fabm 1 lesson 2 (pt1)

types of financial statement

it is the residual interest of the owner after deducting liabilities from assets.

it is the withdrawal of owner of cash or other assets in his business. 

• a temporary account used to close the income and expenses account of the business.  This account is equal to the profit or loss of the business and it is close to capital account.

owner's equity

• is increases in economic benefits during the accounting period in the forms of inflows of assets or decreases of liabilities, that result for an increase in equity.

 arises in an ordinary course of business operations.  The account title to be used is based on the business

a. used supplies for the business operations.

b. expired portion of insurance premiums paid for fire, life, calamity, travel etc of the business.

• c. expense incurred from the services provided by employees which includes compensation, 13th month pay, allowances and other benefits.

• d. used of space, equipment or other assets for rentals.

• e. includes expenses incurred from electricity, water, communication, fuel and gasoline.

a. estimated annual decrease in cost of depreciable assets like equipment, building, machinery and furniture and fixtures.

b.any outflow of assets does not meet the definition of expense which may or may not arise from the ordinary course of business.

c. includes any promotional activities paid and used to advertise the business like media, billboards and leaflets. 

• a. also called Doubtful Accounts Expense or Bad Debts Expense, the amount of receivables which estimated to be uncollectible.

• b. expense incurred due to borrowed funds.