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Feb 20, 2024

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Jonelle White University of Maryland Global Campus ACCT 301 : Accounts for non-accounting managers Dr. Hilary Evbayiro 1/16/2024

1. Define accounting, and define generally accepted accounting principles (GAAP) Accounting is a set of concepts and techniques used to measure and report financial information about an economic unit (Walther, 2023). 2. What is the basic accounting equation? The basic accounting equation is assets = liabilities + equity. 3. What are assets, liabilities, and owner's equity? Assets are items owned by an entity, such as cash and items purchased. Liabilities are what a company or owner owes . While the owner’s equity is the sum of assets minus liabilities. 4. How are business transactions recorded in the accounting system using debits and credits? Business transactions are recorded into the accounting system on a Balance Sheet , using a debit/credit system. 5. How do journal entries ensure the basic accounting equation (Assets = Liabilities + Owner's Equity) stays balanced? This is done by using the double entry system.

6. What happens to journal entries when recorded into the accounting system? Describe how debits and credits affect the accounts. Debit and credit illustrate how value flows in and out of a business. Debit represents items that flow in, increasing the accounts of the business. Credit represents the outflow of resources, decreasing the accounts of the business. The overall goal is to have credit and debit equal. 7. Discuss the revenue and expense recognition concepts and why they are essential. The Revenue and expense recognition concept means putting these items into the accounting record. The recognition concept is important because it helps companies keep track of their revenues and expenses. 8. When is revenue recorded under accrual accounting? Revenue is recorded under accrual accounting when I service or product is provided, whether payment has been received or not. 9. When are expenses recorded under accrual accounting? Expenses are recorded when the expense is incurred and depending on the cost. The nature of cost usually falls under one of the following approaches, associating cause and effects, systematic and rational allocation, and immediate recognition.

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10. What is the matching principle of GAAP? The matching principle states that when a revenue is generated, it must be combined with an expense. 11. What are the four financial statements? Describe each statement and what it reports/communicates about the company's financial performance and position. The four financial statements are the Balance Sheet, Cashflow , Income Statement and Retained Earnings . A balance sheet provides detailed information about a company’s assets, liabilities, and shareholders’ equity. Statements of cash flow report the flow of cash within a business. An income statement is a document that illustrates how much revenue is earned over time.

References Walther, L. M. (2023). principlesofaccounting.com. https://www.principlesofaccounting.com/