4. Mechanics and Terminology of Accounting Systems
Accounting is a systematic process that involves recording, classifying, and summarizing financial transactions, which is crucial for effective decision-making in business. It encompasses essential concepts such as the double entry system, various types of accounts, and the importance of compliance with financial regulations. Understanding accounting terminology and its processes aids in financial management and strategic planning for businesses.
Enroll to start learning
You've not yet enrolled in this course. Please enroll for free to listen to audio lessons, classroom podcasts and take practice test.
Sections
Navigate through the learning materials and practice exercises.
What we have learnt
- Accounting is vital for maintaining accurate records of business transactions.
- The double-entry system ensures that every transaction affects at least two accounts, maintaining a balanced approach.
- Key accounting terminology, such as assets, liabilities, and capital, forms the foundation of financial understanding.
Key Concepts
- -- Accounting
- The art of recording, classifying, and summarizing business transactions in monetary terms.
- -- Double Entry System
- A bookkeeping method that requires every transaction to be recorded in two accounts, with equal debits and credits.
- -- Assets
- Resources owned by a business, such as cash and equipment.
- -- Liabilities
- Obligations or debts that a business must repay.
- -- Revenue
- Income generated from business operations.
- -- Expenditure
- Costs incurred in the process of running a business.
- -- Profit
- The financial gain obtained when revenue exceeds expenses.
- -- Journal
- The book of original entry for recording day-to-day transactions.
- -- Ledger
- The book of final entry that contains classified accounts.
Additional Learning Materials
Supplementary resources to enhance your learning experience.