Understanding Accounting Principles

This eBook explains all of the basic accounting concepts and terminology you will need to understand the three primary financial statements that appear in every organization’s annual report and most internal monthly reports.

It describes the differences between cash based and accrual based accounting. Explains the ‘revenue recognition’ principle and the ‘matching’ principle, as well as how depreciation, prepayments and bad debt are allowed for.

Preface

This eBook explains all of the basic accounting concepts and terminology you will need to understand the three primary financial statements that appear in every organization’s annual report and most internal monthly reports.

You will learn:

• The precise definition of essential accounting terms
• The purpose of the income statement, balance sheet, and cash flow statement
• The differences between cash-based and accrual-based accounting
• The ‘revenue recognition’ principle and the ‘matching’ principle
• How depreciation, prepayments, and bad debt are allowed for

Content

1. Basic Accounting Concepts
   1. An Income Statement
   2. Cash Accounting
   3. Accrual Accounting
2. Basic Financial Terms
   1. The Revenue Recognition Principle
   2. The Matching Principle
3. A Sample Income Statement – Using the Accrual Method
4. Summary
5. References