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Practical Application: Basic Accounting Concepts Infographic

Instructor: Scott Tuning

Scott has been a faculty member in higher education for over 10 years. He holds an MBA in Management, an MA in counseling, and an M.Div. in Academic Biblical Studies.

All organizations have an obligation to provide all stakeholders, including shareholders, with accurate financial information. The basic concepts of accounting are foundation upon which accurate financial reports are built.

An Overview of Basic Accounting Concepts

Although all of an organization's reports must be factually correct, accuracy in financial reporting is particularly important. Financial reports are used to calculate taxes, inform shareholders, and make credit decisions. When financial information is inaccurate, significant sums of money can be lost or impacted. If the inaccuracies are intentional, criminal fraud charges are possible.

Disciplined and detail-oriented accounting is the way that organizations ensure accuracy. This accuracy leads to investor and stakeholder confidence. If you need a quick review of the material relevant to ledgers and charts of account, the lesson Ledgers and Charts of Accounts: Definitions and Use may be helpful.

For more information about journal entries and the trial balance, the lesson Journal Entries and Trial Balance in Accounting is a great resource.

Finally, if you want to review the accounting equation, the lesson The Accounting Equation: Definition and Components will be helpful.

Reviewing the Basic Accounting Concepts

Let's briefly review the three most important areas of basic accounting concepts.

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