Unit 3 GENERAL ACCOUNTING

UNIT 3
GENERAL ACCOUNTING
Objectives
• Present and discuss the basic concepts of Accounting and its organizational tools.
• Identify the equity components and equations.
• Recognize the concepts of accounting events, chart of accounts and balance sheet.
Contents
• Definition of Accounting and its equity components.
• Accounting event: definition and examples.
• Account and chart of accounts: definition, account elements, balance, classification and organization.
• What a trial balance is and its usefulness in the accounting practice routine.
Guidelines for the unit study

Before you start the study of this unit, please read the following guidelines:
1) For a better learning of the presented topics, we suggest that you consult the works listed in the bibliographical
references, presented at the end of this unit.
2) Be sure to access and study the complementary materials described in the Integrating Digital Content.
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© ACCOUNTING THEORY
UNIT 3 – GENERAL ACCOUNTING
1. INTRODUCTION
The purpose of this unit is to apply the basic concepts of general accounting. We
will present the definitions of accounting event, ledger account (its elements, balance and
classification), chart of accounts, and balance sheet.
Therefore, we will help you to understand, sufficiently, the accounting process, so that
you can interpret and analyze it properly.
2. BASIC REFERENCE CONTENT

The Basic Reference Content presents, in summary, the topics discussed in this unit. For
your full understanding, it is necessary to deepen the study of the Integrating Digital Content.
2.1. GENERAL ACCOUNTING
What is Accounting?
Many authors of the Accounting Theory, among them Iudícibus, Marion and Faria (2009)
and Lopes de Sá (2010), define the Accounting as a Social Science that aims to analyze, interpret
and record all events that affect the equity of an entity.
The scope of Accounting is the understanding, quantification, classification, registration,
demonstration and analysis of the changes suffered by the entity equity, as well as the
production and systematization of quantitative and qualitative information about the equity.
Its main objective is to ensure the control of this equity and provide its administrators,
owners and other users of the information necessary for the administration, regarding the
equity status and the result of the activities developed by the entity to achieve its purposes.
According to Iudícibus (2015), the Accounting uses various techniques to achieve its
goals:
• Bookkeeping: specific form of this science to record the equity occurrences.
• Financial Statements: expository statements to gather the facts in order to obtain
more information.
• Balance sheet analysis: technique to decompose, compare and interpret the financial
statements content by providing analytical information, which usefulness goes
beyond the administrator.
What is the object of Accounting?

Historically, the human being employs the Accounting since the emergence of property,
exchange system, money and trade. Its main goal was to control the owned assets and the
performed operations.
This need to control the assets has made the Accounting to evolve, adapting to each
time.
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The set of assets that a person or entity owns, from the clothes to the car or house, is
called equity. The equity is the main object of interest in the Accounting, which deals not only
with the elements that make up the equity, but also with the changes that are naturally faced.
According to Marion (2015), equity is the set of assets belonging to a person or entity.
It also consists of amounts receivable (or receivable money). For this reason, in Accounting,
these receivables are referred to as receivable rights or, simply, rights.
However, only relating the assets and rights, the real situation of a person or entity cannot be
identified. It is necessary to highlight the obligations (debts) concerning the assets and rights. For
example, if you say that you have as an asset an apartment and make no reference to the debt
with the mortgage lender (if it has been acquired through this credit system), your information is
incomplete and very little informative (MARION, 2015, n. p.).
Therefore, in Accounting, equity means the set of assets and rights belonging to a person
or entity, and also its obligations to be paid.
Equity of a Person or Entity

Assets and Rights Obligations (to be paid)
Assets: rights and obligations

From the Accounting point of view, it is important to characterize some components of
the Equity. Let’s see them.
Assets
According to Marion (2015), assets are understood as the useful things, able to meet the
people and institutions’ needs.
If the assets have a physical form, they are palpable, they are referred to as tangible
assets, for example: vehicles, real estate, goods inventory, money, furniture and utensils etc.
The non-physical assets, i.e. non-palpable, which do not constitute a physical reality, are
known as intangible assets. Normally, brands are a significant asset to companies (e.g.: Coca-
Cola, Bradesco) and the invention patents, copyright, trade points, are examples of intangible
assets (MARION, 2015).
According to Silva (2008), the assets can be classified as:
• Movable property: assets that can be moved from one place to another without
causing a destruction of the asset or place, that is, concrete objects, palpable and
physical, which are not fixed to the ground (SILVA, 2008). Example: money, vehicle,
furniture, utensils, machine, inventory, animal (with proper movement, self-moving).
• Immovable property: are assets that cannot be removed from its natural place
(linked to the soil and subsoil) without destruction or damage, i.e. those that, to be
displaced must be totally or partially destroyed (SILVA 2008). Example: tree, building,
land, construction.
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Rights
According to Marion (2015), in accounting, the right or receivable rights is understood
as the power to require something. This can be, for example, the value that an institution will
receive from a sale in the long term. The buyer has taken the goods; however, he has not paid
it yet. Then, the institution has the right to receive the corresponding value. This right is called
trade receivables.
Examples: trade receivables, wages receivables, rental receivables, accounts receivables,
security receivables.
Obligations
According to Marion (2015), the obligations are debts with other people or institutions.
In Accounting such debts are named payable obligations, i.e. obligations that will be claimed,
requiring the payment on the due date.
In case of a bank loan, the debtor owes to the bank (payable loans). If the debt is not
settled on the due date, the bank will require the payment.
When you purchase an asset on credit, it is integrated to the equity from the moment
the supplier delivers it. However, the institution now has an obligation with the supplier,
represented by an account payable equivalent to the asset price. So, on one side, there is
an increase in the assets (right) of the institution and, on the other hand, the increase of its
liability (obligation) (STICKNEY & WEIL, 2001).
Examples: Salaries payable, rents payable, accounts payable, vendor or trend payable
(for the purchase of goods on credit), tax payable (or taxes payable).
The readings listed in Topic 3. 1 discuss the General

