Accounting Notes
1. Introduction to Accounting:
- Accounting is the process of recording, summarizing, analyzing, and reporting financial
transactions.
- It provides essential information for decision-making, planning, and controlling business
activities.
- Accounting principles, standards, and regulations ensure accuracy, consistency, and
transparency in financial reporting.
2. Types of Accounting:
- Financial Accounting: Focuses on the preparation of financial statements for external
stakeholders such as investors, creditors, and regulatory authorities.
- Managerial Accounting: Provides financial information for internal decision-making, planning,
and control within an organization.
3. Basic Accounting Equation:
- Assets = Liabilities + Equity
- Assets are resources owned by the company, such as cash, inventory, and property.
- Liabilities are obligations owed by the company, such as loans, accounts payable, and
bonds.
- Equity represents the owner's claim on the assets of the company and includes contributed
capital and retained earnings.
4. Financial Statements:
- Balance Sheet: Presents the financial position of a company at a specific point in time,
showing assets, liabilities, and equity.
- Income Statement: Reports the company's revenues, expenses, and net income or net loss
over a period of time.
- Statement of Cash Flows: Summarizes the cash inflows and outflows from operating,
investing, and financing activities.
5. Double-Entry Accounting:
- Every transaction affects at least two accounts, with one account debited and another
credited.
1. Introduction to Accounting:
- Accounting is the process of recording, summarizing, analyzing, and reporting financial
transactions.
- It provides essential information for decision-making, planning, and controlling business
activities.
- Accounting principles, standards, and regulations ensure accuracy, consistency, and
transparency in financial reporting.
2. Types of Accounting:
- Financial Accounting: Focuses on the preparation of financial statements for external
stakeholders such as investors, creditors, and regulatory authorities.
- Managerial Accounting: Provides financial information for internal decision-making, planning,
and control within an organization.
3. Basic Accounting Equation:
- Assets = Liabilities + Equity
- Assets are resources owned by the company, such as cash, inventory, and property.
- Liabilities are obligations owed by the company, such as loans, accounts payable, and
bonds.
- Equity represents the owner's claim on the assets of the company and includes contributed
capital and retained earnings.
4. Financial Statements:
- Balance Sheet: Presents the financial position of a company at a specific point in time,
showing assets, liabilities, and equity.
- Income Statement: Reports the company's revenues, expenses, and net income or net loss
over a period of time.
- Statement of Cash Flows: Summarizes the cash inflows and outflows from operating,
investing, and financing activities.
5. Double-Entry Accounting:
- Every transaction affects at least two accounts, with one account debited and another
credited.
