Steps of accounting process with definition of assets liability equity owner’s equity income and expenses.

Q. Write the Steps of accounting process
Steps of accounting process:

1. Identify the Accounts in the Transaction (must be at least two accounts)
2. Classify the Accounts (Assets, Liability, Equity)3. Decide if the transaction increases or decreases the Accounts.

4. Determine if the Account is entered in the Debit or Credit Column of the Journal.

5. Record the Account name(s) and amount(s) recorded in the Debit Column.

6. Record the Account name(s) and amount(s) recorded in the Credit column.

7. Copy the Amounts to the correct Ledger Account (Post) and balance the Account.

8. Prepare a Trial Balance

Q. Define the terms assets, liability, Equity, owner’s equity, Income & Expenses.

Assets: An asset is a resource controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise.

Liability: A liability is a present obligation of the enterprise arising from past events the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits. There is a distinction between a present obligation and future commitment. A decision by the management of an enterprise to acquire assets in future does not of itself give the rise to a present obligation.

Equity: In a corporate enterprise equity is classified in the Balance Sheet as Share Capital and Reserve and Surplus. Normally Equity is shown at its paid up value. The equity of the owner is called capital, or proprietorship or owner's equity.

Income and Expenses: Income is increase in economic benefits during the accounting period in the form of inflows or enhancement of assets or decrease of liability that result in increase of equity. Whereas expenses are decreases in economic benefits during the accounting period in the form of' outflows or depletion of assets or increases in liabilities that result in decrease in equity other than those relating to distribution to equity participants.