10

ACCOUNTING
BASICS TO KNOW

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BY NICOLAS BOUCHER
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 ACCOUNTING BASICS TO KNOW #1

THE
ACCOUNTING
EQUATION:

Assets = Liabilities + Owners' Equity

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 ACCOUNTING BASICS TO KNOW #2

THE
BALANCE SHEET
It’s a financial statement that
shows a company's assets,
liabilities, and owners' equity at a
specific point in time.

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 ACCOUNTING BASICS TO KNOW #3

THE
INCOME
STATEMENT
It shows a company's revenues,
expenses, and net income over a
period of time .

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 ACCOUNTING BASICS TO KNOW #4

STATEMENT OF
CASH FLOWS
It shows how a company's cash
has changed over a period of time.

CASH INFLOWS - REVENUES

CASH OUTFLOWS - EXPENSES

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 ACCOUNTING BASICS TO KNOW #5

DEBITS AND
CREDITS
Foundation of double-entry
accounting,

The practice of recording

transactions in two accounts in
order to maintain the integrity
of the accounting equation.

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 ACCOUNTING BASICS TO KNOW #6

CHART OF
ACCOUNTS
It’s a list of all the accounts used by a
company in its general ledger, with
each account being assigned a
unique number for identification
purposes.

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 ACCOUNTING BASICS TO KNOW #7

THE GENERAL
LEDGER
The GL is a record of all a company's
financial transactions, with each
transaction being recorded in the
appropriate account.

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 ACCOUNTING BASICS TO KNOW #8

ACCRUAL BASIS
OF ACCOUNTING
It’s the practice of recognizing
revenues and expenses when they
are earned or incurred, rather than
when they are paid or received.

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 ACCOUNTING BASICS TO KNOW #9

THE MATCHING
PRINCIPLE
It’s the practice of matching revenues
and expenses in the same accounting
period, in order to accurately reflect a
company's financial performance
during that period.

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 ACCOUNTING BASICS TO KNOW #10

CONSERVATISM
& MATERIALITY
It means being conservative in
estimating the value of assets and
liabilities, and of only recording
transactions that are material
(significant) enough to affect a
company's financial statements.

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 SUMMARY
1. THE ACCOUNTING EQUATION
2. THE BALANCE SHEET
3. INCOME STATEMENT
4. STATEMENT OF CASH FLOW
5. DEBITS CREDITS
6. CHART OF ACCOUNTS
7. GENERAL LEDGER
8. ACCRUAL BASIS OF ACCOUNTING
9. THE MATCHING PRINCIPLE
10. CONSERVATISM AND
MATERIALITY

BY NICOLAS BOUCHER
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