Accounting principle is the set of rules and regulations that companies follow to report their

financial data. While it’s true that accounting is most typically viewed as an essential part of the
business world, you’re most likely performing some type of accounting task in the real world as
well. Accounting plays a vital role in running a business because it helps you track income and
expenditures, ensure statutory compliance, and provide investors, management, and government
with quantitative financial information which can be used in making business decisions. So,
more or less in every institution principle of Accounting is under the fundamental course to give
the basic idea to students about general accounting to cope up with future transactions.

As an English literature and non business background student, I’ve always struggled when it
came to maintaining my day to day transactions, as well as my family expenditures. As I’ve
decided to pursue my career in business, it was much needed for me to have basic ideas about the
fundamental pillars of business. Accounting comes first in this case. The experience with NSU in
case of the course BUS 505, Principle of Accounting has been life changing for me at least.
From a complete amateur I’ve transformed myself into at least a moderately skilled person in
Accounting. Course BUS 505, Principle of Accounting has made life easier for me in significant
extend. Being a non business background student I was always away from any kind of math or
transaction related courses. So with the passage of time I turned into a complete unskilled person
when it comes to keeping up with any kind of transactions. I’ve personally always faced
problems in keeping track with my personal transactions as well as with others. I had no idea in
which way all my spending were going. Also I had no record of my revenues as well. Once I
made a grave mistake while helping my father with his audit transactions. Thus the idea of doing
MBA popped up in my head so that I can be better in this field by having proper knowledge. And
the Principle of Accounting course has come to great help.

As we all know, Accounting is a systematic process of identifying, recording, measuring,

classifying, verifying, summarizing, interpreting and communicating financial information. It
reveals profit or loss for a given period, and the value and nature of a firm's assets, liabilities and
owners' equity.

According to different authors and institutions the definition of Accounting are given below-

According to Weygandt, Kieso and Kimmel, "Accounting is and information system that
identifies records and communicates the economic events of organization to interested users."

According to A.W.Johnson, "Accounting may be defined as the collection compilation and

systematic recording of business transactions in terms of money, the preparation of financial
reports, the analysis and interpretation of these reports and the use of these reports for the
information and guidance of management."

According to American Accounting Association [AAA]-1941, "Accounting refers to the process

of identifying, measuring and communicating economic information to permit informed
judgments and decisions by users of the information."
(Source of definitions- http://accountprocessing.blogspot.com/2011/12/define-accounting.html )

We get basic idea here from the definitions. Moving forward, I got to know about accounting
cycle process step by step from the course. Basically accounting cycle process starts with
analyzing and recording transactions followed by posting transactions to the ledger, preparing an
unadjusted trial balance, adjusting entries at the end of the period, preparing an adjusted trial
balance and lastly preparing financial statements. The proper order of the accounting cycle
ensures that the financial statements your company produces are consistent, accurate, and
conform to official accounting standards.

Now let’s discuss about what I’ve learned about accounting cycle below-

 The first step in the accounting cycle is gathering records of your business transactions such
as - receipts, invoices, bank statements, things like that for the current accounting period.
This is the raw financial information that needs to be translated into something useful.

Posting transactions to the ledger involve recording all of the financial information we gathered
in step one into the general ledger. The ledger is made up of journal entries, a list of all of a
business’s transactions, written down according to the rules of double-entry accounting. This
means that whenever a transaction occurs, two journal entries must be made, affecting at least
two accounts: a debit and a credit .If you buy a new Audi car for your business, for example,
your assets account will go up, and your bank account will go down .Once you’ve converted all
of your business transactions into debits and credits, it’s time to move them into your company’s
ledger .The ledger is a large numbered list showing all your company’s transactions and how
they affect each of your business’s individual accounts. The general ledger is like the master key
of your bookkeeping setup. If you’re looking for any financial record for your business, the
fastest way is to check the ledger. Journal entries are usually posted to the ledger on a continuous
basis.

 Next comes preparing an unadjusted trial balance, which happens at the end of the
accounting period. The first step to preparing an unadjusted trial balance is totaling up all the
debits and credits in each of your company’s accounts, and calculating a total balance for
each individual account. An unadjusted trial balance brings all of these totals together in one
place and looks something like this:
 Example of unadjusted trial balance

 Adjusting entries make sure that your financial statements only contain information that is
relevant to the particular period of time you’re interested in. There are four main types of
adjustments: deferrals, accruals, tax adjustments, and missing transaction adjustments.

 Once you’ve posted all of your adjusting entries, it’s time to create another trial balance,
this time taking into account all of the adjusting entries you’ve made. This new trial
balance is called an adjusted trial balance, and one of its purposes is to prove that all of
your ledger’s credits and debits balance after all adjustments. Once you have an adjusted
trial balance, you have all the information you need to start preparing your company’s
financial statements.

 The last step in the accounting cycle is preparing financial statements that tell you where
your business’s money is, and how it got there. It’s probably the biggest reason we go
through all the trouble of the first five accounting cycle steps. Once you’ve created an
adjusted trial balance, assembling financial statements is a fairly straightforward task.

First, an income statement can be prepared using information from the revenue and
expense account sections of the trial balance. A balance sheet can then be prepared, made up
of assets, liabilities, and owner’s equity. After your CPA prepares your company’s financial
statements, they’ll make one more round of adjustments to close out your
company’s temporary accounts, which resets the system and gets it ready for the next
accounting cycle.

The accounting cycle sounds like a lot of work, because it is. But the payoff is worth it:
actionable financial insight into your personal life as well as business. Plus, a bookkeeper
can take care of the accounting cycle for you so you can focus on what you do best.

The course BUS 505, Principle of Accounting has made me understand the whole process
very effortlessly. Needless to say our honorable faculty made the lessons much easier
through his practical learning approach. Last but not least I would like to state that the
course has made me more knowledgeable regarding accounting.