Anisul islam

CSE 33
rd
batch
Leading university,Sylhet

1
Anisul islam
Grateful to
All the credits of my accounting knowledge goes to my honourable teacher
Iehit Sharma
Lecturer of BBA department
Leading university
Sylhet , Bangladesh

Anisul islam 2
Basic theory
(1) What is Accounting ?
The systematic recording ,
representing and analysis of financial
transaction of a business.
(2) Accountant ?
The person in charge of accounting is
called an accountant.

3 Anisul islam
Remember
Luca pacioli is known as the father of modern
accounting.
He introduced and explained the double entry
system ( In every transaction one side will
increase then another side will decrease [
Debit & Credit ])
Accounting helps to represent and explain
income , profit loss , expenditure, liabilities
etc.
Anisul islam 4
Accounting cycle
6. Income statement
Balance sheet
Equity statement
Cash flow statement
5. Adjusting journal
4. Trial Balance
3. General Ledger
2. General Journal
1. Accounting Equation(A = L +C )
5 Anisul islam
Accounting Cycle - 1
1. Accounting equation
2. General journal
3. General ledger
4. Trial Balance
5. Adjusting journal
Anisul islam 6
Accounting Cycle - 2
6. Worksheet
7. Income statement
8. Balance sheet
9. Equity statement
10. Cash flow
Anisul islam 7
Accounting equation


Asset = Liability + Capital

$ 150 $ 50 $ 100
8 Anisul islam
In short , you can say : A = L + C , where A for Asset , L for liability
And C for capital
Not a correct Accounting
equation


Asset = Liability + Capital

$ 150 $ 50 $ 50
9 Anisul islam
T-Format for Accounting Equation
Company name
Accounting Equation
Date Asset = Liability + Capital Explanation
10 Anisul islam
A Sample Question for Accounting
Equation
Anisul islam 11
Barones Repair shop was started on May 1 by Nancy Barone.
A summary of May Transactions is presented below

1. Invested $ 10,000 cash to start the repair shop.
2. Purchased equipment for $ 5,000 cash.
3. Unpaid $ 400 for May office rent.
Sample answer for Accounting
Equation
Barones Repair shop
Accounting Equation
Date Asset = Liability + Capital Explanation
May 1 Cash $ 10,000

- Barones
Capital
$10,000
Capital
Investment
May 2 Cash $ 5,000
Equipment
$ 5,000
- Barones
Capital
$10,000
Purchased
Equipment
May 3 Cash $ 5,000
Equipment
$ 5,000
Office rent
payable
$ 400
Barones
Capital $9,600

office rent
On account
12 Anisul islam
Basic theory
There are some economic characteristics in
Accounting ...
1. Asset
2. Expense including withdraw
3. Liability
4. Capital
5. Revenue

13 Anisul islam
1. Asset
Asset are those things that help us to
generate revenue or which have market value.
Some Example of asset
Cash , Building , machines , Land , vehicle car
Accounts /Notes receivable
Equipment , Supplies ( pen , pencil etc )
Prepaid Insurance , Inventory
Land , Tree garden , crystal or coal etc.
Etc.
14 Anisul islam
2. Expense
The payment of asset for getting revenue
or maintaining the daily operations is called
Expense.
Some Example of Expense
Withdraw / drawing
Salaries expense , supplies expense , Rent expense ,
Travel expense Insurance expense , Advertising
expense, interest expense , Depreciation expense etc.
Utility bill / expense ( electric bill , gas bill etc. )
Etc.
15
Anisul islam
3. Liability
Liability means which has a claim against
the asset and the business must have to pay
that thing.

Identifying liabilities

On account / Accounts payable
On notes / Notes payable
On credit
Accrued
Outstanding
Due
Incurred
Etc.
16 Anisul islam
4. Capital
Anything which are invested by the
owner of the business is called capital . Capital
can be increased by the revenue and
decreased by the expense . Capital is also
called equity and proprietorship.
Identifying capital

Investment , Capital Etc.

17 Anisul islam
5. Revenue

By selling product or performing services
business get something from customer , that
is called Revenue .
Identifying Revenue

service revenue , rent
revenue , Admissions revenue
Etc.

