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Accounting Assignment

Accounting Equation:
The fundamental accounting equation, also called the balance sheet equation, represents the relationship between the
assets, liabilities, and owner's equity of a person or business.

Asset = liabilities + Equity

What is Asset:
In financial accounting, an asset is any resource owned by the business . Anything tangible or intangible that can be
owned or controlled to produce value and that is held by a company to produce positive economic value is an asset

Define Liabilities:
A liability is defined as a company's legal financial debts or obligations that arise during the course of business
operations. Liabilities are settled over time through the transfer of economic benefits including money, goods or
services. Recorded on the right side of the balance sheet, liabilities include loans, accounts payable, mortgages,
deferred revenues and accrued expenses.

Notes Payable.

Accounts Payable.

Define Equity:
In accounting, is the difference between the value of the assets and the value of the liabilities of something owned. It
is governed by the following equation:

Equity = assets - liabilities

if someone owns a car worth $15,000 (an asset), but owes $5,000 on a loan against that car (a liability), the car
represents $10,000 of equity.

Define revenue:
Revenue is the income that a business has from its normal business activities, usually from the sale of goods and
services to customers. Revenue is also referred to as sales or turnover. Some companies receive revenue from
interest, royalties, or other fees.

Example: Provide services to the patient and earn profit.

In common word expenses is an outflow of money to another person or group to pay for an item or service, or for a
category of costs.

Pay electric bill.

Shop rent.

Habib Ullah Sadiq is wholesale trader; following transactions are record in Accounting
1. Commence business with cash Rs 50,000.

2. Bought medicine for cash Rs. 20,000

3. Paid 10,000 for furniture.

4. Purchase medicine of Rs.5000 on account.

5. Paid expenses of Rs. 20,000.

Accounting Equation Asset Liabilities + Equity
Cash + Medicine + Furniture
1 50,000 50,000
2 20,000 -20,000
Bal 50,000 50,000
3 -10,000 +10,000
Bal 50,000 50,000
4 5,000 5,000
Bal 55,000 55,000
5 -20,000
Bal 35,000 35,000