Archive for Basic Accounting
November 19, 2008 at 5:27 am · Filed under Basic Accounting
According to American Institute of Certified Public Accountants (AICPA), accounting is “the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof.”
Basically, accounting is the process of identifying, measuring and communicating economic information so a user of the information may make informed economic judgments and decisions based on it.
From the definition above, there are three important activities in the accounting process, namely identifying, measuring and communicating.
Identifying
This accounting process is the recognition or nonrecognition of business activities as “accountable” events. An event is accountable or quantifiable when it has an effect on assets, liabilities and equity. Accounting event is an economic activity. It involves measurement of economic resources and economic obligations. In other words, only economic activities are emphasized and recognized in financial accounting. Sociological and psychological matters are not yet in the range of today’s accounting practice.
Economic activities of an enterprise are referred to as transactions which may be classified as external and internal. External transactions or exchange transactions are those economic events involving one enterprise and another enterprise. Purchase of merchandise or acquisition of equipment from a supplier, sale of merchandise to customer, borrowing money from a bank, payment of salaries to employees, payment of taxes to government are examples of external transactions.
Internal transactions are economic events involving the enterprise only. These are the economic events that take place entirely within the enterprise. Production of goods available for sale to customers and casualty loss are example of internal transactions. Casualty is any sudden and anticipated loss from fire, earthquake an other events ordinarily termed as an act of God.
Measuring
This accounting process is the assigning of dollar amounts or functional currency of the entity to the accountable economic transactions and events. To be comprehensible and useful, accounting information must be expressed in terms of a common financial denominator. Based on the economic substance of the underlying circumstances relevant to an entity, the functional currency must be determined. It is the currency that mainly influences the normal operations of the Company.
Communicating
Communicating is the process of preparing and distributing accounting reports to potential users of accounting information. Investors, owners, managers, creditors, government regulatory bodies and other interested parties are the potential users of accounting information. These users read and analyze these reports to obtain information that may be helpful to them. An owner may use information to know the profitability of his business or a creditor may analyze the liquidity or the ability to pay of his debtors.
Communication process entails recording, classifying and summarizing economic business transactions.
Recording or journalizing is the process of systematically maintaining a record of all economic business transactions after they have been identified and measured.
Classifying is the sorting or grouping of similar and interrelated economic transactions into their respective classes. For instance, all transactions involving the sale of merchandise can be grouped into one total sales figure and all transactions involving cash can be grouped to report a single net cash figure.
This is accomplished by posting to the ledger. The ledger is a group of “accounts” which are systematically categorized into asset accounts, liability account, capital accounts, revenue accounts and expense accounts.
Summarizing is the preparation of financial statements which include the balance sheet, income statement, statement in changes in equity and statement of cash flows.
http://computeprofit.com/2008/10/12/what-is-basic-accounting/
November 17, 2008 at 6:57 am · Filed under Basic Accounting
The profession that involves accountancy is one of the most demanding career paths. Because of such a description, you can always get paid in a good way for accounting will always be a part of a business operation. Now, are you ready to submit your cover letter? You should also be prepared to write your accounting cover letter if you are going to compose a resume that will be the gateway for your success.
An accounting cover letter is a specific article that intends to highlight your intention to apply for an accountancy position. Actually, there is no other way for a person to apply to a job post other than sending his interest letter together with a resume. So how do I write an accounting cover letter?
Cover letters will always need the information that will introduce who you are. Therefore, you should put your name, your address, the contact details like phone numbers or e-mails and of course your letter to the hiring person.
Since you will be composing an accounting cover letter, it is important to first highlight your intention why you are interested for a particular job post. This can be included at the very start of your letter. Afterwards, you can then put your education background in your accounting cover letter at the middle part of it. Lastly, you need to insert in your cover letter the work experiences that you have undertaken under the domain skill that include accountancy.
