Accounting Skills

 Accounting Equation
 Topic & Structure of the lesson

 Introduction to accounting equation

 Analyse business transactions based on
accounting equation

BM001-3-1-Accounting Skills Accounting Equation

 Learning Outcomes

 At the end of this topic, YOU should be able to:

 Analyse transactions using the accounting equation

BM001-3-1-Accounting Skills Accounting Equation

 Key Terms you must be able to use

If you have mastered this topic, you should be able to use the following terms
correctly in your assignments and exams:

1.Assets , liabilities and capital (owner’s Equity)

BM001-3-1-Accounting Skills Accounting Equation

 Introduction
Accounting equation is the basis of accounting that will
always be used each time we record a transaction. It
consists of three components or basic elements, which
are:

 Asset - Resources that can bring economic benefits, owned by

the entity. For example, cash, building and fittings.

liability - Rights or claims made by the loan providers.

Capital - Rights or claims made by the owner itself.

BM001-3-1-Accounting Skills Accounting Equation

  Transactions Analysis
 Accounting Equation: ASSET = LIABILITY + CAPITAL
 Example
No. Date(Nov) Transactions

1 1 Reen invested cash of $30,000 into Reen Cyber Service.

2 2 Purchased a piece of land valued at $20,000. The business

paid cash $5,000 and the balance is financed by bank loan.

3 4 Purchased office supplies valued at $2,700 on credit.

4 15 Received revenue from consultancy services provided to

customer. The customer paid $15,000 cash.

BM001-3-1-Accounting Skills Accounting Equation

 Solutions

BM001-3-1-Accounting Skills Accounting Equation

BM001-3-1-Accounting Skills Accounting Equation
 Quick Review Question

BM001-3-1-Accounting Skills Accounting Equation

 Question and Answer Session

Q&A

BM001-3-1-Accounting Skills Accounting Equation

 Next Session

Introduction to Double Entry and preparation of Trial

balance

BM001-3-1-Accounting Skills Accounting Equation