LIABILITIES

These are the payables of business. Hence, liabilities involve the amounts that the business owes. These are the current obligations of the business.  There are two types of liabilities. Current liabilities Non-current liabilities Current liabilities These are the liabilities that should be settled within a year. Therefore, liabilities are short Read more…

Assets

Assets are resources that the business owns and controls. There are two types of assets. Current assets  Non-current assets Current assets These are assets that are expected to be used or convert into cash within a year (12 months). Current assets are the short term assets of a business. Examples: Read more…

Accounting Elements

Introduction to Accounting Elements Why you should know the accounting elements? Accounting elements are the building blocks of accounting. These are the basic terms that you should know to understand complex accounting theories. There are 05 accounting elements. Assets Equity Liabilities Income Expenses These five accounting elements build up the Read more…

Double Entry Practice Question 01

Question  The following transactions occurred within the first week of March of a business. Record these transactions in accounts. Introduced capital by the owner Rs. 200 000 Purchased equipment Rs. 20 000 Received commission income Rs. 50 000 Paid salaries Rs. 20 000 Invested in a fixed deposit Rs. 30 Read more…

Accounting Equation

Fundamentals of Accounting Equation for a sole proprietorship The accounting equation is the foundation for double-entry bookkeeping system. The key principle behind the accounting equation is that the total assets of a business should be equal to the total ownership of those assets.   Assets are the resources that a Read more…

Double-Entry System

Introduction to Double-Entry System Generally, a transaction impacts on two items in the accounting equation. This is called the dual impact of a transaction. We record this the dual impact of a transaction in ledger accounts. One impact is recorded in one account as the debit entry. The other entry Read more…