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99 Fundamentals of AccountingFundamentals of Accounting
Define accounting and itsDefine accounting and its
function in business.function in business.
zz Accounting:Accounting: A system that measures the business’s activities in:
- financial terms
- provides written reports and financial statements about those activities
- communicates those reports to decision makers and others.
Define accounting and its Define accounting and its
function in business.function in business.
Then what’sThen what’s
bookkeeping?bookkeeping?
Define accounting and itsDefine accounting and its
function in business.function in business.
zz^ BookkeepingBookkeeping: The recording function of the accounting process.
Define accounting and its Define accounting and its
function in business.function in business.
z z DoubleDouble--entry bookkeepingentry bookkeeping: An accounting system in which the recording of each transaction affects two or more accounts and the total of the debits is equal to the total of the credits.
Chart of AccountsChart of Accounts
zz Chart of AccountsChart of Accounts: A system of accounts that lists the account titles and account numbers to be used by a company. z Provides the backbone or skeleton of the Accounting program.
Chart of Accounts Chart of Accounts
zz (^) AssetsAssets: Properties (resources) of value owned by a business (cash, supplies, equipment, land).
Chart of AccountsChart of Accounts
zz (^) LiabilitiesLiabilities: Obligations that come due in the future.
Chart of Accounts Chart of Accounts
zz^ Owner’s equity:Owner’s equity^ Rights or financial claims to the assets of a business (in the accounting equation, assets minus liabilities) by the owner.
Chart of Accounts Chart of Accounts
zz^ Capital:Capital:^ The owner’s investment of equit y in the company.
zz^ Withdrawals:Withdrawals:^ A subdivision of owner’s equity that records money or other assets an owner withdraws from a business for personal use.
Assets = Liabilities + Owner’s Equity + RevenueAssets = Liabilities + Owner’s Equity + Revenue
z z RevenueRevenue: An amount earned by performing services for customers or selling goods to customers; it can be in the form of cash and/or accounts receivable.
Chart of AccountsChart of Accounts
zz ExpenseExpense: A cost incurred in running a business by consuming goods or services in producing revenue; a subdivision of owner’s equity. When expenses increase, there is a decrease in owner’s equity.
