2. How you handle money is a reflection of your soul. Money is the great magnifier. It
simply magnifies that which is within you. If you’re a broken person, money will make
you more broken. If you’re a selfish person, money will make you more selfish. But if
deep within you, you’re good and humble and kind and generous and selfless and
disciplined, money will magnify all that fantastic stuff in you.
If you’re already rich on the inside—God doesn’t mind you being rich on the outside.
Because the Bible says, Let the Lord be magnified, who has pleasure in the
prosperity of His servant (Psalms 35:27).
May this presentation enlighten us how to control our finances by learning some
basic terms in accounting..
3. Unlocking of Difficult Terms
Accounting Equation
Balance Sheet Accounts
What is Asset?
What is Liability?
What is Equity?
Capital
Quiz
4. • Balance Sheet Accounts - used to track the changes in value of
things you own or owe.
• Assets– group of things that you own.
• Tangible– clear enough or definite enough to be easily seen, felt, or
noticed
• Intangible – abstract or is hard to define or measure
• Patent – an official right to be the only person or company allowed
to make or sell a new product for a certain period of time
• Liquidity - speed at which something can be converted into cash.
• Appreciate – increase of value
5. • Depreciate – lose of original value
• Liability – debt
• Debenture – type of savings bond which offers a fixed rate of
interest over a long period.
• Overdraft – spending money more than you have in a bank
• Equity - what is left over after you subtract your liabilities from your
assets
• Income – something that is earned or received
• Dividend – part of a company’s profits shared by its shareholders
• Expenses – money that something costs you
6. Unlocking of
Difficult Terms
Accounting
Equation
Assets, Liabilities, Equity, Income and Expenses
Balance Sheet
Accounts
What is
Asset?
What is
Liability?
What is Equity?
Income and
Expenses
QUIZ
Accounting Equation
(Assets - Liabilities = Equity + (Income - Expenses)
7. Unlocking of
Difficult Terms
Accounting
Equation
Balance Sheet
Accounts
- are used to track the changes in value of things you
own or owe.
What is
Asset?
What is
Liability?
What is Equity?
Income and
Expenses
QUIZ
The
three
so-called
Balance
Sheet
Accounts are Assets, Liabilities, and Equity.
8. Unlocking of
Difficult Terms
Accounting
Equation
Balance Sheet
Accounts
• possession of something that will
bring benefits in the future.
What is
Asset?
• group of things that you own
What is
Liability?
• anything that will add
value to your business.
What is Equity?
Income and
Expenses
QUIZ
future
10. Unlocking of
Difficult Terms
Accounting
Equation
Balance Sheet
Accounts
What is
Asset?
What is
Liability?
What is Equity?
Income and
Expenses
QUIZ
What is the test of whether
something is considered an asset
for your business? Well, one asks,
―Is the _______ something I own will
bring me benefits in the future?‖
11. If you owned the land, would it
be an asset for your business?
Not sure? Well, do you expect
to receive
benefits for your business in
the future from the land?
Of course. So what are the
benefits it will bring? Well, you
can construct a building on it that
you can use for business. Even
selling it would bring benefits, in
the form of cash.
12. How about a computer that you
own – is this an asset? Will it
bring you benefits in the future?
Well, amongst other things, you
can store and retrieve large
amounts of information and use
it to communicate with suppliers
and customers.
So yes, a computer
is certainly an asset.
13. What about a motor vehicle –
is this an asset? Does it
have benefits for your
business, and if so, what are
they?
Yes, there are benefits for
your business... You can use
the motor vehicle to pick up
and deliver goods. So yes,
this is also an asset.
14. What about cash? Is cash
an asset?
Cash is certainly an
asset.
What are the benefits of
having cash? Simple: you
can pay for things! That
is certainly useful (and
indeed essential) for a
business.
15. Unlocking of
Difficult Terms
Accounting
Equation
Balance Sheet
Accounts
What is
Asset?
What is
Liability?
What is Equity?
Income and
Expenses
QUIZ
Assets can be tangible or intangible.
Tangible assets are physical entities such as land,
buildings, vehicles, equipment, and inventory.
Intangible assets include Accounts Receivables,
patents, and contracts.
16. Unlocking of
Difficult Terms
Accounting
Equation
Assets are also grouped according to their liquidity, or the speed
at which they can be converted into cash.
Balance Sheet
Accounts
Current assets can be converted into cash in 12 months or less.
What is
Asset?
What is
Liability?
What is Equity?
Income and
Expenses
QUIZ
Non-Current/Fixed assets are tangible assets with a life span of
at least one year and usually longer. High-cost fixed assets such
as machinery and computer systems are not expensed, but their
value is depreciated, or "written off," over a number of years
according to one of several depreciation schedules.
17. Asset
Type of Asset
Benefits
Machine
Non-current
Used for the production of goods for
sale to customer.
Office Building
Non-current
Provides space to employees for
administering company affairs.
Vehicle
Non-current
Used in the transportation of company
products and also for commuting.
Inventory
Current
Cash is generated from the sale of
inventory.
Cash
Current
Used to pay any expenses
Receivables
Current
Will eventually result in inflow of cash.
18. Unlocking of
Difficult Terms
Accounting
Equation
Balance Sheet
Accounts
What is
Asset?
What is
Liability?
What is Equity?
Income and
Expenses
QUIZ
• A present
from past
expected
enterprise
benefits.
obligation of the enterprise arising
events, the settlement of which is
to result in an outflow from the
of resources embodying economic
• A debt of the business.
