Umair Ali Khan.docx

Asset account Assets are what an enterprise owns. Most enterprise keeps separate accounts for recoding increases and decreases in each major asset. The following are some of the usual asset accounts. Property, plant, and Equipments (PP&E)  Land The land account shows land owned by the enterprise and kept for use in its business.  Buildings The building account records acquisitions and disposal of buildings used by an enterprise to carry out its operation. An enterprise records its building and the land on which it stands in separate accounts. There are separate accounts for different types of buildings such as factory buildings, warehouses and office buildings.  Equipment A business often owns different types of equipment and records each major type of equipment in a separate account. Thus the plant and machinery account shows various kinds of factory equipments. The office equipment account records photocopiers, fax machines and computers. The furniture and fittings account records chairs, tables and cupboards.

Current Assets Current asset include asset that are expected to be changed into cash within a year from the balance sheet data.  Cash The cash account shows receipts and payments of cash. Cash includes coins,currency, cheques and amounts deposited in banks in various types of accounts. Separate accounts exits for each bank with whom a business has transactions. Firm that have major overseas operations keep accounts with banks abroad in the currency of the countery.  Prepaid expenses Sometimes a business pays for services before they have been received or used . Usually it is not possible to get a refund of the amount for the benefits

not received. When you buy a prepaid phone service,you pay first and use the service later. Any unused portion of the service can be used later but there will be not refund. Rent ,insurance ,magnazine subscriptions and property taxes are other examples of prepayments. The prepaid expenses account records all such amounts,to the extent the related benefits have not expired. If a refund for the unused portion of a service is possible, the amount may appear in the advances to suppliers accounts.  Account receivable

Business enterprises often sell goods and services on credit so that customers can pay after the specified period of credit. The accounts receivable or debtors account records the amounts receivable from customers for sales on credit. In addition there are separate accounts for individual debtors.

Liability account Liability account a credit general ledger account in which a company account its balance, obligations, purchaser deposit and customer prepayments, certain late income taxes, etc. that are the result of a past transaction. There are two types of liabilities current liability and long-term liability.

Current Liabilities A current liability is one the company expect to give in the short term using asset noted on the current account.The current liabilities contain accounts payable, salaries, taxes and late revenues (services or goods yet to be deliver but for the cash has already be received).  Accounts Payable Several companies buy inventory on credit from seller or goods. When the dealer delivers the stock, the company generally has 30 days to pay for it. This responsibility to pay is referred to as payments on accounts payable. No written deal needs to be in place. The assure to pay can also be even implied.  Accrued Expenses Since accounting period rarely fall genuinely after an expense period, company often incur fixed cost but don’t give them until the next period. The expense are called accrued liabilities. Take utilities for example. The current month’s utility bill is generally due the following month. The service expense are accrue and paid in the next stage.

Non-current Liabilities  Bonds Payable several companies choose to issue bond to the public in order to financial support future growth. Bonds are effectively contracts to pay the bondholders the face amount plus point notice on the maturity date. Bonds are almost forever long-term liabilities.  Notes Payable A note payable is a long-term agreement to borrow currency from a creditor. The most general notes payable are mortgages and own notes.  Unearned Revenue Unearned income is slightly different from other liability because it does not involve direct borrow. Unearned revenue arise when a company sell goods or services to a buyer who pays the company but does not receive the goods or services. In result, this customer paid in advance for is buy. The company must identify a liability because it owe the customer for the goods or services the customer paid for.

Long-term liabilities A long term liability(LTL) is a company done a agreement to pay more than one year servies.Long-term liability is generally official through paperwork that list is terms such as the principal amount involved, its interest payments, and when it comes due. These types of long-term liabilities are use in bank loan, notes payable and bond payable. Examples of Long-Term Liabilities The long-term some portion of a bond payable is report as a long term obligation. Since a bond payable typically covers a drawn period of time, the regular of a bond payable is long term. The present estimation of a rent installment that reach out recent year is a long term obligation. Conceded salary assess liabilities regularly stretch out to future expense years, and if so, the duty liabilities are viewed as a long term obligation. Home loans, auto installments or different credits for hardware, gear or land are long term with the exception of the following installments to be made in the subsequent a year.

Relationship between Assets and Liabilities The bookkeeping recipe basically demonstrate what the firm claims (its advantages) are bought by either what it owes (its liabilities) or by what its proprietors contribute (its shareholders value. This relationship is communicated as a mathematical statement: Assets = Liabilities + Owner's Capital

International This mathematical statement needs to adjust on the grounds that everything the firm possesses (resources) must be acquired with something, either a risk or proprietor's capital. Resources allude to things like stock or records receivable. May be a standout amongst the most troublesome ideas to comprehend in starting bookkeeping is the relationship between resources, liabilities, salary and costs. In the twofold section bookkeeping framework generally utilized by business and taught as a part of bookkeeping classes, the advantages and pay should offset each other. In a dissolvable business, resources gained are recorded as a charge sum; salary is entered as a credit sum. To balance the advantage and obligation passages, we enter pay as an acknowledge sum and costs as charge sums. The meanings of debit and credit have been established.