What is Accounting? Accounting 101 Explained for All Levels

Explore the five main accounts - assets, liabilities, shareholders equity (owner's equity), revenues, and expenses - and how future benefits, future obligations, and net worth explain basic accounting.

Explore what an asset is—a resource owned for future economic benefits used to pay expenses and generate revenues, with five key examples: cash, inventory, land, equipment, and patent.

Explore how liabilities are obligations that arise from past transactions and create creditor claims on assets to be settled in the future. Learn types like accounts payable and unearned revenue.

Explain shareholder's equity as the residual claim on assets after liabilities, including common shares with voting rights, non-voting preferred shares, retained earnings, and the owner's net worth.

Explain debt versus equity financing and why equity issues common and preferred shares; common shares have voting rights, preferred shares have dividend priority, with dividends not guaranteed.

revenues represent the total income generated from a business's primary operations, such as sales, service revenue, and interest revenue, even when cash is not yet received.

Learn how expenses are costs incurred to generate revenue and drive day-to-day operations, with examples like cost of goods sold, depreciation, income tax expense, and selling and administrative expenses.

Explore the four financial statements—the income statement, balance sheet, statement of cash flows, and statement of changes in equity—to help banks and investors assess profitability, assets, liabilities, and shareholders’ equity.

explore how the income statement sums revenues and expenses to yield net income or net loss, and compare the single-step format with the groundwork for a multiple-step layout.

Demonstrates how the statement of changes in equity tracks share capital and retained earnings across a 12-month period, incorporating net income, dividends, and share repurchases.

Explore the balance sheet, with assets, liabilities, and shareholders equity. See the accounting equation, assets equal liabilities plus shareholders equity, and how assets are arranged by liquidity.

Learn how the statement of cash flows dissects cash into operating, investing, and financing activities, showing net cash changes and the linkage to beginning and ending balances.

Explore how financial statements interrelate, with net income flowing from the income statement to the statement of changes in equity and equity on the balance sheet, plus cash flow connections.

This lecture provides practice on the income statement, statement of changes in equity, and balance sheet, linking revenue, expenses, net income, dividends, and common shares to retained earnings.

Explore multiple-step income statement, calculating net sales, gross profit, income from operations, income before tax, and net income, with cost of goods sold, loss on disposal, interest revenue and expense.

Practice guides you through preparing a multiple-step income statement from a trial balance, calculating net sales, gross profit, operating expenses, and net income.

Explore how the classified balance sheet groups assets, liabilities, and equity, detailing current assets, long-term investments, property, plant and equipment, intangible assets, goodwill, and current versus non-current liabilities.

Practice building a classified balance sheet from a data set, identifying current assets, property, plant and equipment, current liabilities, and equity, and verify that assets equal liabilities plus equity.

Learn how debits and credits apply to assets, liabilities, equity, revenue, and expenses; memorize that assets are debits while liabilities, equity, and revenue are credits, and expenses are debits.

Explore how t accounts map the five main accounts: assets, liabilities, shareholders' equity, revenues, and expenses, and how debits and credits govern increases and decreases.

Explore the main accounting equation: assets equal liabilities plus shareholders equity, ensuring balance. Learn how debits and credits apply to assets, liabilities, shareholders equity, revenues, and expenses.

Explore the nine-step accounting cycle from transaction analysis to adjusting entries, with debits and credits, through trial balances to the income statement, balance sheet, and the statement of cash flows.

Learn how journal entries serve as the pillar of accounting, recording transactions as the book of original entry, with debits first and credits second across two or more accounts.

Learn how to perform journalizing through a step-by-step journal entry solution, applying debits and credits to cash, equity, liabilities, and expenses in the accounting cycle.

Learn how the general ledger consolidates journal entries into account balances and why T accounts offer a simpler way to view cash movements using debits and credits.

Post journal entries to t-accounts, track debits and credits, and organize assets, liabilities, equity, revenues, and expenses to determine beginning and ending balances.

