Accounting is one of the classes I took in college that has had the most effect on my career. Accounting not only gives students more options, but it also helps them keep track of their lives outside of school. Accounting has a reputation for being hard, so when most people hear about it, they don’t want to do it. Accounting classes can be hard at times, but if you understand and learn the general idea and basics of accounting, the rest falls into place. In this article, I’ll talk about the basics of accounting and how learning these things will help you understand accounting better.
When you first start learning about accounting, there are a few basic things you need to remember if you want to learn more. The first is that Assets = Liabilities + Owners Equity, and Revenue-Expenses will fall under Owners Equity. The first expression is written on the Balance Sheet, and the second is written on the Income Statement. The most important thing is to make sure that the information you put goes in the right place so that everything is in balance. If the files don’t match up, it means that information was either put in the wrong place or was lost. It is very important that this information stays fair.
We will move on to T-Accounts now that we know the basic accounting formula for our balance sheet and income statement. The T-Account is a way to keep track of purchases. Your debits are on the left side of the account, and your payments are on the right. People who have never used T-Accounts before will have the most trouble figuring out whether a transaction is being recorded as a charge or a credit. When working with cash, a debit means that you are getting cash and a credit means that you are giving cash to someone else. For example, if you were paid $100 cash for a job, you would take $100 out of cash and add $100 to the revenue account. Like before, it’s very important to keep these accounts in balance. Most of the time, there will be more than one T-Account, and it’s important to keep these as organised as possible because these numbers will be important later.
After putting information into the T-Accounts, it’s time to write them down in a trial balance. The trial balance keeps track of all the accounts and shows how much money each account owes or has. During the T-Account phase, it’s important to add up all the debits and credits for each account. This makes it easy to put these numbers into the trial balance. Like before, the debits and payments must equal each other or there is a mistake and you need to go back and figure out what went wrong.
If someone knows these basic accounting ideas, it will help them a lot in their business job and at home. Accounting is something that everyone will use outside of school at some point or another. These accounting software programmes will help you learn the rest of the skills you need to become an accountant for a business and start a job.
Accountants for Small Business 