Accounting Basics 1

What is accounting?

• Accounting is the process of recording, summarizing, analyzing, and reporting financial transactions of a business.

• Accounting is the process of gardening

• Accounting is the process of cooking food

• Accounting is the process of fixing cars

Define bookkeeping.

• Managing personal relationships

• Gardening tips

• Recording of financial transactions

• Cooking recipes

Explain the difference between accounting and bookkeeping.

• Bookkeeping focuses on recording transactions, while accounting involves analyzing and interpreting financial information.

• Bookkeeping and accounting are the same thing.

• Accounting focuses on recording transactions, while bookkeeping involves analyzing and interpreting financial information.

• Accounting is only used by small businesses, while bookkeeping is used by large corporations.

Who are examples of internal users of accounting?

• managers, employees, board of directors

• customers, government, managers,

• Suppliers, banks, employees,

• Customers, suppliers, managers

Provide examples of external users of accounting.

• Employees, managers, board of directors,

• Competitors, managers, customers,

• Shareholders, board members, employees

• Investors, creditors, government agencies, suppliers, customers, general public

What are the main objectives of accounting?

• To promote environmental sustainability

• To provide entertainment value

• To provide financial information, facilitate decision-making, ensure accountability, and comply with legal requirements.

• To encourage physical fitness

What is the accounting equation?

• Assets = Liabilities + Equity

• Assets = Equity - Liabilities

• Liabilities = Assets - Equity

• Equity = Assets - Liabilities