Introduction to

Accounting
Accounting is the systematic process of recording, analyzing, and
interpreting financial transactions. It provides businesses and individuals
with the necessary information to make informed decisions about their
financial future.
Accounting Principles

Double-Entry System
Accrual Basis Consistency

Revenues and expenses Every transaction is Accounting methods and

are recorded when they are recorded as a debit in one practices are applied
earned or incurred, not account and a credit in consistently from one
when cash is received or another, ensuring the period to the next, allowing
paid. accounting equation for meaningful
remains in balance. comparisons.
Branches of Accounting

Financial Accounting Managerial Accounting

Focuses on preparing financial statements Provides internal decision-makers with

to report a company's financial position information to help plan, control, and
and performance to external stakeholders. evaluate business operations.

Tax Accounting Auditing

Ensures compliance with tax laws and Examines and verifies the accuracy and
regulations, helping businesses and reliability of financial records and
individuals minimize their tax liabilities. statements.
Accounting Rules and Regulations

1 Generally Accepted Accounting 2 International Financial Reporting

Principles (GAAP) Standards (IFRS)
Standardized set of guidelines and global set of accounting standards
rules for preparing financial statements adopted by many countries around the
in the United States. world.

3 Internal Revenue Code (IRC) 4 Sarbanes-Oxley Act

There are federal tax laws and Enacted in 2002 to improve corporate
regulations in the United States that governance and increase transparency
govern accounting for tax purposes. in financial reporting.
Journalizing Transactions

1 Identify
Analyze each transaction to determine which accounts are affected and how
they are affected (debit or credit).

2 Record
Enter the transaction details into the journal, including the date, account
names, and debit and credit amounts.

3 Verify
Ensure the total debits and credits for each journal entry are equal,
maintaining the accounting equation.
Maintaining the General Ledger

Posting
Transfer journal entries from the journal to the corresponding accounts in the
general ledger.

Balance
Determine the ending balance for each account by adding debits and
subtracting credits.

Reconcile
Ensure the total debits and credits in the general ledger are equal, verifying
the accounting equation.
Subsidiary Books and Cash Books

Sales Book Purchases Book Cash Book Journal Book

Records all credit Records all credit Record all cash Records all other
sales transactions. purchases receipts and cash transactions not
transactions. payments. recorded in the
specialized books.
Preparing the Trial Balance

Purpose To verify the equality of debits and credits in

the general ledger, ensure the accounting
equation is in balance.

Process List all the account balances from the

general ledger, totaling the debit and credit
columns separately.

Importance A trial balance is a crucial step before

preparing financial statements, as it helps
identify and correct any errors in the
accounting records.