General Accounting Principles (Coursework Sample)

General Accounting Principles
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General Accounting Principles
Question 1
Bookkeeping is considered to be a process that entails accumulation, organization, storage and access of financial data. Financial data are always required for two fundamental purposes, which are the facilitation of the routine operations of the entity and financial statements preparations. Similarly, accounting is the organized recording, analysis, summary and reporting of financial information for an entity. In bookkeeping, an accountant is expected to follow the generally accepted accounting principles (Gilbertson & Lehman, 2009).
Bookkeepers have to record financial information as per a set of financial systems that are under set procedures known as internal controls. Internal controls were formulated to minimize errors that are associated with the numerous activities that bookkeepers record daily in business. On the other hand, accountants record and analyze financial data under the generally accepted accounting maxims to ensure the proper storage of financial information. Both processes have one sole goal of keeping financial data to minimize errors with regard to daily financial activities in an entity. This implies that both processes are similar (Rodger & Lucas, 2011).
Question 2
The accounting equation states that Assets = Liabilities + Owner’s Equity. Assets are the economic resources of an entity, liabilities refer to the money owed to other persons such as loans, and owner’s equity is confined to the stake of the owner in a business entity. This appears to be the basis of all accounting procedures since accountants have to ensure that the transactions of a business do not affect the balance of the accounting equation (Gilbertson & Lehman, 2009).
Particularly, this implies that all the transactions recorded in the balance sheet must bring a balance to the equation. A failure to have a balance means that there is a possible error in the reco...