The word Accounting comes from the Latin word computer which means to reckon and count numbers. So, Accounting means recording or reckoning of numbers.
Accounting originated in Mesopotamia around 7000 years ago. The advent of agriculture and trade led to the keeping of records which was the start of accounting.
Debits and Credits:
Debits and credits are the key components of a financial record system known as double entry book-keeping. In more primitive times, there was little need to record financial transactions because the person who made the goods was the one who sold it.
However, during the Renaissance period, there was a huge increase in inter-state trade. This new trading in goods between different entities created quite complex financial dealing because it involves many financial transactions between many different stakeholders. The rise of banks and investors who funded these enterprises further complicated the process and increased the need for objective financial status reports.
To deal with this new complexity, merchants created a double entry book-keeping system to accurately record financial transactions so that they can monitor the amount of money owed, the assets owned and the profitability of their enterprises.
Before a business starts to record transactions, different charts of accounts are made in which different transactions are recorded. These accounts can be classified as a Balance Sheet or Income Statement accounts.
Balance Sheet accounts consist of Assets, Liabilities and owner’s Equity and in the Income Statement accounts are the Revenue and Gains, Expenses and Losses.
Common types of assets account include Cash, Accounts received, equipment inventory and prepaid expenses. Common types of liability accounts include Accounts payable, unearned revenue and deferred taxes and the common types of Owner’s equity are Capital and Retained earnings.
Capital accounts include both the money invested from the owner and the money withdrawn for the personal use and the retained earning account includes the portion of the net income retained by the business.
Two income statement accounts are revenue and gains and expenses and losses. In revenue and gains account, most primary type is revenue where the company’s primary revenue is recorded and in expenses and losses account includes Salaries, Selling expenses, Depreciation, Rent, and Interest Expense and so on.
There are four questions which are primarily asked and they are what is Being exchanged?
What accounts are affected? Which of the accounts is increasing or decreasing? Are the amounts debits or credits?
Becoming an Accountant:
Students who want to be an Accountant can pursue Bachelor’s, Master’s and Doctoral Degrees in Accountancy where they will get to learn about the finances and money in the businesses. They also get to learn about Corporate Finance, Financial Accounting, Law and Ethics to name a few. They can either go to a college or study the course content from some of the top online accounting colleges.
Best Online Accountancy Degree Programs in the USA include University of Memphis UM Online, Pennsylvania State University World Campus, University of Massachusetts, Missouri State University, Colorado State University, and Northwestern State University of Louisiana.
On the succession of completing a degree in Accounting, one should have great organizational, team-working and communicational skills. Accountants have a vast knowledge in Finance, Taxation, Management, Auditing, Managerial Accounting and much more.
Colleges offering the best Online Accountancy degree:
Best online colleges in Arizona are Arizona State University (ASU), University of Phoenix, Western International University, and National Paralegal College (NPC).
Best online colleges in California are San Joaquin Valley College (SJVC), University of Southern California (USC), Trident University International (TUI), and North Central University (NCU).
One of the top online colleges in Idaho is Boise State University.