FUNDAMENTALS OF

ACCOUNTING

LECTURE NO.3
Fixed Assets:
• Building
• Land
• Factory
• Shops
• Furniture & Fixtures
• Tools
• Automobile
• Equipment
• Machinery
Intangible Assets:
• Goodwill
• Trademark
• Patents
• Copyrights
LIABILITIES:

1. Current Liabilities

2. Long-term Liabilities
Current Liabilities
• Account Payable
• Bill Payable
• Notes Payable
• Salaries/ Wages Payable
• Mortgage Payable
• Advance from Customer (Cr. Balance)
• Bank Overdraft
• Unearned Commission
Long-term Liabilities
• Bank Loan
• Bonds Payable
• Debentures Payable
• Notes Payable (Due more than a Year)
Expenses
• Purchases
• Purchase Discount (Contra Account)
• Purchase Return & Allowances (Contra A/c)
• Salaries or Wages Expenses
• Advertising/ Insurance/ Commission/ Rent/
Interest/ services/Fee Expenses
Revenues
• Sales
• Sale Discount (Contra A/c)
• Sale Return & Allowance (Contra A/c)
• Commission/ Rent/ Interest/ services/ Fee Income
OWNER’S EQUITY:

• Capital

• Drawing
Business Transaction
Transaction means give and take.
All the business events are called transaction.
Or
Value exchange between two or more parties called
transaction.
Accounting System
■ Single Entry Accounting System
■ Double Entry Accounting System
Double Entry Accounting System
Every business transaction has two fold effects. They
may be that the both effects are increasing, both are
decreasing or one is increasing and other is
decreasing. But it is necessary that one is on the
debit side and other on the credit side.
This universal recording system is known as Double
entry accounting system.
 Account

Debit Credit

Dr. Cr.
Rules of Debit and Credit