topic 1 introduction to financial accounting

• DEADCLIC:

  Debit: Expenses, assets and drawings

  Credit: Liabilities, income, capital
• Accounting equation :

  A=C+L

  C=A-L
• Bookkeeping: Businesses and other organisations carry out numerous financial transactions on a daily basis. They can not remember all this information and have to record it in books. Recording the data in books minimises the risk of fraud and makes the accounts reliable and acceptable
• Accounting: Once data has been recorded it has to be sorted to provide useful information to the business. Income statement can calculate profit/loss in a given period of time. The SOFP shows A=C+L