Awaken the Accountant in You | Master the Accounting Basics

The GAAP are the then commandments of Accounting:

1. Economic Entity Assumption
2. Monetary Unit Assumption
3. Time Period Assumption
4. Cost Principle
5. Full Disclosure Principle
6. Going Concern
7. Matching Principle
8. Revenue Recognition Principle
9. Materiality Principle
10. Conservatism Principle

The Accounting Equation is a crucial concept. Although it may sound as a strict mathematical concept, h it is not. Indeed the Accounting Equation tells you that Assets always equal Liability plus Equity. In other words, the business has two ways to acquire the asset, either liability or equity. Once you understand the accounting equation you will understand right away how the balance sheet works. In fact, the balance sheet is a clear display of it.

The Double-Entry system is the foundation of Accounting. After the Accounting Equation this is the second most important concept. Once you grasp the meaning of it the Accounting discipline will look way easier.

In Accounting we usually have five main accounts:

• Asset
• Liability
• Equity
• Income
• Expense

Those five main accounts will help us to build the main financial statements: Balance Sheet and Income Statement. Indeed, to build our Balance Sheet we need Asset, Liability and Equity. To build our Income Statement instead, we need Income and Expense.

Debit and Credit in Accounting work differently of how you may intuitively think. In fact, debit and credit are a set of rules to determine when cash will increase or decrease, according to the account in consideration.

The GL is a big book where all the transactions for a certain period a reported. It usually is more detailed compared to the other statements. In fact, the GL is the report from which are generated BS (Balance Sheet) and IS (Income Statement).

There is a main difference between the cash method and the accrual method. The first implies that revenue and expenses are recognized once money goes from one hand to the other. In other words, once you actually get the money from your customer the revenue will be recorder and once you give the money to your supplier the expense will be recognized. The Accrual method instead means that revenue and expenses will be recognized independently from money disbursement.

Follow the instructions to make your first journal entry.

Knowing how the Accounting department is structured is crucial for any professional. Either if you work in Sales, Marketing, Engineering and so on. Indeed, from the smallest to the largest expense will need to be approved by the Accounting Department. If you know the logic behind it the life within your company will be way smoother.

Have you ever wondered how do we go from a single transaction to generating an entire report for outside investor. In this lecture you are going to see how the entire internal accounting process works.

This lecture will give you an overview about the main financial statements, such as BS, IS and Cash Flow Statement.

The Income Statement tells us how profitable is an organization.

The Balance Sheet Shows the financial position of any company in any moment in time.

In this lecture you are going to find:

1. Slides of the Lectures that you can either use to follow the instructions or use it as reference for later on
2. Extra exercises. Open the excel workbook. Click on the "exercises" sheet and solve them. Just after trying use the "solutions" sheet to check if you did well.