Introduction to Accounting as the principal academic degree in accountancy in several

countries

What is accounting? The practice of recording, organizing, and summarizing transactions and
occurrences is known as accounting. First and foremost, we keep track of transactions by recording
them in a variety of accounting books, including notebooks, ledgers, and so on. After that, these
documents are arranged into pertinent headings and categories. This categorization is crucial since
accurate perspective is essential for making sense of all data. In many countries, the Bachelor of
Accountancy, sometimes known as Bachelor of Accounting, is the primary academic degree in
accounting. It is frequently the sole undergraduate degree accepted for future practice as a professional
accountant. Possessing this degree is beneficial if you want to engage in business. Businesses always
need someone to take care of their money, even when things are tough. That's where accountants come
in! They're super important because they help businesses get ready for tax time and make sure
everything is filed correctly. That's why accountants are always needed, no matter what's going on in the
economy.

Identify and Understand the use of different types of accounts: asset, liability, equity,
revenue and expense.

If you're planning on making accounts, adding money, or checking out money reports, it's really
important to know what type of account you're dealing with. : asset, liability, equity, revenue and
expense.

Assets are things that a company owns that are worth money. There are two types of assets: tangible
and intangible. Tangible assets are things you can touch, like land, buildings, cars, and stuff the company
has to sell. Intangible assets are things you can't touch, like money the company is owed, patents,
contracts, and certificates of deposit. assets are also grouped according to either their life span or
liquidity - the speed at which they can be converted into cash. Current assets are items that are
completely consumed, sold, or converted into cash in 12 months or less. Fixed assets, or non-current
assets, are tangible assets with a life span of at least one year and usually longer.
When a business owes money to someone else, that's called a liability. There are two types of liabilities:
current and long-term. Current liabilities are debts that need to be paid off within a year, like bills for
things the business needs to keep running. Examples of current liabilities are money owed to suppliers
or customers who have paid in advance. Long-term liabilities are debts that take longer than a year to
pay off, like loans for buying big things that the business needs to keep running. These loans are usually
for things like buildings or equipment.
Equity is of utmost importance to the business owner because it is the owner's financial share of the
company - or that portion of the total assets of the company that the owner or shareholder(s) fully
owns. Equity may be in assets such as buildings and equipment, or cash. Equity is also referred to as Net
Worth.
When a business sells something or gets money from investments, that's called income. It can also be
called revenue, gross income, turnover, or the top line. But when you take away all the expenses, what's
left is called net income. That's also known as profit, net profit, or the bottom line. Income accounts are
like a clean slate that gets wiped clean every year. They're called "temporary" or "nominal" accounts
because they don't keep track of money over a long period of time. Instead, they start fresh at the
beginning of each year. This is usually done by a computer program, so you don't have to worry about it.
Expenses are things a company spends money on every month to keep running. Some examples of
expenses are things like buying office supplies, paying for electricity and water, renting a building, having
fun with coworkers, and traveling for work. Just like how a company keeps track of how much money
they make, they also keep track of how much money they spend. But, at the end of each month, they
start over and keep track of new expenses. Most accounting programs do this automatically.

Analyze the transactions - asset accounts (cash and cash equivalents), liability accounts
(accounts payable, and long-term bonds payable), equity accounts (common and treasury
stock), revenue accounts (sales and others) and expense accounts (selling, and
amortization).

