Priciples Of Accounting Essay

1119 words - 5 pages

Michael D Boffeli
American InterContinental University
Professor Cynthia Armes
ACCT205-1301B-02
Principles of Accounting
Unit 1 IP

Abstract
The paper is about a hypothetical scenario requiring the writer to give and informative introductory class on the subject of accounting. The primary objectives of accounting are identified and described in basic terms. Basic accounting terminology is identified and defined using the New York State Society of CPA’s Accounting Terminology Guide. A brief personal example is given regarding personal ethics and how they have applied to accounting. Lastly, the roll of technology and its effects on small business are discussed.

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Assets are usually found after some type of previous transaction.
Equity – Is best described as portion of the business or company’s assets that are divided between the owners based on investment share. The following is a simple example; 3 investors gave money for 100 percent of a certain venture. Investor 1 gave 50%, Investor 2 gave 30% and Investor 3 gave 20% of the funds needed. The assets of the company are divided between each investor based on the percentage of the amount invested. The investor gets their “share” of the equity.
Dividends – Portion of a company’s profits that are paid out to stakeholders. A stakeholder may be an employee who, without the company would not have a job.
Expense – A decrease in a company’s resources or assets. Decreases typically include hiring additional employees, a sale of some type a sale, utilities such as water power or sewer, and rent.
Income Statement – An income statement contains accurate accounting information detailing the income and expenses of a business.
Balance Sheet – A document used to report a business’s assets, equities and liabilities.
Liability – A principle used by accountants that shows resources in possession of the company that require payment. Typically these items are bought using credit.
Revenue – When a company sells a good or service, the payment for that product is called revenue.
Comparability – Accountants use comparability in order to measure companies in comparison to one another.
Gross Income-This is the beginning point for all income no matter how it is made or where it comes from.
Net Income-When a company has an excess of revenue once the expenses are subtracted from revenue, they have calculated their net income. (Accounting Terminology Guide, 2013)
Understanding these terms and knowing how to communicate them is vital to business. Using them properly and honestly makes for a good accountant. Using them improperly and unethically makes for trouble and certain financial ruin for everyone involved.
Today there is much attention given to the damage guns, drugs, and the national debt cause people. Many well-meaning people blame the guns and drugs for damage they do to people and society. When it comes to the national debt, people want to hold individuals responsible. Americans hold various people at fault, Ben Bernake, Congress and the President and rightly so. Ethics are what people do when no one is watching and there is a high probability...

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