Objectives of accounting in any business are; systematically record transactions, sort and analyzing them, prepare financial statements, assessing financial position, and aid in decision making with financial data and information about the business.
5 accounting principles are; (1) revenue recognition principle, (2) historical cost principle, (3) matching principle, (4) full disclosure principle, and (5) objectivity principle.
An accounting event is a financial event that would change the account balances in financial statements of a business. Any event that brings financial changes in the company and needs to record in the book.
GAAP are rules of action which are derived from experience and practice and they prove useful and become Generally Accepted Accounting Principles.
To run a business you need data, records, reports, analysis, accurate information about assets, debts, liabilities, profits; and that is why Accounting is Importance for any business activities. The accounting information is very important for the management or the decision making the body of an organization. Management cannot decide without reasonable information for backing it up….
4 accounting assumptions are; (1) business entity assumption, (2) money measurement assumption, (3) going concern assumption and (4) accounting period assumption.
Understanding the difference between transaction and event is required in accounting to properly record financial events of a business. The main difference between them is that all events are not transactions and all transactions are events.
3 Basic principles of accounting information system are cost-effectiveness, useful output, and flexibility for efficient and effective accounting information system.
Main difference between journal and ledger is that; the business transactions are at first recorded in the journal and then these transactions are permanently posted in the ledger.