ACCT 101
Chapter 01
Introducing Accounting in Business
Level 3
‫تقديم المحاسبة في األعمال التجارية‬
The Basic Accounting Equation ‫المعادله المحاسبيه‬
Assets = Liabilities + Owner's Equity
)‫ حقوق الملكيه (رأس المال‬+ ‫األصول = االلتزامات‬
Assets




Resources a business owns.
Provide future services or benefits.
Cash, Supplies, Equipment, Vehicles, building, land, Account receivable, Note receivable
‫ اوراق قبض‬, ‫ حسابات المدينين‬, ‫ االراضى‬, ‫ المبانى‬, ‫ السيارات‬, ‫ المعدات‬, ‫ المهمات‬, ‫النقديه‬




Claims against assets (debts and obligations). ‫االلتزامات (الديون) هى االلتزامات على الشركه‬
Creditors - party to whom money is owed.
Accounts payable, Notes payable, wages payable, tax payable
‫ ضرائب مستحقه الدفع‬, ‫ اجور مستحقه الدفع‬, ‫ اوراق دفعه‬, ‫حسابات قابله للدفع‬
Liabilities
Owner’s Equity
 Ownership interest on total assets. ‫حقوق الملكيه هى ملكيتنا فى اصول الشركه‬
 It consists of (Contributed Capital + Retained Earnings – Dividends)
 )‫ االرباح المحتجزه – التوزيعات‬+ ‫حقوق الملكيه تتكون من (رأس المال المدفوع‬
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Exercise:Indicate which of these items is an asset (A), liability (L) or owner’s equity (OE) account.
_______
(1) Supplies
_______
(2) Building
_______
(3) Note Payable
_______
(4) Taxes Payable
Solution
1. Assets (A)
2. Asset (A)
3. Liability (L)
4. Liability (L)
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Exercise
Use the accounting equation to answer the following questions.
1. Abdallah Company has total assets of $120,000 and total liabilities of $35,000. What is owner’s equity?
2. Ayman academy has total assets of $225,000 and owner’s equity of $105,000. What are total liabilities?
3. Hossam Restaurant has total liabilities of $40,000 and owner’s equity of $95,000. What are total assets?
Solution
1. $120,000 – $35,000 = $85,000 owner’s equity
2. $225,000 – $105,000 = $120,000 total liabilities
3. $40,000 + $95,000 = $135,000 total assets
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ACCT 101
Chapter 01
Introducing Accounting in Business
Level 3
‫تقديم المحاسبة في األعمال التجارية‬
Determine the missing items.
Assets = Liabilities + Owner’s Equity
$75,000
(b)
$52,000
(a)
$28,000
$34,000
$84,000
(c)
$55,000
Solution
a. $23,000
b. $62,000
c. $29,000
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Q- The total liabilities of Mustafa Company are $80,000. The total assets of the company are three times the
amount of its total liabilities. Question: What is the amount of Mustafa Company's total owner's equity?
Solution
Asset = 3 * Liabilities = 3*80000 = 240000
Asset = liabilities + OE
240000 = 80000 + OE
OE = 240000 – 80000 = 160000
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Indicate whether each of the following statements presented below is true or false.
1. The three steps in the accounting process are identification, recording, and communication.
2. The two most common types of external users are investors and company officers.
Answer
1. True
2. False. The two most common types of external users are investors and creditors.
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Classify each of these items as an asset (A), liability (L), or owner’s equity (OE).
_____ 1. Accounts receivable
_____ 2. Accounts payable
_____ 3. Ahmed, Capital
_____ 4. Office supplies
_____ 5. Cash
_____ 6. Note payable
_____ 7. Equipment
Solution
1.
2.
3.
4.
A
L
OE
A
5.
6.
7.
A
L
A
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ACCT 101
Chapter 01
Introducing Accounting in Business
Level 3
‫تقديم المحاسبة في األعمال التجارية‬
Presented below items for El-bop Company at December 31, 2008.
Accounts payable
$35,000 L
Accounts receivable
36,000 A
Cash
27,000 A
Equipment
52,000 A
El-bop, capital
30,000 OE
Notes payable
50,000 L
Compute each of the following:
1. Total assets.
2. Total liabilities.
Solution
1.
Total assets = $115,000 ($36,000 + $27,000 + $52,000)
2.
Total liabilities = $85,000 ($35,000 + $50,000)
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