Basics

                 1. Accounting Equation

                 2. Principles of Accounting

                 3. Debits and Credits

                 4. Analyzing and Recording Transactions

                 5. Trial Balance

           Assets

                 1. Fixed Assets

                 2. Current Assets

                 2. Long Term Investments

                 3. Inventory

                 4. Intangible Assets

                 5. Depreciation

                 6. Bank Reconciliation Statement

           Liabilities

                 1. Long Term Liabilities

                 2. Short Term Liabilities

                 3. Equity

           Financial Statements

                 1. Balance Sheet

                 2. Income Statements

                 3. Statement of Owner's Equity

                 4. Statement of Cash Flows

           Financial Ratios

                 1. Liquidity Ratios

                 2. Asset Turnover Ratios

                 3. Financial Leverage Ratios

                 4. Profitability Ratios

                 5. Dividend Policy Ratios

Welcome to the world of Accounting.  Accounting Chum attempts to explain the vast field of accounting in the most simplified terms possible.

Accountancy or accounting is defined as the systematic recording, verifying, and reporting of financial transactions, including the origination of the transaction, its recognition, processing, and summarization in the Financial Statements. It has been defined by the AICPA as " The art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof." Such financial information is primarily used by lenders, managers, investors, tax authorities and other decision makers to make resource allocation decisions between and within companies, organizations, and public agencies.

Financial Accounting is "a major branch of accounting involving the collection, recording and presentation of financial information, in accordance with legal, professional, and capital market requirements.

The whole system of present day accounting and bookkeeping is based on certain principles commonly known as Generally Accepted Accounting Principles. First step in the process is to analyze every transaction that affects the business and record an entry in the Journal. While doing so an accountant always has to make sure that the Accounting Equation remains in balance. The next step is to post transactions to the accounts in the General ledger. The account balances are then transferred to the Trial Balance. As the Double-Entry System requires, that in any transaction the total of debits must equal the total of credits, so in a Trial Balance the total of the debit side should always be equal to the total of the credit side. This is then used to prepare the Financial Statements which includes a periodic Profit and loss Account, a Balance Sheet and a Cash Flow Statement. While Profit and Loss statement summarizes the result of operation for the given period, balance Sheet gives the statement of Assets and Liabilities on the last day of the accounting cycle. Financial Ratios are commonly used by various interested parties to interpret the financial statements.

Recording and presenting financial operations of a nonprofit entity are studied separately as Accounting for Non Profit Organizations. Similarly the accounting standards for Governmental organizations are governed by GAO and studied separately under Governmental Accounting.

While information provided by financial accounting is also used by various outside parties, Cost Accounting information is used within an organization and is usually confidential and accessible only to a small group, mostly decision-makers. Tax Accounting is the accounting needed to comply with jurisdictional tax regulations. 

The related, but separate financial audit comprises internal and external audit.