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Accounting Standards You Should Know

Accounting Standards You Should Know


Accounting Standards You Should Know

by Virginia Anthony

A critical factor in whatever business is knowing where your money is being spent. Accounting commandments over the ages have helped individuals delineate their capital and how it is truly being used in the business.

As you can likely see, the practice of accounting will ensure you exactly how much cash you have at hand, how much you owe and how much is the value of your business at any afforded time. It is essential to acknowledge this information chiefly for tax intents and attending of pecuniary obligations.

To the untrained eye, accounting principles may seem complicated, but it is actually simple. The main principle in accounting is this: Accounts are divided into three types, namely assets, liabilities and equity. Each account type has its own properties.

The accounts can be represented as simple "T" accounts with a left and right side classified by a perpendicular center line. All you need to do is create a large T. Each side of the "T" will enter gains or diminutions in that account balance in the form of debits or credits. Debits are always on the left side while credits are on the right.

Remember that asset accounts use debit entry as increases and credit entry as decreases. Liability and equity accounts are the precise opposite.

For every debit, there must be a corresponding credit so that there is a balance that can be trailed. Once you master these basic accounting principles, you'll always know where you stand in reporting fiscal data should authorities come knocking at your door demanding for records.

About the Author:
When it comes to quickbook 2008, getting the right information can be a daunting task. That's why we put together this confidential report for you at Free Online Accounting.

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