ACCOUNTING:

The art of recording, classifying and summarizing in terms of money, transactional evens in order to provide
useful information to business.

TRANSACTIONS:

Cash transaction: where cash is paid or received instantly.

Credit transaction: when cash is received or payment is delayed to future date.

PURCHASES:

when goods are purchased with the intention of selling during the current period or year.

it includes both cash and credit purchases.

Purchase discount: it is a contra asset account consider as a reduction in the cause of purchase as an offer
given by the seller for customer to pay quickly.

Purchase return: when the inventory of goods is returned if goods are found defective, or in damaged
conditions.

SALES:

money generated by selling goods is known as revenue or sales. includes both cash and credit sales.

Sales returns or return inwards: goods returned by the customer.

Sales discount: contra account which decreases the value of sales.

RECEIVABLE: claims hold against customers or other parties for money. it includes accounts receivables, notes
receivables, interest receivables.

PAYABLES: sum of money due to be paid by one party to another for any reason. it includes accounts payables,
notes payables, interest payables.
ACCOUNTS:

A summarized record of transactions relating to a person or a thing.

Accounts are classifies as:

Assets

Liabilities

Capital

Revenues

Expenses

ASSETS: resources owned by the business or entity and are expressed in monetary terms.

LIABILITIES: Obligations to pay to other parties.

CAPITAL/ EQUITY: the investment of owner in business.

in sole proprietorship business - capital

in partnership business - partner's capital

in company - share capital

REVENUES: income derived from sale of goods.

EXPENSES: costs of business.

ACCOUNTING EQUATION:

ASSETS = LIABILITIES + CAPITAL