Principle Of Accounting

What is accounting?

1. Accounting is an information and measurement system that identifies, record and communicate business activities. in other word language of business

• Process 

1. identification - transaction
2. recording - record - classify - summarize
3. communication - prepare accounting report (analyze and interpret for user)

Business Entity Concept 

• Economic units considered separate and distinct from its owner (example: separate owner money from company money)

Business Transaction 

• Event, occurance, or condition that need to be recorded, usually in monetary term. (monetary = something that related to currency)

Asset 

• resources owned by a business @ thing of value that are owned

Equities

• Right or claims to properties (asset) (right of ownership toward the properties) (asset = equities) 
• Type Of Equities :

1. liabilities = debt, things owed 
2. owner equities or capital = residual claim

Accounting Equation 

1. + = +
2. - = -
3. +- = 0
4. 0 = +-
5. asset = equities 
6. asset = liabilities + owner equities 
7. asset = liabilities + capital

Revenue

• (increase owner equity)
• asset coming into the business for work performed  
• Against Expense

Expense

• (decrease owner equities)
• sacrifice made in order to earn revenue 

Accrual Basis

• recorded when business transaction happen

Cash Basis

• recorded when transaction perfectly done