Basic Accounting Principles
As accounting has been defined by the Professor William A Paton of the University of Michigan is one basic function of facilitating the administration of economic activity. Therefore, this function has two directly related phases; the first one is measuring and the collection of economic data; and the second one is the ability of communicating the finding results to the interested parties.
A good example of this is a company's accountant that his job is to regularly measure the profit and loss for each month or economic and financial year and the ability to publish these results in a statement called an income statement. An income statement lists and includes elements of receivable accounts and payable accounts. However, more than often it gets complicated with subjects like retained earnings and accelerated depreciation.
A simple accountant is usually concerned with the basic bookkeeping such as the process that records every transaction; due bill that needs to be paid or bills that have already be paid, and in general is in charge for the businesses financial statements and has to keep records of every financial transaction that occurred with the company and a third party.
Financial Statement aims to summarise the company's, organisation’s or corporation assets. The assets’ value is directly assigned to the price that it was first purchased by the company. Financial Statements also records what the resource of these assets. Where, some assets can be in a loan form that has to be paid back, while others can be the company’s properties and the company’s incomes are also be considered as an asset for the business.
Double-entry bookkeeping also includes and summarise the liabilities. Obviously, what a company aiming is to show a higher quantity of assets to balance its liabilities in order to have a profit.
The seesence of simple accounting and bookkeeping is the management of those elements within a company or organisation.