Basic Accounting Concepts

Or maybe you've been studying it for a while and you just don't get it...

Or maybe you feel like you know it pretty well, apart from a few small things...

Well, no matter who you are, if you don't understand the basic accounting concepts then you're going to have a tough time with the subject.

What do we mean by the basic accounting concepts?

Well, it's the fundamentals of the subject. The basic stuff. The stuff which - if you didn't get it down - you'd be screwed!

No matter how hard you studied for the exam - you'd still fail... And sorry to tell you this, but you'd fail again, and again... That's how crucial this section is...

Now, the first thing you should always do, no matter what subject you're studying, is to define the subject itself. I know, this sounds kind of dumb, but it's actually true. And it's the first basic concept.

Let's try it out... Let's define accounting. Read through this short lesson before anything else, then move on through the rest of the basic accounting concepts...

The Basic Accounting Equation is the key, key, key, key equation of the subject. Did I mention it's key? If you understand this simple, yet often misunderstood equation, you will be leap years ahead of most accounting students! I really mean it... You see, everything in accounting - and I mean e-v-e-r-y-t-h-i-n-g - revolves around this equation! The rest of the subject is a breeze if you get this concept.

And in order to fully understand this key, key equation, we will be taking a detailed look at each of its three components:

1. Assets
2. Liabilities
3. The Owners Equity.

By learning what each of these terms mean, and how they add up to the equation, you'll be in a perfect position to go through more complicated parts of the subject, like debits and credits (scary terms, but please don't run away yet! We'll get to this and sort it all out pretty soon!).

And finally, check out our final lesson of Basic Accounting Concepts, where where we'll go over the accounting equation and financial position.

Once you're done with these lessons, take the basic accounting test and check your knowledge of this section.

When you've gone through the tutorials above, click through to the next section, Basic Accounting Transactions. In this section we'll go over what a transaction is, as well as the ten or so different types of transactions, and how they affect the basic accounting equation.

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