Accounting. At this point, you must perform these readings to
learn more about the addressed topic.
2.2. NET EQUITY (NE)
When going to a large company, you can imagine how big the equity of this company
is. There is a possibility, however, that you are wrong, because, as we have seen, the equity
also involves obligations. The company may be on the verge of bankruptcy or totally in debt,
although the numbers of its equity are high. Therefore, we can conclude that the equity itself
does not measure the actual wealth of a company or institution.
So, it is necessary to know the net wealth of the person or entity: assets and rights are
added and, from this total, the obligations are subtracted; the result is the net wealth, that is,
the part that remains from the equity to the person or institution. The net wealth is called net
equity.
The net equity status represents what, in fact, the entity has. That is, its effective wealth,
what is left after paying all its debts (MARION, 2015).
The net equity is represented by the equation:
Net Equity = Assets + Rights - Obligations
For example, if the institution has a set of assets and rights in the amount of $100,000.00
and debts (obligations) in the amount of $40,000.00, its net equity will be $60,000.00.
Now let’s see how it will be shown in the equity statement. In the following representation,
Assets and Rights are put on the left and, on the right side, the Obligations and Net Equity.
Equity

Assets and Rights Obligations
R$ 100,000.00 R$ 40,000.00

Net Equity
R$ 60,000.00

Total: R$ 100,000.00 Total: R$100,000.00
Balance Sheet
The balance sheet or simply balance – one of the three main financial statements,
represents a “picture” of a company or institution investments (the assets), and these
investments financing (the liabilities and net equity) at a specific date and reflects the following
equality:
Assets = Liabilities + Net Equity
The balance sheet is graphically represented by two columns: on the left side it is named
Assets and on the right side the Liabilities. Remembering that naming the left column as Assets
and the right one as Liabilities is a mere convention (MARION 2015).
Please note below a diagram of the balance sheet:
BALANCE SHEET
Assets Liabilities
Assets Obligations
• Machines • Suppliers
• Vehicles • Payable salaries
• Inventory • Bank loans
• Money • Payable taxes
Rights Net Equity

• Receivables • Capital
• Bank deposits
Source: adapted from Marion (2015).
Figure 1 Balance Sheet.
Assets
According to Stickeney and Weil (2001), in Accounting, the set of assets and rights
controlled by the company or institution (which right use is owned by it) with the capacity or
potential to provide it future economic benefits are considered the assets.
Liability
The liabilities are the payable obligations, and namely, the company or institution liabilities
result from the fact that the company has previously received benefits (cash, inventories), and
it has to pay for it a certain amount on a future date (STICKENEY; WEIL, 2001).
Net Equity
This is the residual interest in the institution assets after deducting all its liabilities
(STICKENEY & WEIL, 2001).
At this point, you must complete the reading listed in

Topic 3. 2 to learn more about the studied topic.
2.3. EQUITY EQUATIONS
The equity status of an institution can be presented in different manners in the equity
equation:
Table 1 Equity status settings.

Assets = Liabilities + Net Equity Shows a normality situation of the company, because the set of assets and
rights surpasses the obligations (there is positive Net Equity (NE). Indicates
the existence of own wealth.
Asset = Net Equity (being a Liability = 0) Reveals the non-existence of debt. Therefore, all assets belong to partners.
Assets = Liabilities (and NE = 0) Reveals the non-existence of own capital, which means that the company
asset was fully financed with third-party resources. It is a state of alert. This
is a null or compensated situation.
Assets + Net Equity = Liability Shows that the company is in an insolvency status; part of the obligations
will not be paid, even if the company sells all its assets. That is, the asset
is not sufficient to settle all debts. To eliminate the deficit, the NE must be
increased with additional capital from its owners. This is a situation called
Unsecured Liability. This is an unfavorable, negative or deficit situation.
Source: adapted from Iudícibus (2010).
In summary, the assets, rights and obligations can be named equity components.
2.4. ACCOUNTING EVENT
Every institution practices acts considered administrative events. These events may or
may not interfere in its equity, whether in its qualitative or quantitative aspect. Example:
• Purchase of equipment for the production: this event interferes with the equity,
because the institution has acquired an asset.
• Submission of a price quote for its products in a public bid: this event does not
change the equity, because the institution has only expressed its intention to bid.
Events that interfere or change the equity composition are called accounting events.
Only these events interest to the Accounting.
The accounting event is, therefore, the dynamic element of the equity. All that the
institution needs to carry out its activities is represented by a set of accounting events. The
accounting events are classified into three groups: Permutative accounting events (qualitative
or compensatory), modificatory accounting events (or quantitative) and mixed accounting
events (or compound). Let’s see below each of them.
Permutative, qualitative or compensatory accounting events

Only the equity components (accounts) of the assets and/or liabilities are changed, or
only the net equity, without having the increase or decrease of this equity.
Examples:
1) Acquisition in cash of a computer for $ 2,000:
• The acquisition of a computer increases the assets.
• Payment in cash – decreases the Asset – Cash.
+ A (2,000) = - A (2,000)
2) Acquisition of goods on credit for resale in the amount of $ 100.00:
+ A (100) = + L (100)
3) Cash payment of a debt of $ 150, AP vendor:
- A (150) = - L (150)
4) Increase of share capital on $200, with the use of reserves:
- NE (200) = + NE (200)
Modificatory or qualitative accounting events

Cause variation in the net equity in an amount equal to the one that changed the Asset
or Liability and is:
• Increasing or positive, when causes the increase in the net equity (+NE).
• Diminutive, or negative, when causes the decrease in the net equity (-NE).
Examples:
1) Received $30 as a monetary correction of the value applied in investment fund:
+ A (30) = + NE (30)
2) Expiration of part of the debt to the creditor $ 70:
- L (70) = + NE (70)
3) Payment of salaries in the amount of $125:

- A (125) = - NE (125)
4) Record by the accrual basis of the rent corresponding to the month of December in
the amount of $175 not paid:
+ L (175) = - NE (175)
Mixed accounting event

Changes of equity components and, at the same time, changes the Net Equity to more
or less and is:
• Augmentative, or positive, when causes the increase in the net equity +NE.
• Diminutive, or negative, when causes the decrease in the net equity -NE.
Examples:
1) Sale of goods with profit: acquired by $100 and sold in cash by $120:
+ A (120) > - A (100) = + NE (20)
2) Debt payment to the supplier, using the financial discount (advance payment):
• Debt value: $ 350.
• Discount for advance payment: $ 10.
- L (350) > - A (340) = + NE (10)
3) Debt payment to supplier with legal additions:
• Recorded debt: $ 70.
• Legal additions: $ 10.
- A (80) > - L (70) = - NE (10)
4) Loan taken from XY Bank, with anticipated interest discount:
• Loan value: $ 200.
• ( - ) interests in advance: $ 20.
• Net value received: $ 180.
+ NE (200) > + A (180) = - NE (20)
The accounting event and the document

