Who is known as the Father Of Accounting ?

The fact is that some sort of recordkeeping has only been around for a very few years.

In order to understand accounting you need to become familiar with the accounting language

Accounting tracks the financial transactions of a business, records the financial transactions in an information system, and reports those results to interested groups.

An income statement details the economic resources of a business and the claims on those resources.

A statement of cash flows summarizes the cash inflows and outflows for various business activities.

The output of the accounting process is the formal financial statements.

Managerial accounting provides information to external parties like creditors.

There are many different types of accounting.

There are two methods generally used to do accounting, the accrual method of accounting and the other is the cash basis method of accounting.

The cash basis of accounting results in more accurate financial statements than the accrual basis.

For the cash basis of accounting, revenues are recorded when cash is received and expenses are recorded when cash is paid.

Using the accrual method, transactions are recorded in the period in which they occur.

In accounting we have many principles, assumptions and concepts that help us determine the proper way to account for transactions.

The accounting equation is the basic framework for recording financial transactions.

Owner's equity is the creditor's claim on the assets.

The asset side of the accounting equation must always equal the liabilities and equities side.

Expenses are the cost of assets used up or the result of liabilities incurred in the process of earning revenues.

Assets are claims from outside parties, commonly known as creditors.

Revenues are inflows that result from business activities entered into for the purpose of earning income.

Assets are items that have value and will provide benefit into the future.

Liabilities are often described as debts or amounts owed.

Net income is revenues minus expenses when expenses are greater than revenues.

Net income is revenues minus expenses when revenues are greater than expenses.

The single step income statement provides more detailed information than the multi step income statement.

The Ledger is sometimes call the Book of Original Entry.

Debits and credits are how different accounts are increased or decreased.

Accounts are grouped or organized into broad categories.

A journal is a chronological list of a company's transactions.

Each transaction must effect two or more accounts to keep the accounting equation balance.

Debits do not always equal credits.

The ledger, sometimes known as the general ledger, is a collection of all the company's accounts.

Revenuesare defined as the amounts distributed to the owners of a businesses.

Expenses are outflows from operations and result in a decrease to equity.

Account balances are either debit balances or credit balances.

Revenues are inflows from operations and result in an increase to equity.

The accounting cycle is the steps used to perform the bookkeeping and reporting processes.

Let's start with a first step.

The first step in the accounting cycle is preparing financial reports.

Journal entries become the chronological list of all the transactions and that list is known as the general journal.

Transactions are posted from the journal to the ledger.

Debits are always on the left and credits are always on the right.

Adjusting entries update asset and libiliity accounts as well as revenue and expense accounts.

Adjusting entries will always include one income statement account and one balance sheet account.

When we make adjusting entries there are two main types of sub-categories. One is deferrals and the other is accruals.

A trial balance is a list of company accounts and their ending ledger balances.

Wel use the adjusted trial balance to prepare the formal financial statements.

Closing the books means to zero out the temporary account balances.

There are two primary formats for the income statement the single step income statement and the multi-step income statement.

Gross profit is is calculated by taking net sales revenue and deducting operating expenses.

Cost of Goods Sold is the cost of inventory sold to customers and is a revenue account.