New Company Owners Must Understand The Basics Of Accounting Well

Broadly speaking, accounting is the art and process of recording financial transactions for the benefit of reports to owners or investors. While according to experts, accounting is defined as a measurement, processing, communication of information to the company. This is the basis of the accounting concept. Accounting has been used in all types of companies because accounting has benefits in facilitating the operational work of the company. That is why it is important for you to learn and understand the basics of corporate accounting. In the meantime, if you need to track your finance when you are traveling, you may hire a certified mobile bookkeeper.

Understanding What Accounting Is

To make it easier for you to learn science, you must first understand the meaning and purpose of that knowledge. Also included in accounting, it is very important to know and understand what accounting is. The notion of accounting is divided into 2 points of view, namely from the point of view of the user and the point of view of the activation process.

When viewed from the user’s point of view, accounting is a science that provides the financial information needed by interested parties with a company. Meanwhile, if viewed from the perspective of the process of its activities, accounting is an activity to record, classify, make an overview, present, report and analyze the financial transaction data of a company.

Understanding Basic Accounting Equations

The basic accounting equation is generally accepted as the basis for creating financial statements, balance sheets, income statements, and cash flow statements. Try to consider the following basic accounting equation:

ASSET = LIABILITY + EQUITY

This is the basic equation of true accounting, where it can be seen that the amount of assets on the left side is equal to the number of liabilities and equity. Then what exactly is the basic equation function of accounting? First, all business transactions can be stated or recorded as changes that occur in the 3 elements of the basic accounting equation formula or basic accounting equation.

All derivatives of various business transactions can be included in the accounting equation. Second is the basic equation of accounting can be a super powerful accounting tool in analyzing a business transaction to then compile financial statements.

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