As defined on the first chapter; Accounting is an information system.
Why? Because it measures, processes and communicates information which are primarily financial in nature.
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Accounting Process:
1. Analyzing - identify the transaction from source documents and determine the effects on the business supported by accounting documents.
2. Recording - inputting of information in the accounting books called journals.
(Special Journals - Cash receipts book, cash disbursements book, sales book and purchase book.
General Journal - transactions that are not grouped in the special journals.)
3. Classifying - posting of journalized transactions in the ledgers, T-accounts.
(Subsidiary Ledgers - show the details of those transactions in the general ledger.)
4. Summarizing - trial balance; accounts grouped into assets, liabilities, owner's equity, revenue and expense.
(Accounting cycle also includes adjusting of trial balance. After adjusting that's when you do the next step.)
5. Reporting - financial summaries called financial statements.
(Income statement, balance sheet, cash flows and changes in equity)
6. Interpreting - combination of figures and narrations. Interpreting of the financial reports and the results.
**
Just remember the acronym, ARC-SRI. HAHAHA Anyway, credits to Solita Frias and Investopedia.
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Accounting
RandomThis book is filled with accounting lessons specially crafted for accounting students and aspiring accountants. Dive into the world of numbers and financial know-how as I guide you through essential concepts and practical insights. Whether you're ju...
