Fundamentals Of Accountancy, Business, And Management (FABM11)
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Class notes Fundamentals Of Accountancy, Business, And Management (FABM11)
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Course
Fundamentals Of Accountancy, Business, And Management (FABM11)
Institution
Bulacan State University
This class notes discuss 3 basic topics in accounting including the accounting equation, types of major accounts, and the book of accounts. It also features proper journal entry procedure, function of journal and ledger in bookkeeping, and other essential topics designed to easily understand by the...
Fundamentals Of Accountancy, Business, And Management (FABM11)
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Fundamental of Accounting and Business Management
Lesson 7: The Accounting Equation
Study Materials October 2018
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Accounting Equation
The accounting equation is Assets = Liabilities + Equity
For every transaction, the accounting equation should always be balanced.
Assets – are resources owned by the business
Liabilities – are obligations by the business.
Equity – is the residual interest of the owner of the business. Meaning, any assets left after
paying liabilities is the right of the owner of the business.
There are four elements that affect equity:
1. Investment;
2. Withdrawal;
3. Revenue, and;
4. Expenses
Illustration of the effects of the transaction in the accounting elements
Assets invested by the owner
July 1 – Paolo Reyes started a delivery service on July 1, 2013. The following transactions occurred
during the month of July. He invested PHP300,000 cash and Cars amounting to PHP200,000
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