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1st year accounting notes written By Tariq Aziz
HEAD OF ACCOUNTS / ELEMENTS OF ACCOUNTS/NATURE OF ACCOUNTS
There are only five heads of accounts to maintain the books of accounts.
1) Assets.
2) Liabilities.
3) Owner’s equity / Proprietorship.
4) Revenue and income.
5) Expenditure/ Expense
What are the three basic elements of accounting
The three major elements of accounting are: Assets, Liabilities, and Capital.
Assets
CURRENT ASSETS
An asset of a business intended for continuing use, rather than a short-term current asset (such as merchandise) is called fixed asset.
There are two types of fixed assets:
Land, Building, Machinery, Furniture, Equipment, etc.
Intangible Fixed Assets:::
Goodwill, Copyright, Trademark, Patents, etc.
LIABILITIES
CURRENT LIABILITIES
LONG TERM LIABILITIES
03)OWNER’S EQUITY
04) Income or Revenue
Contra Income:
05) Expense
ASSETS | LIABILITIES | EXPENSES |
Current Assets: | Current Liabilities: | Purchases |
Cash on hand | Accounts payable | Salaries expenses |
Cash at bank | Notes/bills payable | Rent expenses |
Accounts receivable | Accrued expenses | Commission expenses |
Notes/bills receivable | Unearned | Interest expenses |
Merchandise inventory | Bank overdraft | Repairs expenses |
Accrued income | Long Term Liabilities: | Advertising expenses |
Prepaid | Bank loan payable | Utilities expenses |
Supplies | Mortgage payable | Transportation |
Marketable securities | Debentures payable | Depreciation expenses |
Contra Current Asset: | Bad debts expenses | |
Allowance for bad debts | Contingent Liabilities: | General expenses |
Fixed Assets: | Miscellaneous expense | |
Tangible Fixed Assets: | OWNER’S EQUITY | Selling expenses |
Land | Capital | Administrative expenses |
Building | Drawings | Amortization |
Equipment | Profit and loss | Other expenses |
Furniture | Wages expenses | |
Machinery | REVENUE & INCOME | Carriage inward |
Vehicles | Sales | Carriage outward |
Contra Fixed Assets: | Commission income | Printing and stationary |
Allowance for depreciation | Rent income | Postage and telegram |
Intangible Fixed Assets: | Interest income | Supplies expenses |
Goodwill | Fees income | Depletion |
Patents | Repairs income | Cost of goods sold |
Copyright | Other Income | |
Trademark | Contra Income: | Contra Expenses: |
Fictitious Assets: | Sales returns and allowance | Purchase returns & allowance |
Preliminary expenses | Sales discount | Purchase discount |
Ordinary shares discount | ||
Retained earnings deficit | ||
Contingent Assets: |
Normal balance: Debit
Normal balance: Debit
Normal balance: Credit
Normal balance: Credit
Normal balance: Credit
Q)What is accounting equation formula?
State the fundamental accounting equation.
Question 02) Rules of debit and credit
Debit | Credit |
Increase in assets | Decrease in assets |
Increase in expenses | Decrease in expenses |
Decrease in liabilities | Increase in liabilities |
Decrease in income | Increase in income |
Decrease in equity | Increase in equity |
Accounting Element | Normal Balance | To Increase | To Decrease |
1. Assets | Debit | Debit | Credit |
2. Liabilities | Credit | Credit | Debit |
3. Capital | Credit | Credit | Debit |
4. Withdrawal | Debit | Debit | Credit |
5. Income | Credit | Credit | Debit |
6. Expense | Debit | Debit | Credit |
Question # 1: 1989 Regular & Private, 2012 Regular & 2012 Private – BIEK
Question # 2: 1998 Regular & Private & 2003 Regular & 2012 Regular – BIEK
For any FIVE of the following accounts state whether they are asset, liability, owner’s equity,
expense or income. Also state whether they would normally have a debit or credit balance:
1st Test For Accounting students 04 August 2018
Question # 1: the following accounts state whether they are asset, liability, owner’s equity,
expense or income. Also state whether they would normally have a debit or credit balance:
Question # 2: the following accounts state whether they are asset, liability, owner’s equity,
expense or income. Also state whether they would normally have a debit or credit balance:
1.Cash in hand 2 cash at bank 3. Stationary/ supplies 4. capital
5.Goods/stock/Inventry 6. Salary expense 7. Salary payable 8. Bank draft
Question # 04
Total assets 3000 and total liabilities 1500
Question # 05
total liabilities 150,000 and owner equity 150,000
Question # 06
Total assets 110,000 and owner equity 90,000
Question # 07 The owners of a start?up invest $1,000,000 into the business. After one year of operations, the business has assets of $850,000 and losses of $300,000. What are the total liabilities at the end of the first year?
