Your father runs a small auto body shop. He has decided to computerize Essay

Your father runs a small auto body shop. He has decided to computerize his records and has asked you to explain the basics of accounting - Essay Example Assets in the balance sheets include money, financial records, notes receivable, catalog, prepaid operating cost, office materials, equipment, apparatus, vehicles, structures, and real estate. The law for asset accounts shows that they ought to augment with a debit entry and reduce with a credit entry. The standard balance for an asset account is debit. The standard balance of any financial credit is the entry type, debit, or credit. This augments the account when saving transactions in the periodicals and redistributing to the ledger. Liabilities, on the other hand, include debts and obligations, which may include accrued expenses, salaries payable and sales tax payable in the balance sheet. For the equation to balance, recording of the liability account increases in an opposite way of the assets. Stakeholders’ equity is the net assets after deductions have been made. The deductions depend on the company. Depending on spending, the stakeholders’ equity either increases or decreases. Income statements reflect on revenue expense activity. In the balance sheet, retained earnings make part of the stakeholders’ equity. These earnings remain after deductions have been made on all the expenses and net income. Journal entries that would affect the balance sheet are any item that is related to assets, owner’s income, and liability. Examples are machinery, creditors, and stakeholders income. Journal entries that would affect the income statement are any expenses, and revenues. Assumptions that have done include entity concepts, principle of reliability, principle of cost, principle of going-concern and the concept of stable-monetary unit (Agtarap-San,