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About this document
- Pages
- 2 pages
- Price
- $2 one-time, yours to keep
- Membership
- Included in every plan
- Format
- Subject
- Accounting
- Module
- ACC 290
This study guide covers commercial accounting principles, including double-entry bookkeeping, generally accepted accounting principles (GAAP), and the differences between accrual-basis and cash-basis accounting. It is useful for students studying ACC 290.
What's inside
- Commercial accounting definition
- Double-entry bookkeeping
- Generally accepted accounting principles (GAAP)
- Accrual-basis accounting
- Cash-basis accounting
Who it is for: Students studying ACC 290. (Undergraduate)
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Summary
Commercial accounting is about how businesses record their transactions. Students learn about the two main accounting methods and the rules that guide financial reporting.
Commercial Accounting Defined
Commercial accounting involves recording all business transactions accurately. It uses a system called double-entry bookkeeping to ensure completeness and avoid duplication.
Generally Accepted Accounting Principles
GAAP are the rules for preparing financial statements. They help investors and creditors make economic decisions about a company.
Accrual-Basis Accounting
This method records transactions when they occur, not when payments are made. It is used by incorporated companies and is required by GAAP.
Cash-Basis Accounting
This method records transactions when cash is received or paid. It is often used by smaller companies and sole proprietors because it is simpler.
Key terms
- Double-entry bookkeeping
- A system that records both aspects of a transaction.
- Generally Accepted Accounting Principles
- Rules for preparing and standardizing financial statements.
- Accrual accounting
- Recording transactions when they occur, not when payments are made.
- Cash-basis accounting
- Recording transactions when cash is received or paid.
- Financial statements
- Reports that show a company's financial performance and position.
- Revenue
- The income that a company earns from its business activities.
Questions this document helps with
- What are the main differences between accrual and cash-basis accounting?
- Which accounting method is required by GAAP?
- How do financial statements help investors and creditors?
Summary written with AI from the document's text.
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