Accounting for Non-Accountants 1

Accounting they say is the language of business. It is the art of analyzing, recording, summarizing, reporting, reviewing, and interpreting financial information. No matter what language they speak, businessmen around the world use accounting to keep track of the performance of their businesses.

The idea is that the total assets of a business is equal to the total claims of its creditors and the equity of its owners or stockholders. This fundamental equation may be extended to include revenues which are essentially additions, and expenses which are deductions from owners' equity.

To maintain the balance of this accounting equation, standard accounting makes use of the double-entry method in recording transactions. This means that for every debit, there is a corresponding amount of credit. Any error would result to a discrepancy, a "disbalanse" in Filipino, and nothing is more irritating to the one maintaining the books.