Balance Sheet : This financial statement is a listing of the Assets (items owned), Liabilities (items owed), and Owner’s Equity (what belongs to the owner(s)). The relationships between all these items are represented by the accounting equation. Assets As was discussed above, Assets are items that are of value and are owned by the entity … Read more
Accounting Equation : A(ssets) = L (iabilities) + OE (Owner’s Equity), The formula depicts the relationships of the various elements of the Balance Sheet to each other. Often the relationships between Assets (A), Liabilities (L), and Owner’s Equity (OE) are shown in terms of a formula. Accounting Equation A = L + OEAssets = Liabilities … Read more
Imagine that you make a list of everything that is important to you. Along with this list you attach values to all of these items. Then you make a list of everything that you owe to others, and again you attach values to these items. Then you subtract the total value of the second list … Read more
It is important that you understand the concepts of Generally Accepted Accounting Principles (GAAP), which form the basis of accounting and are part of the language of accounting and business. This chapter will introduce the agencies responsible for standardizing the accounting principles that are used in the United States and it will describe those principles … Read more
Proprietorships are businesses with a single owner like you and me. These types of businesses tend to be small retail businesses started by entrepreneurs. The accounting for these proprietorships includes only the records of the business—not the personal financial records of the proprietor of the business. Alert! Don’t Mix and Match: The financial records of … Read more
Accountants supply information to people both inside and outside the firm by issuing formal reports that are called financial statements. The financial statements are usually issued at least once a year. In many cases they are issued quarterly or more often where necessary. A set of rules, called Generally Accepted Accounting Principles, govern the preparation … Read more
In the world of business, accounting plays an important role to aid in making critical decisions. The more complex the decision, the more detailed the information must be. Individuals and companies need different kinds of information to make their business decisions. Let’s start with you as an individual. Why would you be interested in accounting? … Read more
The purpose of accounting is to provide information that will help you make correct financial decisions. Your accountant’s job is to give you the information you need to run your business as efficiently as possible while maximizing profits and keeping costs low. Finding an Accountant: Hiring a professional and ethical accountant to aid in your … Read more