The term “Introduction to Accounting” can be easily defined if topics given below are explained in the proper way. Let’s start in the following way:
An accounting serves the purpose of providing a means of reporting, interpreting, summarizing and reporting economic data. This is possible with the help of a designed accounting system that helps the users in many ways by providing required accounting information. This designed system allows the users to issue the reports that assist them to make the required decisions for various departments. Undoubtedly, in the current competitive world, everyone uses accounting in one form or another hence the proper knowledge of its principles can be quite beneficial to all.
Accounting Fields
There are two categories in which accounting profession is usually divided: Private Accounting and Public Accounting. A businessman employs private accountants, while public accountants have right to practice individually or as a member of an accounting firm. Private accountants can make their practice without licenses. Public accountants on the other hand are liable to follow the strict government requirements and regulations which are set by each individual state where acquiring a license is so vital to do this.
Basic Accounting Principles Concepts
Bookkeeping is all about recording the business data. Accounting on the other hand is primarily concerned with the interpretation and design of data, and the preparation of financial reports. As far as the forms of business entities are concerned, they can be of three types: sole proprietorship, partnership and corporations. To be very precise, we can say that a corporation is a separate legal entity where many shareholders are involved in its ownership. In this regard, it is also true that a shareholder’s responsibility is bound to his contribution to capital. Whenever the recording of a business transaction takes place, the need of the accounting records becomes so vital. We can say that the recording of all business transactions is so important. All properties purchased and owned by individuals or businesses are assets. Liabilities are all debts and equity is the right of owners.
The Basic Accounting Equation Transactions
The basic elements of the accounting equation include owner’s equity, liabilities and assets. The owner’s equity is defined through the excess of assets over liabilities. Therefore, assets are generally found equal to liabilities as well as owner’s equity at all times. At least one of these elements is quite responsible for affecting any business transaction. These topics are generally covered when it comes to defining the term “Introduction to Accounting“.
