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History of accounting from ancient times to today

2020-09-03T13:05:00.005-07:00

HISTORY OF ACCOUNTING

The history of accounting is as old as the history of civilization itself. It is linked to the first human manifestations of the social need to protect possession and to perpetuate and interpret the facts that have occurred with the material object that man has always disposed of to achieve the proposed ends.

Leaving hunting, the man turned to the organization of agriculture and herding. The economic organization regarding the right to use the land has resulted in separativeness, breaking community life, creating divisions and a sense of ownership. Thus, each person created their individual wealth.

When he died, the legacy left by this person was not dissolved, but passed on as an inheritance to his children or relatives. The inheritance received from the parents (pater, patris), was called patrimony. The term came to be used for any values, even if they had not been inherited.

The origin of Accounting is linked to the need for trade records. There are indications that the first commercial cities were from the Phoenicians. The practice of commerce was not exclusive to these, being practiced in the main cities of Antiquity.

The trading and selling activity of Semitic traders required the monitoring of changes in their assets when each transaction was made. Exchanges of goods and services were followed by simple records or reports about the fact. But tax collections in Babylon were already done with writing, albeit rudimentary. An Egyptian scribe counted the deals made by the government of his country in the year 2000 B.C.

As the man began to possess a greater amount of values, he was concerned with knowing how much they could yield and what was the simplest way to increase their possessions; such information was not easy to memorize when already in greater volume, requiring records.

It was the thought of the “future” that led man to the first records so that he could know his real possibilities of use, consumption, production, etc.

With the appearance of the first private administrations, there was a need for control, which could not be done without proper registration, in order to be able to account for the administered thing.

It is important to remember that at that time there was no credit, that is, purchases, sales and exchanges were in cash. Subsequently, tree branches were used as proof of debt or discharge. The development of papyrus (paper) and calamus (writing pen) in ancient Egypt made it extremely easy to record business information.

As economic operations become complex, their control is refined. The governmental writings of the Roman Republic (200 B.C.) already included cash income classified as income and profits, and the expenses included in the items wages, losses and diversions.

In the medieval period, several innovations in accounting were introduced by local governments and the church. But it is only in Italy that the term Contabilitá appears.

We can summarize the evolution of accounting science as follows:

ANCIENT WORLD ACCOUNTING - period that begins with the first civilizations and goes until 1202 of the Christian Era, when Liber Abaci, authored by Leonardo Fibonaci, Pisano, appeared.

ACCOUNTING IN THE MEDIEVAL WORLD - period from 1202 of the Christian Era to 1494, when the Frei Luca Paciolo's Tratactus de Computis et Scripturis appeared, published in 1494, emphasizing that the accounting theory of debt and credit corresponds to the theory of positive and negative numbers, a work that contributed to insert accounting among the branches of human knowledge.

MODERN WORLD ACCOUNTING - period from 1494 to 1840, with the appearance of the work “La Contabilità Applicatta alle Amministrazioni Private e Pubbliche”, by Franscesco Villa, awarded by the Austrian government. Notable work in the history of Accounting.

SCIENTIFIC WORLD ACCOUNTING - period that began in 1840 and continues to this day.

OLD PERIOD

Empirical accounting, practiced by ancient man, already had Heritage as its object, represented by herds and other goods in their quantitative aspects.

The first records were processed in a rudimentary way, in the man's memory. As this is a thinking, intelligent being, he soon found more efficient ways to process his records, using recordings and other alternative methods.

The inventory played an important role, since counting was the method adopted for the control of goods, which were classified according to their nature: herds, metals, slaves, etc. The word "Account" means the grouping of items of the same kind.

The first accounting writings date from the end of the Polished Stone Age, when the man recorded his first drawings and recordings.

The first controls were established by the temples, which lasted for several centuries.

The Sumerians and Babylonians, as well as the Assyrians, made their records in clay pieces, rectangular or oval, becoming famous the small tablets of Uruk, measuring approximately 2.5 to 4.5 centimeters, with slightly convex faces.

The records combined the figurative with the numerical. The face of the animal whose existence was wanted to be recorded and the number corresponding to the existing heads was recorded.

