Accounting 101 - The Principles Of Accounting

Learn the principles of accounting with a focus on bookkeeping, covering recording, classifying, summarizing, analyzing, and interpreting transactions across assets, liabilities, revenue, expenses, and capital.

Assets are resources with economic value owned by individuals, companies, or countries, expected to provide future benefits, including tangible fixed and current assets, and intangible assets like goodwill.

Liabilities are obligations to pay others, settled by cash or assets; bills payable, wages payable, taxes payable, deposits of customers, debt payable, interest charges, and goods and services on credit.

Revenue captures income from business activities, also called sales or turnover; it comes from selling goods or services, not cash deposits, and is distinct from assets and capital.

Define expenses as money spent to generate revenue and the cost of doing business that aims to profit, with examples like electricity, transport, internet, and office stationery.

Understand capital as net wealth and classify business transactions into assets, liabilities, revenue, and expenses using examples like cash, buildings, and overdrafts.

Explore the accounting process, starting with organizing transactions by accounts, then recording in the general journal, posting to the ledger, and producing cash flow, profit and loss, and balance sheet.

Differentiate cash and credit transactions by payment immediacy and whether the party's name is recorded; cash records exclude the name, while credit records include it, guided by keyword rules.

Practice distinguishing cash and credit transactions using keywords paid, received, and cash, plus company or individual names as indicators. Apply the rules in the examples to determine each transaction type.

Master the double-entry system by learning the debit and credit rules for assets, expenses, liabilities, capital, and revenue, and applying them to general journal entries.

Learn about the general journal, a book of original entry that records transactions, and the three steps to post entries: identify accounts, debit or credit, and post.

Post cash sales of 50 dollars and a credit sale to John, recording debits to cash and accounts receivable and a credit to sales, plus a sale return from John.

Practice question on posting December transactions to the journal, applying debit and credit rules for assets, capital, purchases, sales, returns, office furniture, rent, salaries, and more.

Post January journal entries to record cash, purchases, sales, accounts receivable, sales returns, purchase returns, and salary expense using debits and credits.