Accounting involves systematically recording, measuring, and communicating financial information, which is essential for decision-making. This process helps stakeholders understand a company's financial health.

The accounting equation is fundamental in accounting and states that a company's assets are financed by liabilities and owner's equity. This equation ensures that the balance sheet remains balanced.

Debits and credits are core components of the double-entry bookkeeping system, ensuring each transaction is recorded in at least two accounts. This system helps maintain the balance of the accounting equation.

A balance sheet shows a company's assets, liabilities, and owner's equity at a specific moment. This statement helps users understand the financial strength and solvency of the business.

Double-entry accounting requires that each transaction impacts at least two accounts to maintain the balance in the accounting equation. This system is critical for detecting errors and ensuring accurate financial reporting.

The income statement summarizes a company's revenues and expenses over a period, providing insights into profitability. It is crucial for assessing operational performance.

A trial balance is prepared to ensure that the sum of debits equals the sum of credits after posting transactions. It is an essential step for detecting errors within the ledger.

The accrual basis of accounting recognizes revenues when they are earned and expenses when they are incurred, irrespective of the cash flow. This method provides a more accurate representation of a company's financial performance.

The Matching Principle in accounting ensures that expenses are recorded in the same period as the revenues they help generate. This alignment is critical for accurately reporting a company's performance.

Adjusting entries update account balances at the end of an accounting period to ensure revenues and expenses are recorded in the correct period. They are necessary for preparing accurate financial statements.

Every transaction in double-entry accounting must maintain the balance of the accounting equation. When an asset increases, there is a corresponding decrease in another asset or an increase in liabilities or equity.

The Revenue Recognition Principle mandates that revenues should be recorded when they are earned rather than when cash is received. This provides a truer picture of a company's financial performance during a period.

Purchasing inventory on credit creates an obligation to pay the supplier, which increases liabilities. This transaction affects both the assets (inventory) and liabilities (accounts payable) on the balance sheet.

The journal is the first point of entry for recording transactions in chronological order. It is subsequently used to post data to individual ledger accounts, establishing the foundation for the accounting cycle.

The cost principle requires that assets be recorded at their original purchase cost rather than their current market value. This provides a consistent and objective basis for recording asset values over time.

Accrued revenue adjusting entries recognize revenue that has been earned even though cash has not yet been received. This entry increases an asset such as Accounts Receivable while recording the revenue on the income statement.

Under accrual accounting, expenses must be recorded when incurred regardless of payment. Recording an unpaid expense involves debiting the appropriate expense account and crediting a liability account, such as Accounts Payable.

Paying a supplier for previously purchased inventory on credit reduces the cash asset and decreases the liability (accounts payable). This transaction does not affect the overall balance of the accounting equation.

When a prior period error is identified that understated an asset, the correction is made by increasing the asset account and adjusting retained earnings. This ensures that the error is corrected without affecting the current period's operations.

When inconsistencies arise in the ledger, the first step is to prepare a trial balance. This process helps pinpoint discrepancies that require further investigation and correction.