Although rudimentary, the registration, in its form, resembled what is happening today. The account name, “Matrizes”, for example, replaced the engraved figure, while the numerical aspect became more qualified, with the addition of the monetary value to the quantitative one. This evolution allowed that, in parallel to the “Application”, it was also possible to demonstrate its “Origin”.

In the city of Ur, in Chaldea, where Abraham lived, a biblical character mentioned in the book Genesis, there are, in excavations, important accounting documents: cuneiform writing table, where accounts related to labor and materials are registered, or that is, Direct Costs. This means that, 5,000 years before Christ, man already considered it essential to determine its costs.

The Accounting System is dynamic and has evolved with the duplication of documents and “Stamps of Secrecy”. The records became daily and were later synthesized on papyrus or tablets at the end of certain periods. They underwent a new synthesis, grouping several periods, which resembles the daily, the monthly trial balance and the annual balance.

The confrontation between positive and negative variations was already established, applying the Principle of Competence empirically. The revenue was recognized, which was compared to the expense.

Egyptians bequeathed a rich collection to Accounting historians, and their records date back to 6,000 years before Christ.

Writing in Egypt was supervised by the Royal Tax Authorities, which made clerks zealous and serious in their profession. The inventory was of such importance that the counting of the ox, a deity adored by the Egyptians, marked the beginning of the adopted calendar. Movable and immovable property were registered, and administrative and financial controls were already established in a primitive way.

The "Diary Matches" resembled the modern process: registration started with the date and name of the account, followed by unit and total quantities, transportation, if any, always in chronological order of entries and exits.

It can be mentioned, among other accounts: “Slave Payment Account”, “Daily Sales Account”, “Synthetic Monthly Account of Miscellaneous Taxes”, etc.

Everything indicates that the Egyptians were the first people to use monetary value in their records. They used as a base, a coin, minted in gold and silver, called “Shat”. It was the practical adoption of the Common Monetary Denominator Principle.

The Greeks, based on Egyptian models, 2,000 years before Christ, already recorded Cost and Revenue Accounts, proceeding, annually, to confront each other, to determine the balance. The Greeks perfected the Egyptian model, extending bookkeeping to various activities, such as public, private and banking.

IN THE BIBLE

There are interesting biblical accounts of accounting controls, one of which Jesus himself reported in Luke chapter 16, verses 1 to 7: the administrator who defrauded his master by changing the receivables receivable records.

In Joseph's time in Egypt, there was such an accumulation of goods that they lost track of what they had! (Genesis 41.49).

There was a very rich man, named Job, whose heritage was detailed in the book of Job, chapter 1, verse 3. After losing everything, he recovers the assets, and a new inventory is presented in Job, chapter 42, verse 12 .

Solomon's goods and rents were also inventoried in 1 Kings 4: 22-26 and 10: 14-17.

In another parable of Jesus, there is a quote from a builder, who does the math to see if what he had was enough to build a tower (Luke 14: 28-30).

Still, the story is told of a debtor, who was forgiven of his registered debt (Matthew 18: 23-27).

Such reports prove that, in biblical times, asset control was common practice.

MEDIEVAL PERIOD

In Italy, in 1202, the book “Liber Abaci”, by Leonardo Pisano, was published.

At the time, mathematical techniques, weights and measures, exchange rates, etc. were studied, making man more evolved in commercial and financial knowledge.

If the Babylonian Sumerians planted the seed of Accounting and the Egyptians watered it, it was the Italians who cultivated and harvested it.

It was an important period in the history of the world, especially in the history of Accounting, called the “Technical Era”, due to the great inventions, such as windmill, improvement of the compass, etc., that opened new horizons to the navigators, like Marco Pólo and others.

The craft industry proliferated with the emergence of new techniques in the mining and metallurgy system. Foreign trade increased through the Venetians, resulting, as a consequence of the needs of the time, the cash book, which received records of receipts and payments in cash. Debt and credit were already used in a rudimentary way, arising from the relationship between rights and obligations, and referring, initially, to people.