Cash and cash equivalents are things that a company owns that can be turned into money right away.
This is shown on a special paper called a balance sheet. Examples of cash and cash equivalents are bank
accounts and special papers called marketable securities. These special papers are like loans that are
paid back in less than 90 days. But, sometimes things like stocks are not included because their value
can change a lot.
Bonds Payable are like a big IOU that a company gives out when they need to borrow a lot of money for
a long time. They promise to pay back the money they borrowed plus extra money called interest at a
certain time. This is a big responsibility for the company because they have to make sure they have
enough money to pay it back. When they first give out the IOU, they write it down in their books and
take away some of their cash.
Treasury stock is usually a corporation's previously issued shares of common stock that have been
purchased from the stockholders, but the corporation has not retired the shares. The number of shares
of treasury stock (or treasury shares) is the difference between the number of shares issued and the
number of shares outstanding. Since the treasury shares result in fewer shares outstanding, there may
be a slight increase in the corporation's earnings per share.
Revenue Accounts are like a report card for a business's money. They show how much money the
business made and have a positive balance. Some examples of Revenue Accounts are money from
selling things, money from renting things out, and money from interest. When a company makes money
from its main business, it's called Sales Account or Operating Activities. To figure out how well the
company is doing, we use different ratios like Turnover, Gross Profit, and Net Profit. We start with the
amount of money in Sales Account and use that to calculate the ratios. This helps us understand how
much money the company is making and how much profit it's earning.
If a company makes most of its money from renting things out, they have a special account called the
Rental Income Account. This account is also sometimes called the Operating Income Account or Sales
Account. But if renting isn't the main way the company makes money, then the Rental Income Account
falls under a different category called Non-Operating Revenue Accounts. Basically, all the money that
comes in from renting things out goes into this account.
Interest in Capital is when a company or organization earns money from the interest they get on things
like savings accounts or tax refunds. They keep track of this money in a special account. So basically, if
you save your money in a bank account and earn interest on it.
The Dividend Income Account is a fancy way of saying that when people invest in companies, they can
earn money from something called dividends. Dividends are like a little bonus that companies give to
their investors when they make a profit.
The Professional Income Account is where a business keeps track of the money they make from their
main job. This includes things like getting paid for helping someone buy or sell something (Commission
Income) or charging for services they provide (Service Fees). It's called the Operating Revenue Account
because it's the money they make from their main operations.
Expense accounts are like a diary that a company keeps to track how much money they spend on
everyday things during a certain time period. These accounts only last for a little while, like a month or a
year, and then new ones are made. They're called temporary accounts because they don't last forever.
When a company spends money, the expense account goes up. But if they get money from somewhere
else and put it into the expense account, the account goes down. The goal is to make sure that the
account is balanced at the end of the time period. Expense accounts are important because they show
up in a report that tells the company how much money they made or lost during that time period. This
report is called the profit and loss statement.

Differentiate bookkeeping from accounting

Keeping track of your money is super important, and bookkeeping and accounting are two ways to do it.
They might seem pretty similar, but they're actually different things. Bookkeeping is all about writing
down and organizing your money information. Accounting is more about explaining that information to
people who own or invest in a business. Simply put, bookkeeping is more transactional and
administrative, concerned with recording financial transactions. Accounting is more subjective, giving
you insights into your business’s financial health based on bookkeeping information. Bookkeepers and
accountants are both important for keeping track of money, but they have different jobs.
Apply the measurement, processing, and communication of financial and non-financial
information about economic entities such as businesses, and corporations

Accountancy is like keeping track of money for businesses and companies. It's important because it
helps people understand how well a business is doing financially. It's kind of like a language that helps
people communicate about money. Different people use this information, like people who invest in the
business, people who lend money to the business, the people who run the business, and the people who
make sure the business is following the rules. Accountants are like superheroes for businesses. They
make sure that companies are doing the right thing and being good members of society. They do this by
watching, measuring, and talking to people. It's kind of like being a detective! They use a lot of different
skills like math, science, and even history.

Recording, posting and interpretation of financial data.

It's important to stay organized so that everything runs smoothly. Different companies might use
different time periods for their accounting cycle, like every month or every three months or every year.
This helps them see how well they're doing and make plans for the future. Bookkeepers know how
much money a company has every day. It's super important to figure out how long each accounting
cycle should be because it helps set dates for when to start and stop. When one cycle ends, a new one
starts and the whole process starts over again.

The accounting cycle starts with recording every company transaction individually and ends with a
comprehensive report of the company’s activities for the designated cycle timeframe. When you use
cash accounting, you write down when you get money or when you spend it. Double-entry
bookkeeping is a bit more complicated. It means you write down two things for every transaction. This
helps you keep track of how much money you have and how much you're making or spending.

Once a transaction is recorded as a journal entry, it should post to an account in the general ledger. The
general ledger provides a breakdown of all accounting activities by account. This allows a bookkeeper to
monitor financial positions and statuses by account. One of the most commonly referenced accounts in
the general ledger is the cash account which details how much cash is available. The ledger used to be
the gold standard for recording transactions but now that almost all accounting is done electronically,
the ledger is less of an active concern as all transactions are automatically logged.
Forms of business organizations

Sole proprietorships are easy to set up and give you full control over your business. If you are conducting
commercial activities but have not registered any other business, you are automatically considered a
sole proprietorship. A sole proprietorship does not form its own business unit. This means that business
assets and liabilities are not separated from personal assets and liabilities. You may be personally liable
for the Company's debts and obligations. Sole proprietors can still obtain a trade name. It can also be
difficult to raise money because you can't sell your shares and banks are reluctant to lend to sole
proprietorships. Sole proprietorships are suitable for low-risk businesses and owners who want to test
their business ideas before embarking on a more formal venture.

