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Accounting Notes Basic Fundamentals

Accounting is the systematic recording, reporting, and analysis of financial transactions. Key principles include the Economic Entity Assumption and the Revenue Recognition Principle, while the accounting cycle involves steps from journalizing transactions to preparing financial statements. The double-entry system ensures that each transaction affects at least two accounts, maintaining the equation Assets = Liabilities + Equity.

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5 views4 pages

Accounting Notes Basic Fundamentals

Accounting is the systematic recording, reporting, and analysis of financial transactions. Key principles include the Economic Entity Assumption and the Revenue Recognition Principle, while the accounting cycle involves steps from journalizing transactions to preparing financial statements. The double-entry system ensures that each transaction affects at least two accounts, maintaining the equation Assets = Liabilities + Equity.

Uploaded by

lopezali282
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Accounting Notes Basic Fundamentals

Accounting Fundamentals - Class Notes

Definition:

Accounting is the systematic recording, reporting, and analysis of financial transactions of a

business.

Basic Accounting Principles:

1. Economic Entity Assumption

2. Revenue Recognition Principle

3. Matching Principle

4. Full Disclosure Principle

Types of Accounts:

- Assets: Cash, Equipment, Receivables

- Liabilities: Loans, Payables

- Equity: Owner's Capital, Retained Earnings

- Revenue: Sales, Service Income

- Expenses: Rent, Utilities, Salaries

Key Financial Statements:

- Balance Sheet

- Income Statement

- Statement of Cash Flows

- Statement of Changes in Equity


Double-Entry System:

Each transaction affects at least two accounts and maintains the accounting equation:

Assets = Liabilities + Equity

Accounting Cycle:

1. Journalizing Transactions

2. Posting to Ledger

3. Trial Balance Preparation

4. Adjusting Entries

5. Financial Statement Preparation

6. Closing Entries

Notes:

- GAAP standards are followed in preparing financial reports.

- Debits must always equal credits.


Continuation of Accounting Notes Basic Fundamentals

(Continued from previous page)

Accounting Fundamentals - Class Notes

Definition:

Accounting is the systematic recording, reporting, and analysis of financial transactions of a

business.

Basic Accounting Principles:

1. Economic Entity Assumption

2. Revenue Recognition Principle

3. Matching Principle

4. Full Disclosure Principle

Types of Accounts:

- Assets: Cash, Equipment, Receivables

- Liabilities: Loans, Payables

- Equity: Owner's Capital, Retained Earnings

- Revenue: Sales, Service Income

- Expenses: Rent, Utilities, Salaries

Key Financial Statements:

- Balance Sheet

- Income Statement

- Statement of Cash Flows

- Statement of Changes in Equity


Double-Entry System:

Each transaction affects at least two accounts and maintains the accounting equation:

Assets = Liabilities + Equity

Accounting Cycle:

1. Journalizing Transactions

2. Posting to Ledger

3. Trial Balance Preparation

4. Adjusting Entries

5. Financial Statement Preparation

6. Closing Entries

Notes:

- GAAP standards are followed in preparing financial reports.

- Debits must always equal credits.

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