has equal debits and credits. 3) An example transaction of a business owner contributing $30,000 cash as equity with corresponding journal and ledger entries debiting cash and crediting equity.

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    accounting_mechanics

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    This document discusses accounting principles including: 1) The accounting equation that assets equal liabilities plus equity. 2) The double-entry system where every transaction has equal debits and credits. 3) An example transaction of a business owner contributing $30,000 cash as equity with corresponding journal and ledger entries debiting cash and crediting equity.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Als PPT, PDF, TXT herunterladen oder online auf Scribd lesen
    Markieren Sie unangemessene Inhalte
    16 Ansichten11 Seiten

    Accounting Mechanics: DR Amit Kumar Sinha

    Hochgeladen von

    Amit Sinha
    This document discusses accounting principles including: 1) The accounting equation that assets equal liabilities plus equity. 2) The double-entry system where every transaction has equal debits and credits. 3) An example transaction of a business owner contributing $30,000 cash as equity with corresponding journal and ledger entries debiting cash and crediting equity.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Als PPT, PDF, TXT herunterladen oder online auf Scribd lesen
    Markieren Sie unangemessene Inhalte
    von 11

    A man who cannot make mistakes cannot do anything.

    (Bernard's Bingo Magazine)

    ACCOUNTING MECHANICS
    Dr Amit Kumar Sinha
    aksinha1@amity.edu
    1

    ACCOUNTING EQUIVALENCE

    Assets = Owners Equity + Outside Liabilities

    A = OE + OL
    2

    DOUBLE ENTRY SYSTEM

    A = OE + OL
    Debit = Credit
    In the double-entry accounting system, every transaction is recorded by equal amounts of debits and credits.
    3

    ACCOUNTANTS LIFE

    A = OE + OL
    ASSETS Debit Credit for for Increase Decrease
    ASSETS LIABILITIES Debit Credit for for Decrease Increase LIABILITIES

    EQUITIES Debit Credit for for Decrease Increase


    EQUITIES

    Debit

    Credit

    Debit

    Credit

    Debit

    Credit

    ACCOUNTING CYCLE
    1. Business Transaction 2. Transaction is recorded in document

    3. 4. 5. 6. 7.

    (Voucher / Receipt) Analyze the transaction location ? Journal Entry Ledger Accounts (or T account) Trial Balance Balance Sheet, P&L A/c, Cash Flow Statement

    ACCOUNTANTS ROUTINE

    Transaction

    Source documents

    Analyze

    Balance Sheet P & L A/c Cash Flow Prepare a trial balance

    Post to the ledger

    Journal Entry
    6

    ACCOUNTANTS ROUTINE

    Transaction

    Source documents

    Analyze

    Balance Sheet P & L A/c Cash Flow Prepare a trial balance

    Post to the ledger

    Journal Entry
    7

    TRANSACTION-1
    Chirag started business with cash $ 30,000.
    The accounts involved are: (1) Cash (asset) (2) Owners Equity (equity)
    Assets Cash Supplies Equipment 30000 = OE Accounts Notes Payable Payabl + (1) OL Owners' Capital 30000

    30000

    0 30000

    0 =

    0 30000

    30000

    TRANSACTION-1
    EQUITIES ASSETS Chirag started business with cash Rs. 30,000.

    The accounts involved are: Debit Debit Credit (1) Cash (asset) (2) Owners Equity (equity)

    Credit

    +
    Page 1

    JOURNAL ENTRY
    Date 2001 Dec. 1 Cash Particulars LF Debit 30,000

    Credit

    To Capital Investment by owner

    30,000
    9

    TRANSACTION-1 - LEDGER
    JOURNAL ENTRY
    Date 2001 Dec. 1 Cash Particulars LF Debit 30,000 30,000

    Page 1
    Credit

    To Capital Investment by owner Dec. 2 Supplies Cash Purchased store supplies Cash for cash (1) 30,000 2,500

    2,500

    Capital
    (1)

    30,000

    10

    Thank You

    Now, was that debits to the left or credits to the left? I sure wish I had paid more attention in class!

    Email: dramitksinha@gmail.com

    11

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