Accounting All-in-One For Dummies (+ Videos and Quizzes Online), 3rd Edition

Chapter 1

Accounting for the Basics

IN THIS CHAPTER

Examining the differences between bookkeeping and accounting

Getting to know the accounting cycle

Maintaining balance with the fundamental accounting equation

Individuals can get along quite well without much bookkeeping — but the exact opposite is true for a business. A business needs a good bookkeeping and accounting system to operate day to day, and a business needs accurate and timely data to operate effectively.

In addition to facilitating day-to-day operations, a company’s bookkeeping and accounting system serves as the source of information for preparing its periodic financial statements, tax returns, and reports to managers. The accuracy of these reports is critical to the business’s survival because managers use financial reports to make decisions, and if the reports aren’t accurate, managers can’t make intelligent decisions.

Obviously, then, a business manager must be sure that the company’s bookkeeping and accounting system is dependable and up to snuff.

This chapter shows you what bookkeepers and accountants do so that you have a clear idea of what it takes to ensure that the information coming out of the accounting ...