Introduction To Accounting Essay

943 words - 4 pages

Running Head: Introduction to Accounting 1

Introduction to Accounting
Jesse Vitkow
Maria Aurora Makalintal – Torio

The public be damned; I am working for my stockholders
William Vanderbilt

The beginning of accounting can be attributed to a time period of the Renaissance. In the late 1400’s, Italy was a dominating factor when it came to commerce and mainly distribution. In order for the market to stay a float and prosper, mathematicians were called upon to see that all transactions be notarized; and this is when a man by the name of ...view middle of the document...

Most notable profession for the avenue of success can be attributed towards accountants. The purpose of accounting is an information system that identifies, records, and communicates the economic events of an organization to interested users. With every job and placement setting, there will be guidelines and rules to follow.
It is important that companies have general guidelines available to resolve accounting issues. Without these basic guidelines, each company would have to develop its own set of accounting practices. If this happened, we would have to become familiar with every
Running Head: Introduction to Accounting 3

company’s peculiar accounting and reporting rules in order to understand its financial statements. It would be almost impossible. ( Weygandt, Jerry J., Financial Accounting 6e, (Ch. 7), copyright © 2008 John Wiley & Sons, Inc )

Accounting Principles:
The Conceptual framework of accounting:
• Objectives of reporting
• Qualitative characteristics
• Elements of financial statements
• Operating guidelines
Assumptions: Assumptions provide a foundation for the accounting process.
• Monetary unit
• Economic entity
• Time period
• Going concern
Principles: Principles are specific rules that indicate how economic events should be reported in the accounting process.
• Revenue recognition
• Matching
• Full disclosure
• Cost
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Constraints of Accounting: Constraints on the accounting process allow for a relaxation of the principles under certain circumstances.
• Materiality
• Conservatism
• Summary of Conceptual framework

The Four Financial Statements are:
• An income statement: This statement presents the revenues and expenses of a company for a specified period of time.
• A retained earnings statement: This statement summarizes the changes in retained earnings that have occurred for a specific period of time.
• A balance sheet: This statement reports the assets, liabilities, and stockholders’ equity of a business at a specific date.
• A statement of cash flows: This statement summarizes information about the cash inflows (receipts) and outflows (payments) for a specific period...

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