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Looking to Shore up your Business Knowledge?

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"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!

15

Textbook Chapters

15

Video Lectures

25

Average Completion Time (Hours)

3296

Students Enrolled

About the Course

 

Understanding Accounting is Understanding Business.

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.

What You Will Accomplish

Learn Technical Theory

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.

Streamline your Small Business

Cash or Accrual? FIFO or LIFO? Learn about the different accounting methods that businesses can employ and how that will affect its bottom line.

Develop Analytical Skills

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.

Understand Business Operations

Obsolete inventory? Accounting for transactions? Identify trends that inform you about a business' liquidity, profitability, and solvency.

Develop Bookkeeping Principles

Debit or credit? Revenue or expense? Learn how to properly track your income, expenses, purchase, etc as governed by accounting rules.

Certificate of Completion

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.

Table of Contents

Chapter I: Introduction
Chapter II: Basic Accounting Concepts
Chapter III: Cash Vs Accrual Basis
Chapter IV: The Accounting Cycle
Chapter V: Inventory
Chapter VI: Accounting for Sales
Chapter VII: Managing Cash
Chapter VIII: Accounting for Payroll

Chapter IX: Breaking Down the Balance Sheet
Chapter X: Depreciation
Chapter XI: Trial Balance
Chapter XII: Adjusting Entries
Chapter XIII: Preparing Financial Statements
Chapter IV: Wrapping up the Accounting Cycle
Chapter XV: Ratio Analysis
Supplemental Materials: Wrap Up Test

Chapter 4

The Accounting Cycle

 

4.1 Introduction

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:

Accounting Cycle Diagram

 

 

 

4.2 Pieces of the Accounting Cycle

1. Transactions

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:

 

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Chapter 6

Accounting for Sales

 

6.1 Introduction

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.

6.2 Recording Sales

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:

 

Sales 1

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:

 

Sales 2

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:

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Chapter 11

Trial Balance

 

11.1 Introduction

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.

11.2 Preparation of a Trial Balance

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:

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Chapter 13

Financial Statements

 

13.1 Introduction

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

13.2 Balance Sheet

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:

Assets

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:

Current Assets
Investments
Property, Plant, and Equipment
Intangible Assets
Other assets

Liabilities

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:

Current Liabilities
Long Term Liabilities

Shareholder’s Equity

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:

Common Stock
Paid-in Capital
Retained Earnings

 

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Choose a chapter

  • Chapter 4

    - The Accounting Cycle   4.1 […]
  • Chapter 6

    - Accounting for Sales   6.1 […]
  • Chapter 11

    - Trial Balance   11.1 Introduction […]
  • Chapter 13

    - Financial Statements   13.1 Introduction […]

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Topics Covered

 Topics covered include, but are NOT limited to...

bookkeeping principles

Bookkeeping Principles

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.

Business Acumen

Business Acumen

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.

education

Technical Theory

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.

Analytical Skills

Analytical Skills

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.

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Customer Testimonials

John Berry

John Berry

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.

Gary Yamamoto

Gary Yamamoto

Clearly explained the flow of money and how it is recorded and controlled in the accounting system. Essential for all side projects/businesses!

Tom Benchan

Tom Benchan

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!

Pricing

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.

About the author

CalvinAccountCourse

My name is Calvin and I am the author of the course, “Learn Accounting. Understand Business.”. I am a Certified Public Accountant and work full time as a tax consultant with clients ranging from individuals to Fortune 500 companies. I graduated from the University of Southern California with both a Bachelor’s in Accounting as well as a Master’s in Business Taxation.

Throughout my career and personal life, I have seen the universal application of accounting. Friends, Family, Clients- all from different walks of life have sought out basic advice on how to manage their personal finances and business. Whether it's advice on managing cash flow for a start up business or advice on the impact of taking out a mortgage on a house, I quickly realized that no matter what you do for a living, sooner or later you will need to develop a foundation of accounting knowledge. It is through these experiences that I became inspired to create a course that teaches the average individual concepts that he or she can apply to his or her day to day lives.

I understand that the complexities of accounting can be a daunting task especially for those who have no background. However, if you don’t at least try, you will never really know. Let me illustrate with a example from my personal life. When I decided to make this course, I had to face the daunting challenge of making a website. Coming from a business background, I have zero coding knowledge so building a website seemed impossible. I took the time to learn some basic fundamentals and the site you see today was 100% built by me. It took me a couple hours to learn the basics. I’m still not an expert and I still don’t know coding; but as you can see, I was able to create a full functioning website, something that I did not think was ever possible.

My point? We fear the unknown. We make things out to be much harder than they are. You are more capable than you think you are. In today’s digital era, there are so many resources that can significantly reduce the learning curve. Use this course as a guide to become an informed individual and develop one of the most practical skills in today's day and age. No you won’t be an expert, but by the end of the course, you will be equipped with strategies that can make a difference.