Question # 08 At the end of an accounting period, a company’s total assets equaled $576,000, and liabilities equaled $245,000. How much was the company’s owners’ equity?
The Moon Service Inc. engaged in the following transactions during the month of November 2015:
Required: Record the above transactions in a general journal.
The company started business on June 6, 2013. The business was started with $300,000. The transactions they engaged in during their first month of business are below:
Date | Transaction |
June 8 | An amount of $50,000 was paid for six months of rent. |
June 9 | Equipment costing $100,000 was purchased using $40,000 cash. The remaining amount of $60,000 is a one year note with an interest rate of 3.4% |
June 10 | Office supplies were purchased totaling $25,000 on account. |
June 16 | Received $39,400 in cash for services rendered to customers. |
June 16 | Paid the account for office supplies purchased June 10. |
June 20 | $63,900 worth of services were given to customers. Received cash amount of $43,700. Customers promised to pay remaining amount of $20,200. |
June 21 | Paid employees’ wages for June 8-June 21. Wages totaled $23,500. |
June 21 | Received $20,200 in cash for services rendered to customers on June 20. |
June 22 | Received $6,300 in cash as advanced payment from customers. |
June 27 | Office supplies were purchased totaling $3,500 on account. |
June 28 | Electricity bill received totaling $1,850. |
June 28 | Phone bill received totaling $2,650. |
June 28 | Miscellaneous expenses totaled $4,320. |
These events would then be recorded into the accounting journal. The table below records the journal entries for the events above.
Date | Account | Debit | Credit |
June 6 | Cash Capital | 300,000 | 300,000 |
June 8 | Prepaid rent | 50,000 | |
Cash | 50,000 | ||
June 9 | Equipment | 100,000 | |
Cash | 40,000 | ||
Notes Payable | 60,000 | ||
June 10 | Office Supplies | 25,000 | |
Accounts Payable | 25,000 | ||
June 16 | Cash | 39,400 | |
Service Revenue | 39,400 | ||
June 16 | Accounts Payable | 25,000 | |
Cash | 25,000 | ||
June 20 | Cash | 43,700 | |
Accounts Receivable | 20,200 | ||
Service Revenue | 63,900 | ||
June 21 | Wages Expense | 23,500 | |
Cash | 23,500 | ||
June 21 | Cash | 20,200 | |
Accounts Receivable | 20,200 | ||
June 22 | Cash | 6,300 | |
Unearned Revenue | 6,300 | ||
June 27 | Office Supplies | 3,500 | |
Accounts Payable | 3,500 | ||
June 28 | Electricity Expense | 1,850 | |
Utilities Payable | 1,850 | ||
June 28 | Telephone Expense | 2,650 | |
Utilities Payable | 2,650 | ||
June 28 | Miscellaneous Expense | 4,320 | |
Cash | 4,320 |
Weekly accounting Written by Tariq Aziz
1st year test 27 august 2018
Company “Bewaqoof bantey raho” started business with cash Rs 20,000 , Furniture Rs 30,000 and Equipment Rs 40,000. On august 01, 2018
Best of luck
Test
01)the following accounts state whether it is an asset, liability or owner’s equity; also state whether it would normally have a debit or credit balance:
02) the following accounts state whether they are asset, liability, owner’s equity, expense or income. Also state whether they would normally have a debit or credit balance:
03)Transactions given below relate to the business of Atlas Company. For each of the transaction, you are required to indicate the effects on the elements of accounting equation using (+) for increase, (-) for decrease, and (0) for no change.
04)Cash invested in the business by the owner Rs.50,000.
Purchased supplies for cash Rs.1,000.
