Fundamental accounting principles

Accounting is defined as, a Professor of accounting at the University of Michigan William a. Paton have a basic function: "to facilitate the management of economic activity. This function has two related phases: 1) measuring and arraying economic data. and 2) communication on results of this process of interested parties. "

As an example, a company auditors regularly measuring results and profit and loss account for a month, a quarter or a year and publishes this in a statement of the income statement as being named a profit and loss account. These statements are what accounts receivable (amounts owed to the company) and pay bills (what the company owes). It can also get quite complicated with substances such as retained earnings and accelerated depreciation. At the higher levels of accounting and of the organization.

Many of the accounts, but also deals with basic accounting. This is a process by which each transaction records. each invoice is paid every dime owed, every dollar and cents spent and accumulated.

But the owners of the company, which allows individual owners or shareholders of million-us engage most with summaries of these transactions included in the financial statement. Financial statement provides an overview of the assets of a company. A value of an asset is what it costs when it first was purchased. Financial statements are also set out the sources of funds was some assets are in the form of loans to be repaid. Profits are also an asset for the company.

What is double entry is called, the obligations which are also summarized. A company want to show a greater amount of assets to offset liabilities and show a profit. Management of these two elements are at the core of the statements.

There is a system for doing so. not every company or person can think on their own systems for accounting. the result would be chaos!

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