Learn how unadjusted, adjusted, and post-closing trial balances ensure debits equal credits, guide the preparation of formal statements, and reflect assets, liabilities, and equity in order of liquidity.

Prepare unadjusted, adjusted, and post-closing trial balances from ending balances of T accounts to support the income statement and balance sheet.

Explore the first four steps of the accounting cycle: analyze transactions, journalize, post to t-accounts, and prepare the unadjusted trial balance, covering assets, liabilities, revenues, and expenses.

Master adjusting entries under GAAP by applying revenue recognition and matching principles in accrual accounting. Identify six adjusting entries: prepaid expenses, supplies, unearned revenues, depreciation, accrued revenues, and accrued expenses.

Explain prepaid expenses as current assets, focus on prepaid insurance and rent, and show how year-end adjusting entries convert unused prepaid amounts into expense using an October example.

Practice prepaid expenses by recording the June 1 journal entry of 6,000 for Beer Limited's insurance and adjusting at year-end to recognize 3,500 expired and 2,500 unexpired.

Explain how to track supplies as an asset, perform a year-end count to determine how much was consumed, and record adjusting entries debiting supplies expense and crediting supplies for 3000.

Practice a supplies accounting problem: start from opening trial balance of 1500, record May 1 purchase on credit, compute supplies used, and prepare December 31 adjusting entry using T accounts.

Clarify that unearned revenues are payments received before earning, creating a liability for future delivery, illustrated by a 2400 cash receipt and adjusting entries that recognize six months of revenue.

Learn how to handle unearned revenues with a one-year insurance policy, calculate expired and unexpired portions, and prepare adjusting entries to recognize service revenue and reduce unearned revenue.

Explain depreciation expense as the year-end adjusting entry that reduces asset value through accumulated depreciation, using the straight-line method with cost, salvage value, and useful life for vehicles.

Compute straight-line depreciation for a 50,000 truck over five years with zero residual value, record the purchase, adjust entries, and report accumulated depreciation and carrying amount on the balance sheet.

Explore accrued revenues and how they create receivables when income is earned but not yet paid, with rent, interest, and sales examples showing why receivables are assets.

Explain accrued revenues from a monthly maintenance contract, invoicing the prior month on the first and applying year-end adjusting entries, revenue recognition, accounts receivable, and cash receipts.

Learn how accrued expenses create payables by recognizing expenses incurred but not yet paid, such as interest on loans and salaries, and how they produce liabilities.

Compare accounts payable and notes payable while calculating accrued interest on a $30,000 five-month note at 12%, and record the year-end adjusting entry for interest payable and the final settlement.

Analyze journal entries for accrued interest, an accrued expense, on a truck financed with cash and a six-month loan, covering July 1 purchase, December 31 accrual, and January 1 repayment.

Practice accruing and recording salaries through a five-day work week by making journal entries for salaries expense, salaries payable, and cash across November 28, November 30, and December 5.

Explore comprehensive adjusting entries for accruals, including accrued expenses and revenues such as utilities, salaries, and interest, with step-by-step journal entries and subsequent cash transactions.

Practice: comprehensive adjusting entries example #2 guides you through initial journal entries and year-end adjustments for prepaid insurance, prepaid rent, unearned revenue, and repairs and maintenance expense.

Explain quarterly adjusting entries on March 31, 2015, including depreciation using straight-line, unearned rent revenue recognition, interest payable accrual, supplies and prepaid insurance adjustments, and income tax accrual.

Understand closing entries after financial statements by distinguishing permanent and temporary accounts, like assets and liabilities; close revenues and expenses into income summary, then transfer to retained earnings and dividends.

Work through a closing entries example, moving revenues and expenses to income summary, then to retained earnings, while dividends and T accounts illustrate debits and credits.

Close revenues and expenses into income summary, update retained earnings, and close dividends from temporary accounts, then prepare the post-closing trial balance using the adjusted trial balance.

Explore the nine-step accounting cycle with a full walkthrough of journal entries, adjustments, unadjusted and adjusted trial balances, and the preparation of key financial statements.

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