Chapter 2 : Accounting - Introduction

Topics covered in this snack-sized chapter:

• Accounting: Introduction
• What Accounting is all about?
• Types of Expenditures
• Fundamental Accounting Equation
• Double Entry Accounting
• Typical Accounting Cycle
• Remember
• Receivables
• Payables
• Balance Sheet – A Permanent Statement
• Income Statement – A Temporary Statement

• Financial Accounting-This includes revenues, earnings, assets and liability; its core components being:

• Balance Sheet: Reports on a company's assets, liabilities, and ownership equity at a given point of time.

• Income Statement or Profit and Loss Statement (P&L): Reports on a company's income, expenses, and profits over a period of time.

• Management Accounting–This includes cost, budgeting, and net present value. It is mainly prepared for internal purposes.

• Assets

• Liabilities

• Expenses

• Revenue

• Owners’ Equity

• Examples: Cash, accounts receivable, inventory, notes receivable, prepaid expenses, land, buildings, equipment, furniture, and fixtures.

• Examples: Notes payable, accounts payable, accrued liabilities, long-term liabilities (bonds).

• Direct Expenses

• Indirect Expenses 

• Examples: Common stock, retained earnings, revenues, expenses.