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Classification of Accounts:
Assets:
Assets are the economic resources owned by the business to generate revenue from
operations. Assets are classified into current asset and non-current (fixed) asset.
Current assets have useful life with-in a year, whereas Non-current assets have
useful life more than a year.
Examples of Current Assets:
Cash/Bank
Account Receivable
Note Receivable
Prepaid Assets
Merchandise/Inventory
Office Supplies
Advance to Employees
Examples of Non-Current Assets:
Machinery
Plant
Equipment
Furniture
Land
Building
Vehicle
PatentCopyrights
Liabilities:
Liabilities are the economic resources owned by the business. Liabilities are
obligations to pay. Liabilities are classified into current and long-term liabilities.
Current Liability that will accrue within a year. Long-term liability is a liability which
will come due after a year.
Examples of Current Liabilities:
Account Payable
Bank Overdraft
Short-Term Loan
Notes Payable
Salaries Payable
Interest Payable
Unearned Income
Advance from Customer
Debentures Payable
Long-Term Loan
Revenue:
Inflow of assets (cash or others) for the goods sold or services rendered in a given
period.
Examples of Revenue:
Rent Income
Commission Income
Interest Income
Purchase Discount
Sales
Sales Return and All.
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XI Commerce Accounting
Classification of Accounts:
Expense:
The economic costs that a business incurs through its operations to earn revenue. In
order to maximize profits.
Examples of Expense:
Rent Expense
Commission Expense
Interest Expense
Sales Discount
Bad Debt Expense
Depreciation Expense
Purchases
Purchases Return & All.
Salaries Expense
Accrued Expense
Owners Equity:
The portion of the balance sheet that represents the capital received from investors
in exchange for stock, donated and retained earnings. In other words, investment in
particular business.
Drawing:
Withdrawal of investment/cash from business by owner for it personal/private use.
Increase
Decrease
Assets
Debit
Credit
Liabilities
Credit
Debit
Capital/Owner Equity
Credit
Debit
Revenue
Credit
Debit
Expenses
Debit
Credit
Drawing
Debit
Credit
Accounting Equation:
Assets = Liabilities + Equity
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XI Commerce Accounting
Definitions:
List of Complete Accounting Cycle:
1.) Journalizing the Transactions in
General Journal
1.)
Ledger Book
2.)
Control Ledger
3.)
Subsidiary Ledger
4.)
Inventory Control
5.)
Final Account
List of Statements:
1.)
2.)
4.)
6.)
8.)
Cash Book
Sales Book
Sales Return Book
Bills Payable Book
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