Basic Accounting Principles

Accounting was as defined accounting professor at the University of Michigan William Paton as a basic function: "facilitating the management of the economy this function has two closely related phases: 1.), The data and economic order, and 2) communicate the results of this process interested parties. "

For example, to the company accounts at regular intervals to measure the profit and loss account of a month, quarter or fiscal year and publish those results to a result is called a statement. These statements include terms such claims (resulting in the Company) and liabilities (what society expects.) Can be very satisfied with issues such as retained earnings and accelerated depreciation to be complicated. This high level of accounting and organization.

Much of the accounting, but also deals with accounting. It is the process that every transaction, every bill paid, every cent owed records, every dollar spent, and one hundred and accumulates.

But the owner of the company, its owner or millions of individual shareholders with more summaries of these transactions in the financial statements concerned. The financial statements summarizes the assets of a company. A value of an asset is what it is, when it was purchased primarily cost. The financial statement also records what the sources of this material. Some assets are loans that must be paid. The benefits are also an asset to society.

In the so-called double-entry accounting, debts are also summarized. Obviously a company wants to offset a larger amount of assets and liabilities and has to show a profit. The management of these two elements is the essence of accounting.

A system for not every company or person may design their own systems of accounting, the result would be chaos!