21. Unlocking of
Difficult Terms
Accounting
Equation
Balance Sheet
Accounts
What is
Asset?
What is
Liability?
What is Equity?
Income and
Expenses
QUIZ
TYPES OF LIABILITIES
• Current liabilities are debts that are paid in 12 months or less,
and consist mainly of monthly operating debts. Current liabilities
are usually paid with current assets, i.e. Cash. A
company's working capital is the difference between its current
assets and current liabilities. Managing short-term debt and
having adequate working capital is vital to a company's long-term
success.
• Long-term liabilities are typically mortgages or loans used to
purchase fixed assets, and are paid off in years instead of
months.
22. Liability
Long Term Bank Loan
Bank Overdraft
Short Term Bank Loan
Debenture
Tax Payable
Classification
Non-current
Current
Current
Non-current
Current
23.
24. Unlocking of
Difficult Terms
Accounting
Equation
Balance Sheet
Accounts
What is
Asset?
What is
Liability?
What is Equity?
Income and
Expenses
QUIZ
• is the same as "net worth." It represents
what is left over after you subtract your
liabilities from your assets. It can be
thought of as the portion of your assets
that you own outright, without any debt.
25. Unlocking of
Difficult Terms
Accounting
Equation
Balance Sheet
Accounts
What is
Asset?
What is
Liability?
What is Equity?
Income and
Expenses
QUIZ
• is of utmost importance to the business owner
because it is the owner's financial share of the
company. Worded another way, Equity is that
portion of the total assets of the company
that the owner fully owns. Equity may be in
assets such as buildings and equipment, or
cash.
26. Unlocking of
Difficult Terms
Accounting
Equation
For example, if you purchase a $30,000 vehicle with a
$25,000 loan and $5,000 in cash, you have acquired an
asset of $30,000, but have only $5,000 of equity.
Balance Sheet
Accounts
What is
Asset?
What is
Liability?
What is Equity?
Income and
Expenses
QUIZ
• We can see how this equation works with our
example: $30,000 Asset = $25,000 Liability + $5,000
Owner Equity.
27. Unlocking of
Difficult Terms
Accounting
Equation
Balance Sheet
Accounts
What is
Asset?
What is
Liability?
What is Equity?
Income and
Expenses
QUIZ
A ―net worth‖ statement or ―balance sheet‖ is designed
to provide you with a picture of the financial soundness
of your business at a specific point in time. Net worth
statements are often prepared at the beginning and
ending of the accounting period (i.e. January 1), but can
be done at any time.
28. Unlocking of
Difficult Terms
Accounting
Equation
Balance Sheet
Accounts
What is
Asset?
What is
Liability?
What is Equity?
Income and
Expenses
QUIZ
• is the payment you receive for your time, services
you provide, or the use of your money.
• will always increase the value of your Assets and
thus your Equity.
Examples:
Commissions, tips, dividend income from stocks,
and interest income from bank accounts
29. Unlocking of
Difficult Terms
Accounting
Equation
Balance Sheet
Accounts
• The term Capital has several meanings and it is used in
many business contexts. In general, capital is accumulated
assets or ownership. More specifically,
What is
Asset?
• Capital is the amount of cash and other assets owned by a
business. These business assets include accounts
receivable, equipment, and land/buildings of the business.
What is
Liability?
• Capital can also represent the accumulated wealth of a
business, represented by its assets less liabilities.
What is Equity?
Income and
Expenses
QUIZ
• Capital can also mean stock or ownership in a company.
30.
31. Unlocking of
Difficult Terms
Accounting
Equation
It is a possession of something that will bring benefits
in the future.
Balance Sheet
Accounts
What is
Asset?
Assets
Liability
What is
Liability?
What is Equity?
Income and
Expenses
QUIZ
Equity
Income
32. Unlocking of
Difficult Terms
Accounting
Equation
Balance Sheet
Accounts
What is
Asset?
What do you call the present obligation of the enterprise
arising from past events, the settlement of which is
expected to result in an outflow from the enterprise of
resources embodying economic benefits?
Assets
Liabilities
What is
Liability?
What is Equity?
Income and
Expenses
QUIZ
Net worth
Expenses
33. Unlocking of
Difficult Terms
Accounting
Equation
Balance Sheet
Accounts
What is
Asset?
What is
Liability?
It is the same as "net worth." It represents what is left over
after you subtract your liabilities from your assets. It can be
thought of as the portion of your assets that you own
outright, without any debt.
Expenses
Equity
Income
What is Equity?
Liability
Income and
Expenses
QUIZ
34. Unlocking of
Difficult Terms
Accounting
Equation
Balance Sheet
Accounts
What is
Asset?
What is
Liability?
What is Equity?
Income and
Expenses
QUIZ
It is the payment you receive for your time,
services you provide, or the use of your
money.
Income
Expenses
Asset
Liability
40. Unlocking of
Difficult Terms
Accounting
Equation
Balance Sheet
Accounts
What is
Asset?
What is
Liability?
What is Equity?
Income and
Expenses
QUIZ
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Created by: Celinmar B. Montes
www. gnucash.org
www. accounting-simplified.com
www.keynotesupport.com
http://www.accounting-basics-for-students.com
http://accesstocapital.com/what-is-capital/
http://biztaxlaw.about.com/od/glossaryc/g/capital.htm
NGAS Manual for Local Government Units and National
Government Agencies www.coa.gov.ph
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