Accounting Services
Accounting refers to the process of recording a company's financial transactions. It involves analyzing, summarizing, and reporting these transactions to regulators, oversight agencies, and tax collection entities.
The following are three golden rules of accounting
- Debit the receiver and credit the giver
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Debit what comes in and credit what goes out
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Debit expenses and losses, credit income and gains
Debits (dr) record all of the money flowing into an account, while Credits (cr) record all of the money flowing out of an account.
Debits and credits are equal but opposite entries in your accounting books. Credits and debits affect the five core types of accounts:
- Assets: Resources owned by a business that has economic value you can convert into cash (e.g., land, equipment, cash, vehicles)
- Expenses: Costs that occur during business operations (e.g., wages, supplies)
- Liabilities: Amounts owed to another person or business (e.g., accounts payable)
- Equity: Your assets minus your liabilities
- Income and revenue: Cash earned from sales
The eight main types of accounting are
- Financial Accounting
- Government Accounting
- Public Accounting
- Forensic Accounting
- Management Accounting
- Cost Accounting
- Tax Accounting
- Auditing
The following are 5 basic principles of accounting
- Revenue Recognition Principle
- Cost Principle
- Matching Principle
- Full Disclosure Principle
- Objectivity Principle
The accounting method is a practice used by the industry to account for income and expenses. there are two Accounting methods: Accrual Accounting and Cash Accounting.
- Accrual Accounting: Accrual accounting is encouraged by International Financial Reporting Standards(IFRS) and Generally Accepted Accounting Principles (GAAP).
- Accrual accounting is an accounting method where revenue or expenses are recorded when a transaction occurs vs. when payment is received or made.
- Accrual accounting uses the double-entry accounting method.
- Cash accounting is the other accounting method, which recognizes transactions only when payment is exchanged.
Cash Accounting: Cash accounting is an accounting method where payment receipts are recorded during the period in which they are received, and expenses are recorded in the period in which they are paid. In other words, revenues and expenses are recorded when cash is received and paid, respectively.
