charmed life♥

Now here is the part 2 of my bookkeeping tutorials.  I will be discussing the Income and Expense accounts.  Income is the  revenue that a business earns from selling of goods and services.  Increase in Income or Revenue - Credit while decrease in Income is Debit. On the other hand, Expense is a cost of an asset used by a business to produce income.  It is also created not only when cash is paid but also when an asset is used up (in case of depreciation).  Expense is a contra account with debit balance.   Income and Expense are Income Statement accounts.  Income Statement is also known as Profit and Loss statement / Statement of Revenue and Expense, it is a financial statement that reports the company's financial performance or results of operations for over an accounting period. Important Equation: Revenue - Expenses = Net Income / (Net Loss) Example 1: Sold merchandise at P100,000.00, 50% cash and balance on account. Journal entry:  ...

For those who don't really know me, I have been in the corporate world for almost 30 years (in the accounting department).  Now do the math you can easily calculate my age (haha).  Anyway, since a lot of people are into business nowadays, I just want to share something on how to record your transactions.   First, what does "Bookkeeping" mean.. Bookkeeping is the systematic recording of a company's transaction on a regular basis.  There are 5 types of Accounts in Accounting : Assets, Liabilities, Capital, Income and Expense.  Let's start with the three Balance Sheet accounts : Assets, Liabilities and Capital .  Remember this formula : ASSETS - LIABILITIES = CAPITAL ASSETS : are things of value owned by the business.  It includes cash on hand and in bank, properties such as furniture and fixtures, equipment, motor vehicle and goods or services on credit (owed by his customers).  In recording : Increase in Assets - Debit and Decrease in Asset...