ACCOUNTING

First Lecture

Definition

Balance sheet: It summarizes the complete picture of business and its specific time.

Asset: Economic resources own by compnay.

Liabilities (Owes or Udhaar or Loan)

Owner Equity Amount invested by owner in which he has

legal claim.

Definition

Liabilities and Owner Equity:Those asset which can easily be converted into cash in specific time

How To Find Owner Equity:Owner Equity =Total Asset –Total Liabilities

Owner Equity increases if we invest additional fund in business Owner Equity decreases when we have loss in business or withdraw

some money from Solvent:

Abbility to pay their debts

Insolvent:Unable to pay debtsHow to check company solvent or insolvent Cuurent Ratio =Current Asset/current Liabilities

**** Examples are on next slides

Types of Asset

Two different types of asset Current Asset

Those Asset which can easily be converted into cash

Fixed Asset Permanent Asset like

Building,Machinery,Furniture and Fixture

Balance Sheet Making Method

TOSHIBABalance SheetDecember 30,2011

[Table is On Next Slide]

Asset(Current) Liabilities

Cash $21,400 Note Payable $620000

Account 10,600 Account Payable 10000

Laptop 45000 Sale Payable 33,500

Fixed Asset Total Liabilities $663500

Land $ 425000 Owner Equity=Total Asset-Total Liabilities

Building 4,500,000 =6010000-663500

Equipnment 80,000 =5346500

Furnish 100,000,0

Total Asset(C+F) 6010000

To Check Company Solvent or Insolvent

Formula =Current Asset =77000 Current Liabilities 663500

=0.1:1So Company is insolvent if Ratio Answer is 1 or more than 1 then company is solvent

Thanku

Baqi Khud Thek Krtay Rehna Agar Kuch Ghalat Ho Gaia Hai To