Financial Accounting - basic consepts

Financial Accounting - basic consepts - Financial...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Financial Accounting – What? and How? 1. To account for something is to explain why the result is so! Accountable means “can be explained” or “having duty to explain”. 2. Financial Accounting is to explain why the monetary aspect of the result is so! 3. For the purpose of 2., it is necessary to “record” the movements of money. 4. When money moves from X to Y, X is the source (we call credit), and Y is the destination (we call debit) . Therefore, when money moves, there are always TWO records Dr (debit) and Cr (credit) which must be equal because both records refer to the same amount of money. 5. Source (hence Cr) may be profit, sales, capital (from owner), borrowing from creditors. 6. Destination (or application or used, hence Dr) may be purchases, assets, cash in hand, cash at bank, loss, lending out to debtors. 7. One source may give several destinations, or several sources may give one destination. Hence, 1 Cr gainst 1 Dr, or Several Cr against 1 Dr, or 1 Cr against several Dr.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

Financial Accounting - basic consepts - Financial...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online