Overview of Accounting

Definition: Systematic process of recording, measuring, and communicating financial information.
Purpose: To provide useful financial information for decision-making purposes.

Financial Accounting
- Focuses on reporting financial information to external parties (investors, creditors).
- Follows GAAP (Generally Accepted Accounting Principles) or IFRS (International Financial Reporting Standards).
- Key documents: balance sheet, income statement, cash flow statement.
Managerial Accounting
- Focused on providing information to internal management for business operations.
- Includes budgeting, forecasting, and performance evaluation.
- Not governed by GAAP.
Tax Accounting
- Deals with the preparation of tax returns and tax payments.
- Must comply with tax regulations and laws.
Cost Accounting
- Analyzes the costs of producing goods or services.
- Useful for budgeting and internal cost control.
Auditing
- Involves the examination of financial records and statements.
- Can be internal or external, ensuring accuracy and compliance.

Double-Entry Accounting: Every transaction affects at least two accounts; maintains balance (debits = credits).
Accrual Basis vs. Cash Basis:
- Accrual Basis: Revenues and expenses recorded when they are earned or incurred, not when cash is exchanged.
- Cash Basis: Revenues and expenses recorded only when cash is received or paid.

Assets = Liabilities + Equity
- Assets: Resources owned by the company.
- Liabilities: Obligations owed to external parties.
- Equity: Owner's residual interest in assets after deducting liabilities.

Balance Sheet
- Snapshot of assets, liabilities, and equity at a specific point in time.
Income Statement
- Shows revenues, expenses, and profits/losses over a period.
Cash Flow Statement
- Summarizes cash inflows and outflows from operating, investing, and financing activities.

Ledger: A book or collection of accounts.
Journal: A detailed record of all transactions.
Trial Balance: A reconciliation of all ledgers to ensure debits equal credits.
Depreciation: Systematic reduction of the recorded cost of a fixed asset.

Accounting is a systematic process used to record, measure, and communicate financial information.
Its primary purpose is to provide useful financial data for informed decision-making.

Financial accounting reports financial information to external users such as investors and creditors.
It adheres to GAAP (Generally Accepted Accounting Principles) or IFRS (International Financial Reporting Standards).
Key financial statements produced by financial accounting: balance sheet, income statement, and cash flow statement.
Managerial accounting focuses on providing information to internal management for business operations.
It encompasses budgeting, forecasting, and performance evaluation.
Managerial accounting is not bound by GAAP.
Tax accounting involves the preparation of tax returns and payments, ensuring compliance with tax laws and regulations.
Cost accounting analyzes the costs associated with producing goods or services, aiding in budgeting and internal cost control.
Auditing encompasses the examination of financial records and statements to ensure accuracy and compliance.
Audits can be conducted internally or externally.

Double-entry accounting is based on the principle that every transaction affects at least two accounts, ensuring that debits always equal credits.
Accrual basis accounting records revenues and expenses when they are earned or incurred, regardless of when cash is exchanged.
Cash basis accounting records revenues and expenses only when cash is received or paid.

Assets = Liabilities + Equity
Assets represent the resources owned by a company.
Liabilities represent the company's obligations to external parties.
Equity indicates the owner's residual claim on assets after liabilities are deducted.

The balance sheet provides a snapshot of a company's assets, liabilities, and equity at a specific point in time.
The income statement reports revenues, expenses, and profits or losses over a defined period.
The cash flow statement summarizes cash inflows and outflows from operating, investing, and financing activities.

A ledger is a book or collection of accounts.
A journal is a detailed record of all transactions.
A trial balance reconciles all ledgers to ensure debits equal credits.
Depreciation is the systematic allocation of the cost of a fixed asset over its useful life.

Technology integration involves the use of accounting software and cloud technology to improve efficiency and accuracy.
Sustainability accounting measures a company's environmental and social impacts, reflecting growing concerns about corporate social responsibility.
Data analytics leverages large datasets for informed financial decision-making.