The improvement and growth of Accounting were the natural consequence of the needs generated by the advent of capitalism, in the 12th and 13th centuries. The production process in capitalist society generated the accumulation of capital, changing labor relations. Slave labor gave way to wage labor, making the records more complex. In the 10th century, the first corporations appeared in Italy, transforming and strengthening bourgeois society.

At the end of the 13th century, the “Capital” account appeared for the first time, representing the value of the resources injected into the companies by the owning family.

The Double Match method originated in Italy, although it is not possible to specify in which region. Its appearance implied the adoption of other books that would make Accounting more analytical, and then the Book of Cost Accounting appeared.

At the beginning of the 14th century, explicit records of commercial and industrial costs were already found, in their various phases: acquisition cost; transportation and tax costs; interest on capital, referring to the period between the acquisition, transportation and processing; aggregate direct labor; storage; dyeing, etc., which represented a very analytical appropriation for the time. Writing was already done today, considering, separately, expenses with raw materials, direct labor to be added and indirect manufacturing costs. Costs were accounted for in separate stages, until they were transferred to the industrial year.

MODERN PERIOD

The modern period was the phase of pre-science. Three important events that occurred in this period should be mentioned:

in 1453, the Turks took Constantinople, which caused great Byzantine sages to emigrate, mainly to Italy;

in 1492, America is discovered and, in 1500, Brazil, which represented an enormous potential for wealth for some European countries;

in 1517, religious reform took place; Protestants, persecuted in Europe, emigrate to the Americas, where they took root and started a new life.

Accounting became a necessity to establish control of the countless riches that the New World represented.

The introduction of accounting techniques in private businesses was a contribution of Italian traders of the century. XIII. Loans to commercial companies and investments in cash determined the development of special writings that reflected the interests of creditors and investors and, at the same time, were useful to traders, in their relations with consumers and employees.

The modern period was the phase of pre-science. Three important events that occurred in this period should be mentioned:

in 1453, the Turks took Constantinople, which caused great Byzantine sages to emigrate, mainly to Italy;

in 1492, America is discovered and, in 1500, Brazil, which represented an enormous potential for wealth for some European countries;

in 1517, religious reform took place; Protestants, persecuted in Europe, emigrate to the Americas, where they took root and started a new life.

Accounting became a necessity to establish control of the countless riches that the New World represented.

The appearance of the work of Frei Luca Pacioli, a contemporary of Leonardo da Vinci, who lived in Tuscany in the 15th century, marks the beginning of the modern phase of Accounting.

FREI LUCA PACIOLI

He wrote “Tratactus de Computis et Scripturis” (Double-entry Accounting), published in 1494, emphasizing that the accounting theory of debt and credit corresponds to the theory of positive and negative numbers.

Pacioli was a mathematician, theologian, accountant and other professions. He left many works, notably the “Summa de Arithmetica, Geometria, Proportioni et Proporcionalitá”, printed in Venice, in which his treatise on Accounting and Bookkeeping is inserted.

Pacioli, despite being considered the father of Accounting, was not the creator of Double Matches. The method was already used in Italy, mainly in Tuscany, since the 14th century.

The treaty initially highlighted what was necessary for the good merchant. Next, I conceptualized inventory and how to do it. He talked about mercantile books: memorial, diary and reason, and about their authentication; on transaction records: acquisitions, exchanges, companies, etc .; on accounts in general: how to open and how to close; storage accounts; profits and losses, which at the time, were "Pro" and "Dano"; about bug fixes; on archiving accounts and documents, etc.

On the Double Match Method, Frei Luca Pacioli explained the adapted terminology:

“Per”, through which the debtor is recognized;

"A", by which the creditor is recognized.

He added that, first, the debtor must come, and then the creditor, a practice that is still used today.

The work of Frei Luca Pacioli, a contemporary of Leonardo da Vinci, who lived in Tuscany in the 15th century, marks the beginning of the modern phase of Accounting. Pacioli's work not only systematized accounting, but also set a precedent for new works to be written on the subject. It is understandable that the formalization of Accounting took place in Italy, after all, in this period mercantilization was established, with Italian cities being the main interpositions of world trade.

