FINANCIAL ACCOUNTING

INFORMATION PROCESS
REFERENCE:
ACCOUNTING ESSENTIALS I
VERON • ANASTACIO
 BUSINESS TRANSACTIONS

• Events which involve the exchange of

values between two or more parties
• Causes at least two changes in
accounts
• Always expressed in terms of money
 THE ACCOUNTING EQUATION

For Sole Proprietorship

ASSETS = LIABILITIES + CAPITAL

For Partnership
ASSETS = LIABILITIES + PARTNERS’ CAPITAL

For Corporation
ASSETS = LIABILITIES + SHAREHOLDERS’ EQUITY
 ACCOUNTING ELEMENTS

•ASSETS
•LIABILITIES
•CAPITAL
•REVENUE
•EXPENSES
 EXAMPLES

1. Owner invested cash into the business – BT

2. Hired new employees – NBT
3. Paid taxes and other business permits – BT
4. Purchased machineries for operations – BT
5. Closed contract for an audit engagement - NBT