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    ACCTG 2 - Chapter 2 - Discussions

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    Kasdeya Centresca
    1) The document discusses key accounting concepts including the components of an accounting information system, elements of financial statements, the basic accounting model of assets equaling liabilities plus equity, and definitions of various accounts. 2) Key types of business entities are discussed such as sole proprietorships, partnerships, and corporations. Basic accounting principles like double-entry bookkeeping and the treatment of various accounts are also covered. 3) The document provides examples of how to classify assets and liabilities as current or non-current, defines various income and expense accounts, and discusses the impact of business transactions on the accounting equation.

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    ACCTG 2 - Chapter 2 - Discussions

    Uploaded by

    Kasdeya Centresca
    25 views2 pages
    1) The document discusses key accounting concepts including the components of an accounting information system, elements of financial statements, the basic accounting model of assets equaling liabilities plus equity, and definitions of various accounts. 2) Key types of business entities are discussed such as sole proprietorships, partnerships, and corporations. Basic accounting principles like double-entry bookkeeping and the treatment of various accounts are also covered. 3) The document provides examples of how to classify assets and liabilities as current or non-current, defines various income and expense accounts, and discusses the impact of business transactions on the accounting equation.

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    1) The document discusses key accounting concepts including the components of an accounting information system, elements of financial statements, the basic accounting model of assets equaling liabilities plus equity, and definitions of various accounts. 2) Key types of business entities are discussed such as sole proprietorships, partnerships, and corporations. Basic accounting principles like double-entry bookkeeping and the treatment of various accounts are also covered. 3) The document provides examples of how to classify assets and liabilities as current or non-current, defines various income and expense accounts, and discusses the impact of business transactions on the accounting equation.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    25 views2 pages

    ACCTG 2 - Chapter 2 - Discussions

    Uploaded by

    Kasdeya Centresca
    1) The document discusses key accounting concepts including the components of an accounting information system, elements of financial statements, the basic accounting model of assets equaling liabilities plus equity, and definitions of various accounts. 2) Key types of business entities are discussed such as sole proprietorships, partnerships, and corporations. Basic accounting principles like double-entry bookkeeping and the treatment of various accounts are also covered. 3) The document provides examples of how to classify assets and liabilities as current or non-current, defines various income and expense accounts, and discusses the impact of business transactions on the accounting equation.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Name: Dansel Rose Ambrocio

    Section: BSMA 1A

    Chapter 2

    Discussions:

    1) Accounting information system is the combination of personnel, records and procedures that a
    business uses to meet its need for financial information. Moreover, it has six primary
    components: people, procedures and instructions, data, software, information technology
    infrastructure and internal controls.
    2) Elements of financial statement:
    a.) Asset – present economic resource controlled by the entity as a result of past events.
    b.) Liability – present obligation of the entity to transfer an economic resource as a result of
    past events.
    c.) Equity – residual interest in the assets of the entity after deducting all its liabilities.
    d.) Income – increases in assets or decreases in liabilities, that result in it increases in equity.
    e.) Expenses – decreases in assets or increases in liabilities that result in decreases in equity.
    3) The basic summary device of Accounting is the account. It maintained for each element that
    appears in the balance sheet ( assets, liabilities and equity) and in the income statement
    (income and expenses). For convenient access to the information accounts are grouped
    together in a record called ledger.
    4) A sole proprietorship is one of the easiest form of business with only one owner. Partnership is a
    business with two or more owners. Corporation is a business owned by stockholders.
    5) The owner’s equity will increase if you have revenues and gains and it will decrease if you have
    an expenses and loses.
    6) The basic accounting model is: Assets = Liabilities + Equity
    7) Accounting is based on double-entry system which means that the dual effects of a business
    transaction is recorded. If there is debit there is credit. An account is debited when an amount is
    entered on the right side.
    8) Debit is when increases in assets are recorded (on the left side of the account) and credit when
    decreases in assets are recorded.
    9) Source of assets is an asset account increases and a corresponding claims account increases
    while exchange of assets is one asset account increases and another asset account deceases.
    10) Entity shall classify ”assets” as current when:
    a) It expects to realize there asset.
    b) It holds the asset primarily for the purpose of trading.
    c) It expects to realize the asset within twelve months after the reporting period.
    d) The asset is cash or a cash equivalent (as defined in PAS No. 7) unless the asset is
    restricted from being exchanged or used.
    11) Prepaid expense are the expenses which paid by the business in advance. It is an asset because
    the business avoids having to pay cash in the future for a specific expense. This include
    insurance and rent.
    12) Accumulated depreciation account is a contra account that contains the sum of the periodic
    depreciation charges.
    13) Intangible assets are identifiable, nonmonetary assets without physical substance held for use in
    the production. Some examples are trademarks, brand names and licenses.
    14) An entity shall classify a “Liability” as current when:
    a) It expects to settle the liability in its normal operating cycle.
    b) Holds the liability primarily for the purpose of trading
    c) Liability is due to be settled within 12 months after reporting period
    d) Entity does not have an unconditional right
    15) Income a) service income b) sales
    Expenses a) cost of sales b) rent expense c) insurance expense d) interest expense e) supplies
    expense
    16) Payment to creditors – because it will decrease the cash and decrease in creditors.
    17) Exchange of claims
    18) Cash is an asset account. Revenue increases stockholders' equity. This increases the left side and
    right side of the accounting equation by the same amount, which keeps it in balance.
    19) Revenue is the sum or the income which is earned by providing or offerings customer’s product
    or its services and is credited in profit or loss accounts.

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