Accounting For Organisations Essay Example | Topics and Well Written Essays - 1500 words

Accounting For Organisations - Essay ExampleSales or revenues are generated when a company sells a product or service. The revenue recognition principle dictates that revenue be recognized in the accounting period in which is clear (Accoutingtools, 2015). Two of the major expenses categories within the income statement are cost of goods sold and operating expenses. The figure at the bottom of the income statement is the engagement income or net loss of the company during an accounting period.The proportion sheet is a statement that shows the financial position of a company at a specific superlative in time. The balance sheet follows the logic of the basic accounting equation. The basic accounting equation states that assets equal liabilities plus stockholders equity (Misscpa, 2011). The three major sections of the balance sheet are assets, liabilities, and equity. The preparation of the balance sheet must follow the historic cost principle. Historical cost is a measure ofvalue a pplyin accountingin whichthe price of an assetonthe balance sheet is based on itsnominal or original cost when acquired by the company (Investopedia, 2015). Assets in the balance sheet are subdivided into four subcategoriesSome examples of assets included in the balance sheet are cash, inventory, account receivables, short bourn investments, prepaid expenses, office equipment, and goodwill (Weygandt, Kieso, Kimmel, 2002). The liabilities section of the balance sheet is divided into current liabilities and long term liabilities. Current liabilities are liabilities that expire in slight than one year. A few of the current liabilities included in the balance sheet are notes payables, account payable, current maturities of long-term obligations, unearned revenue, salaries and wages payable, taxes payable, and opposite current liabilities. A list of potential long-term liabilities are bank notes payable, mortgage payable, bonds payable, and other long term