Accounting is one of the subjects that does not usually create a positive reaction. It is a fact that mere mention of the word often causes people to crumble. It seems to be extremely boring and boring, and therefore people tend to be afraid of life scales and income statements. Yes, accounting is difficult and not everyone is cut out to be an accountant but there are some basic accounting considerations that are very simple and easy to learn if it can be explained well. In fact, these accounting principles can be applied to everyday business life and it is imperative for anyone in the business world to get to know these aspects. So what are these "need to know" considerations? Well these are the basic accounting equation, the debts and credits, and the balance sheet.
Equity Equity Liabilities plus capital stock equity is the basic accounting equation. This is the basis for accounting and taught by accounting students on the first day of accounting 101. This is as simple as it sounds, the tools actually have equal obligations plus capital stock equity. As you will be complicated with this simple equation, make sure this is true. If assets are not equal to liabilities and shareholder capital, there is a big problem. In order for this equation to be true, we need to know what each piece of the equation is. The assets are owned by the company. These may be land owned by industry, buildings, equipment and cash. Liabilities are those payments to which the company or the enterprise owes. Payable bills, payables and unrealized revenue are examples of liabilities. And finally, the ownership of the property claim to his property. Equity is also capital. Shares consist of stocks, dividends, income and expenses. So, there is, basically, what we own is equal to what we owe to our money. By understanding this equation, other elements of accounting become more lucrative and less frightening, such as debt and credit.
The next major aspect of accounting is the difference between the load and the loan. A simple reconciliation between the burden and the borrowing can be the difference between huge profits and bankruptcy. So it is unmistakable that this is not something the accountants need to mix. The first thing to remember is that debt is always on the left, and the credits are always on the right. This is never an exception. Debt and credit depend on each other when it increases debts in a single account, it needs to reduce the amount of credit, and when it increases the loans, the debt must be reduced. Sometimes complicated, it determines which bills are a burden of growth and a decline in credit and which are a decreasing decline and credit growth. For example, it can not be assumed that just because a load increase in a particular account does not mean that all other accounts are a load lift. Each invoice must be examined separately.
And finally, the most important aspect of accounting is the profit and loss account. The beauty of accounting is that one thing is built on another, so the basic accounting equation and the knowledge of debits and debts are key to preparing and reading the balance. Basically, the balance sheet is like a very detailed equation of the assets' equivalent liabilities plus the equity of the shareholder in the form of a diagram. At the top of the balance is the name of the company and the date. The date is listed at the top of the page because the balance represents a business or corporate financial situation at a given time. On the left are the listed devices and the bottom of the entire device. On the right side there are liabilities and the shareholder's equity and bottom, both the shareholders' equity and liabilities. Like the basic accounting equation, all assets on the lower left side of the balance must match all the liabilities and equity of the left.
So there are three fundamental, yet critical, principles of calculation, the basic accounting equation, the debts and credits, and the balance. Hopefully accounting will no longer be intimidating and frightening. If you ever have one business day or you have to pay for your own account, think back to these simple concepts. Perhaps, like any real accountant, you will be able to save yourself some cash and make math yourself, instead of spending money on a professional.
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