Introduction to Accounting (ACC 101)

Definition of Accounting:
- Process of recording, summarizing, and reporting financial transactions.
Purpose of Accounting:
- Provide information for decision-making by managers, investors, and stakeholders.

Generally Accepted Accounting Principles (GAAP):
- Framework for accounting standards in the U.S.
Double-Entry System:
- Each transaction affects two accounts (debits and credits must equal).
Accrual vs. Cash Accounting:
- Accrual: Recognizes revenue and expenses when they occur, regardless of cash flow.
- Cash: Recognizes revenue and expenses only when cash is exchanged.

Balance Sheet:
- Snapshot of a company's assets, liabilities, and equity at a specific point in time.
Income Statement:
- Reports revenue and expenses over a period of time, showing profitability.
Cash Flow Statement:
- Tracks cash inflows and outflows from operating, investing, and financing activities.

Assets: Resources owned by a business (e.g., cash, inventory, property).
Liabilities: Obligations or debts owed to outsiders (e.g., loans, accounts payable).
Equity: Owner's interest in the business; also known as net assets (Assets - Liabilities).
Revenues: Income generated from normal business operations.
Expenses: Costs incurred in the process of earning revenues.

Identify Transactions:
- Record business events that have a financial impact.
Journal Entries:
- Record transactions in the general journal.
Posting:
- Transfer journal entries to the general ledger.
Trial Balance:
- List of all accounts and their balances to ensure debits equal credits.
Adjusting Entries:
- Update accounts at the end of the period to reflect unrecorded items.
Financial Statements Preparation:
- Generate the balance sheet, income statement, and cash flow statement.
Closing Entries:
- Reset revenue and expense accounts for the new accounting period.

Accountant: Prepares financial statements, ensures compliance with regulations.
Auditor: Reviews financial statements and internal controls for accuracy and compliance.
Controller: Oversees accounting functions and financial reporting.

Adherence to integrity, objectivity, confidentiality, and professional behavior is crucial in accounting practices.

Accounting involves recording, summarizing, and reporting financial transactions.
It provides crucial information for decision-making by managers, investors, and other stakeholders.

GAAP (Generally Accepted Accounting Principles): The U.S. accounting standard framework.
Double-Entry System: Each transaction impacts two accounts, ensuring debits always equal credits.
Accrual vs. Cash Accounting:
- Accrual: Recognizes revenue and expenses when they occur, regardless of cash flow.
- Cash: Recognizes revenue and expenses only when cash is exchanged.

Balance Sheet: A snapshot of a company's assets, liabilities, and equity at a specific point in time.
Income Statement: Reports revenue and expenses over a period, showcasing profitability.
Cash Flow Statement: Tracks cash inflows and outflows from operating, investing, and financing activities.

Assets: Resources a business owns (cash, inventory, property).
Liabilities: Obligations or debts owed to outsiders (loans, accounts payable).
Equity: Owner's interest in the business, also known as net assets (Assets - Liabilities).
Revenues: Income generated from normal business operations.
Expenses: Costs incurred in the process of earning revenues.

Identify Transactions: Record business events impacting finances.
Journal Entries: Record transactions in the general journal.
Posting: Transfer journal entries to the general ledger.
Trial Balance: List of all accounts and their balances to ensure debits and credits are equal.
Adjusting Entries: Update accounts at the end of the period for unrecorded items.
Financial Statement Preparation: Generate balance sheet, income statement, and cash flow statement.
Closing Entries: Reset revenue and expense accounts for the new accounting period.

Accountant: Prepares financial statements, ensuring compliance with regulations.
Auditor: Reviews financial statements and internal controls for accuracy and compliance.
Controller: Oversees accounting functions and financial reporting.