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Accounting 101

đź’ˇ Accounting is the language of business. It's a system for recording, summarizing, and communicating financial information about a company or organization.
The fundamental equation in accounting is: Assets = Liabilities + Owners' Equity
Transactions are events that change a company's financial position and must be recorded in the accounting system. The accounting cycle starts with analyzing and journalizing transactions as debits and credits in a general journal.

Debits increase asset or expense accounts and decrease liability, equity or revenue accounts.Credits increase liability, equity or revenue accounts and decrease asset or expense accounts.After journalizing, transactions are posted to the general ledger accounts.

At the end of an accounting period, accounts are totaled and adjusted to ensure accurate reporting. Financial statements like the income statement, balance sheet, and cash flow statement are then prepared from the adjusted accounts.
Generally Accepted Accounting Principles (GAAP) are the standards and rules that govern accounting practices.

Key accounting principles include the cost principle, revenue recognition, matching, and conservatism.

Accounting provides critical financial data for internal decision-making and external reporting to stakeholders.

From recording transactions to preparing statements, accounting is the systematic process of measuring and communicating a company's financial performance and position.

Accounting will allow you to understand your company’s finances, make business decisions and present information to other readers of financial information, including external readers (e.g., bankers, investors, buyers) and internal users (e.g., valuation specialists, managers).

Accounting Cheat Sheet

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