Italy was the first country to restrict the practice of accounting by any individual. The government started to only recognize as accountants people duly qualified to practice the profession. The importance of the matter increased with the intensification of international trade and with the wars that occurred in the 18th and 19th centuries, which enshrined numerous bankruptcies and the consequent need to proceed with the determination of losses and profits between creditors and debtors.

SCIENTIFIC PERIOD

The Scientific Period presents, in its beginnings, two great renowned authors: Francesco Villa, Milanese writer, public accountant, who, with his work “La Contabilità Applicatta alle administrazioni Private e Plubbliche”, begins the new phase; and Fábio Bésta, Venetian writer.

The studies involving Accounting gave rise to three schools of accounting thinking: the first, headed by Francisco Villa, was the Lombarda School; the second, the Tuscan School, headed by Giusepe Cerboni; and the third, the Venetian School, by Fábio Bésta.

Although the 17th century was the cradle of the scientific age and Pascal had already invented the calculator, the science of accounting was still confused with the science of administration, and equity was defined as a right, according to legal postulates.

At that time, in Italy, Accounting had already arrived at the university. Accounting began to be taught with the court trade class in 1809.

Francesco Villa's work was written to participate in a contest on Accounting, promoted by the Austrian government, which won back Lombarda, the author's birthplace. In addition to the award, Villa held the position of University Professor.

Francisco Villa extrapolated traditional accounting concepts, according to which bookkeeping and bookkeeping could be done by any intelligent person. For him, Accounting implied knowing the nature, details, rules, laws and practices that govern the administered matter, that is, the patrimony. It was patrimonialist thinking

It was the beginning of the scientific phase of Accounting.

Fábio Bésta, follower of Francesco Villa, surpassed the master in his teachings. It demonstrated the fundamental element of the account, the value, and came very close to defining equity as the object of Accounting.

It was Vicenzo Mazi, a follower of Fábio Bésta, who for the first time, in 1923, defined equity as the object of Accounting. The framing of Accounting as a fundamental element of the Aziendalist equation, had, above all, the undoubted merit of calling attention to the fact that Accounting is much more than a mere record; it is a basic management tool.

However, the European school had an excessive weight of theory, without practical demonstrations, without fundamental research: the theoretical exploration of accounts and the excessive use of double entries, making the necessary flexibility impossible, especially in Management Accounting, worrying itself too much to demonstrate that accounting was a science rather than giving way to serious field and group research.

From approximately 1920 onwards, the North American phase of accounting began.

NORTH AMERICAN SCHOOL

As European schools declined, American schools flourished with their theories and accounting practices, favored not only by the support of a broad economic and political structure, but also by the serious research and work of Organs associative bodies. The emergence of the American Institut of Certield Public Accountants was extremely important in the development of Accounting and accounting principles; several associations have undertaken many efforts and large sums in research in the United States. There was a total integration between academics and already accounting professionals, which did not happen with European schools, where universities were decreasing in level, in importance.

The creation of large companies, such as multinationals or transnationals, for example, that require large capital, from many shareholders, was the primary cause of the establishment of accounting theories and practices, which would allow correct interpretation of the information, by any shareholder or other interested party, anywhere in the world.

At the beginning of the current century, with the rise of gigantic corporations, combined with the formidable development of the capital market and the extraordinary pace of development that the United States of America has experienced and still experiences, it is a fertile field for the advancement of accounting theories and practices . It is no coincidence that the world currently has numerous accounting works of North American origin that have a direct impact on the countries of the economy.

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What is Accounting's Definition

2020-08-26T23:17:00.008-07:00

What is Accounting

Accounting is the science that studies, interprets and records the phenomena that affect an entity's assets. It achieves its purpose through the registration and analysis of all the facts related to the formation, the movement and the variations of the administrative patrimony, linked to the entity, in order to ensure its control and to provide its administrators with the necessary information for the administrative action, as well as to its holders (owners of the patrimony) and other persons related to it, information about the patrimonial status and the result of the activities developed by the entity to achieve its purposes.

