PRINCIPLES OF ACCOUNTING I

Principles of accounting can also refer to the basic or fundamental principles of accounting: cost principle, matching principle, full disclosure principle, revenue recognition principle, going concern assumption, economic entity assumption, and so on. What is Accounting?It is the language of business.The language helps us understand where a business is financially.The language can be broken down into 5 parts. It can be grouped in to financial statements. We use these statements to analyze transactions.Transactions are things that effect a business that can be measured in money. Two of the three financial statements you have to know are:Balance SheetA=L+CIncome Statement+R-EA stands for Assets. Assets are something of value you own. You know the names of many of these assets already. They have names like: Cash Machinery Accounts Receivable Equipment Notes Receivable Office Furniture Supplies Land Building Truck There are more assets and we will learn their names as we go.L stands for Liabilities. Liabilities are something you owe. Liabilities have names like Account Payable, Note Payable, Wages Payable, Salaries Payable.C stands for Capital or Owners Equity.