Accounting Essay

350-word summary on one or two of the following transcripts below:

Transactions and Accounting Equation:

Profits, losses, revenues, expenses, financial data, are vital to every business. No company can succeed without gathering this data, analyzing it, and explaining what it means. If you can master accounting basics, you'll always be on the money.

Hi, I'm Samantha Boncheck. To you, accounting may be a mystery. But to many accounting professionals, it's a fascinating world. They speak in numbers, in data, in the language of business.

You may not understand what it is, but try running a business without accounting. You can't. It would be complete chaos, starting in the president's office and trickling down to everyone. And if you like getting your check on time every week, you have accounting to thank for that, too. You may never work in accounting, but learning the basics can help you be more successful in nearly any career.

We created this series to help you understand some basic accounting principles and procedures. We'll use fictional examples and real examples from two businesses. First, we'll visit Primedia digital video, a company that produces educational videos, infomercials, and other multi-media products for business. Then, we'll explore a very successful auto dealership, Huffines Dodge.

First, let's define our terms. Accounting means collecting financial data about a company, recording that data, analyzing it, and then communicating what it all means to other people. Those people need financial data to help them make important business decisions. 

Financial Statement:

Remember our definition of accounting. It means collecting financial data about a company, recording that data, analyzing it, and then communicating what it all means to other people. That's really the main purpose of accounting. To provide people with the financial information they need to make decisions. And how do accountants provide that information? With reports called financial statements.

Let's look at some common examples of financial statements. An income statement reports the revenue and expenses of a business for a specific period of time. Looks like Computer King is doing pretty well. Another financial report is a balance sheet. A balance sheet reports the amounts of a business's assets. Liabilities and owner's equity as of a specific date.

You can plug these numbers into the accounting equation, assets equal liabilities plus owner's equity, to check how a company is doing. A statement of owner's equity just summarizes any changes that either increased or decreased the owner's equity for that period.

Our final example is a statement of cash flow, which is just what it sounds like. It's a summary of the major cash receipts and cash payments for a specific period.

These kinds of reports give decision makers a snapshot of how the business is doing at any particular moment.

So, that's the basics of accounting.

Remember, the more you learn about this not so mysterious practice, the better your chances for making good business decisions, no matter what your career. Just stay on the money.