Accounting

Is the process of calculating, Manipulating, Summarizing, Recording, analyzing the daily transactions of
any firm or company to show out its financial position.

Head of Accounts Debit Credit

Assets Increase Decrease

Liabilities Decrease Increase

Expense (I.S) Increase Decrease

Equity Decrease Increase

Revenue (I.S) Decrease Increase

Assets (Debit)
Purchased Furniture for cash Rs.25000

Debit Credit

Furniture 25000

Cash 25000

Sold Furniture for cash Rs.25000

Debit Credit

Cash 25000

Furniture 25000

Sold Furniture on account/On Credit/To customer/Mr. Saad Rs.25000

Debit Credit

Acct Receivable 25000

Furniture 25000

Received/Collection from Customer/Mr. Saad Rs 25000

Debit Credit
Cash 25000

Acct Receivable 25000

Liabilities (Cr)
Purchased Furniture on account/On Credit/To Supplier/Vendor/Mr. Saad Rs.25000

Debit Credit

Furniture 25000

Acct payable (Liabilities) 25000

Paid to Vendor/Supplier/Mr. Saad Rs 25000

Debit Credit

Acct payable 25000

Cash 25000

Expense (Dr)
Paid Rent Expense for the month Rs.3000

Debit Credit

Rent Expense 25000

Cash 25000

Paid Rent Expense for the month by Cheque Rs.3000

Debit Credit

Rent Expense 25000

Bank 25000
Equity (Cr)
Capital (Cr) Investment

Drawing (Dr) Withdrew for personal use

Proprietor/Mr Zia invested/ Commenced/Established/Started a Business with cash investment Rs.10000

Debit Credit

Cash 25000

Capital 25000

Withdrew cash from business by proprietor for personal/private use Rs.10000

Debit Credit

Drawing 25000

Cash 25000

Revenue (Cr)
Received/ Collected cash for service income Rs.5000

Debit Credit

Cash 5000

Service Income 5000

  Assets (Any resource by which we run the business) Debit)
o Current Assets (Change within a year)
 Cash
 Petty Cash
 Bank
 Acct Receivable (Due of Customers or Debtor, Collection time 3 months)
 Merchandise Inventory (Reselling assets)
 Supplies (Stationary)
 Prepaid Rent
o Fixed Assets (Remain same for more than 1 year)
 Furniture
 Machinery Depreciation Expense
 Equipment
 Building
 Land (Depletion, Natural Resources)

Contra Assets (Credit)

Allowance for Depreciation

Allowance for Bad debts

 Liabilities (Credit)

o Acct Payable
o Notes Payable
o Bank Loan
o Salaries Payable
o Unearned income
o Interest Payable
Owner’s Equity
Capital (Credit)
Drawing (Debit)

 Expense (Debit)
o Rent Expense
o Salaries Expense
o Insurance Expense
o Advertisement Expense
o Interest Expense
o Taxes Expense
o Bank Charges

 Revenue /Income (Credit)

o Sales
o Purchase return
o Purchase Discount
o Service Income
o Commission Income
o Consultant Income
o Fees Income
o Rent Income
o Ticketing Income

 Cost of Goods Sold (Debit)

o Purchases
o Sales Return
o Sales Discount
 Income Statement = Sales- Cost of Goods Sold = Gross Profit- Operating Expense = Net
Profit/Loss

Balance Sheet

Assets = Liabilities + Owner’s Equity

5000 = 1000+ (2000+2000)

Income Statement = Revenue – Expense = Net profit/Loss

Income statement = 10000-9000= 2000