Basic Accounting is an information science used to collect

Accounting is an information science used to collect, classify, and manipulate financial data for organizations and individuals.

What is 'Accounting'                       Accounting is the systematic and comprehensive recording of financial transactions pertaining to a business. Accounting also refers to the process of summarizing, analyzing and reporting these transactions. The financial statements that summarize a large company's operations, financial position and cash flows over a particular period are a concise summary of hundreds of thousands of financial transactions it may have entered into over this period. Accounting is one of the key functions for almost any business; it may be handled by a bookkeeper and accountant at small firms or by sizable finance departments with dozens of employees at larger companies.

 Accounting equation is:                 Assets = Liabilities + Shareholder Equity.

The balance sheet is a complex display of this equation, showing that the total assets of a company are equal to the total of liabilities and shareholder equity.

Assets.               Things that are resources owned by a company and which have future economic value that can be measured and can be expressed in Ruppes. Utility of Assets are more than one Financial Year

Examples include cash, investments, accounts receivable, inventory, supplies, land, buildings, equipment, and vehicles.

 Liability           is an obligation and it is reported on a company's balance sheet. A common example of a liability is accounts payable. Accounts payable arise when a company purchases goods or services on credit from a supplier.

When the company pays the supplier, the company's accounts payable is reduced.

Shareholder equity represents the equity stake currently held on the books by a firm's equity investors. It is calculated either as a firm's total assets minus its total liabilities, or as share capital plus retained earnings minus treasury shares: Also known as "shareholders' /Stockholders' equity".

 Expense                              is a cost that occurs as part of a company's operating activities during a                    specified accounting period.

Income                  is increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants 

Explain the difference between an asset and an expense

Assets are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events. 

Expenses are outflows or other using up of assets or increases of liabilities (or a combination of both) from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major or central operations. 

As can be seen from the definitions of both items, the key difference between an expense and an asset is timing.

An asset represents any source of future economic benefit to the firm that goes beyond one year. An expense is an item whose usefulness to the company is complete with in one Year

Accounting Transactions:

Rules of Debits and Credits

Every transaction in accounting is either a debit or a credit.  How simple is that concept?  Everything you record in a financial manner (in other words that has a value) is either a debit or a credit. 

The abbreviations for debit and credit are DR and CR, respectively. 

Even the abbreviations are quite simple.  The difficulty comes in determining which type of transaction you are recording.

Debits are a component of an accounting transaction    that will increase assets and decrease liabilities and equity.  

Credits are a component of an accounting transaction that will increase liabilities and equity and decrease assets.

This can put this into a simpler format:

Credits increase liabilities and equity; credits decrease assets.

Debits decrease liabilities and equity; debits increase assets.

If you will simply make yourself a chart, with the information above, you should easily be able to discern which transactions are credits or debits for which accounts.

Let's take a look at the basic rules when recording debits and credits.  For each transaction, there are at least two accounts affected, one with a debit and one with a credit.  Every financial transaction credits one account and debits another.  It is only because of the distaste for accounting that many individuals have, that we find it so difficult to grasp this idea.  We have no trouble understanding yin and yang, give and take, action and reaction, and credits and debits are no different; it just so happens they apply to accounting!

Even if you fail to realize the real life application of debits and credits, we use the system in almost every aspect of our lives.  This is why I have such trouble in comprehending why readers do not readily grasp the debit/credit concept.  The rules are simple: for every debit, there is a credit.  The concept is the same as for actions and reactions; with an exception: actions/reactions refer to energy, and debits/credits refer to finances.  When you make a purchase at the local grocery, you credit your cash, and debit your food supply.  You decreased your cash (always an asset); therefore the decrease is recorded as a credit; that leaves the increase in your food supply to be recorded as a debit. If necessary, read this last paragraph once more, and try to view your daily events in a financial light.  As for the accounting professionals, every day is a debit or credit, an exchange of value between assets and liabilities.

The accounting cycle is the name given to the collective process of recording and processing the accounting events of a company. The series of steps begin when a transaction occurs and end with its inclusion in the financial statements.

Accounting principles are the rules and guidelines that companies must follow when reporting financial data. The common set of U.S. accounting principles is the generally accepted accounting principles (GAAP).

An accounting information system (AIS) is a system of collecting, storing and processing financial and accounting data that are used by decision makers. An accounting information system is generally a computer-based method for tracking accounting activity in conjunction with information technology resources.

1. Bad debts = Noncollectable accounts

2. Provision for doubtful debts = Allowances for doubtful accounts.

3. Sundry debtors = Accounts receivable(A/R).

4. Sundry creditors = Accounts payable(A/P).

5. Closing stock of goods = Closing inventory of merchandise.

6. Opening stock of goods = Opening inventory of merchandise.

7. Gross profit = Gross income.

8. Net profit = Net income.

9. Trading and profit and loss A/c = Income statement.

10. Bills payable = Notes payable.

11. Bills receivable = Notes receivable.

12. Capital = Owner's equity.

13. Income = Revenue

14. Purchases on credit = Purchases on account.

15. Annual general meeting = Annual stockholders meeting

16. Authorised share capital = Authorized capital stock

17. Base rate= Prime rate

18. Bridging loan = Bridge loan

19. Cash machine = ATM 20. Cheque= Check

21. Company= Corporation

22. Merchant bank = Investment bank

23. Notes = Bills

24. Ordinary share = Common stock

25.Retail price index = Consumer price index