Partnerships are the simplest structure for two or more people to own a business together. Partnerships
come in two general types: Limited Partnership (LP) and Limited Liability Partnership (LLP). In a limited
partnership, she is the only general partner with unlimited liability and all other partners have limited
liability. LLP will indemnify each partner against any liability to the partnership, but will not be
responsible for the actions of any other partner. Partnerships are suitable for multi-owner businesses,
professional groups (such as lawyers), and groups who want to test their business idea before starting a
more formal venture.

With Limited liability company, you can take advantage of both corporate and partnership structures.
Profits and losses can be transferred to personal income without corporate tax. However, LLC members
are considered self-employed and must pay self-employment tax contributions to Medicare and Social
Security. LLCs are suitable for medium- or high-risk businesses, owners with significant personal assets
that need protection, and owners who want to pay lower tax rates than corporations.
Implement accounting fundamentals, capitalizing a business - Debits and Credits

When accounting for these transactions, we record numbers in two accounts, where the debit column is
on the left and the credit column is on the right. A debit is an accounting entry that either increases an
asset or expense account, or decreases a liability or equity account. A credit is an accounting entry that
either increases a liability or equity account, or decreases an asset or expense account.

Every time an accounting transaction is created, at least two accounts are always affected, with a debit
entry on one account and a credit entry on the other. There is no upper limit on the number of accounts
involved in a transaction - but the minimum is no less than two accounts. The totals of debits and credits
for any transaction should always be equal, so an accounting transaction is always said to be "balanced".
If a transaction is not balanced, financial statements will not be generated. Therefore, the use of debits
and credits in a two-column transaction record format is the most essential of all accounting accuracy
controls.

There can be considerable confusion about the inherent meaning of debit or credit. For example, if you
debit a cash account, it means the amount of cash on hand increases. However, if you debit the
Accounts Payable account, it means the Accounts Payable amount decreases. These differences arise
because debit and credit have different effects on several key account types.

Applying the proper classification of current assets, fixed assets, current liabilities,
statement of equity and retained earnings, issuance of stock, gross sales, costs of goods sold,
expenses, EBIT, income taxes and income statement.

Assets, liabilities, and equity are the three main categories in your accounting spreadsheet. An asset is
everything your business owns. Liabilities and equity are what your business owes to third parties and
owners. To balance your books, the rule of thumb in accounting is that assets equal liabilities plus
equity. The concept behind it is that everything the business has come from somewhere — either a third
party, such as a lender, or an owner, such as a stockholder.

An asset is anything that can be owned or controlled and generates — or will generate — an economic
benefit. Assets are what follows; Liquid assets: Cash and cash equivalent, Tangible assets: real estate like
buildings and land; and business equipment such as machinery and vehicles, Intangible assets: Patents,
investments like stocks and bonds, Noncurrent assets: accounts receivable.
A liability is a financial obligation. Debt is a type of liability and is generally the most dangerous type.
They can be a vital part of a company’s operations, in both day-to-day business and long-term plans.
Like; Current liabilities: Anything due within a year including accounts payable, interest payable, short-
term loans and taxes payable, Long-term liabilities: Anything due in more than a year, including bonds
payable, notes payable, deferred tax and mortgages. These might also appear on your business debt
schedule, Contingent liabilities: An obligation that might happen, depending on the occurrence or
outcome of another event, such as a lawsuit.

Equity is the monetary value of an owner's ownership after recording liabilities. Lenders and other third
parties usually have the first claim on the company's assets. The exact calculation of this value may vary.
Market value is the current price that an investor sees to predict future value. The book value is the
historical value and is simply used to record history. net worth: Preferred stock, common stock and
treasury stock, retained earnings

The gross profit is a profitability measure that evaluates how efficient a company is in managing its labor
and supplies in the production process.

The cost of goods sold (COGS) is the sum of all direct costs associated with making a product. It appears
on an income statement and typically includes money mainly spent on raw materials and labor. It does
not include costs associated with marketing, sales or distribution.

The income statement also includes tax-related charges. This statement determines your pre-tax income
and subtracts all tax payments to determine your net income after tax. Companies can also use this
method to estimate their income tax liability.

Earnings before interest and taxes (EBIT) is a measure of a company's profitability. EBIT can be
calculated as income minus expenses, excluding taxes and interest. EBIT is also known as operating
profit, operating profit, and profit before interest and tax.
Different accounting steps to prepare basic financial statements for a given period of time /
as of a given period of time.

The accounting cycle is a standard, 8-step process that tracks, records, and analyzes all financial activity
and transactions within a business. It starts when a transaction is made and ends when a financial
statement is issued and the books are closed.

The first step in the accounting cycle is to identify and record transactions through subledgers (journals).
As financial activities and business events occur, transactions are recorded in books and included in
financial statements. Billing period types for recording transactions include monthly and yearly.