Purchased equipment on account Rs.15,000.
Paid cash to creditor Rs.5,000.
Returned equipment to the supplier Rs.1,000.
Withdrew cash by owner for personal use Rs.400.
Require solve this question using accounting equation
Illustration01: Mr. Salman Proprietor.
(i) Mr. Salman started business with capital (brought in
cash)Rs. 40,000.
(ii) Paid salaries to staff Rs. 5,000.
(iii) Purchased machinery for Rs. 20,000 in cash.
(iv) Placed an order with Ahmed & Co. for goods for Rs. 5,000.
(v) Opened a Bank account by depositing Rs. 4,000.
(vi) Received pass book from bank.
(vii) Appointed Tariq as Manager on a salary of Rs. 4,000 per
month.
(viii) Received interest from bank Rs. 500.
(ix) Received a price list from Lalit.
REQUIRED
Record the effect of each transaction
Illustration 2
REQUIRED
Record the effect of each transaction
Illustration 3 )Jan. 1 Mohan started business with cash 80,000
Jan. 6 Purchased goods from Ram on credit 30,000
Jan. 8 Sold goods on cash 6,000
Jan. 15 Bought Furniture from Yash for cash 8,000
Jan. 18 Paid Salary to manager 6,500
Jan. 20 Paid Rent to land lord in cash 1,000
REQUIRED
Record the effect of each transaction
Illustration 4 :mr tariq 2005
Nov. 1 Paid to Arun Rs. 5,250 discount allowed by him Rs.50
6 Received from Somesh Rs. 1,900 and from Komesh Rs. 400
8 Goods purchased for cash Rs. 4,000
Furniture purchased for cash Rs. 3,000
Paid cash to Raman Rs. 2,090
Paid Salary in cash Rs. 7,600
Paid Rent in cash Rs. 1,400
question 01)
01)transaction
02)transaction
03)transaction
04) no transaction
05)transaction
06) no transaction
07) no transaction
08)transaction
09)no transaction
ACCOUNTING EQUATION
Assets = liabilities + owner’s equity
liabilities = Assets – owners equity
owner’s equity = Assets – liabilities
Question # 01
Total assets 300,000 and total liabilities 150,000 calculate Equity?
Solution
Accounting Equation
Assets = liabilities + owner’s equity
Owner’s equity = Assets – liabilities
Owner’s equity = 300,000-150,000
Owner’s equity = 150,000 |
Question # 02
total liabilities 150,000 and owner equity 150,000 calculate assets?
Solution
Accounting Equation
Assets = liabilities + owner’s equity
Assets = 150,000 + 150,000
Assets = 300,000 |
Question # 03
Total assets 110,000 and equity 90,000 calculate liabilities?
Solution
Accounting Equation
Assets = liabilities + owner’s equity
Liabilities = Assets – owner’s equity
Liabilities = 110,000 – 90,000
Liabilities = 20,000 |
Question # 03 (a) The assets of business entity having liabilities of Rs.60,000 and owner’s equity Rs.120,000
Solution
Accounting Equation
Assets = liabilities + owner’s equity
Assets = 60,000 + 120,000
Assets = 180,000 |
Rs.250,000.
Solution
Accounting Equation
Assets = liabilities + owner’s equity
Owner’s equity = Assets – liabilities
Owner’s equity = 600,000 – 250,000
Owner’s equity = 350,000 |
Rs.70,000.
Solution
Accounting Equation
Assets = liabilities + owner’s equity
Liabilities = Assets – owner’s equity
Liabilities = 310,000 – 70,000
Liabilities = 240,000 |
Question # 4)1993 Regular & Private – BIEK For each of the following determine the underlined missing item:-
(a) The liabilities of a business entity having assets of Rs.200,000 and owner’s equity of
Rs.90,000.
Solution
Accounting Equation
Assets = liabilities + owner’s equity
Liabilities = Assets – owner’s equity
Liabilities = 200,000 – 90,000
Liabilities = 110,000 |
(b) The assets of a business entity having liabilities of Rs.50,000 and owner’s equity of
Rs.100,000.
Solution
Accounting Equation
Assets = liabilities + owner’s equity
Assets = 50,000 + 100,000
Assets = 150,000 |
(c) The owner’s equity of a business having assets of Rs.80,000 and liabilities of Rs.40,000.
