Basic Accounting Concepts

Comprehensive teaching/learning resources on Financial Accounting from Bized including Lesson Plans, Worksheets, Mind Maps, Case studies, Simulations and Activities.

Topics cover Cash Flow, Ratio Analysis, Depreciation, ROCE, Costs, Break-Even, Sources of Finance, Profit and Loss Account

The Income Statement reports on the financial performance of a business for a given accounting period. Typical accounting periods are monthly, quarterly and annually. The Income Statement summarizes the revenues earned and subtracts the expenses incurred in earning that revenue to calculate the resulting net profit or loss for the business for a given accounting period. The Income Statement may also be referred to as the 'Profit & Loss Statement', 'P&L' , 'Statement of Financial Performance' , 'Revenue Statement' , 'Earnings Statement', 'Operating statement' or 'Statement of Operations'.

Financial statement analysis is defined as the process of identifying financial strengths and weaknesses of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account.

Overview and Introduction to Financial Statements - 19 lectures with notes for an accounting course that teaches basic concepts of corporate financial accounting and reporting provided by MIT.

The purpose of accounting is to provide financial information about economic entities in the form of financial statements and other reports. Financial statements allows internal and external stakeholders make evaluations about the performance of the business and its management. This evaluation permits stakeholders to make informed judgments and decisions about the entity and their engagement with the entity.

Overheads in accounting are important when trying to calculate product costs in the manufacture of goods or the provision of services. Overheads are those expenses that do not relate directly to a specific product and so must be shared equitably between all products produced by the business. Typical examples of overheads in accounting include rent, insurance and utilities. Overheads in accounting may also be known as indirect costs, fixed expenses or burden cost.

In this article, you will learn and familiarize yourself with the accounting principles and accounting concepts relevant in performing the accounting procedures.

Financial statements are used by stakeholders to assess the financial position and performance of an enterprise. These stakeholders may be internal or external to the enterprise. The information provided by the financial statements helps supports their decisions and actions in relation to the enterprise.