Basic Accounting Principles

Accounting has been defined as by Professor of accounting at the University of Michigan William A. Paton as having a basic function: "facilitating the administration of the economic activity." This function has two closely related phases: 1) measurement and provision of the data; and 2) communicate the results of this process to interested parties. »

For example, the company periodically accounting measure the profits and losses during a month, a quarter or a year and publish results in a profit and loss statement which called for an income tax return. These statements include items such as accounts receivable, which is due to the company) and accounts payable (what the company needs).It can get quite complicated with topics such as retained earnings and amortization accéléré.Cela accounting and organization level.

A large part of the accounting is concerned with basic accounting .c ' is the process that saves each transaction. each invoice paid every penny due, every dollar and cent past and accumulate.

But the owners of the company, which can be individual owners or shareholders million are more concerned with summaries of these transactions contained in the financial statements. Financial statements summarizes the assets of the company.A value of an asset is what it cost when it was first acquis.Les financial statements also saves what are the sources of the assets. Some assets are in the form of loans to be repaid.Profits are also an asset of the company.

In what is called double-entry accounting, responsibilities are also summarized.Obviously, a company wants to show a greater amount of resources to offset liabilities and show a bénéfice.La management of these elements is the essence of accounting.

There is a system for each company or individual can develop their own systems of accounting; the result would be chaos!