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what is accounting, accounting concepts, financial accounting, accounting principles, accounting cycle, cost accounting, management accounting, basic accounting, accrual accounting, introduction to accounting

Learning the Basics: What is Accounting?

Accounting can also be defined as is the systematic and detailed recording of different financial transactions that are related to a business. Accounting is also the process of summarizing, analyzing and reporting all the recorded financial transactions to different agencies, regulators and tax collection entities. Financial transactions come with financial statements which are used to summarize organization operations, cash flows and financial position for a specific period. Accounting and Bookkeeping both are not same. Accounting is an advanced level of Bookkeeping. If you want to learn more about Bookkeeping

Accounting which is referred to as the “language of business” is used to measure the results of a company’s economic activities. Accounting also conveys the result of a company’s economic activities to diverse users. Some of the users are the creditors, regulators, investors, management and more. It is of paramount importance to know that accounting and financial reporting are used interchangeably by many people.

Type of Accounting

There are two major types of Accounting – Managerial Accounting also known as Cost Accounting and Financial Accounting. Let’s discuss both types of Accounting in more detail and conceptual

Financial Accounting

This kind of accounting is usually for money lenders, investors and different government agencies. It involves the recording and classification of business financial transactions. We also develop financial reports.

The Major Reports are Income Statement, Balance Sheet, Statement of Cash flow. These Reports are created focusing on accounting standards. These standards are set by international accounting and government-related bodies.  These Financial reports are available for both the internal and external users.

There are things to be observed while financial statements are prepared. GAAP and accounting principles that are generally accepted are observed. Financial accounting is related to historical DAT processing.

Management Accounting

Perhaps, this is mostly for internal management of a business. Management accounting is mainly focused on the preparation of reports that aid the managerial sector of any business establishment to make decisions. In management accounting, there is no form of standards or external rules to follow. However, there are certain standard methods accounting students are exposed to. Managerial accounting involves different areas such as budgeting, financial analysis,  forecasting, evaluation of business decisions, cost analysis, and other related areas.

Management accounting otherwise known as managerial accounting provides vital information to be used by users outside the management. This type of accounting aims at meeting NM g the needs of the management of a company and not strict compliance with accounting principles that are generally accepted.

There many examples of this type of accounting. They include budgets, cash flow projections, variance reports, business acquisition analysis reports, and product costings. Managerial accounting includes different standards statements, like balance sheets, cash flow statements and profit and loss of a company.

Managerial or management accounting are prepared to be easy to understand, meaningful to the managerial board of such establishment to make good business decisions. Small business establishments may do just a cash projection in their managerial head. However, it is good to know they may or may not do this cash projection in their head.

The proposed or new business venture, on the other hand, may do a rough calculation for them to achieve good monetary targets. Large-scale business establishments, like the manufacturers, make good use of management accounting reports. Manufacturers may also work with dedicated staff or external Virtual CFO in every business unit, site or region.

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What is the Accounting Cycle and What are Accounting Cycle Steps?

The Accounting Cycle is a complete and steps by step process of analyzing, recording, accepting and summarization the business transactions. Basically, the accounting cycle is the flow of developing financial statements. So that we can make a decision about our business. What are we getting from our financial activities and what we are losing?

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What is a Journal Entry, journal entries, accounting journal entries, general ledger, accounting cycle, journal of accountancy, journal entries examples, journal examples, post journal

What is a Journal Entry and Journal Entries Examples?

Before we will move on When we have to use Journal Entry. Do we have to learn more about What is a Journal Entry? Do you need to make a journal Entry or you are going to leave it on your Accountant, Bookkeeper or your ProAdvisor?

What is a Journal Entry?

Let’s start looking with what is a Journal Entry? We will go back in the history of Accounting and Bookkeeping when first recorded in a ‘journal’, hence the term ‘journal entry.

A journal is the record of Business Financial Transactions order by date in the world of  Accounting and Bookkeeping. There are a few things we have to keep in mind when we are going to record the manual journal entry. Those are the following:

  • The Correct Date of Transaction
  • The Account and Amount that will be Debited
  • The Account and Amount that will be Credited
  • The Short Description that will be related to Journal
  • The Debit and Credit must be Equal Amounts

We are heading over the 2018 and entering into 2019. The Accounting & Bookkeeping software recording the transactions automatically. The QuickBooks Online will automatically record most of the business transactions into the general ledger accounts immediately after the software prepares the transaction. This will applies to sales invoices, deposits, payments to invoices, expenses, bills, payments to bills, inventory purchases.

Here are few Journal Entries Examples

accounting journal entries journal entries accounting cycle what is journal entry cost accounting general entry accounting journal entries journal of accountancy 300x249 - What is a Journal Entry and Journal Entries Examples?Journal entries are the first step of the Accounting Cycle. It begins as an accounting period starts. First business transactions occurred, Journal Entries started. Because we have to pass the Journal Entries to complete our Accounting CycleI am going to share few transactions examples. We will do Journal entries Examples of those transactions.

After Analysing the transactions we must need to Classify our Business Financial Transactions. We have to record them as Debit and Credit with amounts and Accounts.  Which one we want to Add into proper Account

Examples Accounting Journal Entries

QuickBooks Online is cloud base accounting software. So you don’t need to process the accounting journal entries in QuickBooks online. Some journal entry examples include:

  • Investment of Capital (Partner Contribution)
  • Use of Supplies
  • Acquisition of Land
  • Purchase of Machinery
  • Depreciation on Machinery
  • Interest on loan accounts
  • Sale of Products
  • Payment of Wages & Salaries

There are many more examples of journal entries but currently. I am offering Accounting & Bookkeeping services for small business owners.