To record non-routine accounting transactions, prepare journal entries for a required transaction not
recorded through a subsidiary ledger like accounts receivable. You can also use journal entries to make
corrections. Use automatic journal entries when possible.

Accounting systems can post sub-journals and journal entries to the general ledger.

Next you generate an unadjusted balance sheet report from your financial records. Check for errors to
ensure that all transactions are recorded in your general ledger. The format of the trial balance is that
each account's balance or total amount is listed without details. In a double-entry bookkeeping system,
total debits must equal total credits.

Use worksheets to analyze, reconcile, and identify adjusting entries and consolidation entries. When
possible, use the capabilities provided by your accounting system. Each balance sheet account should be
reconciled at least monthly to find and correct errors with adjusting journal entries. Compare each of
the bank accounting statements to its general ledger cash account. A list of cash reconciling items will
include outstanding payments and outstanding deposits that haven’t yet cleared the bank and bank
service fees.

Create adjustment journals to correct errors and reflect differences found when reconciling balance
sheet accounts. Journal entries must be reviewed and approved. After reconciliation entries are entered
and posted to the general ledger, the total debit balance should equal the total credit balance as part of
the accounting process.

Close temporary income accounts in a permanent account. Temporary accounts include income and
expense accounts. At the end of the year, the net result is closed to a fixed, retained earnings account.
The income and expense ledger account balances are reset to zero by a closing entry in the system.
Recognize the significance of T- accounts, journal entries, general ledger, trial balance,
adjusting entries, closing entries, post-closing balance, and the accounting cycle.

T-accounts are often used to prepare adjusting entries. The matching principle in accrual accounting
states that all expenses must match the revenue generated during the period. The T-account instructs
accountants on what to enter in the general ledger to get an adjusted balance so that revenue equals
expenses. A business owner can also use T-accounts to extract information, such as the nature of a
transaction that occurred on a particular day or the balance and movements of each account.

Journal entries are the basis for effective record keeping. These are organized into different charts of
accounts and, once verified for accuracy, they are posted to the general ledger, which then feeds into
the financial statements that decision makers business depends on. Accurate and complete journaling is
also essential during an audit, as journal entries provide a detailed account of every transaction.
Auditors, both internal and external, will look for entries or adjustments that are missing
documentation, interpretation or approval that are appropriate or out of line with the business's
standards.

Traditionally, accountants recorded financial transactions in the general ledger by hand, using the
double-entry accounting method. Business owners (and their accountants) use the general ledger to
view the details of transactions for each month, quarter, or year. Let's say you checked your trial balance
sheet and found an unexpected balance in fixed assets at the end of the year. In this case, the
accountant can check the general ledger report to see details of all the transactions that occurred on the
investment account during the year. There, we may find and fix booking errors. B. Transactions posted
to the wrong account or wrong amount.

The purpose of a trial balance is to ensure that all entries made into an organization's general ledger are
properly balanced. A trial balance lists the ending balance in each general ledger account. The total
dollar amount of the debits and credits in each accounting entry are supposed to match. Therefore, if
the debit total and credit total on a trial balance do not match, this indicates that one or more
transactions were recorded in the general ledger that were unbalanced.

An adjusting entry or an adjusting journal entry is a type of entry that an accountant makes in a
company's general ledger to match unrecognized expenses and revenues between accounting periods.
Unrecognized expenses and revenues occur when you sell goods or services and accrue expenses during
an accounting period, but do not receive or make payment for those transactions until a later date. The
purpose of a journal entry is to physically or digitally record every business transaction properly and
accurately. If a transaction affects multiple accounts, the journal entry will detail that information as
well.
A closing entry is a journal entry made at the end of accounting periods that involves shifting data from
temporary accounts on the income statement to permanent accounts on the balance sheet. Temporary
accounts include revenue, expenses, and dividends, and these accounts must be closed at the end of the
accounting year.

The trial balance after closing is a list of all balance sheet accounts with a non-zero balance at the end of
the reporting period. The trial balance after closing is used to verify that the total debit balance is equal
to the total credit balance, which must be zero. The purpose of the trial balance after closing is to ensure
that the sum of all debits and credits is equal to give a net worth of zero. A trial balance after net close
of zero indicates that all temporary accounts have been closed, the opening balance returns to zero and
the next accounting period can begin.

The accounting cycle is a standard, 8-step process that tracks, records, and analyzes all financial activity
and transactions within a business. It starts when a transaction is made and ends when a financial
statement is issued and the books are closed. It enables the financial accounting that businesses need to
perform to be in compliance with federal regulations and tax codes. The government requires
companies of all sizes to disclose their financial results and pay taxes on their profits, which they must
calculate on their own.