The accounting records all accounting events of the institution. For that, it is essential
that the event is represented by a document. Every accounting event must have a document
that evidences it.
However, some accounting events do not generate a document at the time they occur.
The accountant should create it to demonstrate the basis that gave rise to the accounting
event. Example: when the accountant records the depreciation of machinery and equipment
owned by the institution, he must make a series of calculations that will be archived in maps,
demonstrating the path adopted to reach the depreciation values recorded (calculation
memory). After the records, all documents must be archived, so that they can evidence the
events at any time.
Double-entry method
As we have said, an accounting event always causes at least two changes in the equity
of the institution. In order to record these changes, the accounting uses a specific method,
which we will discuss later. To better understand the meaning of debt and credit, suppose
the following accounting event: the institution buys a truck in the amount of $ 50,000.00
and makes the payment in cash. In this accounting event, the institution exchanged an asset
(money) for another asset (truck). It applied its resources on the purchase of a vehicle. The
origin of the resources used for the payment was the money that was available.
Purchase Payment
The vehicle that the institution The money that the institution
acquires and becomes part of its equity. uses to buy the truck. Indicates the
Indicates the application of resources: resources source: $50.000,00
$50.000,00
Accounting event: purchase of a truck in cash

Debt Credit
Resources application Resources origin
Vehicle $50,000.00 Money $50,000.00
The double-entry method, universally used by accounting, is based on the debt and
credit and establishes that:
1) For a single accounting event there are, mandatorily, a debt and a credit.
2) For each debt there are one or more credits of equal value.
3) For each credit there are one or more debts of equal value.
4) There is no debt(s) without the corresponding credit(s).
At this point, you must complete the reading listed in

Topic 3. 3 to learn more about the studied topic.
2.5. ACCOUNT
Each of the items that make up the equity and the operating result represents a series
of operation types that the Accounting must record. Therefore, we have accounting events
involving the movement of: assets, liabilities, net equity, expenses and revenues.
The groups of assets, liabilities, net equity, expenses and revenues are generic. In each
one there are several types of specific operations.
Now, if each of the mentioned operations represents an accounting event of different
nature, consequently, each one must be individually recorded, using a specific title. For
example, cash on hand will be represented by the account “cash”.
The following are examples of accounting representing individual events:
Accounting Event Account Name

Purchase of a machine Machinery and equipment
Deposit in current account Bank account movement – Bank X
Purchase of goods for resale Inventory of goods for resale
Receipt of interests Financial revenues – active interests
Once the account is created, all operations of a similar nature that the institution carries
out should be recorded in it. Therefore:
• If you buy a new machine, you must record the purchase in the account “Machinery
and equipment”.
• If you make new deposits or issues check of Bank X, you must record them in the
account “Bank account movement – Bank X”.
• If you buy goods for resale, you must record the purchase in the account “Inventory
of goods for resale”.
Also, you can represent several elements of similar characteristics in the same account,
which will receive the name that best represents the grouped elements (IUDÍCIBUS et al., 2010
p. 38). This often occurs in practice. Example:
a) The set formed by chair, desk, computer, printer, etc. can be recorded on a single
account named “Furniture and utensils”.
b) The set of small expenses, without the need to detail them can receive the name of
“Miscellaneous expenses” or “General expenses”.
c) Several receivable values, with no need for isolated representation, can be recorded
in the account “Receivable values” or “Accounts receivable”.
d) Several payable values, with no need for isolated representation, can be recorded in
the account “Payable values” or “Accounts payable”.
2.6. LEDGER
According to Iudícibus et al. (2010, p. 38):

In the past, the accounts were recorded on the pages of a book called “Ledger”. Then they started
being recorded in loose sheets or forms. Today they are in the computers’ memory. However, in
its set, whether kept in a book or file, or in a memory, they receive the name of “ledger”. The
important thing is that each account holds the movement record of the asset, liability or net equity
component that it refers to.
The ledger is only considered an auxiliary book. It is not ruled by law and, therefore, does
not obey the legal formalities that the general daily record is subject to. Its specific purpose
is to control, individually, each of the accounts used by the company or entity. The ledger
provides the debt and credit movements, and the relevant debt or credit balance.
Trial ledger
The trial ledger derives from the ledger, being a simplified version, a didactic feature of
the ledger. This is a resource that helps to understand the mechanics of accounting entries. On
the left side of the trial ledger the debts (debt balances) are entered, and on the right side the
credits (credit balances) are entered, and the account name is at the top of the “T”.
The T account, as described above, serves as a very useful graphic element in the
representation of each page of the ledger.
Below is a simplified model of a ledger form:
Date History Debt Credit Balance D/C
ACCOUNT NAME
Debt Credit
Debt balance Credit balance
So, on one side of the trial ledger the increases are recorded and, on the other, the
decreases. The account nature is what determines the side to be used for the increases and
the side to be used for decreases.
Asset accounts
The elements that make up the “assets” appear on the left side of the balance sheet.
Consistently, the asset accounts (assets and rights) should always show the debt balances, i.e.
on the left side.
For Iudícibus et al. (2010, p. 40):
It should be noted that an institution has or not assets and rights. There are no negative assets
or negative rights; therefore, the asset accounts have debt or null balance. For an asset account
(assets and rights) having a debt balance, it is required that the increases and decreases there
occurred are so recorded.
Any Asset Account

Debt Credit
$ Increases $ Decreases
Liability accounts
According to Iudícibus et al. (2010, p. 41):
As the liability accounts always appear on the right side of the balance sheet (and, therefore),
will always have a credit balance), here is the opposite of what happens with the assets. So, the
increases and decreases of the liabilities (obligations) should be recorded as follows:
Any Liability Account

Debt Credit
$ Decreases $ Increases
Net equity accounts

As the positive net equity occupies the right side of the balance sheet, the operation of
its account will be equal to the liabilities (IUDÍCIBUS et al., 2010, p. 41).
Any Net Equity Account

Debt Credit
$ Decreases $ Increases
Whenever:
• An institution has or not assets and rights; there are no negative assets or negative
rights. Therefore, the assets accounts have a debt or null balance;
• An institution has or not outstanding obligations; there is no negative debt. Therefore,
the liability accounts have a credit or null balance;
• The net equity [asset (-) liability], however, can be positive, null or negative.
Summarizing the mechanisms mentioned above, we can say that:
Table 2 – Summary of the Debt and Credit Mechanism.

