Introduction to Accountancy Principles

The art of recording, classifying, summarizing, and interpreting financial transactions.
Provides essential financial information for decision-making.

Accrual Principle: Recognizes revenue and expenses when they occur, not when cash is exchanged.
Consistency Principle: Requires that businesses use the same accounting methods over time.
Going Concern Principle: Assumes that a business will continue operating for the foreseeable future.
Matching Principle: Expenses should be matched with the revenues they help to generate.

Financial Accounting: Focuses on preparing financial statements for external users (investors, creditors).
Managerial Accounting: Provides internal management with information for decision-making.
Cost Accounting: Analyzes costs to help manage budgets and improve profitability.
Tax Accounting: Deals with tax returns and tax payments compliant with regulations.

Balance Sheet: Snapshot of a company’s financial position at a specific point in time. Components:
- Assets
- Liabilities
- Shareholders' Equity
Income Statement: Reports on a company's revenue, expenses, and profits over a period of time.
Cash Flow Statement: Provides insights into cash inflows and outflows, categorized into operating, investing, and financing activities.

Assets: Resources owned by a business (e.g., cash, inventory).
Liabilities: Obligations or debts owed to others (e.g., loans, accounts payable).
Equity: The owner's interest in the business, calculated as Assets - Liabilities.
Depreciation: Allocation of an asset's cost over its useful life.

Transaction Occurrence: Recording financial transactions as they happen.
Journal Entry: Initial recording of transactions in the journal.
Posting: Transferring journal entries to the ledger accounts.
Trial Balance: Summarizing all ledger accounts to check for accuracy.
Adjusting Entries: Making necessary adjustments to ensure accurate reporting.
Financial Statements Preparation: Generating the balance sheet, income statement, and cash flow statement.
Closing Entries: Closing temporary accounts to prepare for the next accounting period.

Accounting Software: Automates bookkeeping and financial reporting (e.g., QuickBooks, Xero).
Cloud Accounting: Allows access to financial data from anywhere, enhancing collaboration and security.
Data Analytics: Improves decision-making by analyzing financial data trends and forecasts.

Accountancy is the process of recording, classifying, summarizing, and interpreting financial transactions.
It provides crucial financial information to guide decision-making.

Accrual Principle: Records revenue and expenses when they occur, not solely when cash is exchanged.
Consistency Principle: Businesses must consistently use the same accounting methods throughout their operations.
Going Concern Principle: Assumes a business will continue operating in the foreseeable future.
Matching Principle: Expenses are matched with the revenues they generate.

Financial Accounting: Focuses on preparing financial statements for external users like investors and creditors.
Managerial Accounting: Provides management with internal information needed for decision-making.
Cost Accounting: Analyzes costs to manage budgets and improve profitability.
Tax Accounting: Deals with tax returns and payments ensuring compliance with regulations.

Balance Sheet: A snapshot of a company's financial position at a specific moment, showing assets, liabilities, and shareholder equity.
Income Statement: Reports on a company’s revenue, expenses, and profitability over a specific period of time.
Cash Flow Statement: Shows the movement of cash both into and out of a company, categorized into operating, investing and financing activities.

Assets: Resources controlled by a business, such as cash or inventory.
Liabilities: Obligations or debts owed to others, such as loans or accounts payable.
Equity: The owner's interest in the business, calculated as assets minus liabilities.
Depreciation: The gradual allocation of an asset's cost over its useful life.

Transaction Occurrence: Recording financial transactions as they happen.
Journal Entry: The initial recording of transactions in a journal.
Posting: Transferring journal entries to individual ledger accounts for further organization.
Trial Balance: A summary of all ledger accounts to check for accuracy in the accounting process.
Adjusting Entries: Necessary adjustments to ensure accurate financial reporting.
Financial Statements Preparation: Generating the balance sheet, income statement, and cash flow statement.
Closing Entries: Entries used to close temporary accounts at the end of an accounting period to prepare for the next period.

Accounting Software: Automates bookkeeping and financial reporting processes (e.g., QuickBooks, Xero).
Cloud Accounting: Allows access to financial data from any location, enhancing collaboration and security.
Data Analytics: Helps improve decision-making by analyzing trends and forecasting potential outcomes based on financial data.

Facilitates informed business decisions by providing financial insights.
Ensures regulatory compliance and transparency in financial reporting.
Improves financial performance through cost management and efficient resource allocation.
Provides stakeholders with relevant financial information to assess the business's financial health.