Search results
Results from the WOW.Com Content Network
The accounting equation is a statement of equality between the debits and the credits. The rules of debit and credit depend on the nature of an account. For the purpose of the accounting equation approach, all the accounts are classified into the following five types: assets, capital, liabilities, revenues/incomes, or expenses/losses.
Generally Accepted Accounting Principles (GAAP) [a] is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC), [1] and is the default accounting standard used by companies based in the United States.
Given the above, one view of the progression of the accounting and finance career path is that financial accounting is a stepping stone to management accounting. [16] Consistent with the notion of value creation, management accountants help drive the success of the business while strict financial accounting is more of a compliance and ...
An accounting information system (AIS) is a system of collecting, storing and processing financial and accounting data that are used by decision makers.An accounting information system is generally a computer-based method for tracking accounting activity in conjunction with information technology resources.
Debits and credits are traditionally distinguished by writing the transfer amounts in separate columns of an account book. This practice simplified the manual calculation of net balances before the introduction of computers; each column was added separately, and then the smaller total was subtracted from the larger.
However, because accounting is kept on a historical basis, the equity is typically not the net worth of the organization. Often, a company may depreciate capital assets in 5–7 years, meaning that the assets will show on the books as less than their "real" value, or what they would be worth on the secondary market.
Mark-to-market accounting can change values on the balance sheet as market conditions change. In contrast, historical cost accounting, based on the past transactions, is simpler, more stable, and easier to perform, but does not represent current market value. It summarizes past transactions instead.
Accounting standards prescribe in considerable detail what accruals must be made, how the financial statements are to be presented, and what additional disclosures are required. Some important elements that accounting standards cover include identifying the exact entity which is reporting, discussing any "going concern" questions, specifying ...