"Learn Accounting. Understand Business." is a beginner level accounting course that bridges the gap between technical theory and practical business knowledge. We understand time is of the essence which is why we specifically targeted course content geared toward everyday essentials. There is no prerequisite knowledge required!
Take a minute and think about the world we live in today. Whether it is social media, sport teams, non-profits, or local mom and pop shops- all of these are individuals, like me and you, creating a business and delivering it to the masses. Regardless of your background, you are immersed in a world of business. A foundation in accounting can help you navigate the complexities and develop a new perspective on the world we live in. Accounting is the language of business and in its simplest form, accounting is a platform that allows businesses to record transactions.
Business and accounting come hand in hand. You cannot have one without the other. This course seeks to teach you basic accounting principles through a business lense. By the end of this course, you will understand key accounting concepts that are universally applicable to all businesses.
You have to walk before you run. Develop a strong baseline of accounting terms, definitions, and principles comparable to that taught at a collegiate level class.
Cash or Accrual? FIFO or LIFO? Learn about the different accounting methods that businesses can employ and how that will affect its bottom line.
Are high revenues always good? What about leveraged companies? Learn how to analyze key elements of financial statements that tell a story that may not be readily apparent.
Obsolete inventory? Accounting for transactions? Identify trends that inform you about a business' liquidity, profitability, and solvency.
Debit or credit? Revenue or expense? Learn how to properly track your income, expenses, purchase, etc as governed by accounting rules.
Looking to build your resume? Take our final exam with a passing score of 75% or higher and receive a certificate of completion of our course.
As alluded to in previous lessons, the flow of information starts with a transaction and is then recorded as a journal entry. However, before the journal entries get combined into financial statements, there are still intermediate steps that must be completed. The process of taking transactions and aggregating them into financial statements is known as the accounting cycle. Below is a diagram of the major components of the accounting cycle:
Whether it is the sale of a product, payment of salary, or return of goods, individual financial transactions begin the accounting cycle. In order for an activity to qualify as a transaction, it has to be denominated in dollars or some form of currency. From purchase of property, payment of debt, receipt of dividend- any financial activity of the business will qualify as a transaction. At the advent of the cycle, the business is basically running its day to day operations.
2. Journal Entries
Once a transaction has been identified, it is time to enter the information into an accounting system. As discussed in previous lessons, a journal entry is essentially a debit (DR) and credit (CR). Each journal entry will hit at least two different accounts. Don’t forget the rule of thumb! Total debits should always equal total credits. Presentation wise credits usually follow debits, however, there are circumstances where the opposite may be more appropriate. Examples of common journal entries are listed below:
When you have a for profit business, there will always be some sort of sales revenue. Whether you are selling inventory or a service, there are common issues with sales that you will have to understand the proper accounting treatment for. Are you paid in cash or are you extending a credit? What if your customers default on the credit? How do you record discounts given? These are all common issues universal in nearly in all businesses. This lesson will dissect these issues and shed light on different methods to account for them.
As you may recall from previous lessons, accounting for a sale is pretty straight forward. First off we will review again the journal entry to record a cash sale:
What happens if you have a sale, but the customer decides to return the product? The journal entry record a sales return is as follows:
Conceptually, let’s visit cash first. This makes sense as you had in increase in cash for the sale, but with the return you will have a decrease in cash. On the income statement, Sales Returns & Allowances is subtracted from Sales Revenue to arrive at total sales. Thus, Sales Returns & Allowances is referred to as a contra-revenue account as it reduces Sales. By tracking sales returns in a separate account, this allows management to get a better picture of the ratio between sales returns and sales. From a business perspective, if the ratio is very high this may pose as an area of concern.