Several techniques are used by accounting in order to achieve its objectives: bookkeeping is a proper way for this science to register patrimonial events; the financial statements are expository statements to gather the facts in order to obtain more information, and the analysis of balance sheets is a technique that allows to decompose, compare and interpret the content of the financial statements, providing analytical information, whose utility goes beyond the administrator.

There is still a difficulty in classifying the accounting. Although generally considered a social science, as well as economics and administration, it is sometimes called technique or art.

However, regardless of their classification, it is this technique, art or science that acquires increasing importance, given the growth of corporations, entities and companies, which requires great efficiency from accounting professionals, so that they are able to work the infinite range information that is necessary for the study and control of heritage.

Definitions of Accounting by different authors

According to A. W. Johnson; “Accounting may be defined as the collection, compilation and systematic recording of business transactions in terms of money, the preparation of financial reports, the analysis and interpretation of these reports and the use of these reports for the information and guidance of management”.

According to the American Institute of Certified Public Accountants [AICPA]; “Accounting is the art of recording, classifying and summarizing in a significant manner and terms of money, transactions and events, which are, in part at least, of a financial character and interpreting the result thereof”.

According to the American Accounting Association [AAA]; “Accounting refers to the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information”.

Accounting Science develops its functions around heritage as a means to achieve its purpose.

Its purpose is to record facts and produce information that enable the owner of the property to control (make sure that the organisation is acting in accordance with the plans and policies outlined) and planning (decide which course to take to achieve it more quickly, efficiently and proposed objective) of how to act on its assets.

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The main Objectives of accounting for a business

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The main objectives of accounting for a business:

ensuring control over property, property rights and obligations;

formation of complete and reliable data on accounting accounts for the preparation of financial and tax reports required by owners, investors, creditors, government agencies and other users;

providing the administration of the enterprise with information that allows it to control the use of economic resources in accordance with the current regulations, established estimates and norms, as well as to effectively manage economic and financial activities;

timely prevention of negative phenomena in economic and financial activities;

identification of on-farm reserves, their mobilization and effective use;

assessment of the actual use of identified reserves.

Some thinkers of accounting science indicate that the main objective of accounting is to provide structured information through quality accounting reports that allow the user to make managerial decisions. However, I think that this concept is incomplete, taking into account that the reports generated by the accounting professional will only be a way of providing the necessary data so that the user, whatever his objective, makes the best possible decision.

Thus, the central objective of accounting must be to fully satisfy the needs of each main group of users, to assess the entity's economic and financial situation, in a static sense, as well as to make inferences about its future trends. In both assessments, however, the financial statements will constitute a necessary, but not sufficient, element.

Accounting objectives, therefore, must adhere to what the user considers to be important elements for his decision-making process. It will have no sense or reason if accounting is a "neutral" discipline, which is content only to pursue without questioning a literal truth.

The complete success of its objective will only be achieved when there is sufficient emphasis on disclosure and the principle of primacy of essence over form. It is not enough to register operations as documents are presented, but rather to reflect what that operation actually represents.

A practical way to check whether accounting is reaching its objectives, as initially stated, is to research the degree of use of financial statements by groups of users for whom, primarily, it is believed that financial statements should be of great use. . For example: investment analysts, for advice on buying or not buying shares in certain companies.

Obviously, they have increasingly used accounting statements, and because they already have technical knowledge combined with a broad business vision, they increasingly need complementary information to assist them.

A major advance in this regard was the mandatory inclusion of explanatory notes in all published reports (even if only in the daily book), regardless of the size or tax regime adopted by the entity. But it is certain that this alone will not fill all the necessary gaps; and that's where the real role of the accounting professional is. Generate complementary reports and effectively assist in the process of building the best decision on whatever aspect is necessary.

I believe, yes, that the accountant should sit next to investors, bankers and entrepreneurs when thinking about what is the best strategy to be adopted, as he has privileged and satisfactory information to detail past aspects and future provisions on the equity situation and financial performance of companies. Of course, it is also necessary for the accountant to act steadily in constant updating and in the constant search for total quality.

Thus, in my opinion, when we talk about accounting objectives, the generation of quality information is a means; and full user satisfaction in the decision-making process is over.

