ACCOUNTS BASIC TERMS AND CONCEPTS

DEBIT AND CREDITS : These are the backbone of any accounting system. Understand how debits and credits work and you'll understand the whole system. Every accounting entry in the general ledger contains both a debit and credit. Further, all debit must equal all credits. if they don't the entry out of balance. Out of balance entires throw your balance sheet out of balance.

The accounting system must have a mechanism to ensure that all entries balance. Most automated accounting system won't let you enter an out of balance entry they'll just beep at you untill you fix you error.

Depending on what the type of account you are dealing with, a debit or credit will either increase or decrease the account balance.

INCOME STATEMENTS : " An income statements, otherwise known as a profit and loss account statement, is a summary of company's profit or loss during any one given period of time, such as a month, three month, or one year."

BALANCE SHEET : A balance sheet is a snap shot of a business. Financial condition of a specific moment in time, usually at the close of ac accounting period. A balance sheet compramise assets, liabilities, and owners or stockholders equity.

DEPRECIATION :The concept of depreciation is really petty simple. For example let's say you purchase a truck for your business. The truck losses value the minute you drive it out of the dealership. The truck is considered an operational asset in running your business.

INVENTORY ACCOUNTING : Inventory Accounting may sound like a huge undertaking but in reality, it is quite straight forward and easy to understand. you start with inventory you have an hand. No matter when you sell product, the value of your inventory will remain constant based on accepted rational methods of inventory accounting.