The four phases of accounting include recording, categorizing, summarizing, and interpreting financial data. The first phase identifies and records transactions, the second phase sorts and classifies transactions, the third phase summarizes, and the fourth phase interprets the data. This is an entry-level accounting course provided by Stefan Ignatovski. In this course, students can learn about debit and credit, FIFO and LIFO, an accounting cycle, bad debt, and dividends.
It reinforces that you will share important information with stakeholders before you enter into a contract together. This gives each person a full and clear picture of your business before they make an agreement. The working accountant is compliant with GAAP rules and regulations. There are four main types of expenses, although some expenses fall into more than one category. These two might sound the same if you’re new to business finance, but they’re very different.
Financial statements are prepared at the end of each accounting period, which may be one month, one quarter (three calendar months), or one year. Then we will consider transaction unique to a corporation format of entity. Like the partnership form of entity, the corporation will use the same double-entry accounting system we learned at the beginning of the course.
Lizzette Matos is a certified public accountant in New York state. She earned a bachelor of science in finance and accounting from New York University. Matos began her career at Ernst & Young, where she audited a diverse set of companies, primarily in consumer products and media and entertainment. She has worked in private industry as an accountant for law firms and for ITOCHU Corporation, an international conglomerate that manages over 20 subsidiaries and affiliates. Matos stays up to date on changes in the accounting industry through educational courses.
The cash flow statement lists any cash inflows or outflows your organization had for a set period. The lines on the cash flow statement are categorized into operations, financing, and investing activities, and each source and recipient of cash is listed. The income statement, also called the profit and loss statement, or P&L, shows your organization’s revenue, expenses, and profit, typically on a quarterly or annual basis. In its most basic sense, accounting describes the process of tracking an individual or company’s monetary transactions.
In this section, we will learn how to record the sale of capital stock and the sale of preferred stock. We will record transaction related to the purchase of treasury stock. We will discuss how to record cash dividends and stock dividends. GAAP generally requires the use of what is called the allowance method to value accounts receivable. We will compare the allowance method to the direct write off method, an easier method but one that does not conform to accrual accounting as well.
Wrapping up, there’s no denying that accounting plays a crucial role in running a business. All businesses have to come up with ways of capturing and reporting accounting data. To provide useful information and simplify decision-making, law firm bookkeeping businesses will have to use consistent accounting methods, procedures and standards. If you adhere to these established principles, not only do you get reliable and sustainable workflow but also confidence in future growth.
To make accounting even easier to understand, we created a collection of premium materials called AccountingCoach PRO. Our PRO users get lifetime access to our visual tutorials, video https://investrecords.com/the-importance-of-accurate-bookkeeping-for-law-firms-a-comprehensive-guide/ training, cheat sheets, flashcards, quick tests, quick tests with coaching, business forms, and more. A receipt is an official written record of a purchase or financial transaction.