Accounting Basics

Accounting BasicsAccountancy is the standardized process of communicating financial information about a business entity to users such as shareholders and managers.

Accounting is the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof.

An Account is a separate record for each type of asset, liability, equity, revenue, and expense used to show the beginning balance and to record the increases and decreases for a period and the resulting ending balance at the end of a period.

You should be aware that All Accounts: 

  • Can Be Debited and Credited
  • Have an Increase Side and a Decrease Side
  • Have a Debit Side and a Credit Side
  • Debit Side is the Left Side (Left Column)
  • Credit Side is the Right Side (Right Column)
  • Have a Normal Balance Amount that is normally a Debit Balance or a Credit Balance
  • Have a Type and are classified as an Asset, Liability, Equity, Revenue, Expense, or Draw
  • Are Either a Balance Sheet or Income Statement Account
Accounting equation and statements:

T Accounts:The simplest account structure is shaped like the letter T. The account title and account number appear above the T. Debits (abbreviated Dr.) always go on the left side of the T, and credits (abbreviated Cr.) always go on the right.

 
Few of the top resources for learning basics:


1. http://www.youtube.com/user/SusanCrosson Check accounting basics on this channel
2. www.accountingcoach.com

We will learn more in second part.

2 thoughts on “Accounting Basics

  1. This is very understandable. Aspiring students of accounting can benefit from this. On the other hand, lessons like this can serve as refreshers for accountants or bookkeepers. It’s not like the basics are hard to remember, but people are really busy these days. 😀

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