| People tend to” judge the book by the | | | | decrease the account with a debit/credit |
| cover” when it comes to understanding what | | | | balance. To simply remember how these |
| accountants are and their job responsibilities. For | | | | accounts works with each other, always |
| most people they assume that accounting is | | | | remember that assets equals liability plus equity |
| based on numbers, and to their knowledge | | | | and both sides of the equations must equal value |
| accountant’s only prepare taxes. But what | | | | of change another. |
| people don’t realize is all the concepts and | | | | Accountants also have to be able to prepare |
| formats an accountant must comprehend. | | | | financial statements for the business. Financial |
| A lot of people who have difficulties with | | | | statements are formal records of the businesses |
| mathematics tend to be scared of accounting, | | | | financial activity during a period of time. There |
| because they believe that accounting only obtains | | | | are four financial statements that are required by |
| numbers and calculations. For many accountants | | | | the Generally Accepted Accounting Principles |
| numbers and mathematics calculations come | | | | (GAAP) which consist of: statement of financial |
| easily; however, performing mathematical | | | | position (balance sheet), income statement, |
| calculation is just part of an accountant’s job. | | | | retained earnings, and statement of cash flows. |
| With all the high tech computer equipment and | | | | Each of these statement measures different |
| software available, most accounting firms use the | | | | activities for a company. The statement of |
| software to all their financial calculations. | | | | financial position demonstrates where the |
| Tax accounting is the most recognizable type of | | | | company stands financially during the fiscal year |
| account but does not mean it is the only one. | | | | or during certain points of the year. To |
| There are many different types of accounting | | | | summarize the company’s revenue and |
| such as: managerial, bookkeeping, accountant, | | | | expenses transactions for a period of time an |
| Certified Public Accountant, and in large companies | | | | accountant would prepare an income statement |
| they break down their accountants into more | | | | for the company. When a company wants to |
| direct sections (Accounts Receivable/Payable, | | | | illustrate a change in the company retained |
| Payroll, etc). | | | | earnings of a period of time an accountant would |
| Not only do accountants have to understand the | | | | then perform a statement retained earrings. |
| laws that they must obey and make ethical | | | | Demonstrating how the company’s cash |
| decision making, but they also have to understand | | | | has changed during a designated period of time is |
| the basic accounting concepts before they can | | | | referred to statement of cash flows. Not only |
| perform any accounting task. One of the | | | | does an accountant have to be knowledgeable on |
| important basic concepts is understand what | | | | what financial statement to use and what |
| assets, liabilities, and equity means in the | | | | information/numbers is obtained in those |
| accounting world and how they work with each | | | | statements, they also have to know how to |
| other. Assets are anything that the company | | | | correctly format the statements. |
| owns, liabilities is what the company owes, and | | | | Once an accountant can comprehend the basic |
| equity is the company net worth. | | | | accounting principles then they are capable to |
| Another concept that is important to know is | | | | work with numbers to perform these tasks. |
| which of these accounts hold a debit balance (right | | | | Mainly all the number are given or shown by |
| side) and which hold a credit balance (left side). An | | | | transactions, only little calculations maybe |
| asset normally holds a debit balance while liability | | | | needed. An accountant job is to organize |
| and equity normally hold a balance credit. This can | | | | financial information/numbers and demonstrate |
| get tricky because depends on the accounts | | | | the company financial activities. |
| balance determines if one would increase | | | | |