What is accounting

ACCOUNTING
accounting
Assets

 What Is an Asset?
 An asset is a resource owned by an individual or organization which provides
economic value. This includes cash, equipment, property, rights, or anything that
helps a company generate revenue or reduce expenses.
Liability

 A liability is a debt or other obligation owed by one party to another party. In

more direct terms, it is a payment or obligation for which a company is held liable
by another party. Companies primarily increase their liabilities by taking out
loans, issuing debt in the form of bonds, or increasing accounts payable.
Liabilities are recorded on a company’s balance sheet along with ass Because a
liability is an amount of money that must be paid by some point in the future,ets
and equity.
What is financial statement and types

 Income statement

 A financial statements definition is, in the simplest sense, any document that helps
show the financial state of your company.
 types
 Cash flow statement

 Statement of changes in equity

 Balance sheet
 Income statement
Income statement

 An income statement may also be known as a profit and loss statement, showing
your businesses income and outgoings over a set period. The income statement
takes revenue, losses, and expenses into account
Cash flow statement

 The cash flow statement shows how money enters and leaves your business, so
you can see what you have available as working capital at a particular time. A
cash flow statement is essential for showing you how quickly you could source
cash if you needed it, as it doesn’t take into account things like raw materials or
purchases made – but not yet paid for – on credit.
Balance sheet

 The balance sheet displays three key things: your assets, your liabilities, and your
equity. The balance sheet can show the current value of a business for the period it
covers. Looking at your balance sheet can help you understand if you can meet
your financial obligations.
Statement of change equity

 This document shows the changes made to your company’s share capital, retained
earnings, and accumulated reserves. For a sole trader, it shows changes to the
owners equity. For a partnership, it shows the changes between both partner’s
equity. In the case of a company, then the statement of change in equity shows
how equity share has changed among all the shareholders.
 Although these two are very similar in their function, let us look at some of the points of difference between the source document and voucher.

 Source Document

 Voucher

 Definition
 Source document is a document that contains the details of a business transaction.

 Vouchers are a type of source documents that acts as the evidence of the business transaction that has taken place between two parties

 Purpose
 Source documents are used for preparing accounting vouchers

 It is used by audit team for verifying the business transaction

 Examples
 Examples of source documents are invoices,