Accounting the language of business.

Lesson 1: Introduction to Accounting Principles

1.1 Definition of Accounting Principles:

Accounting principles are like the rules in a game. They help us record, report, and understand financial transactions. It’s like following a recipe to make sure our financial statements are accurate and fair.

1.2 Generally Accepted Accounting Principles (GAAP):

Think of GAAP as a common language everyone agrees on. It ensures that financial information is presented in a way that everyone can understand, no matter the business or industry.

1.3 Relevance and Reliability:

Imagine you’re reading a map. Information should be relevant, like showing the right landmarks, and reliable, like having accurate distances. Accounting info is the same – it must help decisions and be trustworthy.

Lesson 2: Basic Accounting Concepts

2.1 Entity Concept:

Consider your personal wallet and your work’s cash register. The entity concept says these are separate – your money isn’t the company’s money. It keeps things clear.

2.2 Money Measurement Concept:

Money talks in accounting. This concept says we record everything in money terms, making it simpler to compare and understand.

2.3 Going Concern Concept:

Imagine your favorite bakery. The going concern concept assumes it’ll keep baking. It lets us plan for the future without assuming the business will suddenly stop.

2.4 Cost Concept:

Think of your phone. Its value in the books is what you paid, not its current market price. That’s the cost concept – assets are recorded at their historical cost.

2.5 Dual Aspect Concept:

Every transaction has two sides, like a seesaw. You buy a laptop (debit), and you pay cash (credit). It’s the dual aspect concept, keeping the books balanced.

Conclusion:

Congrats! You’ve dipped your toes into the accounting world. In Module 2, we’ll dive deeper into the accounting equation and the magic of double-entry accounting.