Accounting: Balance Sheet and Business

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Accounting Basics f or S t u d e n t s
Ba sic a ccou nting le ss ons an d qu es tio ns fo r high s cho ol a nd c ollege s tude nts

By Michael Celender

Accounting Basics for Students Copyright © 2010 Michael Celender. All Rights Reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including but not limited to digital copying and printing, without the express written permission of the author. The author, Michael Celender, has made his best effort to produce a high quality, informative and helpful book. In spite of this, he makes no representation or warranties of any kind with regard to the completeness or accuracy of the contents of the book. The author hereby accepts no liability of any kind for any losses or damages caused or alleged to be caused, directly or indirectly, from using the information contained in this book.

CONTENTS
ACKNOWLEDGEMENTS ............................................................................................... v FOREWORD .................................................................................................................... vii HOW TO PASS (OR EXCEL IN) YOUR ACCOUNTING TESTS AND EXAMS .......................... viii CHAPTER 1: BASIC CONCEPTS .................................................................................. 1 WHAT IS ACCOUNTING?..................................................................................................... 1 THE ACCOUNTING EQUATION............................................................................................. 3 ASSETS .............................................................................................................................. 4 LIABILITIES ....................................................................................................................... 7 THE OWNER’S EQUITY ...................................................................................................... 8 FINANCIAL POSITION ......................................................................................................... 9 SELF-ASSESSMENT ........................................................................................................... 11 CHAPTER 2: TRANSACTIONS AND THE DOUBLE-ENTRY SYSTEM.............. 15 TRANSACTIONS................................................................................................................ 15 GEORGE’S CATERING ....................................................................................................... 16 INCOME… EXPENSES… PROFIT? ..................................................................................... 20 INCOME ........................................................................................................................... 21 INCOME ON CREDIT .......................................................................................................... 23 EXPENSES ........................................................................................................................ 27 EXPENSES ON CREDIT ...................................................................................................... 29 SELF-ASSESSMENT ........................................................................................................... 32 CHAPTER 3: DEBITS AND CREDITS ........................................................................ 37 BEFORE WE START: ANOTHER VIEWPOINT ....................................................................... 37 WHAT ABOUT A DECREASE IN THE FIVE ELEMENTS? ........................................................ 39 DEBIT? CREDIT? HUH?! .................................................................................................. 41 APPLYING DEBITS AND CREDITS ...................................................................................... 43 INCOME...
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