ACCOUNTING BASICS: a Guide to (Almost) Everything | Highlights and Annotations by Gistr.

This video explains financial accounting using the example of a fictional tabloid, Ruff Times. It covers the accounting equation (Assets = Liabilities + Equity), double-entry bookkeeping, journal entries, the general ledger, trial balances (adjusted and unadjusted), adjusting entries to align with accrual accounting, and the creation of the three main financial statements (balance sheet, income statement, cash flow statement). The video concludes by explaining closing entries to prepare for the next accounting period. FInancianl Accounting ten minutes or so and you'll see exactly how financial accounting works. we've got lots cover but I do recommend watching this right through to the end at least once so that you can get an idea of the big picture. let's do this! imagine that you own ruff times a tabloid newspaper covering all the latest gossip on our furry friends during March you run a promotional offer for annual subscriptions that begin on April 1st. People can't get enough of your stories and you end up with $40,000 in new subscriptions all paid for in cash. The first step in financial accounting is to identify the transaction well that's easy I just mentioned one you made $40,000 in new annual subscriptions these start on April 1st and continue through to March 31st next year. So what next then? it's time to prepare a journal entry. A journal is a record of a financial transaction and it looks like this. You have a unique journal number, a date, a description, the accounts affected in this case. that's cash and subscription revenue. And then you have your debits and credits which are both $40,000 ruff times is a serious business. So you're using double entry accounting which means this transaction affects at least two accounts and long time ago by this guy in this book, and it revolutionised the way we record transactions. It’s the foundation of double-entry accounting, the theory that there are at least two equal and opposite sides. to every transaction. Because this accounting equation is always true, It must always balance debits. And credits are the words we use to reflect these two sides. Credits represents the sources that economic benefit flows from, whereas debits represent the destinations that it flows to. Nowadays, pretty much every large business in the world uses double entry accounting. And so does ruff times, In this case, you debit cash by $40,000 to increase your assets and you credit subscription revenue by $40,000 to record your income. Are you hanging in there?? I know there's a lot to take in. And some of these terms might not make sense right away. that's okay. just give it some time and let it all seep in. after this. You can always jump into my accounting bases playlist and explore everything I mention in a lot more detail, I drop a link to that. down below in the description, just below that big red subscribe button. I don’t know what that voice that was, but.,.,. anyway,.,.,. the next step is to post the journal into your general ledger. The general ledger is a place where you store all of your financial data. It contains a complete record of your accounts and journal entries back in the day. It used to be this huge book that you’d fill out by hand. But thankfully, we've moved on now. And businesses like