What is known by Accounting Principles or Accounting Cycle?

First Segment of this course is Accounting Cycle which is also known as Principles of Accounting but let me share the definition of Accounting

What is accounting?

Accounting is the basic need of every individual like a lay man, women, business man , non-business man, Company owners , Sole proprietorship for everyone,  even for house wife you will see she also make some decision for making saving etc.

Actually all the above used accounting in any form but in short they are user of accounting in their daily life. Here is a small list of Accounts users  

Accounts Matters can be visualized in

A Government Office

A Business Office

Income Generating Organization

Services Organization

Small Organization

Multi National Organization

And All type of Business environment Accounting is used and the financial matters can be checked out.

What is accounting?

"Accounting Shows the Results of Business Operations for an Accounting Period (financial period)”

“It is the Language of business enterprise to show its financial Results"

That mean these Accounts language show what are they doing in their business like making profit or loss etc. It is the record the financial entries accounting actually communicate the results.

Purpose of Accounting

Provide Decision makers with sufficient, relevant information to make prudent business decisions

Or

Information provided through accounting reports called financial statements this process is known as financial Reporting

Which kind of Financial Statements generated by a Business

1. Income Statement / Profit and loss Statement

 (It shows the Operations results of business during the accounting period or Over the Accounting Period)

2. Statement of Owner's Equity (It derived from Income Statement)

(Shows changes in owner's Capital accounts ( +plus or – minus  ) Addition in owner equity in some case it will go down )

3. Balance Sheet

(It shows Financial Position at a specific date. Here one thing is Very important that financial statement are those which show particular picture on a particular date like income statement is for the accounting period or during an accounting period while Balance sheet  is just for particular date that is the end of Accounting Period. It show what the business owns at this time and normally Balance sheet are create at the end of Financial Year.)

4. Statement of Cash flows.

"Shows Cash inflows (Receipts) and Cash Outflows ( Payments) over / During the Accounting Period it is prepared from balance Sheet" (it show the cash position during and end of the accounting period)

5. Notes to Financial Statements

These are the integral part of financial statements. Financial statement cannot be read properly if you ignore the notes to financial statement)

What is accounting Period.

Accounting period is the Period of time covered by an income statement.

The time which relates to income statement it may vary organization to organization but the normally accounting period is considers one year some time it is Calendar bases like January to December or it may be financial Year like July to June.

Remember

Financial Statements are prepared at the end of Accounting Period and Financial Statements are the end products of Accounting process / Accounting cycle.