Basic accounting concepts

Money measurement concept: Only business transactions that can be expressed in terms of money are recorded in accounting, though records of other types of transactions may be kept separately.

Basic accounting concepts

Basic Accounting Principles Accounting assumptions and principles provide the bases in preparing, presenting and interpreting general-purpose financial statements. This also holds true for expenses as they are recorded when they were incurred, rather than when they were paid.

10 basics of accounting

But what are some of the basic accounting concepts that you need to know? Then indent the next line and show the account and amount to be credited. For example to record a loan payment you would debit two accounts Notes Payable and Interest Expense. Nevertheless, reversing entries are optional. Accounting year concept: Each business chooses a specific time period to complete a cycle of the accounting process—for example, monthly, quarterly, or annually—as per a fiscal or a calendar year. Assets Assets can be classified as current or non-current. Conservatism concept. In addition, the concepts of accrual, accounting entity, monetary unit, and time period are also important in preparing and interpreting financial statements. Lesson 3 The accounting equation is the unifying concept in accounting that shows the relationships between the accounting elements: assets, liabilities, and capital.

Going Concern — Also known as continuing concern concept or continuity assumption, it means that a business entity will continue to operate indefinitely. The American Institute of Certified Public Accountants defines accounting as: The art of recording, classifying, summarising in a significant manner and in terms of money, transactions and events which are, in part at least of financial character, and interpreting the results thereof.

fundamental accounting concepts

This lesson takes you through the steps in the accounting cycle. Lesson 4 Here are some more sample transactions and their effect to the accounting equation.

13 accounting concepts

In that case, the company might need to start considering the liquidation value of assets.

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Basic Accounting Concepts