FUNDAMENTALS OF FINANCIAL ACCOUNTING. British library cataloguing-in- publication data. A catalogue record for this book is available from the. Subject: Financial Accounting-I . information or external use (financial accounting function). .. In other words, fundamental accounting concepts are broad. Introduction to. Financial Accounting. Second Edition. Based on International Financial. Reporting Standards. Henry Dauderis. David Annand.
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Fundamentals of Management Accounting – basic knowledge and its application. Section A: Fundamentals of Financial Accounting [60 marks]. 1. Accounting. explain the fundamental concepts and principles of accounting and auditing. . Ashish K. Bhattacharyya Essentials of Financial Accounting; PHI Learning Pvt. Financial Accounting Fundamentals, Ch. 1, Wild, Page 1. CHAPTER 1: INTRODUCING FINANCIAL ACCOUNTING. I. IMPORTANCE OF ACCOUNTING.
A debit is an entry that either increases an asset or expense account or decreases a liability or equity account. A credit is an entry that either increases a liability or equity account or decreases an asset or expense account.
Financial Accounting Fundamentals 6th Edition – Ebook PDF Version
Debits are recorded on the left side of an accounting ledger, while credits are recorded on the right. GAAP Generally accepted accounting principles GAAP are a common set of accounting principles that companies use to put together their financial statements.
The idea behind GAAP is to have a set of uniform, recognized standards that all companies adhere to, regardless of industry or size. Imposing GAAP on companies allows investors to benefit from a certain level of consistency when reviewing financial reports and comparing investment opportunities.
Financial statements Financial statements are a collection of reports about a company's financial activities. They highlight a company's ability to generate cash flow and its capacity to repay its debts. Businesses are expected to prepare financial statements in accordance with generally accepted accounting principles.
Financial statements consist of three key reports: The balance sheet, which shows a company's assets, liabilities, and shareholders' equity over a specified period The income statement, which reviews a company's revenues, expenses, gains, and losses over a specified period The statement of cash flows, which highlights changes in a company's cash flows and activity over the course of a specified period 5.
Cash vs. Under the cash method, revenue is recorded when it is actually received from customers, and expenses are recorded when cash is actually paid out.
Under the accrual method, revenue is recorded when it is earned and expenses are recorded when they are incurred, regardless of when the cash is actually received or paid out.
Common liability accounts: accounts payable, notes payable, and unearned revenue, wages payable, and taxes payable.
Chapter 1: Welcome to the World of Accounting
Common equity accounts: common stock and retained earnings and dividends. A note payable is formal promise, usually denoted by signing a promissory note to pay a future amount. A note payable can be short-term or long-term, depending on when it is due, and usually carries an interest charge based on amount and time.
An account payable also references an amount owed to an entity.
An account payable can be oral or implied, and often arises from the download of inventory, supplies, or services. An account payable is usually short-term and not charged interest.
There are several steps in processing transactions: 1 Identify and analyze the transaction or event, including the source document s , 2 apply double-entry accounting, 3 record the transaction or event in a journal, and 4 post the journal entry to the ledger. These steps would be followed by preparation of a trial balance and then with the reporting of financial statements.
A general journal can be used to record any business transaction or event. Debited accounts are commonly recorded first.
The credited accounts are commonly indented.An account payable also references an amount owed to an entity. Acquisition and Disposition, Operational Assets: Author s : Dennis Caplan Introduction to Financial and Managerial Accounting This course note explains the basic concepts of financial and managerial reporting.
Also highlighted the concept of activity based costing, cost records and different costing systems. GAAP Generally accepted accounting principles GAAP are a common set of accounting principles that companies use to put together their financial statements.
Chapter 1: Welcome to the World of Accounting
The viewpoint is that of readers of financial and managerial reports rather than the accountants who prepare them. Under the cash method, revenue is recorded when it is actually received from customers, and expenses are recorded when cash is actually paid out.
Common equity accounts: common stock and retained earnings and dividends. Under the accrual method, revenue is recorded when it is earned and expenses are recorded when they are incurred, regardless of when the cash is actually received or paid out. This article is part of The Motley Fool's Knowledge Center, which was created based on the collected wisdom of a fantastic community of investors.