Sheet (2)

Tegara English
First year

Financial
Accounting

Groub: Faculty of Commerce English Section

& BIS Department

Edited by Dr/ Magdy Kamel

Tel/ 01273949660

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Accounting equation ‫المعادلة المحاسبية‬
Assets = liabilities + owner’s equity
Assets are property or resources owned by business
‫االصول هى ممتلكات المشروع‬
Liabilities are debts on the enterprise ‫االلتزامات هى ديون على المشروع‬

Owner’s equity :which represent the owner’s claim to the assets

of the business ‫حقوق الملكيه تمثل نصيب المالك من اصول المشروع‬

Example :
Total assets = 7,000,000 , Total liabilities = 2,000,000
Required
Determine the owner’s equity
Solution
Assets = liabilities + owner’s equity
7,000,000 = 2,000,000 + owner’s equity
Owner’s equity = 7,000,000 – 2,000,000 = 5,000,000
First: assets ‫االصول او ممتلكات لينا‬
A) Current Assets ( Short Term Assets)  Less than one year
)‫اصول متداولة او قصيره االجل (عمرها اقل من سنة‬
 Cash
 Accounts Receivable ) ‫( فلوس لينا عند العمالء بضمان شخص‬
 Notes Receivable ) ‫كمبياله تستحق التحصيل ( فلوس لينا عند العمالء بكمبيالة‬
 Inventory ‫بضاعه‬
 Shop Supplies ‫مستلزمات ومهام المشروع‬
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  Prepaid expense ً ‫مصروفات مدفوعة مقدما‬
B) Fixed Assets (Long Term Assets )  more than one year
)‫اصول ثابتة (اصول طويلة االجل ) (عمرها اكترمن سنة‬
 1) Land ‫ارض‬
 2) Building ‫مبنى‬
 3) Machine ‫االالت‬
 4) Equipment ‫معدات‬
 5) Furniture ‫أثاث‬
 6) Vehicles ‫مركبات او عربة‬
 7) Trucks

Liabilities ‫االلتزامات‬
A) Current Liabilities ( Short Term Liabilities ) ‫االلتزامات صصيه االلل‬

 Accounts Payable ) ‫اوراق تستحق الدفع ( فلوس عليا بضمان شخصى‬

 Notes Payable ) ‫كمبيالة تستحق الدفع ( فلوس عليا بورق رسمى‬
 Loan Payable ( less than one year )
B) Long Term Liabilities (More Than One Year) ‫االلتزامات طويلة‬
‫االجل‬
 mortgage loans ‫قروض عقارية‬
 loan payable (more than one year) ‫قروض طويله االجل‬

Owner’s equity ‫حقوق ملكية‬

 capital ‫راس المال‬

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Notes
 Assets  1-20 of which a) Current assets : from 1 - 10
b) Fixed assets : from 11 - 20
 Liabilities  21-30 of which a) Current liabilities : from 21 - 26
b) Long term liabilities : from 27 - 30
 Owner’s equity  31 - 32 Capital  31 & Drawing  32
 Revenues  33 - 40
 Expenses  41 – 60

System of double entry ‫نظام القيد المزدوج‬

Debit credit
Left side right side

 Assets increase debit ( dr.) ‫طبيعتها لما تزيد‬

 Expenses
 Drawings decrease credit (Cr.)

 liabilities increase credit ‫طبيعتها لما تزيد‬

 owner’s equity
 revenue decrease debit

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Example (1) lecture
1/1: Ahmed started his business by depositing 100,000 in cash
5/1: equipment purchased amounted to 30,000 paid in cash
9/1: furniture purchased 20,000 of which 5,000 paid in cash &
the remaining on credit
15/1: equipment purchased amount to 20,000 of which 5,000 paid
in cash and the remaining for note due after one month.
21/1: service rendered to some customers amounted to 15,000
collected in cash.
27/1: 5,000 paid in cash salary of employees
31/1: paid in cash 10,000 from accounts payable.
Solution
Date Assets Liabilities Owner's
equity
Cash Equipment Furniture Accounts Notes Capital
Payable payable
1/1 100,000 100,000
5/1 (30,000) 30,000
Balance 70,000 30,000 100,000
9/1 (5,000) 20,000 15,000
Balance 65,000 30,000 20,000 15,000 100,000
15/1 (5,000) 20,000 15,000
Balance 60,000 50,000 20,000 15,000 15,000 100,000
21/1 15,000 15,000
Balance 75,000 50,000 20,000 15,000 15,000 115,000
27/1 (5,000) (5,000)
Balance 70,000 50,000 20,000 15,000 15,000 110,000
31/1 (10,000) (10,000)
Balance 60,000 50,000 20,000 5,000 15,000 110,000