ACCOUNTS An entry is made to:
Credit Debt
From To To
Asset Increase Decrease
Liability Decrease Increase
Net Equity Decrease Increase
2.7. ACCOUNT ELEMENTS
Creating an account or deciding which accounts will be used to record an accounting

event requires common sense and accurate examination of each situation.
Follow the examples and the reasoning used to analyze the accounting event and select
the accounts.
Example 1
Accounting event: the institution purchased goods to resell in the amount of $ 600.00
and made the payment in cash.
Reasoning: Where was the resource applied? It was applied to the purchase of goods
for resale. What is the origin of the resource that was applied to the purchase of goods? The
resource used was the money that was in cash. Therefore, the origin is the cash.
Conclusion:
Application = debt = goods inventory
Origin = credit = money in cash
Account name: buying merchandise for resale is an act that a commercial institution
often practices. This good is in the goods inventory to be sold. The fact of purchasing goods is
constant and specific. So, the best name to represent it would be: goods inventory.
Example 2
Accounting event: the institution purchased goods to resell in the amount of $ 500.00,
on credit, and owed the goods to the supplier.
Reasoning: Where was the resource applied? It was applied to the purchase of goods
for resale. What is the origin of the resource that was applied to the purchase of goods? Credit
granted by the supplier. The institution received the goods, but did not pay the supplier; it
owed this amount to the supplier, which is funding the purchase.
Conclusion:
Application = debt = purchase of goods
Origin = credit = supplier
Account name: buying goods, as we know, will be debited in the goods inventory. If the
institution usually buys on credit, there will be several suppliers. So, this accounting event will
occur several times. We can, therefore, assign the account name as “goods suppliers”.
Example 3
Accounting event: the institution opened an account at Banco do Brasil with an initial
deposit in cash in the amount of $ 100.00.
Reasoning: Where was the resource applied? It was applied in the current account
deposit at Banco do Brasil. What was the origin of the resource that was applied in the current
account deposit at Banco do Brasil? The origin is the money that was in the institution cash.
Conclusion:
Application = debit = deposit in current account at Banco do Brasil.
Origin = credit = institution money in cash
Account name: an institution opens an account in a Bank to facilitate its work and have
more security. It will move it constantly with new deposits, withdrawals and transfers. Banco
do Brasil represents the money that the institution has saved. However, we can assign the
account the name Bank, because it best refers to the events of depositing or issuing checks;
“Banco do Brasil – current account”.
2.8. BALANCE AND CLASSIFICATION OF ACCOUNTS
Accounts balance
The balance of an account is the algebraic difference between the debts and credits. An
account can show: debit balance, credit balance and null balance.
• Debt balance: occurs when the sum of debt values is greater than the sum of credit
values.
• Credit balance: occurs when the sum of credit values is greater than the sum of debit
values.
The existence of a debt or credit balance only depends on the type and nature of the
accounting event that the account represents. For example: the cash account, which represents
the money existing in the institution safe may only have two types of balance: debt or null.
Under no circumstance there will be a credit balance, because, if we put $100.00 in the safe, it
will be impossible to remove $150.00. At maximum we will withdraw the same $100.00.
An account, according to the accounting event that it represents, has a single kind of
balance: debt or credit. It cannot present a debt balance now and a credit balance then.
Exceptions: an account may have both debt and credit balance only in transitory
character. For example: the account “Bank X – current account”. By nature, this account must
always have debt balance, that is, the sum of debts/investments is greater than the sum of
credits/withdrawal, because the institution will not be able to withdraw from the bank more
than invested. However, when the bank trusts an institution that has account there, this
may be allowed to overdraft, i.e. the institution makes an agreement with the bank, which
authorizes it to use amounts above the deposits, up to a threshold value previously agreed and
during a given period. In this situation the balance of this account may be momentarily with
credit balance, representing an obligation of the institution, and should appear in the current
liabilities of the balance sheet.
ACCOUNTS BALANCE
DEBT BALANCE CREDIT BALANCE
Resources application Resources origin
Classification of accounts
The accounts are classified into two main groups: the equity accounts and income
accounts. The accounts of each group have specific purposes:
• Equity accounts: record accounting events related to the equity: assets, rights,
obligations and net equity.
• Income accounts: record accounting events related to revenues and expenses.
Equity Accounts
The accounts that represent the accounting events movements that involve the
institution equity, i.e. assets, rights, obligations, and net equity. They are divided into two large
groups: assets and liabilities.
BALANCE SHEET
Asset Liability
Obligations with third-party

Creditors
=
Assets and Rights controlled by Net Equity
the entity
Obligations with the company

Owners/Shareholders
Income Accounts
The accounts in this group represent the operating dynamics of the institution and serve
to refine the result obtained in the fiscal year. This result, profit or loss, will be incorporated
to the equity through the “accumulated loss” account (when the result is negative) or “profit
reserve” (when the result is positive). They are divided into two groups: revenues and expenses.
• Revenues accounts: represent the entry of elements in the asset, in the form of
money or receivable rights, usually corresponding to the sale of goods or products,
or the provision of services. Revenue can also derive from interests on bank deposits
or securities, rents or other sources. Its nature is the credit balance. Examples: goods
sale, received interests, obtained discounts.
• Expenses accounts: represent the consumption of goods and services that, directly
or indirectly, help to produce the revenue. Decreasing the asset or increasing the
liability, an expense is realized in order to obtain the revenue.
During the fiscal year, all expenses and revenues of the institution are recorded in the
“operating income (expenses and revenues)” accounts. At the end of the fiscal year, the
balances of these accounts are closed, and the result is transferred to the “year income (profits
and losses)” account, which temporarily appears in the net equity. The income statement of
the fiscal year is detailed in Unit 4 (“Financial statements”).
INCOME ACCOUNTS
DEBT BALANCE CREDIT BALANCE
EXPENSES REVENUES
CONSUMPTION OF ASSETS AND ENTRY OF ELEMENTS TO THE ASSET,
SERVICES UNDER THE FORM OF MONEY OR
RECEIVABLES
2.9. CHART OF ACCOUNTS
What is a chart of accounts?

