Fundamental Accounting Concepts

In preparing general-purpose financial statements, several guidelines that are understood by both the accountants who prepare them and the users of such reports should be followed.

Those guidelines are called generally accepted accounting principles or GAAP.

Generally accepted accounting principles (GAAP) are actually based on fundamental accounting principles and concepts.

This chapter covers the core concepts in accounting that you need to know before moving on to the more intricate topics.

Lesson 1

Basic Accounting Principles

The Conceptual Framework of Accounting mentions the underlying assumption of going concern. In addition, the concepts of accrual, accounting entity, monetary unit, and time period are also important in preparing and interpreting financial statements. Read more..
Lesson 2

Accounting Elements: Assets, Liabilities, and Capital

The three major elements of accounting are: assets, liabilities, and capital. These terms are used widely so it is necessary that we take a look at each element. We will also discuss income and expense which are actually included as part of capital. Read more..
Lesson 3

The Accounting Equation and How It Stays in Balance

The accounting equation is the unifying concept in accounting that shows the relationships between the accounting elements: assets, liabilities, and capital. In this lesson, you will learn about the basic accounting equation and how it stays in balance. Read more..
Lesson 4

Accounting Equation: More Examples

Here are some more sample transactions and their effect to the accounting equation. Read more..
Lesson 5

Expanded Accounting Equation

The expanded accounting equation is the same as the basic accounting equation except with the capital portion broken down into: owners' contributions, owner's withdrawals, income, and expenses. Read more..
Lesson 6

Double Entry Accounting System

The double entry accounting system emerged as a result of the industrial revolution. Merchants in the olden times recorded transactions in simple lists. Business became more and more complex, hence the development of more effective ways to keep track of business transactions. Read more..
Lesson 7

The Accounting Cycle: 9-Step Accounting Process

The accounting cycle, also commonly referred to as accounting process, is a series of procedures in gathering, processing, and communicating financial information. This lesson takes you through the steps in the accounting cycle. Read more..

Fundamental Accounting Concepts: Summary

This is a summary of the topics discussed in Fundamental Accounting Concepts under the Accounting 101: The Basics tutorial series.
Test Yourself

Fundamental Accounting Concepts: Quiz

Test your accounting skills with this short quiz in Fundamental Accounting Concepts, under the Accounting 101: The Basics.
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