What are the basic accounting terminology?

What are the basic accounting terminology?

Bookkeeping Terminology Balance Sheet – A financial document that reconciles all the company’s assets with their liabilities and equity. Income Statement – All outstanding debts owed by the company. This could include accounts payable, loans, liens on property or other long-term investments.

What is financial accounting and its terms?

Financial accounting is a specific branch of accounting involving a process of recording, summarizing, and reporting the myriad of transactions resulting from business operations over a period of time.

What are the 7 accounting principles?

Basic accounting principles

• Accrual principle.
• Conservatism principle.
• Consistency principle.
• Cost principle.
• Economic entity principle.
• Full disclosure principle.
• Going concern principle.
• Matching principle.

What are the 10 accounting concepts?

: Business Entity, Money Measurement, Going Concern, Accounting Period, Cost Concept, Duality Aspect concept, Realisation Concept, Accrual Concept and Matching Concept.

What are the 10 accounting principles?

What Are the 10 Principles of GAAP?

• Principle of Regularity.
• Principle of Consistency.
• Principle of Sincerity.
• Principle of Permanence of Method.
• Principle of Non-Compensation.
• Principle of Prudence.
• Principle of Continuity.
• Principle of Periodicity.

What is the main principles of financial accounting?

There are four basic principles of financial accounting measurement: (1) objectivity, (2) matching, (3) revenue recognition, and (4) consistency. 3. A special method, called the equity method, is used to value certain long-term equity investments on the balance sheet.

What is basic accounting principles?

Accounting principles are the rules and guidelines that companies must follow when reporting financial data. The Financial Accounting Standards Board (FASB) issues a standardized set of accounting principles in the U.S. referred to as generally accepted accounting principles (GAAP).

Why is GAAP used?

GAAP helps govern the world of accounting according to general rules and guidelines. It attempts to standardize and regulate the definitions, assumptions, and methods used in accounting across all industries. GAAP covers such topics as revenue recognition, balance sheet classification, and materiality.

What are the principles of GAAP in accounting?

Principle of Regularity: GAAP-compliant accountants strictly adhere to established rules and regulations. Principle of Consistency: Consistent standards are applied throughout the financial reporting process. Principle of Sincerity: GAAP-compliant accountants are committed to accuracy and impartiality.

How many types of accounting principles are there?

ten major types

What are the types of accounting standards?

Types of Accounting Standards:

• (1) Disclosure Standards:
• (2) Presentation Standards:
• (3) Content Standards:

What are the 12 GAAP principles?

Here are a few of the principles, assumptions, and concepts that provide guidance in developing GAAP.

• Revenue Recognition Principle.
• Expense Recognition (Matching) Principle.
• Cost Principle.
• Full Disclosure Principle.
• Separate Entity Concept.
• Conservatism.
• Monetary Measurement Concept.
• Going Concern Assumption.

What does GAAP stand for?

Generally Accepted Accounting Principles

Is IFRS the same as GAAP?

The primary difference between the two systems is that GAAP is rules-based and IFRS is principles-based. This disconnect manifests itself in specific details and interpretations. Basically, IFRS guidelines provide much less overall detail than GAAP.

What are accounting concepts?

Accounting concepts are a set of general conventions that can be used as guidelines when dealing with accounting situations. Accounting information should be reliable. Accounting information should contain no biases. Accounting information should faithfully represent the related business transactions.

What are the five accounting conventions?

What is Accounting Convention?

• #1 – Conservatism. The accountant has to follow the conservatism principle of “playing safe” while preparing financial statements, considering all possible scenarios of loss while recording transactions.
• #2 – Consistency.
• #3 – Full Disclosure.
• #4 – Materiality.

What are the 3 fundamental concepts of accounting?

The three major elements of accounting are: assets, liabilities, and capital. These terms are used widely so it is necessary that we take a look at each element. We will also discuss income and expense which are actually included as part of capital.

What are the various types of financial statements?

There are four main types of financial statements, which are as follows:

• Income statement. This report reveals the financial performance of an organization for the entire reporting period.
• Balance sheet.
• Statement of cash flows.
• Statement of changes in equity.

What are the 5 types of financial statements?

Those five types of financial statements including income statement, statement of financial position, statement of change in equity, statement of cash flow, and the Noted (disclosure) to financial statements.

What are the six components of financial statements?

The Financial Accounting Standards Board (FASB) has defined the following elements of financial statements of business enterprises: assets, liabilities, equity, revenues, expenses, gains, losses, investment by owners, distribution to owners, and comprehensive income.

What are the 6 basic financial statements?

They are: (1) balance sheets; (2) income statements; (3) cash flow statements; and (4) statements of shareholders’ equity. Balance sheets show what a company owns and what it owes at a fixed point in time.