Financial Accounting Content Index

2020-08-24T10:51:00.006-07:00

Financial Accounting Book Index

• Chapter 1: What is Accounting

• Objective of Accounting

• What Is Accounting? Accounting Definitions

• History of Accounting

• How Accounting Works?

• Users of Accounting Information

• Types of Accounting

• Requirements of Accounting

• Example of Accounting

• Businesses and Business Activities

• Ethics in Accounting

• Chapter 2: Debit and Credit

• Introduction to Debit and Credit, What is an Account? Double Entry-Accounting, Debit & Credit

• T-Accounts, Journal Entries, When Cash is Debit & Credit

• Normal Balances, Revenues and other incomes or gains usually credited

• Banks Debit and Credit, Bank Balance Sheets

• Chapter 3: The Accounting Cycle

• Introduction: The Accounting Cycle

• The Accounting Cycle

• Accounts, Journals, Ledgers, and Trial Balance

• General Rules for Debits and Credits

• Journal Entries

• Posting to the General Ledger

• Preparing a Trial Balance

• Glossary: Lesson 3

• Debit and Credit Review

• Exercises: Unit 3

• Chapter 4: Completion of the Accounting Cycle

• The Accrual Basis and Cash Basis of Accounting

• Classes and Types of Adjusting Entries

• Adjusting for Accrued Items

• Adjusting for Deferred Items

• Preparing an Adjusted Trial Balance

• Preparing Financial Statements

• Closing Entries

• Accounting in the Headlines

• Glossary: Completing the Accounting Cycle

• Exercises: Unit 4

• Chapter 5: Chart of Accounts

• Introduction to Chart of Accounts

• Sample of Chart of Account of Large Corporation

• Sample of Chart of Account of Small Corporation

• Chapter 6: Bookkeeping

• Introduction to Bookkeeping - Old and New

• Accrual Method

• Double Entry Debit and Credit

• General Ledger Account

• Debit and Credit in the Accounts

• Asset Account

• Liability and Stock Holders' Equity Account

• Income Statement Account

• Recording of Transactions

• Bank Reconciliation

• Adjusting Entries, Reversing Entries

• Balance Sheet, Income Statement, Balance and Income statements are linked

• Cash Flow Statement

• Statement of Stockholders, Equity, Cut-off Importance of Controls

• Chapter 7: Accounting Equation

• Introduction to Accounting Equation

• Accounting Equation for Sole Proprietorship: Exercise Transaction 1-2

• Accounting Equation for Sole Proprietorship: Exercise Transaction 3-4

• Accounting Equation for Sole Proprietorship: Exercise Transaction 5-6

• Accounting Equation for Sole Proprietorship: Exercise Transaction 7-8

• Calculation of a missing amount within owner's Equity

• Accounting Equation for Corporation: Exercise Transaction 1-2

• Accounting Equation for Corporation: Exercise Transaction 3-4

• Accounting Equation for Corporation: Exercise Transaction 5-6

• Accounting Equation for Corporation: Exercise Transaction 7-8

• Accounting Equation - Expended for Sole Proprietorship

• Accounting Equation - Expended for Corporation

• Chapter 8: Accounting Principle

• Introduction Principle of Accounting, Basic Accounting Principle

• Characteristics of Accounting

• Chapter 9: Financial Accounting

• Introduction to Financial Accounting, Double Entry and the Accrual Basis of Accounting, Accounting Principle, Financial Statement, Financial Statement, Financial Reporting, Financial Accounting and Other Accounting

• Chapter 10: Adjusting Entries

• Introduction to Adjusting Entries

• Adjusting Entries - Asset Account

• Adjusting Entries - Liability Account

• Accrual and Deferrals, Avoiding Adjusting Entries

• Chapter 11: Financial Statement

• Introduction to Financial Statement, Amounts comes from where, Accrual method of Accounting

