Chapter 1. Conquering double-entry bookkeeping system
This chapter describes accounting process that transactions are processed to prepare balance sheet (BS) and income statement (IS). The core parts of the process are journalizing(record transactions originally in journals) and posting(post the record to the ledger accounts). During the process, accounting always enters the same amount in debit and credit dually, furthermore the entire accounting is always balanced.
In this chapter it is important to understand the T-account working principle that the entire components of accounting such as BS, IS, trial balance, T-accounts and journalization are always in harmony of an orchestra. That's the peculiar technique of accounting process which distinguishs accounting from other sciences. To go forward without mastering it is a visionary project which soon collapses. There are a lot of students who take an extracurricular lesson to master it. This is enough easy to study by yourself and moreover gives you core essence of T-account working principle.
First of all, you must understand BS and IS because every T-account principle is deduced as a logical consequence from BS and IS.
<Important objectives you should master in this chapter>
1. prepare balance sheet and income statement - your own, your parents' and a company'.
2. T-account working principle
4. trial balance
5. interrelationship of BS and IS
6. distinguish double-entry bookkeeping from other bookkeeping
7. accounting cycle
As you read the body you will often meet gray-background paragraphs, which are comprised of guide, airing and bonus. you can read them lightly.
Guide: guide you with the directions to study and form concepts relating to the context.
Airing: go aside from the body and give you useful materials (including non-accounting) relating to the context.
Bonus: somewhat difficult and so no matter not to know but additional for the readers to know more.
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