Tag: Accounting Basics
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How to record a Transaction
Recording a transactions involves documenting all the financial activities of a business in a systematic way to ensure accuracy and compliance. Why Recording Transactions Matters Accurate transaction recording is essential because it: Key Elements of a Transaction Record Each recorded transaction includes the following details: Steps to Record Transactions 1. Identify the Transaction Determine the…
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Ledgers – Features, Types and Benefits
A ledger is a book or a digital record that contains all the financial transactions of a business, categorized into different accounts.
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How to make a Chart of Accounts
A chart of accounts is a list of all the accounts a business uses to record its financial transactions. Each account represents a specific type of asset, liability, equity, revenue, or expense.
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Owner’s Equity – Types and How to Calculate it
Owner’s equity also known as Owner’s Capital is a critical concept in accounting and finance, representing the owner’s stake in a business. It reflects the net value of the business after liabilities are subtracted from assets. What Is Owner’s Equity? Owner’s equity, also known as net worth or shareholders’ equity (in corporations), represents the residual…
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Liabilities – Types and Characteristics
Liabilities represent the financial obligations of a business. These obligations arise from past transactions or events and require settlement in the form of cash, goods, or services. What Are Liabilities? In accounting, liabilities are defined as a company’s legal debts or obligations resulting from its operations. They are recorded on the right side of the…
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Assets- Types and Characteristics.
Assets represent everything a company owns that has value and can be used to generate future economic benefits. What Are Assets? In accounting, an asset is any resource owned or controlled by a business that is expected to produce future economic value. Assets can be tangible, like machinery or inventory, or intangible, like patents and…
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Intangible Assets – Types and Characteristics
Intangible assets are non-physical resources that hold significant value for a business. Unlike tangible assets, these cannot be touched or seen but contribute to a company’s operations and profitability. What Are Intangible Assets? Intangible assets are resources without a physical form but with monetary value. They provide long-term benefits, such as generating revenue or enhancing…
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What is the Accounting Process
The accounting process is a systematic way to record, organize, and analyze financial transactions of a business. These steps ensures accuracy in financial reporting and helps businesses make informed decisions. 1. Identifying Financial Transactions The first step in accounting is to identify transactions that need to be recorded. These could include: Only transactions that have…
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What is Accounting- Accounting Cycle, Types and Importance
Account- To record or report an event. What is Accounting? Definition and Process When you think of accounting, what comes to mind? Spreadsheets, numbers, taxes or maybe even Ben Affleck? While these are part of the story, accounting is much more than crunching numbers. It’s the language of business—a way to record, summarize, and interpret…