Introduction to the Basics of Financial Accounting

Accounting is primarily concerned with the measurement, processing and communication of financial information about economic entities. The term financial accounting is the recording of financial transactions of a company for external purposes. This data is used to prepare financial reports such as the income statement and balance sheet of an organization for owners/shareholders of the company and certain lenders. Because of the external nature of financial statements, they must be prepared in compliance with prescribed accounting standards and generally accepted accounting principles (GAAP).


Evan Vitale-Account Expert,

Terminology in Accounting

It is important to know some accounting terminology when preparing financial reports for your business. A few of the accounting terminologies include:

  1. Business: An organization created with the objective of making profit.
  2. Bookkeeping: Bookkeeping is a record of daily transactions of company.
  3. Book Value: The net amount showed in the accounts for an asset, liability and shareholders’ equity.
  4. Transactions: The exchange of goods or services between businesses or individuals.
  5. Journal: Listing of all transactions and indicates the accounts to which they posted.
  6. Journal Entry: Journal entries are general ledger transactions where debits equal credits.
  7. Ledger: Records the summary of all transactions related to person, assets, expense and income which has taken place during a period of time or specified reporting period.
  8. Trial Balance: List of all account balance that provides a “test” for whether total credits equal to total debits.
  9. Balance Sheet: Comprises the total assets and total liabilities of a company.
  10. Current Assets: Current assets are those which are easily convertible into cash within one year. These items would include cash and cash equivalents, liquid assets
    that can be readily converted to cash, prepaid expense, etc.…
  11. Current Liabilities: Liabilities of a company which is to be paid within one year.
  12. In order to make your company more financially strong, it always helps to hire an experienced accounting and finance expert.  Evan Vitale, Certified Public Accountant can help an already strong business become stronger and a start-up business gain a competitive advantage in the industry.

In order to make your company more financially strong, it always helps to hire an experienced accounting and finance expert.  Evan Vitale, Certified Public Accountant can help an already strong business become stronger and a start-up business gain a competitive advantage in the industry.

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