Basic of accounting

by: mstf

BASIC ACCOUNTING -an Introduction
The accounting system is used to maintain records for all businesses, whether a multinational corporation or a small business.
To account for something means to keep a record of something in your business by using the accounting system.
An accountant (or bookkeeper) collects documentation and records this information, categorizes it (i.e. organizes the different bits of information under certain categories), and presents it in specific formats.

  1. 1

    Business claims against the property of a customer arising from the sale of goods and/or services on account.

  2. 2

    The owner's rights to the property (assets) of the business; also called proprietorship and net worth.

  3. 3

    The gross increase in owner's equity (capital) resulting from the operations and other activities of the business.

  4. 4

    Decrease in owner's equity (capital) resulting from withdrawals made by the owner.

  5. 5

    Assets = Liabilities + Owner's Equity (Capital)

  6. 6

    Expenditures for items held for resale in the normal course of a business's operations.

  7. 7

    Decrease in owner's equity (capital) resulting from the cost of goods, fixed assets, and services and supplies consumed in the operations of a business.

  8. 8

    Type of accounting/bookkeeping system that requires every transaction to be recorded in at least two places (accounts) using a debit and a credit.

  9. 9

    Monetary items that are available to meet current obligations of the business

  10. 10

    Increase in owner's equity (capital) resulting from additional investments of cash and/or other property made by the owner.

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