Реферат: Double Entry Types of Balance Sheet

• Machinery

• Furniture

• Debtors (money owed from customers)

• Stock/Inventory

Liabilities

Liabilities are those items which are owed by the business to bodies outside of the business. Examples of liabilities are:

• Loans to banks

• Creditors (money owed to suppliers)

• Bank overdrafts

Owner's Equity

The simplest way to understand the accounting equation is to understand what makes up “owner's equity”.

By rearranging the accounting equation you can see that Owner's Equity is made up of Assets and Liabilities.

Owner's Equity = Total Assetsless Total Liabilities

Owner's Equity can also be expressed as:

Owner's Equity = Capital invested by owner + Profits (Losses) to date (also known as 'Retained Earnings')

Rearranging the equation again, therefore:

Total Assets - Total Liabilities = Capital + Retained Earnings

The accounting equation establishes the basis of Double Entry Bookkeeping

Double Entry Bookkeeping

All accounting transactions are made up of 2 entries in the accounts: adebit and a credit .

For example, if you purchased a book, your value of books would increase, but your value of cash would decrease by the same value, at the same time. This is double entry bookkeeping.

Ledger Accounts

A ledger account is an item in either the Profit & Loss account (which we'll discuss shortly) or the balance sheet. A Ledger account is either a:

• Asset

• Liability

• Equity

• Income

• Expense

The example of purchasing a book, mentioned above, can be shown in the form of ledger "T" accounts as follows:

“Dr” is short form “Cr” is short form for Debit for Credit