1st Bac - Accounting Basic Principles

 https://www.youtube.com/watch?v=dbhZSrTdFlU&ab_channel=EduCounting

Accounting basic principles 

To compare two or more companies that are engaged in the same commercial activity, it has been determined that the accounting processes of the financial accounts of a business are performed in a standard way, that means, that the financial reports show the same analysis criteria. This is helpful for when the entrepreneur needs to present financial information to government entities. 

Accounting formats

The development of the accounting process of the financial accounts of a business revolves around an accounting principal universally accepted. This is called a double-entry.

 

 

Debit: Increases in an account (received money)

Credit: Decreases in an account (paid money)

 

Debit and credit of a financial account

When we talk about a financial account, it refers to a place with a specific name where we keep records of financial transactions that can increase or decrease in value. For example, in a restaurant, the sales of the day will go into debit. When the entrepreneur pays the supplier for the food, this will go into credit.

 

Characteristics of the double-entry

It is interpreted as the concern that must be present because the value of the record on the debit side of one or more accounts has to be equal to the sum of the value recorded in the credit of one or more financial accounts of the business. 

This means that the movements registered in the debit must add the same value as those recorded in the credit of the financial accounts of the business.

DC ADEx LER

Financial Transaction

A business sales 200 products at $10 each to a buyer, the buyer pays 50% at this moment and the rest (50%) will be paid in 2 weeks. According to the principal of the double-entry, the accounts involved are income ($2000) and accounts receivable ($1000). The $2000 of the sale will be registered as credit, in the debit of cash and accounts receivable we will register the 50% in each. This will equal debit ($2000) and credit ($2000)

Sales
Debit	Credit
	$2000

 

Cash
Debit	Credit
$1000

 

Accounts Receivable
Debit	Credit
$1000

The supplier of chicken for a fast food restaurant gets and order for $100. 60% is paid in cash and 40% is registered as accounts payable. The accounts involved are chicken supplies ($100), cash ($60) and accounts payable ($40). In shopping the debit side is affected, and the credit of the cash ($60) and accounts payable ($40). This has to equal debit ($100) and credit ($100).

Supplies
Debit	Credit
$100

 

Cash
Debit	Credit
	$60

 

Accounts Payable
Debit	Credit
	$40