Ch 2: Key Accounting Concepts

About This Chapter

Use these engaging lessons to explore key accounting concepts. The easy-to-understand format of this chapter can help you grasp these fundamental principles of accounting and allows you to test your comprehension with self-assessment quizzes.

Key Accounting Concepts - Chapter Summary and Learning Objectives

Before beginning any accounting task, one must first understand the foundational concepts of accounting to better understand the methods and terminology associated with it. This informative chapter highlights all the key concepts of accounting while providing useful resources to help you retain the information. Lesson quizzes, a chapter exam, printable transcripts for video lessons and access to expert instructors combine to create an interactive learning experience. Some of the things you'll learn in this chapter include:

  • Accounting's relevance and necessity
  • The accounting cycle and GAAP (Generally Accepted Accounting Principles)
  • Examples of accounting concepts, such as debits and credits, expenses, revenues and net profits and loss
  • Types of business transactions and assets

LessonObjective
What is Accounting? - Purpose, Importance & Relationship to BusinessEvaluate accounting's function and importance, including its role in business.
What is GAAP? - The Generally Accepted Accounting PrinciplesDissect the rules and regulations governing accounting.
The Accounting Cycle: Definition, Steps & ExamplesAnalyze the steps in the accounting cycle.
Source Documents in Accounting: Definition and PurposeAppraise the role of source documents in accounting and evaluate examples.
What is Double-Entry Accounting? - Basics & ExamplesConsider the reasons this method is commonly used to maintain financial records.
Business Transaction: Definition, Types & AnalysisIllustrate types of business transactions and ways to analyze them.
What Are Accounts? - Definition and Use to Categorize TransactionsClassify different types of accounts and their functions.
Understanding Debits and Credits in AccountingExplain the relevance of credits and debits in accounting.
Business Assets: Definition & ExamplesCategorize various types of business assets and discover which ones are most common.
Accrued Expenses & Revenues: Definition & ExamplesDifferentiate between accrued revenue and expenses.
Direct & Indirect Expenses: Definition & ExamplesDistinguish what classifies as an indirect or direct expense.
Operating Expenses: Definition, Formula & ExamplesCalculate operating expenses using examples.
Net Loss: Definition & FormulaExperiment with the formula used to calculate net loss to determine how it can be detrimental to business owners.
Net Profit: Definition & CalculationConnect the concept of net profit to everyday life and formulate how to measure it.

14 Lessons in Chapter 2: Key Accounting Concepts
Test your knowledge with a 30-question chapter practice test
What Is Accounting? - Purpose, Importance & Relationship to Business

1. What Is Accounting? - Purpose, Importance & Relationship to Business

Just as French is considered the language of love, accounting is considered the language of business. In this lesson, you will learn exactly what accounting is. You will also learn the purpose of accounting, why it is important, and how it relates to the business world.

What Is GAAP? - The Generally Accepted Accounting Principles

2. What Is GAAP? - The Generally Accepted Accounting Principles

Rules and regulations are a part of life for everyone, including those in the accounting industry. In this lesson, you will learn about GAAP standards, what they mean to accounting, and who establishes them.

The Accounting Cycle: Definition, Steps & Examples

3. The Accounting Cycle: Definition, Steps & Examples

Accounting is essential to the proper and efficient functioning of a business. In fact, it is often referred to as the 'language of business.' In this lesson, you'll learn about the steps in the accounting cycle. A short quiz follows.

Source Documents in Accounting: Definition and Purpose

4. Source Documents in Accounting: Definition and Purpose

Do you know what role source documents play in accounting? If not, don't worry; by the end of this lesson, you will. You will also learn the definition of source documents and see some common examples of source documents.

What Is Double-Entry Accounting? - Basics & Examples

5. What Is Double-Entry Accounting? - Basics & Examples

Double-entry accounting is the method used by professional accountants and bookkeepers to maintain business (and even personal) financial records. The basis of the double-entry system is the accounting equation.

Business Transaction: Definition, Types & Analysis

6. Business Transaction: Definition, Types & Analysis

This lesson looks at business transactions and offers a definition for them. We'll also go over types of business transactions and look at some examples.

What Are Accounts? - Definition and Use to Categorize Transactions

7. What Are Accounts? - Definition and Use to Categorize Transactions

Everything in this world is made up of parts. Accounting is no different. The numerous parts that exist in the accounting world are called accounts. In this lesson, you will learn what accounts are, how they are classified, and what they do.

Understanding Debits and Credits in Accounting

8. Understanding Debits and Credits in Accounting

Debits and credits are major players in the accounting world. In this lesson, you will learn just what debits and credits are and why they are important to accounting.

Business Assets: Definition & Examples

9. Business Assets: Definition & Examples

Learn what business assets are, and find out some of the most common assets that companies have on their balance sheets in this lesson. Also, learn about some of the different ways that these assets are categorized.

Accrued Expenses & Revenues: Definition & Examples

10. Accrued Expenses & Revenues: Definition & Examples

Accruals are a part of the accounting world for most businesses. In this lesson, you will learn about two important parts of the concept of accruals: accrued revenue and accrued expenses.

Direct & Indirect Expenses: Definition & Examples

11. Direct & Indirect Expenses: Definition & Examples

Did you know that raw materials are a type of direct expense? In this lesson, we will define direct and indirect expenses and discuss examples of both kinds of expenses.

Operating Expenses: Definition, Formula & Examples

12. Operating Expenses: Definition, Formula & Examples

This lesson introduces the concept of operating expenses. It explains what operating expenses are and how they are calculated. Examples of operating expenses are included.

Net Loss: Definition & Formula

13. Net Loss: Definition & Formula

Business owners hope that each period, the money brought in is more than the money paid out. But that's not always the case. In this lesson, you'll learn the definition and formula for net loss, and why it can be bad news for business owners.

Net Profit: Definition & Calculation

14. Net Profit: Definition & Calculation

In this lesson, you will learn about net profit. You will learn the definition of net profit, how it is calculated, and see an example of how it relates to everyday life.

Chapter Practice Exam
Test your knowledge of this chapter with a 30 question practice chapter exam.
Not Taken
Practice Final Exam
Test your knowledge of the entire course with a 50 question practice final exam.
Not Taken

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