18 Anisul islam
Now again back to the answer...
Barones Repair shop
Accounting Equation
Date Asset = Liability + Capital Explanation
May 1 Cash $ 10,000

- Barones
Capital
$10,000
Capital
Investment
May 2 Cash $ 5,000
Equipment
$ 5,000
- Barones
Capital
$10,000
Purchased
Equipment
May 3 Cash $ 5,000
Equipment
$ 5,000
Office rent
payable
$ 400
Barones
Capital $9,600

office rent
On account
19 Anisul islam
Test 1
Questions
[Classify each item based on its economic
characteristics.]
1. Cost of renting property
2. Truck purchased
3. Notes payable
4. Amount earned from providing service
5. Amounts owed to suppliers
20 Anisul islam
Test 1
Solution

1. Cost of renting property: Expense.
2. Truck purchased: Asset.
3. Notes payable: Liabilities.
4. Amount earned from providing service: Revenue.
5. Amounts owed to suppliers: Liabilities.
21 Anisul islam
Test - 2

Cash , Building , machines , Equipment , Supplies ,Prepaid Insurance ,
Inventory , Land ,Accounts /Notes receivable, Land , Tree garden , service
revenue , rent revenue , Admissions revenue On account / Accounts
payable, On notes / Notes payable, On credit, Accrued , Outstanding ,
Due, Incurred , Investment
Now put this account titles into the following table
:
(1
st
one is done for you)

Anisul islam 22
Asset Liability Capital
Cash
Thats all from me. Thank you very much for
watching my video. If you find out any error
on my video then I do apologies for that. If
you have any comment about the related
topic then feel free to contact with me.
Contact details
Anisul islam
CSE 33
rd
batch
Leading university
01710444700
anisul2010s@yahoo.co.uk
Journal formula
When increase When decrease
Dr.
Asset
Expense
Cr.
Liability
Capital/Revenue
Dr.
Liability
Capital/Revenue
Cr.
Asset
Expense
24 Anisul islam
Format for General Journal

Company name
General journal
Date Account title
and
explanation
Ref Debit ($) Credit ($)
25 Anisul islam
Sample for General Journal

Miller deliveries
General journal
Date Account titles
and
explanation
Ref Debit ($) Credit ($)
June 1,2008 Cash

Millerss capital


( Capital
investment )
$ 10,000

-
-

$ 10,000
To be
continue......
..................... ...................... ....................... ....................
26 Anisul islam
Format for General Ledger
Date explanation Ref Debit ($) Credit ($) Balance ($)
Company name
General Ledger
cash
capital
Date explanation Ref Debit ($) Credit ($) Balance ($)
To be
continue......
..................... ...................... ....................... ....................
27 Anisul islam
Sample for General Ledger
Date explanation Ref Debit ($) Credit ($) Balance ($)
June 1,2008 - - $ 10,000 - $ 10,000
June 2,2008 - - - $ 2,000 $ 8,000
June 2,2008 - - - $ 500 $ 7,500
June 2,2008 - - $ 1,250 - $ 8,750
Miller deliveries
General Ledger
cash
capital
Date explanation Ref Debit ($) Credit ($) Balance ($)
- -
- -
To be
continue......
..................... ...................... ....................... ....................
28 Anisul islam
Format for Trial balance

Company name
Trial balance
Date
Serial no. Account titles Ref Debit ($) Credit ($)
29 Anisul islam
Sample for Trial balance

Company name
Trial balance
Date
Serial no. Account titles Ref Debit ($) Credit ($)
1 Capital - - 22,500
2 Purchase - 15,000 -
3 Accounts
receivable
- 8,000 -
To be
continue......
..................... ...................... ....................... ....................
30 Anisul islam
Format for Adjusting Journal

Company name
Adjusting journal
Date
Date Account title
and
explanation
Ref Debit ($) Credit ($)
31 Anisul islam
Question for Adjusting journal
Anisul islam 32
Sample answer for Adjusting Journal

MASASI COMPANY
Adjusting journal
June 30,2008
Date Account titles and
explanation
Ref Debit ($) Credit ($)
June 30,2008 Supplies expense

