FUNDAMENTAL-ACCOUNTING-CONCEPTS.pdf

fundamental Accounting concepts RAMOS, DONABELLE I. Professor, Accounting 2 BASIC ACCOUNTING PRINCIPLES Going Concern Assumption Accrual Basis of Accounting Accounting Entity Concept Time Period (Periodicity) Monetary Unit Assumption  elements of accounting Assets Li...

fundamental Accounting concepts RAMOS, DONABELLE I. Professor, Accounting 2 BASIC ACCOUNTING PRINCIPLES Going Concern Assumption Accrual Basis of Accounting Accounting Entity Concept Time Period (Periodicity) Monetary Unit Assumption  elements of accounting Assets Liabilities Current Assets Current Liabilities Cash and Cash Equivalents Trade and other payables Receivables Current provisions Inventories Short-term borrowings Prepaid Expenses Current-portion of a long-term liability Non-Current Assets Current tax liabilities Long term investments Non-Current Liabilities Land Long-term notes, bonds, and mortgage Building payables Equipment Deferred tax liabilities; and Intangibles Other long-term obligations Other long term assets elements of accounting Capital Initial and additional contributions of owner/s (investments) Withdrawals made by the owner/s (dividends for corporation) Income; and Expenses Income Revenues Gains Expense  Accounting equation: EXAMPLES The Basic Accounting Equation is: Assets = Liabilities + Capital Accounting Equation Illustration Assume the following transactions: 1. Mr. A invested $20,000 to start a printing business, 2. The company obtained a loan from a bank, $30,000, 3. The company purchased printers and paid a total of $1,000. Transaction No. 1  Accounting equation: EXAMPLES Transaction No. 2 Transaction No. 3  Accounting equation: EXAMPLES The Basic Accounting Equation is: Assets = Liabilities + Capital 4. Rendered services and received the full amount in cash, $500 5. Rendered services on account, i.e., receivable from customer, $750 6. Purchased office supplies on account, i.e., payable to supplier, $200 7. Had some equipment repaired for $400, to be paid after 15 days 8. Mr. A, the owner, withdrew $5,000 cash for personal use 9. Paid one-third of the loan obtained in transaction #2 10. Received customer payment from services in transaction #5  Accounting equation: EXAMPLES Transaction No. 4  Accounting equation: EXAMPLES Transaction No. 5  Accounting equation: EXAMPLES Transaction No. 6  Accounting equation: EXAMPLES Transaction No. 7  Accounting equation: EXAMPLES Transaction No. 8  Accounting equation: EXAMPLES Transaction No. 9  Accounting equation: EXAMPLES Transaction No. 10