One of the most important instruments to perform the accounting work is the chart of
accounts.
The chart of accounts shall be prepared in accordance with the institution needs and
the type of activity that it intends to exercise (industry, trade, provision of services etc.). It is
essential that the created accounts accurately reflect the equity and operations situations that
will be performed. Therefore, each institution has its own chart of accounts.
The chart of accounts structure complies with certain conventions and provisions of the
accounting legislation. Basically, it matches with the accounts classification: equity accounts
(assets, liabilities, net equity) and income accounts (revenues and expenses).
Analytic accounts and synthetic accounts

In the chart of accounts we find two categories of accounts: analytic and synthetic.
Suppose the following situation:
An entity has two current accounts in different banks: one in the ABC Bank and another
in the XYZ Bank.
To control the operations of those two banks the accounts must have an account that
represents the “ABC Bank-current account” and an account that represents the “XYZ Bank-
current account”.
Due to its nature, it can also have an account that immediately reports the total balance
available in the banks in which the entity has a current account. So, it has the control of the
individual account balance, bank by bank, and the global balance, i.e. the sum of the balance
of ABC Bank and XYZ Bank, representing the total availability in “Banks – current account”.
Therefore we have two analytical accounts (ABC Bank and XYZ Bank – current account) and a
synthetic account (Banks – current account).
• Analytical accounts: are those created by the accounting according to its control
needs, and in which the accounting events are recorded with all the details.
• Synthetic accounts: are those that have the function to synthetize, as its name says.
They do not reproduce the accounting event, just summarize the movement occurred
in the analytical accounts that are part of the group.
The accounting needs to have both the general movement of the accounts in a group
and the individual movement of each. In individual accounts, the accounting event is reported
with all its details.
In the general movement there is no need for details, just the summary of the accounts
of a group. The term “movement of the day” or “movement of the month” is used as the
accounting is made by daily or monthly entries, respectively.
2.10. ACCOUNTS DEGREE
In addition to the distinction between analytic and synthetic accounts, the chart of
account also has the accounts levels or degrees.
In the previous example, we have two degrees of accounts: one of 1st degree and two of
2nd degree.
1st degree Banks – current account (synthetic account)
2nd degree ABC Bank – current account (analytical account)
2 degree
nd
XYZ Bank – current account (analytical account)
The degree of an account represents a position in relation to the other accounts of the
chart.
Whatever the number of degrees established in the chart of accounts, the accounts
of the last degree will always be analytical accounts, and the accounts of preceding degrees
will always be synthetic accounts. So, if a group has three degrees of accounts, the analytical
account is of 3rd degree. The others, i.e. the 2nd and 1st degrees are synthetic. If there are four
degrees, the analytical account will be the 4th degree; the others (3rd, 2nd and 1st degrees) are
synthetic. Schematically we have:
Synthetic
Sintéticas Analytic
Analíticas
3º. grau
3rd degree
22º.
nd
grau
degree
3º. grau
3rd degree
1st degree
1º. grau
3º.
3rd grau
degree
2nd2º. grau
degree
4º.
4th grau
degree
4thgrau
4º. degree
3rd3º. grau
degree
4º.
4thgrau
degree
22º.
nd grau
degree
4º.
4thgrau
degree
3rd3º. grau
degree 4º.
4thgrau
degree
1º. grau
1st degree
4º.
4th grau
degree
3rd3º. grau
degree
4º.
4th grau
degree
22º.
nd grau
degree
4º.
4th grau
degree
3rd3º. grau
degree 4º.
4th grau
degree
Source: adapted from Benedetti (1990).

Figure 2 Accounts differentiation by degrees.
The accounts differentiation by degrees is important to show the composition of the

groups and subgroups of the assets, liabilities, expenses and revenues. It also allows performing
accounting statements by accounts degree. Depending on the purpose, the accountant can
develop a trial balance with only the 2nd degree accounts, for example.
Numeric code
In order to facilitate the chart of accounts use, a numeric code is assigned to each
account, appearing to the left of its name.
The accounts numeric code has a direct relation with the chart of account structure and
the accounts degrees. It is possible to identify each group that the account belongs to only by
its code.
The system used for the coding is the decimal. For a chart of account with five degrees,
we have:

Figure 3 Numeric code.
Please note that the code number constitution, due to the degrees, starts from the left
to the right, i.e. the first number represents a 1st degree, the second, a 2nd degree account, and
so on. The last one is always the analytical account.
The chart of accounts has the basic structure of the two main financial statements:
the equity statement and the income statement for the year. Both are divided into two large
groups:
• Asset and liability (equity accounts).
• Expenses and revenues (operating income accounts)
Let’s establish the codes for these four first groups of the chart of accounts, which are
the 1 degree accounts:
st
Code Title
1 Asset
2 Liability
3 Revenues
4 Expenses
These numbers immediately indicate to which group the account belongs to. An account
which code starts with the number 1 belongs to the asset group; with 2 belongs to the liability
group, and so on.
Each of these groups has subdivisions. Let’s take as an example the asset which
composition is given by the following groups: current and non-current. Its coding is:
Code Title
1 Asset
1.1 Current
1.2 Non-current
In turn, each of these groups also has subdivisions. Taking the current group, which
composition is:
Code Title
1 Asset
1.1 Current
1.1.1 Cash and cash equivalent
1.1.2 Short-term asset
1.1.3 Inventories
1.1.4 Prepaid expenses
Figure 4 Current group.
As an example, see a diagram in the current assets, which distinguishes the analytic and
synthetic accounts, the degrees and the codes.
Synthetic Analytic
1111 1111.01
Assets in Cash Cash
(4th degree) (5th degree)
1111.02
Check receivable
(5th degree)
111 1112 1112.01

1 11
Bank Deposits in Cash ABC Bank
Current Cash
Asset (4th degree) (5th degree)
(2nd degree) Cash
(1st degree) Equivalent 1112.02
XYZ Bank
(3rd degree)
(5th degree)
1113 1113.01
Bonds and Securities Investment in Open Market
(4th degree) (5th degree)

Figure 5 Differentiation of analytic and synthetic accounts.
In principle, the groups up to the fourth digit of the code are not very flexible. They
represent a pattern adopted by all entities and are based on a legal provision.
From this conventional pattern, each entity can create as many degrees and accounts
they find convenient, with the purpose of improving the information level. This requires a
good knowledge in accounting and legislation, in order to establish criteria that ensure the
appropriate record of certain accounting events.
2.11. STRUCTURE OF CHART OF ACCOUNTS
In this item we will present the main divisions of assets and liabilities groups and of
revenues and expenses and their meanings. As we have already explained, these groups and
subgroups are relatively fixed and are the “skeleton” of any chart of accounts.
CHART OR ACCOUNTS (wording provided by Law 11.638/2008)