Supplies

( supplies adjusted )
-

-
1,400

-
-

1,400
June 30,2008 Utilities expense

Utility payable

( utility expense adjusted )
-

-
150

-
-

150
33 Anisul islam
June 30,2008 Insurance expense

Prepaid insurance

(Prepaid insurance
adjusted )
-

-
250

-
-

250
June 30,2008 Unearned service Revenue

Service revenue

(Service revenue
adjusted )
-

-
2,500

-
-

2,500
June 30,2008 Salaries expense

Salaries Payable

(salaries expense
adjusted )
-

-
2,000

-
-

2,000
34 Anisul islam
June 30,2008 Depreciation expense
office equipment

Accumulated Depreciation
office equipment

(Depreciation on office
equipment adjusted)
-


-
250

-
-

250
June 30,2008 Accounts Receivable

Service revenue

(Service revenue adjusted)
-

-
1,500

-
-

1,500
35 Anisul islam
Format for Worksheet
Company name
Worksheet
Date
Account
titles

Trial
Balance
Adjustment
Adjusted
Trial
Balance

Income
statement

Balance
sheet
DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT
36 Anisul islam
Formula for Income statement
Dr.
Expense
Cr.
Revenue
Income
Expense
Revenue
37 Anisul islam
Formula for Balance sheet
Dr.
Asset
Withdraw
Cr.
Liability
capital
Accumulated
depreciation
38 Anisul islam
Question for Worksheet
Anisul islam 39
Sample for Worksheet
MASASI COMPANY
Worksheet
June 30,2008
S
N
Account titles

Trial
Balance
Adjustment
Adjusted
Trial
Balance

Income
statement

Balance
sheet
DEBIT
($)
CREDIT
($)
DEBIT
($)
CREDIT
($)
DEBIT
($)
CREDI
T
($)
DEBIT
($)
CREDI
T
($)
DEBIT
($)
CREDI
T
($)
1 Cash 7,150 - - - 7,150 - - - 7,150 -
2 Accounts Receivable 6,000 - 1,000 - 7,000 - - - 7,000 -
3 Supplies 2,000 - - 1,400 600 - - - 600 -
4 Prepaid Insurance 3,000 - - 250 2,750 - - - 2,750 -
40 Anisul islam
S
N
Account titles

Trial Balance

Adjustment


Adjusted
Trial
Balance


Income
stateme
nt

Balance
sheet
Dr.
($)
Cr.
($)
Dr.
($)
Cr.
($)
Dr.
($)
Cr.
($)
Dr.
($)
Cr.
($)
Dr.
($)
Cr.
($)
5 Office equipment 15,000 - - - 15,000 - - - 15,000 -
6 Accumulated
depreciation-office
equipment
- - - 250 - 250 - - - 250
7 Accounts payable - 4,500 - - - 4,500 - - - 4,500
8 Unearned service
revenue
- 4,000 2,500 - - 1,500 - - - 1,500
9 Salaries payable - - - 2,000 - 2,000 - - - 2,000
10 Utilities payable - - - 150 - 150 - - - 150
11 T.Masasi , Capital - 21,750 - - - 21,750 - - - 21,750
41 Anisul islam
S
N
Account titles

Trial
Balance
Adjustment
Adjusted
Trial
Balance

Income
statement

Balance
sheet
DEBIT
($)
CREDIT
($)
DEBIT
($)
CREDI
T
($)
DEBIT
($)
CREDI
T
($)
DEBIT
($)
CREDIT
($)
DEBI
T
($)
CREDI
T
($)
12 Service revenue - 7,900 - 2500+
1000
-
11,400
- 11,400 - -
13 Supplies expense - - 1,400
-
1,400 - 1,400 - - -
14 Depreciation expense - - 250
-
250 - 250 - - -
15 Insurance expense - - 250 - 250 - 250 - - -
16 Salaries expense 4,000 - 2,000 - 6,000 - 6,000 - - -
17 Rent expense 1,000 - - - 1,000 - 1,000 - - -
42 Anisul islam
S
N
Account titles

Trial
Balance
Adjustment
Adjusted
Trial
Balance

Income
statement

Balance
sheet
DEBIT
($)
CREDIT
($)
DEBIT
($)
CREDIT
($)
DEBIT
($)
CREDI
T
($)
DEBIT
($)
CREDI
T
($)
DEBIT
($)
CREDI
T
($)
18 Utilities expense - - 150 - 150 - 150 - - -
19 Total
38,150 38,150 - - - - 9,050 11,400 32,500 30,150
20 Net Income - - - - - - 2,350 - - 2,350
Totals
38,150 38,150 7,550 7,550 41,550 41,550 11,400 11,400 32,500 32,500
43 Anisul islam
Format for Income statement-1
Anisul islam 44
Particulars Amount($)
Sales
(-)Sales returns
(-)Sales discounts
(-)Sales allowances
(-)Sales commissions
(-)Freight out