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 Accounting Cycle ‫الدوه المحاسبية‬
1) Recording the financial transaction in general journal.
‫تسجيل العمليات المالية فى دفتر اليومية العامة‬
2) Posting the general entries to general ledger
‫نقل القيود اليوميه الى دفتر االستاذ العام‬
 First: Running Balance  second: T- Account
3) Preparing the trial balance. ‫اعداد ميزان المراجعة‬
4) Adjustment and adjusting entries. ‫التسويات وقيود التسوية‬
5) Preparing adjusted trial balance ‫اعداد ميزانيه المراجعه بعد التعديل‬
6) Preparing the financial statements ‫اعداد القوائم المالية‬
7) Closing entries ‫قيود االقفال‬

1) recording the financial transaction in the general journal

Example (2)
The following transaction take place during the month of june
June 1, Ahmed started his business by depositing 60,000 in cash
June 2, Furniture purchased amounted to 8,000, paid in cash 3,000 and
the rest for note payable after two months.

June 5, Services rendered to some customers for 5,000 , collected 1,000

in cash and the remaining on account.

June 8, Ahmed withdrew 1,000 in cash for personal use

June 12, Equipment purchased amounted to 12,000 of which made 3,000 a
cash down payment and the remaining is due within 10 days.

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June 15, Ahmed made an additional investment in the business by
depositing 15,000 in cash

June 19, Collected the remaining amount for services rendered on june 5
June 22, Paid in cash the accounts payable due from 12/6.
June 25, Services provided to some customers for 9,000 , collected 2,000
in cash and the balance for notes receivable after one month

June 27, Paid in cash the rent expense amounted to 1,500.

June 30, Paid in cash the salaries expenses 6,000.
Required
Prepare the journal entries in general journal.

Solution
Journal entries
Date Account title Acc- debit credit
no
1/6 Cash 1 60,000
Ahmed, Capital 31 60,000
2/6 Furniture 12 8,000
Cash 1 3,000
Notes Payable 22 5,000
5/6 Cash 1 1,000
Accounts Receivable 2 4,000
Service Revenue 33 5,000
8/6 Ahmed, Drawing 32 1,000
Cash 1 1,000

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 12/6 Equipment 13 12,000
Cash 1 3,000
Accounts Payable 21 9,000
15/6 Cash 1 15,000
Ahmed, Capital 31 15,000
19/6 Cash 1 4,000
Accounts Receivable 2 4,000
22/6 Accounts Payable 21 9,000
Cash 1 9,000
25/6 Cash 1 2,000
Notes Receivable 3 7,000
Service Revenue 33 9,000
27/6 Rent Expense 41 1,500
Cash 1 1,500
30/6 Salaries Expense 42 6,000
Cash 1 6,000

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Example (3)
Nouran organized a business to provide boat repair services. The business
transactions during the month of may are described below:
May 1 nouran opened a bank account in the name of the business by
depositing $50,000 in cash.
May 4 purchased equipments from Gold Star Company for 10,000. Cash
down payment of $4,000 was made, the remaining to be paid after
15 days.
May 7 made repairs to some customers for $3,000, collected $500 in cash,
and the remaining balance billed to customers and due within 10 days.
May 10 nouran withdraw $1,000 cash for personal use.
May 13 made repair services to some customers for $2,500, collected
$1,000 in cash, and the remaining balance for note due after 40 days.
May 17 collected the amount billed to customers on may 7.
May 19 paid the remaining amount owned to Gold Star Company
May 23 Nouran made an additional investment in the business by
depositing $5,000 cash in the company bank account
May 25 purchased additional equipments from Gold Star Company for
$15,000 of which $2,000 paid in cash, $3,000 to be paid after 10
days, and the remaining for note due after 2 months.
May 28 paid in cash $1,000 a rent expense for the month of may.
May 31 paid in cash $2,000 salaries expenses to employees for services
rendered during may.
Instructions
Prepare journal entries required to record the above transactions
Solution
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Journal Entries

Date Account Title Acc Debit Credit

No
1/5 Cash 1 50,000
Nouran,Capital 31 50,000
4/5 Equipment 13 10,000
Cash 1 4,000
Accounts Payable 21 6,000
7/5 Cash 1 500
Accounts Receivable 2 2,500
Repair Service Revenue 33 3,000
10/5 Nouran,Drawing 32 1,000
Cash 1 1,000
13/5 Cash 1 1,000
Notes Receivable 3 1,500
Repair Service Revenue 33 2,500
17/5 Cash 1 2,500
Accounts Receivable 2 2,500
19/5 Accounts Payable 21 6,000
Cash 1 6,000
23/5 Cash 1 5,000
Nouran, Capital 31 5,000
25/5 Equipment 13 15,000
Cash 1 2,000
Accounts Payable 21 3,000
Notes Payable 22 10,000
28/5 Rent Expense 41 1,000
Cash 1 1,000
31/5 Salaries Expense 42 2,000
Cash 1 2,000

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