Accounting

Accounting

Sara Lamb

American Intercontinental University

Hello students! Thank you for your interest in accounting. Accounting is the process of identifying, measuring, and communicating economic information to permit informed judgments and decisions. Put more simply, accounting is the language of business. When you want to know about the financial results of a business, you must understand and speak accounting. A debit is a transaction of value “added” to an account. A credit ia a transaction of value “removed” from an account. Debit, value is added. Credit value is removed. Accounts are simply established to provide a record of individual business transactions as they apply to a certain area or item. Your personal checking account is established in order to provide you a record of personal financial transactions you create when you write a check. All accounts are listed in a general ledger. Today, this is all done with computer software that creates the general ledger on your computer. The general ledger is the central location for maintaining all your accounts. Journal entries refer to the posting or entry of the financial transactions to a particular account. Assets are accounts that add value to your individual or business worth. Liabilities are accounts that remove value form you individual or business worth. Equity is used to identify the individual contribution of money, or other financial equivalent, invested in individual or business worth. The revenue account is simply the account that tracks all income generated. Expense accounts are the individual accounts setup to record the finical transactions that occur, as expenditure, in generating that income.

An accounting system offers a method for checking, balancing, and reconciling all those transactions in order to produce accurate pictures of our financial health.  Profit and Loss Reports, Balance Sheets, and Cash Flow Statements are the end result of compiling all the transactions into...