Accounting Basics

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Accounting

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The process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by users of the information.

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Accounting Cycle: Journalizing

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Journalizing is the process of recording transactions in the journal as the first step in the accounting cycle.

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Accounting Cycle: Adjustment/Adjusting Entries

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Adjusting entries are made to update accounts before preparing financial statements, ensuring accuracy.

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Accounting Cycle: Post-Closing Trial Balance

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The post-closing trial balance is prepared to ensure that all temporary accounts are closed and the ledger is balanced.

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Definition of Assets

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Assets are things of value owned by the business and are resources received which have future benefits.

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Examples of Typical Business Assets (Part 1)

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Typical assets for a business include: - Cash - Accounts receivable - Office supplies

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Cash or Credit?

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Accounts receivable are promises received from customers to pay for goods and services later.

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Prepaid insurance provides future benefits.

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This is why it is recorded as an asset in accounting.

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Office supplies are consumable items.

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They are used in the daily operations of a business.

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Examples of office supplies include paper, pens, and floppy disks.

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These items are necessary for administrative tasks.