Are you looking for some references about writing a good resume? You can check out our Archives for more details.
http://grandresume.com/blog/cover-letter-writing/accounting-cover-letter-%E2%80%93-basic-things
November 10, 2008 at 7:49 am · Filed under Basic Accounting
The definition of accounting is the study of how businesses track their income and expenses. Accounting practices are essential in a business for two major reasons:
- To determine whether or not a business is making a profit and how much profit is being made.
- To collect financial information for filing tax returns.
In order to understand accounting systems, knowledge of some basic accounting concepts is necessary. The accounting process is comprised of three parts, which include the journal, general ledger, and subsidiary ledgers. Each of these parts provide valuable information to a business owner.
Journal - Each individual transaction entry is entered and recorded in a journal. There are often several different types of journals in a business. Each type of journal records a different type of transaction. For example, a transaction may be classified as a sale, purchase, cash receipt, or cash disbursement. After these transactions are entered and organized in the journal, they are transferred to the general ledger.
General Ledger - After being transferred from the journals to the general ledger, the financial data is organized into three main categories: Assets, Liabilities, and Capital. The account balance is then calculated and a financial report is obtained.
Subsidiary Ledger - The subsidiary ledger provides more specific information that is not able to be provided in the General Ledger, such as the name and demographics of each customer and the customer’s balance. This information is obviously important for billing purposes.
Understanding of debits and credits is the foundation of understanding accounting systems. Because every business transaction affects at least two accounts, each transaction is recorded using a double-entry system of debits and credits. Debits are entered on the left side of the balance sheet. Credits are entered on the right side. Costs and Expenses are recorded as debits. Income is recorded as credits. Assets are recorded as debits. Liabilities are recorded as credit. Debits and credits must be equal for all entries.
The following is referred to as the General Accounting Equation:
Assets = Liabilities + Owner’s Equity
Assets are things of value that the company owns. Liabilities are what the company owes. Owner’s equity (or capital) is the net worth of a business and includes any debt owed to business owners.
For example, say I am buying a car for $10,000. If I borrow $5500 and have saved $4500, my assets are worth $10,000, my liabilities are $5500, and my equity is $4500. If we plug these numbers into the General Accounting Equation, we come up with $10,000 = $5500 + $4500. Note how the equation is balanced.
http://www.ibizbiz.com/2008/09/basic-accounting-concepts-introduction.html
November 8, 2008 at 1:41 am · Filed under Basic Accounting
Visual Basic Accounting Software has been around for decades, and now developer are moving into VB dot Net, rather fast! If you are still using VB to create your Accounting software, now may be the time for you to move on. If you are not sure whether to choose VB dot Net as your platform, let me convince you…
Reason #1 - Visual Basic is dead.
As the title, you shouldn’t be following the dead end technology, many advanced tools and resources will not support your old time compiler, don’t get in love with your tools, move on to the new era!
Reason #2 - New King Born - VB Dot Net.
In the Visual Studio dot net, C# is best for utilities and tools, while VB.Net will be perfect for business related environment. Accounting software shouldn’t be written in C# or C++, will increase the learning curve and complicates things. Stay with VB.Net and you are safe…
Reason #3 - Borland Delphi / Code Gear Delphi?
Don’t even think about it! I am a Delphi programmer for the pass 6 years, and I absolutely love it until Visual Studio 2005. Delphi and Visual Basic is a dead product, if you want more resources and a brighter future, move to VB.NET. One of the biggest tools in Delphi is the RAD capability, VS2005 just inherits 70% of it, and I personally think VS2008 will over take Delphi in the RAD tools.
Reason #4 - Power of Dot Net Platform.
Do you know Dot Net Platform allows you to write the code in one place and run it everywhere? Including Linux, Mac OS, Web Platform… you name it. And now SQL 2005 express are free for desktop user, when anytime the user needs more connections, just upgrade the database, and you are done!
Reason #5 - More tools than ever.
Visual Studio 2008 provides more tools than ever before, you will appreciate how powerful the new compiler is and how many 3rd party components has been created just solely for Visual Studio!
After 5 major reasons, do you still need to wait? You are losing money everyday just for waiting, do something about it and move to VB dot net today!
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http://enewsmediamagazine.com/visual-basic-accounting-software/