1 ASSETS
1.1 CURRENT ASSETS
1.1.1 CASH AND CASH EQUIVALENT
1.1.2.1 Bank
1.2. NON-CURRENT ASSETS
1.2.1 LONG-TERM ASSETS
1.2.1.1 Receivables from Third-party
1.2.2. INVESTMENT
1.2.2.1 Permanent Participation in Other Companies
1.2.3. FIXED ASSETS
1.2.3.1 Assets and Use Rights
1.2.4. INTANGIBLE ASSETS
1.2.4.1 Goodwill
2 LIABILITIES
2.1. CURRENT LIABILITY
2.1.1 SHORT-TERM LIABILITIES
2.1.1.1 Suppliers
2.2 NON-CURRENT LIABILITIES
2.2.1 LONG-TERM LIABILITIES
2.2.1.1 Loans and Financing
2.3. NET EQUITY
2.3.1 CAPITAL
2.3.1.1 Social Capital
3 REVENUES
3.1 OPERATING REVENUES
3.1.1 Gross Revenues with Sales
3.1.1.1 Sale of Own Products
4 COSTS AND EXPENSES
4.1 COSTS
4.1.1 Sold Products Costs
4.1.1.1 Initial Inventory of Products under Preparation
4.2 EXPENSES
4.2.1. Operating Expenses - Commercial
4.2.1.1 General Commercial Expenses
4.2.2 Operating Expenses - Administrative
4.2.2.1 General Administrative Expenses
4.2.3 Operating Expenses - Financial
4.2.3.1 Interests and discounts
5 BALANCE SHEET CLOSING ACCOUNTS
Figure 6 Structure of the Chart of Accounts.
Trial balance
Periodically (daily, weekly, monthly) those responsible for the Accounting must check if
the accounting records made in the period are correct.
A commonly used technique to achieve this goal is the trial balance. This instrument, although
very useful, will not detect, however, the entire range of errors that may exist in accounting entries
(MARION, 1998 p. 128).
Still according to Marion (1998, p. 123), “[...] the trial balance is not used exclusively to
detect accounting entries, it is also an important decision-making instrument”.
The trial balance is based on the double-entry method: “there is no debt(s) without
corresponding credit(s)”. Therefore, if on one hand, we add all debts and, on the other, all
credits, we must have the same total. So, we can check if the debt and credit entries were
performed properly (MARION, 1998, p. 126). If the sum of debts (or debt balances) is not equal
to the sum of credits (or credit balances) there are clear signs that the accounting records are
not correct (and first we should review carefully if there was no error in the sum of the balance
columns).
In the event of an error, the accountant should find out where it is. It is not always
an easy task, because this is a research work with the accounting entries already made. It is
important to point out that, if there is a difference in the trial balance, the accounting work
should not proceed (MARION, 1998).
We can clearly understand that, the higher the period between one trial balance and the
other, the harder it is to find any error in the accounting entries.
The following is an example of a trial balance of the simplest kind, with only two columns:
Cia. XYZ – Trial Balance on 12/31/XX
BALANCES
Accounts
Debts Credits
Cash
Accounts 60.000 -
Receivables 9.000 -
Inventories 78.000 -
Land 31.000 -
Furniture and 50.000 -
Utensils - 58.000
Suppliers - 170.000
Capital

Figure 7 Example of Trial Balance.
More complex trial balances may provide data of interest to the user. “So, the trial
balance referred to six columns shows the balances of the previous trial balance, the debts
and credits movements of the period and, finally, the current balances” (IUDÍCIBUS et al.,
2010, p. 53).
Here is an example of a more complex trial balance, with six columns:
Cia XYZ – Trial Balance on 12/31/XX
Last Trial Balance Period Movements Current Trial Balance

Accounts BALANCES CURRENT BALANCES
Debt Credit
Debts Credits Debts Credits
Cash
Accounts Receivables
Inventories
Land
Furniture and Utensils
Suppliers
Capital

Figure 8 Example of a complex Trial Balance.
Trial balance as a decision-making instrument

According to Marion (1998, p. 132):
Given the inconvenience to prepare balance sheets in shorter periods (normally the balance sheet
is prepared once a year); the trial balance has become a powerful decision-making base instrument.
Therefore, through monthly trial balances, for example, the company or institution administration
will have a summary of all operations, as well as all existing balances at the end of the period. So
the decision-making power will be aware of the company financial and economic result at the end
of a given period without the need to structure a balance sheet.
3. INTEGRATING DIGITAL CONTENT

The Integrating Digital Content represents a necessary and indispensable condition to
fully understand the contents presented in this unit.
3.1. GENERAL ACCOUNTING
To learn more about the general Accounting, we recommend that you read the following
articles:
• UNIVERSIDADE FEDERAL DE SANTA CATARINA. Departamento de Ciências Contábeis.
Contabilidade gerencial estratégica: uma abordagem teórica. Available on: <dvl.ccn.
ufsc.br/congresso/arquivos_artigos/artigos/557/20090816163455.pdf>. Access on:
Dec. 20, 2017.
• COTRIN, A. M.; SANTOS, A. L. dos; ZOTTE JUNIOR, L. A evolução da contabilidade
e o mercado de trabalho para o contabilista. Revista Conteúdo. Capivari, v.2, n.1,
jan./jul. 2012. Available on: <www.conteudo.org.br/index.php/conteudo/article/
download/70/63>. Access on: Dec. 20, 2017.
• UNIVERSIDADE FEDERAL DE SANTA CATARINA. Departamento de Ciências Contábeis.
Análise da utilidade da contabilidade no exercício da profissão do administrador e do
economista: percepção dos discentes dos cursos de administração. Available on: <dvl.
ccn.ufsc.br/congresso/anais/3CCF/20090729220119.pdf>. Access on: Jan. 24, 2018.
3.2. NET EQUITY (NE)
To learn more about the topics covered in Item 2.2, we recommend that you read the
following articles:
• GERGULL, A. W. Uma reflexão acerca do núcleo fundamental da teoria contábil.
Cad. estud. São Paulo, n.15, Jan./June 1997. Available on: <www.scielo.br/scielo.
php?script=sci_arttext&pid=S1413-92511997000100002>. Access on: Dec. 20, 2017.
• SZUSTER, N.; SZUSTER, F. R.; SZUSTER, F. R. Contabilidade: atuais desafios e alternativa
para seu melhor desempenho. Rev. contab. finanç., São Paulo , v. 16, n. 38, p. 20-30, Aug.
2005. Available on: <http://www.scielo.br/scielo.php?script=sci_arttext&pid=S1519-
70772005000200003&lng=en&nrm=iso>. Access on: Dec. 20, 2017.
• SIBI. Portal de Revistas. Ativos intangíveis e o desempenho empresarial. R. Cont. Fin.