Solution
Accounting Equation
Assets = liabilities + owner’s equity
Owner’s equity = Assets – liabilities
Owner’s equity = 80,000 – 40,000
Owner’s equity = 40,000 |
(d) The revenue of a business entity having expenses of Rs.60,000 and net income of
Rs.15,000
Solution
Revenue = expense + Profit/net income
.Revenue = 60,000 + 15,000
Revenue = 75,000 |
.
(e) The expenses of a business entity having revenues of Rs.90,000 and net loss of Rs.8,000.
Solution
Expense = Revenue + Loss
Expense = 90,000 + 8,000
Expense = 98,000 |
.
Question # 5) 2002 Private – BIEK For each of the following determine the underlined missing item:-
(a) The liabilities of a business entity having assets of Rs.400,000 and owner’s equity of
Rs.180,000.
Solution
Accounting Equation
Assets = liabilities + owner’s equity
Liabilities = Assets – owner’s equity
Liabilities = 400,000 – 180,000
Liabilities = 220,000 |
(b) The assets of business entity having liabilities of Rs.100,000 and owner’s equity of
Rs.200,000.
Solution
Accounting Equation
Assets = liabilities + owner’s equity
Assets = 100,000 + 200,000
Assets = 300,000 |
(c) The owner’s equity of business having assets of Rs.1600,000 and liabilities of Rs.80,000.
Solution
Accounting Equation
Assets = liabilities + owner’s equity
Owner’s equity = Assets – liabilities
Owner’s equity = 1600,000 – 80,000
Owner’s equity = 1,520,000 |
(d) The revenues of business entity having expenses of Rs.120,000 and net income of Rs.30,000.
Solution
Revenue = expense + Profit/net income
Revenue = 120,000 + 30,000
Revenue = 150,000 |
(e) The expenses of a business entity having revenues of Rs.180,000 and net loss of Rs.16,000.
Solution
Expense = Revenue + Loss
Expense = 180,000 + 16,000
Expense = 196,000 |
Question # 6:
1994 Regular & Private – BIEK Compute the missing amount in each of the following independent cases:-
(i) The assets of Javeed Company total Rs.350,000 and the owner’s equity amounts to
Rs.110,000. What is the amount of liabilities?
Solution
Accounting Equation
Assets = liabilities + owner’s equity
Liabilities = Assets – owner’s equity
Liabilities = 350,000 – 110,000
Liabilities = 240,000 |
(ii) The balance sheet of Star Company shows owner’s equity of Rs.80,000 which is equal
to one third amount of total assets. What is the amount of liabilities?
Solution
Compute one third amount of total assets.
80,000×3/1
Assets = 240,000
Accounting Equation
Assets = liabilities + owner’s equity
Liabilities = Assets – owner’s equity
Liabilities = 240,000 – 80,000
Liabilities = 160,000 |
(iii) Moon Company had assets in the amount of Rs.230,000 on December 31, 1988. Assets
increased to Rs.320,000 by December 31 of 1989. During this same period, liabilities
increased by Rs.85,000. The owner’s equity at December 31, 1988 amounted to
Rs.160,000. Compute the amount of owner’s equity at December 31, 1989.
Solution
Accounting Equation
Assets = liabilities + owner’s equity
1988
Liabilities = Assets – owner’s equity
Liabilities = 230,000 – 160,000
Liabilities = 70,000 |
Accounting Equation
Assets = liabilities + owner’s equity
1989
owner’s equity = Assets – Liabilities
owner’s equity = 320,000 – (70,000 + 85,000)
owner’s equity = 320,000 – 155,000
owner’s equity = 165,000
Transactions given below relate to the business of Atlas Company. For each of the transaction,
you are required to indicate the effects on the elements of accounting equation using (+) for
increase, (-) for decrease, and (0) for no change. Use the headings and follow the example given
below:-
Transaction no. Assets Liabilities Owner’s equity
1 + 0 +
Transaction No. | Assets | Liabilities | Owner’s Equity |
(i) | + | 0 | + |
(ii) | + | + | 0 |
(iii) | 0 | 0 | 0 |
(iv) | – | – | 0 |
(v) | + | 0 | + |
(vi) | – | 0 | – |
(vii) | – | 0 | – |
Question # 1: 1994 Regular & Private – BIEK Transactions given below relate to the business of Tara Company. Indicate the effect of each of these transactions upon the total amounts of the company’s assets, liabilities and owner’s equity:-
(i) Owner invested cash in the business.
