This explanation of accounting basics will introduce you to some basic accounting principles, accounting concepts, and accounting terminology.
Some of the basic accounting terms that you will learn include revenues, expenses, assets, liabilities, income statement, balance sheet, and statement of cash flows. You will also see why two basic accounting principles, the revenue recognition principle and the matching principle, assure that a company's income statement reports a company's profitability.
On completion of this module, students will be able to:
* Discuss the concepts of accounting and financial information
* Analyze financial statements
* Discuss user requirements
* Apply standards to evaluate performance and control costs
* Discuss the various approaches to analysis and interpretation
* Apply management accounting techniques in taxation
* Apply auditing techniques.
Introduction to Accounting and Accounting Concepts
Accounting is defined by the American Institute of Certified Public Accountants (AICPA) as "the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof.
Accounting has been defined as "the language of business" because it is the basic tool for recording, reporting, and evaluating economic events and transactions that affect business enterprises. Accounting processes document all aspects of a business's financial performance, from payroll costs, capital expenditures, and other obligations to sales revenue and owners' equity.
The actual recording and summarizing of financial transactions is known as bookkeeping.
Accountancy is the art of communicating financial information about a business entity to users such as shareholders and managers. The communication is generally in the form of financial statements...