Introduction to Accountancy fundamental

Double-Entry System: Each transaction affects at least two accounts (debits and credits).
Accounting Equation: Assets = Liabilities + Equity.
Financial Statements:
- Income Statement: Shows profit or loss over a period.
- Balance Sheet: Snapshot of financial position at a point in time.
- Cash Flow Statement: Inflows and outflows of cash over a period.

Financial Accounting: Produces financial statements; focuses on external users (investors, creditors).
Management Accounting: Helps managers with internal decision-making; includes budgeting and forecasting.
Cost Accounting: Analyzes costs of production to help manage and reduce expenses.
Tax Accounting: Focuses on compliance with tax regulations and strategizing tax liabilities.
Auditing: Examination of financial statements and records to ensure accuracy and adherence to regulations.

Accrual Principle: Revenue and expenses are recorded when they occur, not when cash is exchanged.
Consistency Principle: Same accounting methods should be used consistently.
Conservatism Principle: Revenues and profits are recognized only when certain, while potential losses should be recognized immediately.
Materiality Principle: Impact of an error or omission is considered when determining if it needs correction.

Assets: Resources owned by a business (e.g., cash, inventory).
Liabilities: Obligations or debts owed to outsiders (e.g., loans, accounts payable).
Equity: Owner's claim on assets after liabilities are subtracted (e.g., capital, retained earnings).

Common accounting software includes QuickBooks, Xero, and Sage.
Spreadsheets (e.g., Microsoft Excel) are also widely used for financial modeling and analysis.

Accountants must follow established standards (e.g., GAAP, IFRS) for consistency and transparency.
Regulatory bodies (e.g., SEC, FASB) enforce compliance and ensure reliability of financial reporting.

Accountancy is the process of recording, classifying, and summarizing financial transactions.
It provides financial information for decision-making by stakeholders.

Double-Entry System: Every financial transaction affects at least two accounts, one with a debit and the other with a credit.
Accounting Equation: Represents the fundamental relationship between assets, liabilities, and equity: Assets = Liabilities + Equity.
Financial Statements: Key reports presenting a company's financial performance and position.

Financial Accounting: Focuses on producing financial statements for external users, such as investors and creditors.
Management Accounting: Supports internal decision-making for managers, including budgeting and forecasting.
Cost Accounting: Analyzes production costs to control expenses and improve efficiency.
Tax Accounting: Ensures compliance with tax regulations and minimizes tax liabilities.
Auditing: Reviews financial records and statements to guarantee accuracy and compliance with regulations.

Accrual Principle: Records revenue and expenses when they are incurred, regardless of cash flow.
Consistency Principle: Uses consistent accounting methods over time for better comparability.
Conservatism Principle: Recognizes revenue and profits only when certain, while potential losses are recognized immediately.
Materiality Principle: Considers the significance of an error or omission in determining if it requires correction.

Assets: Resources owned by a business (e.g., cash, inventory, equipment).
Liabilities: Obligations or debts owed to outsiders (e.g., loans, accounts payable).
Equity: The owner's claim on the company's assets after liabilities are subtracted.

Provides accurate financial information for stakeholders, aiding informed decision-making.
Essential for business planning, performance evaluation, and strategic decision-making.
Facilitates compliance with legal and regulatory requirements.
Aids in resource allocation, investment decisions, and financial forecasting.

Common accounting software includes QuickBooks, Xero, and Sage.
Spreadsheets (e.g., Microsoft Excel) are also widely used for financial modeling and analysis.

Accountants must follow established accounting standards (e.g., GAAP, IFRS) for consistency and transparency in financial reporting.
Regulatory bodies (e.g., SEC, FASB) enforce compliance and ensure reliability of financial reporting.