Fundamentals of Accounting (FABM)

Systematic process of recording, classifying, and summarizing financial transactions.
Provides information useful for decision-making.

Financial Accounting: Focuses on reporting financial information to external users (investors, creditors).
Managerial Accounting: Provides information for internal decision-making (management).
Tax Accounting: Involves preparing tax returns and planning for future tax obligations.
Cost Accounting: Analyzes costs associated with production and operations.

Accrual Principle: Revenues and expenses are recognized when they are earned or incurred, not necessarily when cash is received or paid.
Consistency Principle: Accounting methods should remain consistent across periods for comparability.
Going Concern Principle: Assumes that a business will continue to operate indefinitely unless stated otherwise.
Matching Principle: Expenses should be matched with the revenues they help to generate in the same period.

Balance Sheet: Snapshot of an entity’s financial position at a specific point in time.
Income Statement: Shows revenues and expenses over a period, resulting in net income or loss.
Cash Flow Statement: Provides information about cash inflows and outflows over a period.

Assets: Resources owned by a business that provide future economic benefits.
Liabilities: Obligations or debts that the business must settle in the future.
Equity: Owner's residual interest in the assets of the business after deducting liabilities.

Bookkeeping: The recording of daily transactions, primarily focused on maintaining accurate records.
Accounting: Involves interpreting, classifying, analyzing, reporting, and summarizing financial data.

Systematic process for recording, classifying, and summarizing financial transactions.
Provides crucial information for informed decision-making.

Financial Accounting: Targets external users, including investors and creditors, to report financial performance.
Managerial Accounting: Supplies internal management with information for decision-making and operational planning.
Tax Accounting: Focused on tax return preparation and future tax liability planning.
Cost Accounting: Details costs involved in production and operations, aiding in cost control and efficiency.

Accrual Principle: Recognizes revenues and expenses when earned or incurred, not when cash is exchanged.
Consistency Principle: Requires uniform accounting methods across reporting periods for reliable comparisons.
Going Concern Principle: Assumes the entity will continue its operations indefinitely without substantial alteration.
Matching Principle: Aligns expenses with related revenues in the same accounting period for accurate financial reporting.

Assets = Liabilities + Equity
Demonstrates the balance between a company's total resources and its funding sources.

Balance Sheet: Provides a snapshot of assets, liabilities, and equity at a specific date.
Income Statement: Details revenues and expenses over a period, culminating in net income or loss.
Cash Flow Statement: Outlines cash inflows and outflows during a specific period, indicating cash management.

Mandates that each transaction impacts at least two accounts, ensuring that debits equal credits.
Maintains equilibrium in the accounting equation and enhances data accuracy.

Assets: Economic resources owned by a business that hold future benefits.
Liabilities: Financial obligations or debts owed by the business to external parties.
Equity: Represents the owners' claim on the assets after all liabilities have been deducted.

Bookkeeping: Involves the routine recording of financial transactions, ensuring accurate and organized financial records.
Accounting: Encompasses a broader range of activities, including analysis and reporting of financial data for strategic insights.

Informs business planning and strategic decision-making processes.
Ensures legal compliance and accurate tax reports.
Builds credibility and trust with stakeholders through transparency and clarity in financial reporting.