• Accounting Periods, Financial Statement's users

• Income Statement

• Statement of Comprehensive Income

• Balance Sheet

• Statement of Stockholders' Equity, Statement of Cash Flow - SCF

• Notes of Financial Statements

• Chapter 12: Balance Sheet

• Introduction to Balance Sheet

• Liabilities

• Owner's Equity

• Balance Sheet Sample Exercise, Templates

• Chapter 13: Working Capital and Liabilities

• Introduction to Working Capital and Liabilities

• Reporting Working Capital, Current Asset, Current Liabilities, Accrual Method of Accounting, Changes in the Amount of Working Capital

• Liquidity; Working Capital Ratios

• Account Receivable: Revenue / Turn over, Other Income

• Inventory: Turn over (Average and by Item)

• Accounts Payable, Business Credit Card, Cash flow Statement

• Reasons of Liquidity Decrease, Reasons of Liquidity Increase

• Chapter 14: Income Statement

• Introduction to Income Statement , Revenue and Gains

• Expenses & Losses

• Single Step Income Statement

• Multi Step Income Statement

• Reporting Discontinued Operations

• Earnings Per Share of Common Stock, Notes to Financial Statement, Other Income Statement Format, Comprehensive Income, Effect on Stockholders' Equity

• Chapter 15: Cash Flow Statement

•. Introduction to Cash Flow Statement, What Can the Statement of Cash Flows tell us?

• Changes in Cash, SCF Format, 1. Operating Activities, 2. Investing Activities, 3. Financial Activities, 4. Supplemental Info, Balance Sheet Changes, Operating Activities Adjustment

• Story of Illustration, January Transactions and Financial Statements February Transactions and Financial Statements

• March Transactions and Financial Statements

• April Transactions and Financial Statements

• Many Transactions and Financial Statements

• Depreciation Expense, June Transactions and Financial Statements

• Disposal of Assets, July Transactions and Financial Statements

• Chapter 16: Bank Reconciliation

• Introduction to Bank Reconciliation, Accounting for cash at Company, Accounting at Bank, Comparing Accounting: Bank Vs Company

• Checking Account Terminology, Helpful Tip for Bank Reconciliation Adjustment

• Company's Process for Preparing its Bank Reconciliation, Sample of a Company's Bank Reconciliation with Accounts

• Chapter 17: Accounts Receivable and Bad Debts Expense

• Introduction to Accounts Receivable and Bad Debts Expense, Recording Services Provided on Credit

• Recording Sales of Goods on Credit, Credit Term with Discount

• Credit Risk, Allowance Method for Reporting Credit Losses

• Writing off an Account under the allowance Method, Recovery of Account under allowance Method, Bad Debts Expense as a Percent of Sale

• Difference Between Expense and Allowance, Aging of Accounts Receivable, Mailing Statements of Costumers

• Pledging or Selling Accounts Receivable, Accounts Receivable Ratios, Direct Write off Method

• Chapter 18: Accounts Payable

• Introduction to Accounts Payable, An Payable Accounts is Receivable Accounts of another Company

• Account Payable Process

• Related Expense or Asset, End of Period Cut-off, Accruing Expenses and Liabilities

• Adding General Ledger Accounts, Invoice Credit Terms

• Early Payment vs. Need for Cash, Other

• General Ledger Account: Account Payable

• Chapter 19: Inventory and Cost of Goods Sold

• Introduction to Cost of Goods Sold, When Cost Change, Cost Flow Assumptions

• Inventory System, Inventory System and Cost Flow Combined, Periodic FIFO

• Periodic LIFO, Periodic Average

• Perpetual FIFO, Perpetual LIFO, Perpetual Average, Comparison of Cost Flow Assumptions

• Specific Identification, LIFO benefits without tracking units, Inventory Management, Financial Ratios, Estimating Ending Inventory

• Methods of Estimating Inventory

• Chapter 20: Depreciation

• Introduction to Depreciation, Book vs. Tax Depreciation, Book Depreciation Illustrated, Journal Entries for Depreciation

• Use of Estimates, Accelerated Depreciation

• Chapter 21: Payroll Accounting

• Introduction to Payroll Accounting, Employees vs. Non Employees; Salaries & Wages

• Minimum wages and overtime pay

• Payroll Withholding: Tax and benefits Paid by Employer

• Examples f Payroll Journal Entries for Wages

• Examples f Payroll Journal Entries for Salaries