– USP, São Paulo, n. 40, p. 7 – 24, Jan./Abr. 2006. Available on: <www.revistas.usp.br/
rcf/article/viewFile/34174/36906>. Access on: Jan. 24, 2018.
3.3. ACCOUNTING EVENT
To learn more about Accounting Event, we recommend that you read the following
articles:
• CRC-CE. Contabilidade das pequenas e médias empresas. Boletim informativo on-line,
n. 6, fev./2010. Available on: <www.crc-ce.org.br/crcnovo/home.php?st=listinfo&info_
id=323>. Access on: Jan. 24, 2018.
• FERNANDES, T. M. da C. B. M. Ativo e sua mensuração. Cad. estud., São Paulo , n.
18, p. 01-12, Aug. 1998. Available on: <http://www.scielo.br/scielo.php?script=sci_
arttext&pid=S1413-92511998000200002&lng=en&nrm=iso>. Access on: Jan. 24,
2018.
• COMITÊ DE PRONUNCIAMENTOS CONTÁBEIS. Pronunciamento técnico CPC 25.
Available on: <static.cpc.mediagroup.com.br/Documentos/304_CPC_25_rev%2006.
pdf>. Access on: Jan. 24, 2018.
• COMITÊ DE PRONUNCIAMENTOS CONTÁBEIS. Pronunciamento técnico CPC 26 (R1).
Available on: <static.cpc.mediagroup.com.br/Documentos/312_CPC_26_R1_rev%20
06.pdf>. Access on: Jan. 24, 2018.
3.4. BALANCE AND CLASSIFICATION OF ACCOUNTS
Learn more about balance and classification of accounts by browsing the links below:
• GERGULL, A. W. Uma reflexão acerca do núcleo fundamental da teoria contábil.
Cad. estud., São Paulo, n.15, Jan./June 1997. Available on: <www.scielo.br/scielo.
php?script=sci_arttext&pid=S1413-92511997000100002>. Access on: Dec. 20, 2017.
• SZUSTER, N.; SZUSTER, F. R.; SZUSTER, F. R. Contabilidade: atuais desafios e alternativa
para seu melhor desempenho. Rev. contab. finanç., São Paulo, v. 16, n. 38, p. 20-30, Aug.
2005. Available on: <http://www.scielo.br/scielo.php?script=sci_arttext&pid=S1519-
• SIBI. Portal de Revistas. Ativos intangíveis e o desempenho empresarial. R. Cont. Fin.
– USP, São Paulo, n. 40, p. 7-24, Jan./Abr. 2006. Available on: <www.revistas.usp.br/
rcf/article/viewFile/34174/36906>. Access on: Jan. 24, 2018.
4. SELF-EVALUATIVE QUESTIONS
The self-evaluation can be an important tool to test your performance. If you have
difficulties in answering the following questions, please review the studied contents to have
your questions cleared-up.
1) Which of the items below indicate the correct functioning of the debt and credit mechanism in the net equity
accounts?
a) The increases are recorded by credits, and decreases by debits.
b) The increases are recorded by debits, and decreases by credits.
c) Losses are recorded by credits, and profits by debts.
d) All entering debts, all exiting credits.
e) There is no debt without a corresponding credit.
2) The net equity sources are:

a) the owners investments and paid dividends.
b) the initial capital, new owners investments, and paid dividends.
c) owners investments and non-distributed profits.
d) the initial capital, non-distributed profits, and paid dividends.
e) the distributed profits and paid dividends.
3) The trial balances are useful because:

