This course covers the complete accounting cycle and is designed for those who are interested in working in the areas of bookkeeping, clerical accounting, finance or general office work or are looking to review their accounting knowledge.Our accounting course teaches principles of accounting, which are consistent across the globe. Even though there may be minor differences in accounting principles in different countries, the core accounting principles are the same.
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1. Welcome Dear Students Your Account Double any Trouble
2. Video Accounting course Enroll on full versionenroll on
course with lecturers explanation www.elearningpower.com
3. Lesson 5: Learning Objectives 1 Permanent Accounts and
Temporary Accounts Applying the Rules of Debit and Credit for 2
Revenue, Expense and Withdrawals Accounts 3 Business Transaction
Analysis
4. Lesson 5 : What Youll learnWHAT IT IS IMPORTANT WHAT IS
NEEDED UNDERSTANDExplain the difference Use the six-step method
tobetween permanent accounts analyze transactions affectingand
temporary accounts. revenue, expense, and withdrawals accounts.List
and apply the rules ofdebit and credit for revenue, Temporary
accounts showexpense, and withdrawals the changes in owners
equityaccounts. during each accounting period.
6. Summary: What Are Revenue ?Income earned from the sale of
goods orservices is called revenue.Examples of revenue are fees
earned forservices performed and cash receivedfrom the sale of
merchandise.Revenue increases owners equitybecause it increases the
assets of thebusiness.
7. Summary: What Are Expenses ?To generate revenue most
businesses must alsoincur expenses to buy goods, materials,
andservices. An expense is the cost of products orservices used to
operate a business.Examples of business expenses are rent,
utilities, and advertising.Expenses decrease owners equity because
theydecrease the assets of the business or
increaseliabilities.
8. Summary :The effects of revenue and expenses are summarized
as follows: Revenue increases assets and increases owners equity.
Expenses decrease assets and decrease owners equity or increase
liabilities anddecrease owners equity..
9. Summary : What Is a Withdrawal ?If a business earns revenue,
the owner will take cash orother assets from the business for
personal use.This transaction is called a withdrawal, Withdrawals
andinvestments have opposite effects.A withdrawal decreases both
assets and owners equity.A withdrawal is not the same as an
expense..
10. The accounts used by a business can be separated into
:Permanent accounts Temporary accountsPermanent accounts carry
Temporary accounts accumulatebalances forward from one dollar
amounts for only oneaccounting period to the next. accounting
period and then startThe following types of accounts each new
accounting periodare permanent accounts: with a zero balance.
assets The following types of accounts are temporary accounts:
liabilities revenue owners capital expenses owners withdrawals
11. The temporary accounts areAt the end of that period, the
transferredbalances in the temporaryaccounts are transferred to
theowners capital account.Remember, expenses decreaseowners
capital.Revenue increases owners capital
12. The Rules for Revenue AccountsRule 1: A revenue account
isincreased (+) on the credit side.Rule 2: A revenue account
isdecreased (-) on the debit side.Rule 3: The normal balance for
arevenue account is the increaseside, or the credit side.Revenue
accounts normally havecredit balances.Revenue earned from
sellinggoods or services increasesowners capital.
13. The Rule for Revenue Recognition Following the GAAP
principle of revenue recognition , revenue is recorded on the date
earned, even if cash has not been received.
14. The Rules for Expense AccountsRule 1: An expense account
isincreased on the debit side.Rule 2: An expense account
isdecreased on the credit side.Rule 3: The normal balance for
anexpense account is the increase side,or the debit side.Expense
accounts normally havedebit balances.Expenses decrease
ownerscapital.
15. The Rules for the Withdrawals AccountRule 1: The
withdrawals account isincreased on the debit side.Rule 2: The
withdrawals account isdecreased on the credit side.Rule 3: The
normal balance for thewithdrawals account is the increaseside or
debit side.Withdrawals, like expenses,decrease capital, so the
rules ofdebit and credit are the same asfor expense accounts.
16. Summary : Rules of Debit and Credit,Normal Balances of
Accounts
17. Summary: Business transactions between - Balance Sheet and
Income StatementThere are four main types oftransactions between
Balance andIncome Statement to be remembered:1. - Assets + Expenses
(Withdrawals)2. + Liabilities + Expenses3. + Assets + Revenue4. -
Liabilities + Revenue
18. Summary: 4. CompleteBUSINESS TRANSACTION ANALYSIS entry in
T-account Identify and Classify the accounts affected 3. Determine
the amount of 1. Determine Identify accounts - increase or decrease
for and each account affected debited Classify credited accounts
Determine which account is debited and credited . For what amount ?
2. Complete entry in T-account Determine accounts - increase
decrease
19. Follow next LessonThank you ! Lesson 6:Enroll on full
version Recording transactions in a General Journal enroll on
course withlecturers explanationwww.elearningpower.com