=Total sales Revenue(a)
Opening /Merchandise Inventory(b)
Purchases
(-)Purchases returns
(-)Purchases discounts
(-)Purchases allowances
(-)Purchase commissions
(+)Freight in
=Total purchases(c)
=Goods available for sale(d=b+c)
(-)Closing /Merchandise inventory

=Cost of goods sold(e)
Gross profit / loss
(f=a-e)
Company name
Income statement
date
Anisul islam 45
Format for Income statement-2
Administrative expense Amount($)
Here all the Administrative expense will
be entered
=total(g)
Selling expense Amount($)
Here all the selling expense will be
entered
=total(h)
Gross profit / loss(f)
(-)Total operating Expense(g+h)
(-)Interest expense
(+)Interest revenue
= Net Profit /Loss
Sample answer Income statement-1
Anisul islam 46
Particulars Amount($)
Sales
(-)Sales returns & allowances
860,000
(10,000)
=Total sales Revenue(a) 850,000
Opening /Merchandise Inventory(b) 34,360
Purchases
(-)Purchases returns & allowances
(-)Purchase Discounts
(+)Freight in
640,000
(3,000)
(7,000)
5,060
=Total purchases(c) 635,060
=Goods available for sale(d=b+c)
(-)Closing /Merchandise inventory

669,420
36,200
=Cost of goods sold(e) 633,220
Gross profit
(f=a-e)
216,780
Metro Departmental store
Income statement
November 30,1996
Anisul islam 47
Sample answer Income statement-2
Administrative expense Amount($)
Salaries expense
Insurance expense
Rent expense
Utilities expense
Property tax expense
Depreciation expense-store equipment
84,000
4,500
19,000
10,600
3,500
9,500
=total(g) 131,100
Selling expense Amount($)
Salaries expense
Insurance expense
Delivery expense
Depreciation expense-delivery
equipment
Sales commission expense
36,000
4,500
8,200
4,000

14,000
=total(h) 66,700
Sample answer Income statement-3
Anisul islam 48
Gross profit / loss(f) 216,780
(-)Total operating Expense(g+h) (197,800)
(-)Interest expense (8,000)
(+)Interest revenue 5,000
= Net Profit /Loss 15,980
Format for Balance sheet
Anisul islam 49
Company name
Balance sheet
Date
Asset Amount($) Liability & capital Amount
Short term asset Short term liability
cash *payable
Accounts receivable Unearned revenue
notes receivable others
Closing inventory Total short term liability(a)
Prepaid *expense Long term liability
supply Mortgage loan
others others
Total short term asset(a) Total long term liability(b)
Long term asset Total liability ( c = a + b )
land Equity
equipment Capital
Less: Accumulated depreciation Less : withdraw
others Add : profit or
Less : loss
Total long term asset(b) Total capital(d)
Total asset ( c = a + b ) Total liability and capital
(c +d)
Sample answer for Balance sheet
Anisul islam 50
Metro Department store
Balance sheet
November 30,1996
Asset Amount($) Liability & capital Amount($)
Short term asset Short term liability
cash 8,000 Accounts payable 37,310
Accounts receivable 11,770 Notes payable 46,000
Closing inventory 36,200 Property taxes payable 3,500
Prepaid Insurance 4,500 Sales commissions payable 6,000
= Total short term asset(a)
60,470 = Total short term liability(a)
92.810
Long term asset Long term liability
Delivery Equipment(57,000)
(-)Accumulated depreciation on delivery
equipment(19,680)
Store Equipment(125,000)
(-)Accumulated depreciation on delivery
equipment(41,800)

37,320

83,200


-
= Total long term asset(b)
120,520 = Total long term liability(b) 0
= Total liability ( c = a + b ) 92,810
Capital(84,200)
(-)withdraw(12,000)
profit
72,200

15,980
Total capital(d) 88,180
Total asset ( c = a + b ) 180,990 Total liability and capital
(c +d)
180,990