1st Bac - Main Accounts´ Management in Accounting

 Identifying beforehand the different accounts involved in a named financial operation is very useful for understanding the balance sheet . 
 
When the entrepreneur has timely information on the movement of the business main accounts , they are in a position to make a good financial diagnosis by correcting not only the weaknesses, but also by enhancing the strengths identified in the area of corporate finance.
 
A chart of accounts (COA) is a list of financial accounts set up, usually by an accountant, for an organization.  Under the systematic process of accounting, these interactions are generally classified into accounts. There are seven different types of accounts that all business transactions can be classified:
  •     Assets
  •     Liabilities
  •     Equities
  •     Revenue
  •     Expenses
  •     Gains
  •     Losses
What Is a Balance Sheet?

The term balance sheet refers to a financial statement that reports a company's assets, liabilities, and shareholder equity at a specific point in time.


Assets=(Liabilities+Owner’s Equity) 

 Assets - Liabilities=Owner’s Equity

For a small corporation, COAs might include these sub-accounts under the Assets account:

  • Cash
  • Savings account
  • Petty cash balance
  • Accounts receivable
  • Undeposited funds
  • Inventory assets
  • Prepaid insurance
  • Vehicles
  • Buildings

Liabilities account may have sub-accounts, such as:

  • The company credit card
  • Accrued liabilities
  • Accounts payable
  • Payroll liabilities
  • Notes payable
Shareholders' equity can be broken down into the following accounts:
  • Common stock
  • Preferred stock
  • Retained earnings

What is an income statement? (Profits and Loss Statement or Earnings Statement)

The income statement is one of three important financial statements used to report the financial results of a company during a particular accounting period, the other two key statements being the balance sheet and the cash flow statement. 

 

Net Income = (Revenue + Gains) – (Expenses + Losses)

 ABC Company Income Statement for year 2020

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