(ii) Purchased a typewriter on credit.
(iii) Collected an accounts receivable.
(iv) Owner withdrew cash from the business for his private use.
(v) Paid a liability.
(vi) Sold land for cash at a price excess of cost.
(vii) Borrowed money from a bank.
(viii) Purchased office equipment for cash.
(ix) Returned on credit some of the office equipment previously purchased on credit but
not yet paid for.
Question # 2:
2002 Private – BIEK Transactions given below relate to the business of New Way Company.
For each of the transaction, you are required to indicate the effects on the elements of
accounting equation using (+) for increase, (-) for decrease, and (0) for no change. Use the
headings and follow the example given below:-
FOR EXAMPLE
Transaction no. Assets Liabilities Owner’s equity
a + 0 +
(a) Started business with cash investment.
(b) Purchased building for cash.
(c) Purchased merchandise on credit.
(d) Sold merchandise at a cost on credit for the same amount.
(e) Paid to accounts payable.
(f) Withdrew cash from the business for personal use of the owner.
(g) Paid cash for utility bills.
ACCOUNTING TEST
QUESTION 01)
Transactions given below relate to the business of Atlas Company. For each of the transaction,
you are required to indicate the effects on the elements of accounting equation using (+) for
increase, (-) for decrease, and (0) for no change. Use the headings and follow the example given
below:-
Transaction no. Assets Liabilities Owner’s equity
1 + 0 +
QUESTION 02)
Transaction no. Assets Liabilities Owner’s equity
a + 0 +
(a) Started business with cash investment.
(b) Purchased building for cash.
(c) Purchased merchandise on credit.
(d) Sold merchandise at a cost on credit for the same amount.
(e) Paid to accounts payable.
(f) Withdrew cash from the business for personal use of the owner.
(g) Paid cash for utility bills.
QUESTION 03)
1st year pagal Company had assets in the amount of Rs.530,000 on December 31, 2017. Assets increased to Rs.620,000 by December 31 of 1989. During this same period, liabilities increased by Rs.95,000. The owner’s equity at December 31, 2018 amounted to
Rs.500,000. Compute the amount of owner’s equity at December 31, 2017.
QUESTION 04)
01) The balance sheet of Star Company shows owner’s equity of Rs.100,000 which is equal to one third amount of total assets. What is the amount of liabilities?
02)The assets of Javeed Company total Rs.450,000 and the owner’s equity amounts to
Rs.210,000. What is the amount of liabilities?
QUESTION 05) (a) The assets of business entity having liabilities of Rs.60,000 and owner’s equity Rs.120,000
Rs.250,000.
Rs.80,000.
QUESTION 06)1993 Regular & Private – BIEK For each of the following determine the underlined missing item:-
(a) The liabilities of a business entity having assets of Rs.180,000 and owner’s equity of
Rs.80,000.
(b) The assets of a business entity having liabilities of Rs.60,000 and owner’s equity of
Rs.110,000.
(c) The owner’s equity of a business having assets of Rs.850,000 and liabilities of Rs.250,000.
(d) The revenue of a business entity having expenses of Rs.60,000 and net income of
Rs.15,000
(e) The expenses of a business entity having revenues of Rs.100,000 and net loss of Rs.15,000.
QUESTION 07)For each of the following determine the underlined missing item:-
(a) The liabilities of a business entity having assets of Rs.480,000 and owner’s equity of
Rs.280,000.
(b) The assets of business entity having liabilities of Rs.200,000 and owner’s equity of
Rs.300,000.
(c) The owner’s equity of business having assets of Rs.1500,000 and liabilities of Rs.900,000.
(d) The revenues of business entity having expenses of Rs.220,000 and net income of Rs.60,000.
(e) The expenses of a business entity having revenues of Rs.190,000 and net loss of Rs.26,000.
