Module 3 - Account Equation & Account Classification

5 Kinds fo Reports

• Income Statement or Statement of Profit and Loss

• Statement of Changes in Equity

• Notes

• Cash Flow

! In order to produce a balance sheets:

    Journal Entry → Account Ledger → balance Sheet

Accounts - summary of effects of all transactions related to a particular item over a period of time

• Charts of Accounts - list of account names used to record transactions

  • index of all the financial accounts in a company’s general ledger

  • can be modified by a company to fit its size and type of business

  • used for the ACCURACY of period-to-period comparisons

DIFFERENT GROUPS

1. Assets - resources that we own

2. Liabilities - utang or amounts owned by creditors

3. Equity - owners’ claims to resources

4. Revenue - sales made from selling products or services

5. Expense - gastos' from providing servies and products

ASSETS

• resource controlled by the entity as a result of past events and from which future economic benefits(value of the asset for us) are expected to flow to the entity.

  • Controlled by the Entity

    • Direct use of the asset

  • Current Assets

  • 4 main steps of an operating cycle:

    • order goods or raw mats

    • produce goods or services to sell

    • sell them

    • collect payment from customers

LIABILITIES