Chapter 1

Principles of Accounting

IN THIS CHAPTER

check Figuring out the purpose of accounting

check Taking a look at the common financial statements

check Understanding the philosophy of accounting

check Discovering income tax accounting and reporting

Any discussion of how to use QuickBooks to better manage your business begins with a discussion of the basics of accounting. For this reason, in this chapter and the next two, I attempt to provide the same information that you would receive in an introductory college accounting course. I tailor the entire discussion, of course, to QuickBooks and the small-business environment. What you’ll read about here and in the next chapters of this book pretty much describes how accounting works in a small-business setting using QuickBooks.

If you’ve had some experience with accounting, if you know how to read an income statement and balance sheet, or if you know how to construct a journal entry, you don’t need to read this chapter or the next. But if you’re new to accounting and business bookkeeping, take the time to read this chapter carefully. I start the chapter ...

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