General Journal:
Given:
1st year Accounting Test written by Tariq Aziz
01)Owner Invest cash in his business 1000
02)Mr tariq Investment 2000
03)Purchase Building on cash 3000
04)Sold building on cash 4000
05)Purchase Equipment 5000 on cash
06)Proprietor commenced business with cash 1000 , building 2000, Equipment 3000 machine 4000, furniture 5000 , supplies 6000 and land 7000
07)Equipment sold on cash 80,000
08)Sale Building on cash 90,0000
09)Furniture purchase on cash 10,000
10)Owner made additional investment 2000
11)Bought computer on cash 3000
12)Sell computer on cash 4000
13)Owner bring cash and bank in his business 2000 and 40000
14)Owner purchase furniture for business use for cash 26000
15)Sold machinery on cash 25000
01)the following accounts state whether it is an asset, liability or owner’s equity; also state whether it would normally have a debit or credit balance:
Account Title | Head of Account | Normal Balance |
1. Office equipment | Asset | Debit |
2. Tariq Capital | Owner’s equity | Credit |
3. Notes receivable | Asset | Debit |
4. Cash | Asset | Debit |
5. Drawings | Owner’s equity (Contra) | Debit |
6. Notes payable | Liability | Credit |
7. Office supplies | Asset | Debit |
8. Prepaid insurance | Asset | Debit |
02) the following accounts state whether they are asset, liability, owner’s equity, expense or income. Also state whether they would normally have a debit or credit balance:
Account Title | Head of Account | Normal Balance |
Furniture | Asset | Debit |
Bank | Asset | Debit |
Prepaid advertising | Asset | Debit |
note receivable | Asset | Debit |
Purchases | Expense | Debit |
Unearned Commission revenue | Liability | Credit |
Purchase Discount | Expense | Credit |
Office equipment | Asset | Debit |
Sales discount | Revenue /Income | Debit |
Unexpired insurance | Asset | Debit |
Drawings | Owner’s Equity | Debit |
Bank overdraft | Liability | Credit |
Capital | Owner’s Equity | Credit |
Office supplies | Asset | Debit |
Merchandise inventory | Asset | Debit |
Unexpired rent | Asset | Debit |
Accounts receivable | Asset | Debit |
Accounts payable | Liability | Credit |
Salaries payable | Liability | Credit |
accrued expense | Liability | Credit |
Building | Asset | Debit |
Sale | Revenue /Income | Credit |
Sale return | Revenue /Income | Debit |
Example # 1:
January 1: Mr. Tariq started business with cash investment of Rs.100,000.
Date | Particular | P/R | Debit | Credit |
2018 Jan 01 | Cash Capital To record Owner Invest cash | 100,000 | 100,000 | |
XI Accounting Weekly Test By Tariq Aziz
Asim Traders
General Journal
Date | Particular | P/R | Debit | Credit |
2018 Feb 01 | Cash Capital | 100,000 | 100,000 | |
Feb 05 | Equipment Account payable | 20,000 | 20,000 | |
Feb | Purchases Account payable | 25,000 | 25,000 | |
Feb 12 | Cash Account receivable Sales | 10,000 15,000 | 25,000 | |
Feb 18 | Account payable cash | 15,000 | 15,000 | |
Feb 23 | Cash Account receivable | 10,000 | 10,000 | |
Feb 28 | Salaries expense cash | 3,000 | 3,000 |
Question 01) Required General Ledger & Trial Balance
Date | Particular | P/R | Debit | Credit |
2018 jan 01 | Cash Capital | 150,000 | 150,000 | |
jan 05 | Equipment Account payable | 200,000 | 200,000 | |
Jan 10 | Cash Sale | 250,000 | 250,000 |
Question 02) Required General Ledger & Trial Balance
Question 03 1.)owner invested cash and furniture 200,000 and 300,000 respectively
02) Purchase furniture on cash 2000
03)bought building on cash 3000
04) Owner made additional investment 4000
05)purchase Equipment on cash 1000
Question 03 )Above entry record in general journal
Surprise Accounting Test By Sir Tariq Aziz
Weekly Accounting Test By Tariq Aziz
Surprise Weekly Accounting Test By Sir Tariq Aziz
Accounting Test 16 april 2019
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