Search Results for: Financial Accounting
Principles of Accounting Systems
Accounting systems: From manual to computerized The manual accounting system with general journal entry to general ledger has been in use for hundreds of years and is still used by some very small companies and is what you have learned so far. Gradually, some manual systems evolved to include multiple journals and ledgers for increased efficiency. The Read more »
Preparing Financial Statements
After the adjusted trial balance, we will prepare the financial statements. The financial statements are how a business communicates or publishes its story. We previously learned there are 4 financial statements, but we will focus on the first three only: Income Statement: Calculates net income or loss of a company by showing revenues – expenses. If Read more »
The Accrual Basis and Cash Basis of Accounting
In the previous section, you learned the first column of the accounting cycle. Now we will finish the remainder of the accounting cycle. The complete cycle is: Accounting Cycle 1. Analyze Transactions 5. Prepare Adjusting Journal Entries 9. Prepare Closing Entries 2. Prepare Journal Entries 6. Post Adjusting Journal Entries 10. Post Closing Entries 3. Post Read more »
Ethics in Accounting
ETHICAL BEHAVIOR OF ACCOUNTANTS Most of those who write about ethics do not make a clear distinction between ethics and morality. The question of what is “right” or “morally correct” or “ethically correct” or “morally desirable” in any situation is variously phrased, but all of the words and phrases are after the same thing: what Read more »
Financial Statements
Financial statements are how companies communicate their story. Thanks to GAAP, there are four basic financial statements everyone must prepare . Together they represent the profitability and strength of a company. The financial statement that reflects a company’s profitability is the income statement. The statement of retained earnings – also called statement of owners equity shows Read more »
The Basic Accounting Equation
An accounting transaction is a business activity or event that causes a measurable change in the accounting equation. An exchange of cash for merchandise is a transaction. Merely placing an order for goods is not a recordable transaction because no exchange has taken place. In the coming sections, you will learn more about the different Read more »
GAAP – Generally Accepted Accounting Principles
Financial accounting information is historical in nature, reporting on what has happened in the past. To facilitate comparisons between companies, this information must conform to certain accounting standards or principles called generally accepted accounting principles (GAAP). These generally accepted accounting principles for businesses or governmental organizations have developed through accounting practice or been established by an authoritative organization. The Read more »
Users of Accounting Information
The accounting process provides financial data for a broad range of individuals whose objectives in studying the data vary widely. Three primary users of accounting information were previously identified, Internal users, External users, and Government/ IRS. Each group uses accounting information differently, and requires the information to be presented differently. Internal Users Accounting supplies managers and Read more »
The Accounting Cycle
The following video briefly explains key components of the accounting cycle. In the next 2 units we will learn the components of the accounting cycle. In the video, it discussed: Capture activity of a business: we will do this with a journal entry Organize into groups and edit: this will be accomplished by organizing the Read more »
Accounting Defined
Definition of Accounting We understand, from the prior video, that accounting is “the language of business”. The American Accounting Association defines accounting as: the process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by the users of the information. This information is primarily financial—stated in money terms. Accounting, then, is a measurement and Read more »