quartz/content/notes/000 This Semester/002 Courses/Marketing and Accounting Finance/Chapter 1/Accounting.md

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Accounting

Def :: accounting is a type of information system, a system where we deal with financial decision to fullfil the user's needs.

1. Steps of an Accounting Process

1. Identification
2. Recording
3. Communication.

2. Users and uses of accounting

• Internal users
• External users.

3. Ethics is a fundamental business concept

There are 2 kinds of ethics:

• Law
• Norms.

4. Generally Accepted Accounting Principle

def : GAAP(generally accepted accounting principle) are some standard rules to follow which is used to write proper financial account.

4.1. Measurement Principle.

#todo : Add sidenotes

These are mostly selected by considering relevance and faithful representation.

5. 5.GAAP uses one of the ==2== measurements

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1. Cost Principle :: Buying value of an asset
2. Fair Value Principle :: Market(selling) value of an asset.

5.1. Assumption

1. Monetary Unit Assumption
2. Economic Entity Assumption.

5.2. Proprietorship

5.3. Partnership

5.4. Corporation

6. The Accounting Equation

• Basic equation:: $$Assets = Liability + Owner's Equity$$
  • Assets
  • Liability :: Something of a asset, that is used by the owner to get benifit from it.
  • Owner's Equity
    • It has 4 section
      1. Capital(+)
      2. Revinue(+).
      3. Expense(-)
      4. Drawing(-).
• Extended Equation

  • Assets = liability+Capital+Revinue-Expense-Drawing