Recording sales on credit is very similar. Usually how this works is a business will sell their products to customer on credit. After the product is sold, the business will send an invoice to the customer and then the customer will pay within a certain time period. A credit sale will be recorded as follows:
Before you can prepare some of the financial statements we touched upon in Lesson 2 (Income Statement/Balance Sheet), you must first organize all the transactions that transpired. The trial balance does just that. For each transaction one must record a journal entry into an accounting ledger. The trial balance is an extract, a sum, of all these journal entries organized into accounts and sub accounts. Thus, a trial balance ensures that for every debit that is recorded, a corresponding credit is recorded as well.
Trial balances are usually prepared at the end of an accounting period (Quarterly/Annually) and assist in the drafting of financial statements. It follows the format of journal entries: Asset and expenses are debit items, while liabilities are credit items.
So you’ve been operating your Bakery for 3 months and you’d like to prepare quarter financial statements. For each transaction- sale, purchase, loan, etc, you have been diligently recording journal entries into a ledger. Now it is time to organize this information. Generally, information is organized into headers, accounts, and sub accounts, all with unique account numbers.
There are generally five categories in which accounts fall under- Asset, Liability, Equity, Revenue, Expense. These will be your general headers and will be subtotals of the general accounts. We will assign 10000 series to Assets, 20000 series to Liabilities, 30000 to Equity, 40000 to Revenue, and 50000 to Expenses. Below is an example of some of the most common accounts that fall under each respective bucket:
As you may recall, step 6 of the accounting cycle is to prepare financial statements. After adjusting entries have been booked to the trial balance, you have the right information to begin to prepare your financial statements. Financial statements have a variety of uses. They provide potential investors key information to make inferences about the financial status of a company. Furthermore, they provide creditors information when giving out a loan. For purposes of this course, we will go over the preparation of the four main types of financial statements:
-Balance Sheet (Statement of Net Assets)
-Income Statement (Statement of Changes in Net Assets)
-Cash Flow Statement
-Statement of Retained Earnings
The balance sheet is a snapshot of a company at a certain period of time detailing what the company owns as well as what it owes. There are three components to the balance sheet:
Resources of the company that have future economic value. Assets are normally (not always) categorized in order of liquidity; thus, the easier it is converted to cash, the higher it will appear on the balance sheet. Generally, the order of assets will be as follows:
Property, Plant, and Equipment
Obligations of the company. These items generally will have the word “payable” in them. Liabilities are also normally (not always) presented in order of liquidity. The order of liabilities usually appears as follows:
Long Term Liabilities
The difference between assets less liabilities. This is also referred to as Owner’s Equity if the company is a sole proprietorship. Generally, the items found on shareholder’s equity would be:
Topics covered include, but are NOT limited to...
Learn to set up an accounting system that will keep track of your income, expenses, and cashflow. Catalogue transactions and manage your payments, receivables, payables, to ensure nothing falls between the cracks.
Learn about the fiscal year cycles of business. See how a single transaction goes through the accounting cycle and how that affects different parts of your business and ultimately your bottom line.
Debit or credit? Receivable or income? Expense or payable? Master the key terms and become fluent in the language of business. Utilize your new knowedge to learn the technical complexities of accounting.
What's the story behind all the numbers? Learn how to make informed inferences about the financial health and status of companies by evaluating the relationships between different items on financial statements.
I was looking to find ways to financially plan for the future and thought I needed a crash course on basic accounting terminology and concepts. This was exactly what I was looking for. The course does a great job of going over concepts that I've definitely heard before, but never fully understood. Perfect for anyone trying to shore up their knowledge in this field.
Clearly explained the flow of money and how it is recorded and controlled in the accounting system. Essential for all side projects/businesses!
Just what the doctored ordered. I'm starting a small business and this has absolutely cleared all the cobwebs. I now am armed with basic skills to make sure not only the backend of my business is running smoothly, but also, to analyze front end of my business and make sure it is growing in the right direction. Thank you!
Thank you for your interest. Registration in this course will give you lifetime access to 15 video lectures and a 15 chapter textbook. Take the course as many times as you want, whenever you want. To guarantee your satisfaction, we are offering 30 day money back guarantee, no questions asked! You have nothing to lose and everything to gain.