ACCOUNTING REVIEWER

ELEMENTS OF AACOUNTING
ASSETS, LIABILITIES, CAPITAL

ASSETS – Is a resources with economic value that an individual,

corporation or country owns or controls with the expectation that it will
provide a future benefits.
- Bought or created to increase a firm value or benefit that firms
operations.
- Can generate cash flow, reduce expenses, or improve sales.
TYPES OF ASSETS
CONVERTABILITY – CURRENT ASSETS AND FIXED ASSETS
PHYSICAL EXISTENCE – TANGIBLE AND INTANGIBLE ASSETS
USAGE- OPERATING AND NON-OPERATING ASSETS

CURRENT ASSETS- Represent all the assets of the company that are
expected to be conveniently sold, consumed, used or exhausted.
Current assets appear on company balance sheet one of the required
financial statement that must be completed each year.
-cash and cash equivalents
-Account receivable
-Prepaid expenses
-Raw materials
-Inventory
-Short term investment
NON CURRENT ASSETS – Are a company’s long term investment.
LIABILITY- An account owed by a company to supplier, bank, lender, or
other provider of goods and services.
- Can be listed under account payable. And are credited in the
double entry bookkeeping.
CURRENT LIABILITIES- Is an obligation that is payable within one year.
The cluster of liabilities comprising current liabilities is closer watched,
foe business must have sufficient liquidity to ensure that they can be
paid off when due.
-All other liabilities, which are presented in a grouping lower down
in the balance sheet below current liabilities.
NON CURRENT LIABILITIES – also known as long term liabilities, are
obligations listed on the balance sheet not due for more than a year.
Examples: of non-current liabilities include long term loans and lease
obligations, bonds payable and differed revenue.
CAPITAL – (capital is investment) Is the term for financial assets such as
funds help in deposit accounts. Funds obtained from special financing
sources.
- Capital can also be associated with capital assets of the company
that requires significant amount of a capital to finance or expand.
DRAWING ACCOUNT (withdrawal) – Is contra owner’s equity account
used to record the withdrawals of the cash or other asset made by an
owner.
RULES OF DEBIT AND CREDIT
- An account is debited when amount is entered on the LEFT side of
the account and credited when the amount is entered on the
RIGHT side.
- ASSETS INCREASES IT IS DEBITED
- ASSETS DECREASES IT IS CREDITED
- LIABILITIES AND OWNERS EQUITY INCREASES – CREDIT
- LIABILITIES AND OWNERS EQUITY DECREASES – DEBIT
- NORMAL BALANCE OF LIABILITIES, OWNERS EQUITY- CREDIT
INCREASE.
FOR NORMAL BALANCE OF ASSETS - DEBIT INCREASE.

TYPES AND EFFECTS OF TRANSACTION

- SOURCE OF ASSETS
- EXCHANGE OF ASSETS
- USE OF ASSETS
- EXCHANGE OF CLAIMS
ON ACCOUNT – (UTANG)