a) They allow checking the mathematical correctness of the ledger accounts.
b) They list all moved accounts with the relevant balances.
c) They evidence the lack of operations records.
d) They evidence the debt and credit errors in an account rather than another.
e) They evidence a decrease in liability and increase in asset.
4) The entry of a debt in the “Furniture and utensils” account is made to reflect:
a) a decrease in liabilities.
b) an increase in liabilities.
c) an increase in assets.
d) a decrease in assets.
e) an increase in liabilities and a decrease in assets.
5) The account balance is determined:
a) by the sum of debited amounts.
b) by the sum of credited amounts.
c) by the value of the last entry.
d) by the difference between debited and credited amounts.
e) by hiring a debt.
6) An institution has an unsecured liability when:
a) its quick ratio is less than one.
b) it shows a bad financial situation.
c) its asset is less than the liability.
d) its fixed asset is less than the liability.
e) its asset is greater than the liability.
7) About the concept of structure and purpose of a chart of accounts, please select the correct option.
a) It is formed by a set of accounts defined while the bookkeeping is developed.
b) Its structure allows obtaining the information necessary for the preparation of financial statements.
c) The fact of each accounting entity preparing its own chart of account impairs the standardization of
accounting procedures.
d) To check the reliability of a chart of accounts, its structure must be rigid and it should not allow the
inclusion or exclusion of accounts.
e) It shows the complete list of all ledger accounts, regardless if they are used or not by the entity.
8) In accounting, all events resulting from tax documents that cause changes in the institution equity must have
an accounting record.
These are events that may be recorded by the accounting, EXCEPT:
a) bank loan
b) reversal or financial income
c) goods sale
d) signature of a contract by the institution as a grantor of a partner
e) provision for the payment of labor burden
Answer Key
Check below the correct answer to the proposed self-evaluative questions:
1) a.
2) c.
3) a.
4) a.
5) a.
6) c.
7) b.
5. REMARKS
Dear student, in this unit our focus was to present and discuss the basic concepts of
accounting – equity components and equations, and their organization tools – accounting
event, ledger accounts, chart of account and trial balance.
That way, you could understand the general concepts of Accounting, those introductory,
to meet the needs of your early studies in the area, getting familiar with the technical terms
and routine analysis of accounting services. Therefore, we will be able to go to the balance
sheet, presented and discussed throughout the next unit (“Financial Statements”).
6. E-REFERENCES
Websites
COMITÊ DE PRONUNCIAMENTOS CONTÁBEIS. Pronunciamento técnico CPC 25. Available on: <static.cpc.mediagroup.com.br/
Documentos/304_CPC_25_rev%2006.pdf>. Access on: Jan. 24, 2018.
______. Pronunciamento técnico CPC 26 (R1). Available on: <static.cpc.mediagroup.com.br/Documentos/312_CPC_26_R1_
rev%2006.pdf>. Access on: Jan. 24, 2018.
COTRIN, A. M.; SANTOS, A. L. dos; ZOTTE JUNIOR, L. A evolução da contabilidade e o mercado de trabalho para o contabilista.
Revista Conteúdo, Capivari, v.2, n.1, jan./jul. 2012. Available on: <www.conteudo.org.br/index.php/conteudo/article/
download/70/63>. Access on: Dec. 20, 2017.
CRC-CE. Contabilidade das pequenas e médias empresas. Boletim informativo on-line, n. 6, fev/2010. Available on: <www.
crc-ce.org.br/crcnovo/home.php?st=listinfo&info_id=323>. Access on: Jan. 24, 2018.
FERNANDES, T. M. da C. B. M. Ativo e sua mensuração. Cad. estud., São Paulo, n. 18, p. 01-12, Aug. 1998. Available on: <http://
www.scielo.br/scielo.php?script=sci_arttext&pid=S1413-92511998000200002&lng=en&nrm=iso>. Access on: Jan. 24, 2018.
FUNDAÇÃO INSTITUTO DE PESQUISAS CONTÁBEIS, ATUARIAIS E FINANCEIRAS. Homepage. Available on: <www.fipecafi.org>
Access on Dec. 3, 2017.
GERGULL, A. W. Uma reflexão acerca do núcleo fundamental da teoria contábil. Cad. estud., São Paulo, n.15, Jan./June 1997.
Available on: <www.scielo.br/scielo.php?script=sci_arttext&pid=S1413-92511997000100002>. Access on: Dec. 20, 2017.
PLANALTO. Governo Federal. Lei nº 11.941/2009. Seção II – Demonstrações Financeiras. Available on: <http://www.planalto.
gov.br/ccivil_03/_ato2007-2010/2009/lei/l11941.htm>. Access on: Dec. 20, 2017.
PORTAL DA CONTABILIDADE. Homepage. Available on: <http://www.portaldecontabilidade.com.br/>. Access on: Dec. 20,
2017.
SÓ CONTABILIDADE. Homepage. Available on <www.socontabilidade.com.br>. Access on: Dec. 20, 2017.
SZUSTER, N.; SZUSTER, F. R. Contabilidade: atuais desafios e alternativa para seu melhor desempenho. Rev. contab. finanç.,
São Paulo, v. 16, n. 38, p. 20-30, Aug. 2005. Available on: <http://www.scielo.br/scielo.php?script=sci_arttext&pid=S1519-
UNIVERSIDADE FEDERAL DE SANTA CATARINA. Departamento de Ciências Contábeis. Contabilidade gerencial estratégica: uma
abordagem teórica. Available on: <dvl.ccn.ufsc.br/congresso/arquivos_artigos/artigos/557/20090816163455.pdf>. Access
on: Dec. 20, 2017.
______. ______. Análise da utilidade da contabilidade no exercício da profissão do administrador e do economista: percepção
dos discentes dos cursos de administração. Available on: <dvl.ccn.ufsc.br/congresso/anais/3CCF/20090729220119.pdf>.
Access on: Jan. 24, 2018.
7. BIBLIOGRAPHICAL REFERENCES
IUDÍCIBUS, S. (coord.) Contabilidade Introdutória. 11. ed. São Paulo: Atlas, 2010.
______. Teoria da Contabilidade. 11. ed. São Paulo: Atlas, 2015.
______. ; MARION, J. C.; DE FARIA, A. C. Introdução à teoria da contabilidade para o nível de graduação. 5. ed. São Paulo:
Atlas, 2009.
MARION, J. C. Contabilidade básica. 7. ed. São Paulo: Atlas, 1998.
__________. Contabilidade básica. 14. ed. São Paulo: Atlas, 2015.
MARTINS, E. et al. Manual de contabilidade societária. São Paulo: Atlas, 2010.
SÁ, A. L. de. Teoria da Contabilidade. São Paulo: Atlas, 2010.
SILVA, de P. E. Dicionário Jurídico Conciso. 1. ed. Rio de Janeiro: Forense, 2008.
STICKNEY, C. P.; WEIL, R. L. Contabilidade financeira: uma introdução aos conceitos, métodos e usos. Tradução de José Evaristo
dos Santos. São Paulo: Atlas, 2001.

Unit 3 GENERAL ACCOUNTING

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Unit 3 GENERAL ACCOUNTING

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UNIT 3

Guidelines for the unit study

2. BASIC REFERENCE CONTENT

2.1. GENERAL ACCOUNTING

What is the object of Accounting?

Equity of a Person or Entity

Assets: rights and obligations

The readings listed in Topic 3. 1 discuss the General

2.2. NET EQUITY (NE)

The net equity is represented by the equation:

Net Equity = Assets + Rights - Obligations

Rights Net Equity

At this point, you must complete the reading listed in

2.3. EQUITY EQUATIONS

Table 1 Equity status settings.

2.4. ACCOUNTING EVENT

Permutative, qualitative or compensatory accounting events

Modificatory or qualitative accounting events

3) Payment of salaries in the amount of $125:

Mixed accounting event

The accounting event and the document

Accounting event: purchase of a truck in cash

At this point, you must complete the reading listed in

The following are examples of accounting representing individual events:

Accounting Event Account Name

According to Iudícibus et al. (2010, p. 38):

Date History Debt Credit Balance D/C

Any Asset Account

Any Liability Account

Net equity accounts

Any Net Equity Account

Table 2 – Summary of the Debt and Credit Mechanism.

2.7. ACCOUNT ELEMENTS

Creating an account or deciding which accounts will be used to record an accounting

2.8. BALANCE AND CLASSIFICATION OF ACCOUNTS

Obligations with third-party

Obligations with the company

2.9. CHART OF ACCOUNTS

What is a chart of accounts?

Analytic accounts and synthetic accounts

2.10. ACCOUNTS DEGREE

Source: adapted from Benedetti (1990).

The accounts differentiation by degrees is important to show the composition of the

Source: adapted from Benedetti (1990).

111 1112 1112.01

Source: adapted from Benedetti (1990).

2.11. STRUCTURE OF CHART OF ACCOUNTS

CHART OR ACCOUNTS (wording provided by Law 11.638/2008)

Cia. XYZ – Trial Balance on 12/31/XX

Source: adapted from Iudícibus (2010).

Cia XYZ – Trial Balance on 12/31/XX

Last Trial Balance Period Movements Current Trial Balance

Source: adapted from Iudícibus (2010).

Trial balance as a decision-making instrument

3. INTEGRATING DIGITAL CONTENT

3.1. GENERAL ACCOUNTING

3.2. NET EQUITY (NE)

• SIBI. Portal de Revistas. Ativos intangíveis e o desempenho empresarial. R. Cont. Fin.

3.3. ACCOUNTING EVENT

3.4. BALANCE AND CLASSIFICATION OF ACCOUNTS

2) The net equity sources are:

3) The trial balances are useful because:

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