Being an instructor in one of the colleges here on our city, i have learned a lot and keep on learning continuously thru all the things that i have experienced with my students and my fellow instructors. One specific thing that prompt me to do this blog was the impression of most of the students and some people that i met everyday with regard to accounting subject. When i conducted a casual Q&A on what they can say about the accounting subject in general, most of their answers were not so favorable like "Its a boring subject", "Its not interesting" and "One of the hard subjects in college." I tried to asked the same question to other people (not students) and they just answered the same like "I forgot it already. Its been a long time ago." and "I don't care about it." Its ironic that these accounting subject is being taught in secondary school as well as in college but most people thought about it as a non-sense subject. This blog will show the basic accounting lesson with computer application for general users to know how easy and interesting the subject is and how it is important to every peoples lives (applicable to one's properties/assets, businesses/income, services/expenses, etc.). To start with, we should know the following:
Basic Element of Financial Position: (Balance Sheet)
1. Assets - Economic resources of an enterprise that are recognized and measured in conformity with generally accepted accounting principle (GAAP)
2. Liabilities - Economic obligations of an enterprise that are recognized and measured in conformity with GAAP.
3. Owner's Equity - The interest of owners in an enterprise which is the excess of Assets over Liabilities.
Basic Elements of Results of Operations: (Income Statement)
1. Revenue - Gross increases in assets or gross increases in liabilities
2. Expenses - Gross decreases in assets or gross increases in liabilities
3. Net Income (Loss) - The excess (deficit) of revenue over expenses for an accounting period, which is the net increase (net decrease) in owners' equity of an enterprise for an accounting period.
The accounting Equation:
Assets = Liabilities + Owner's Equity
or
Liabilities = Assets - Owner's Equity
or
Owner's Equity = Assets - Liabilities
Step by step instruction using MS Excel for Accounting Equation:
1. Open MS Excel and then click A column and drag to E column. Click on Format icon, choose Column Width then type 11 and click OK.
2 Click Format icon again, choose Format Cells, click Accounting and choose None under Symbol and 2 for Decimal places and then click OK. (or you may directly click the Number (group) icon and then same procedure after clicking Accounting.)
3. Click B column then press CTRL+ D column, Click Format icon again, choose Width, type 3 and then Click OK. This is to reduce the column width.
4. Click at cell C1, click Center in alignment group icon and type "THE ACCOUNTING EQUATION".
5. Type the Labels and = and + signs at cells A3, B3, C3, D3 and E3. As shown in Screen View. Note; when you type labels, you can press? (arrow) to go to next cell but when you type =, +, -, * or / (these are math operators) press enter if you are not making a formula.
Basic Element of Financial Position: (Balance Sheet)
1. Assets - Economic resources of an enterprise that are recognized and measured in conformity with generally accepted accounting principle (GAAP)
2. Liabilities - Economic obligations of an enterprise that are recognized and measured in conformity with GAAP.
3. Owner's Equity - The interest of owners in an enterprise which is the excess of Assets over Liabilities.
Basic Elements of Results of Operations: (Income Statement)
1. Revenue - Gross increases in assets or gross increases in liabilities
2. Expenses - Gross decreases in assets or gross increases in liabilities
3. Net Income (Loss) - The excess (deficit) of revenue over expenses for an accounting period, which is the net increase (net decrease) in owners' equity of an enterprise for an accounting period.
The accounting Equation:
Assets = Liabilities + Owner's Equity
or
Liabilities = Assets - Owner's Equity
or
Owner's Equity = Assets - Liabilities
Step by step instruction using MS Excel for Accounting Equation:
1. Open MS Excel and then click A column and drag to E column. Click on Format icon, choose Column Width then type 11 and click OK.
2 Click Format icon again, choose Format Cells, click Accounting and choose None under Symbol and 2 for Decimal places and then click OK. (or you may directly click the Number (group) icon and then same procedure after clicking Accounting.)
3. Click B column then press CTRL+ D column, Click Format icon again, choose Width, type 3 and then Click OK. This is to reduce the column width.
4. Click at cell C1, click Center in alignment group icon and type "THE ACCOUNTING EQUATION".
5. Type the Labels and = and + signs at cells A3, B3, C3, D3 and E3. As shown in Screen View. Note; when you type labels, you can press? (arrow) to go to next cell but when you type =, +, -, * or / (these are math operators) press enter if you are not making a formula.
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| Screen View |
6. Click at cell A5 and type =C5+E5. You may press Enter or not, it will produce the same result. Then place your cursor at bar end until it turns + and drag it to A7 and release the button. This is one way to copy.
7. Type the Labels and = and + signs at cells A9, B9, C9, D9, and E9 as shown in Screen View again.
8. Click at cell A11 and type = press? to C11, type - press? to E11 and press Enter. This is to illustrate how to make the formula by identifying the cells although you can just directly type the formula outright.
9. Click at cell A11, place your cursor again at the bar end until it turns to + and drag it to A13 and release the button.
10. Type the Labels and = and - signs at cells A15, B15, C15, D15 and E15 as shown in Screen View. You may just Wrap text (under Alignment group icon) on cell A15 to fit the label.
11. Click at cell A17. Now make the formula by following No. 8. Then copy the formula up to A19 by following No. 9.
12. Now enter the amounts (without commas) below at cells indicated and compare the results. As shown in Screen View.
At C5 100000 At E5 200000
At C6 150000 At E6 300000
At C7 200000 At E7 400000
13. Now enter the amounts (without commas) below at cells indicated.
At C11 300000 At E11 200000
At C12 450000 At E12 300000
At C13 600000 At E13 400000
14. Click at cell C11 and drag to C13, Right mouse click Copy button and then click at cell C17 and press Enter. Note: This is another way to copy.
15. Click at C5 and drag to C7, Right mouse click again Copy button and then click E17 and press Enter. See results. Save your file as Excel document in your computer.
That simple! That may serve as a review for basic accounting.
7. Type the Labels and = and + signs at cells A9, B9, C9, D9, and E9 as shown in Screen View again.
8. Click at cell A11 and type = press? to C11, type - press? to E11 and press Enter. This is to illustrate how to make the formula by identifying the cells although you can just directly type the formula outright.
9. Click at cell A11, place your cursor again at the bar end until it turns to + and drag it to A13 and release the button.
10. Type the Labels and = and - signs at cells A15, B15, C15, D15 and E15 as shown in Screen View. You may just Wrap text (under Alignment group icon) on cell A15 to fit the label.
11. Click at cell A17. Now make the formula by following No. 8. Then copy the formula up to A19 by following No. 9.
12. Now enter the amounts (without commas) below at cells indicated and compare the results. As shown in Screen View.
At C5 100000 At E5 200000
At C6 150000 At E6 300000
At C7 200000 At E7 400000
13. Now enter the amounts (without commas) below at cells indicated.
At C11 300000 At E11 200000
At C12 450000 At E12 300000
At C13 600000 At E13 400000
14. Click at cell C11 and drag to C13, Right mouse click Copy button and then click at cell C17 and press Enter. Note: This is another way to copy.
15. Click at C5 and drag to C7, Right mouse click again Copy button and then click E17 and press Enter. See results. Save your file as Excel document in your computer.
That simple! That may serve as a review for basic accounting.
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