Task Sheet #3 Categorizing Grid Merchandising Accounts

KNOW WHERE TO PLACE

We were task to give example in each of the common transactions and bookkeeping for merchandising business, identify the accounting elements which is the debit and credit accounts, and the assets, liabilities, and owner's equity.

ACCOUNTING ELEMENTS/BASIC CONCEPTS

Debit - value received of the business

Credit - value parted with

According to Accounting Coach,

"Assets - things that are resources owned by a company and which have future economic value that can be measured and can be expressed in dollars. Examples include cash, investments, accounts receivable, inventory, supplies, land, buildings, equipment, and vehicles.

Liabilities - obligation and it is reported on a company's balance sheet. A common example of a liability is accounts payable. Accounts payable arise when a company purchases goods or services on credit from a supplier. When the company pays the supplier, the company's accounts payable is reduced.

Owner's Equity - represents the owner's investment in the business minus the owner's draws or withdrawals from the business plus the net income (or minus the net loss) since the business began. Mathematically, the amount of owner's equity is the amount of assets minus the amount of liabilities."

Investments of the owner - owners of merchandising business establish the operation through investments of cash and non-cash assets.

Incurring Liabilities - possible to acquire assets which cash is limited.

Borrowing of money - funds can be borrowed with agreement of paying the interest upon maturity or deducting it from the loan proceeds.

18/20 I learned how to make examples of this three transactions and bookkeeping for merchandising business. Honestly, I followed the format of the example of our teacher to easily provide one. I learned that after the name of the owner, there should be written "on behalf of the business" because according to business entity concept, activities of the business were distinct from the owner and the business is the one buying, incurring, and borrowing money, or any activities that will satisfy basic concept. I received that score because I wrote the interest expense in the owner's equity. I thought that it should be recorded upon maturity date where in fact it should've been journalized upon entry. I learned that I should know be familiar of the account titles for me to know where to place.

#assets #liabilities #ownersequity #debit #credit #accountingelements #basicconcepts