Presentation Transcript

1. Accounting IBA 104

   Practical Cases on Recording process Dr. Mohamed A. Hamada Lecturer of Accounting Information Systems
2. Types of assets: a. Short term assets (Current assets). Current means that the asset will be turned into cash or consumed (used up) either in one year or in the operating cycle, whichever is longer. The operating cycle is the average time between when a company acquires materials and supplies and when it receives cash for sales of the product. Current assets include: Cash Supplies Inventory: Goods held for resale to customers. Accounts Receivable (AR): an asset created by selling products or services on credit. It reflects amounts due from customer. Oral promise. Notes Receivable (NR): an asset created by selling products or services on credit and gets note - written promise.
3. b. Long term assets (Fixed assets). Long term assets are assets will be used over a long time period and will not be quickly turned into cash, like: Land Building Equipment Cars, Trucks Furniture
4. Types of liabilities: a- Short term liabilities (Current liabilities) Short term liabilities are liabilities will be paid in the next year, like: Accounts payable (AP): amounts owed to the suppliers from the purchase of goods on account. Notes payable (NP): amounts owed to the suppliers or to the bank that are represented by a formal agreement called a note. Expenses payable (expenses not paid yet, like salaries payable, rent payable,…) b- Long term liabilities, like: Bank loans
5. Example Company A was incorporated on January 1, 2010 with an initial capital of 5,000 shares of common stock having $20 par value. During the first month of its operations, the company engaged in following transactions: