Principles of Accounting Unit 1

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The role of accounting is to allow business owners to make informative decisions. The main objectives of accounting are to maintain a record of business transactions, calculate profit and loss and depiction of financial position. Recording business transactions accurately is essential in accounting. If proper and complete records are kept, it will make it easier to find and correct any errors made. Different officials can also use records for different decision-making purposes. A balance sheet will show the financial position of the business. A statement of assets minus the liabilities will show the businesses equity. The basic terminology of accounting is debits and credits. A debit is a transaction of value. A credit is to remove a transaction of value. Assets are accounts that add value. Liabilities are accounts that remove value. Equity is the business owner value or investor’s value. An example of an asset would be your home. The liability would be your home loan. The loan removes value from your individual worth. The equity in your home would be the money you paid down toward the purchase of your home. Having knowledge of accounting will also help with a 401 k retirement plan and filing your federal and state tax returns. Technology has changed accounting in a number of ways. Accounting soft ware has made it easier to set up accounts. The internet has made advertising and marketing able to reach a larger and wider audience. It has also enabled business owner to have face-to-face meetings online with anyone in the world.

AIU Online, (2011). ACCT205: Unit 1: Accounting Fundamentals [Multimedia presentation]. Retrieved from AIU Online Virtual Campus. Accounting Principles 1. ACCT205-1101A:15 website Financial Accounting 2010 Edition Godwin, Alderman
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