MUHASEBE I

A liability is a debt of company –that is, something the business owes. A payable is always a liability. The most typical liability accounts:

Accounts Payable. The Accounts Payable account is the opposite of Accounts Receivable. A or The company promises to pay a debt in the future. Arises from a credit purchase.

Notes Payable. A note payable is the opposite of a Note Receivable. The Notes Payable account includes the amounts the company must pay because the company signed a written promise to pay a debt amount in the future. Notes payable, like notes receivable, usually involves interest.

Unearned Revenue (Advances from customers). The obligation occurs when a company receives cash from a customer in advance but has not provided the product or service. The company gives promise to provide services or deliver goods in the future.

Accrued Liabilities. An accrued liability is a liability for an expense you have not yet paid. In another words, an amount owed but not paid yet. Interest Payable, Salary Payable, and Income Tax Payable are typical accrued liability accounts for most companies.

Assets are economic resources that provide a future benefit for a business –something the business owns. Most firms use the following asset accounts:

Debiting refers to the act of making an entry on the left side of an account and when debit amount exceeds credits, debit balance occurs.

Assets, distributions, and expenses increase by debiting (on left side) and normally show debit balance.

In a journal entry, Debits are ALWAYS entered first, and Credits are INDENTED and listed second.

The journalizing and posting process has five steps:
Step 1: Identify the accounts and the account types (asset, liability, or equity).
Step 2: Decide whether each account increases or decreases and then apply the rules of debits and credits.Step 3: Record the transaction in the journal.
Step 4: Post the journal entry to the ledger.
Step 5: Determine whether the accounting equation is in balance.

A trial balance is a list of accounts and their balances at a given time. The trial balance proves the mathematical equality of debits and credits after posting.

A note payable is the opposite of a Note Receivable. The Notes Payable account includes the amounts the company must pay because the company signed a written promise to pay a debt amount in the future. Notes payable, like notes receivable, usually involves interest.

The company will receive assets (for example, cash) in exchange for goods sold and services rendered. Therefore, company’s assets and owner’s equity will increase. The increase in owner’s equity created by delivering goods or services to customers is called revenue. The company uses as many revenue accounts as needed. Examples include Sales Revenue account, Service Revenue account, Interest Revenue account, or Rent Revenue account.