Which form the binance accounts buy, since they provide definitions of the essential items, processes and features applied in accounting to analyze, summarize and record business transactions for the purpose to prepare financial statements and provide accounting data to its users. In order to master the accounting theory and practice, we need to understand these definitions, explained further in this article.
Double-entry accounting – a method of accounting in which each transaction is
recorded in two separate accounts, once as a debit and once as a credit.
Equity – the net worth of assets after the total sum of liabilities is subtracted, i.e. net worth belonging to the owners of business.
Financial Accounting – accounting that aims to present a business’s financial state to outside parties such as shareholders, applying generally accepted accounting principles.
Financial Statements – statements reflecting financial data on the business, including three main types, i.e. balance sheet, income statement and statement of cash flows, supported by explanatory notes.
Fixed Asset – long-term tangible asset such as property, which is used in the business activities for more than a year.
General Ledger – a collection of all accounts used for the accounting purposes in the particular company.
Income Statement – summary statement of revenue and expenses for a particular period of time.
Journal – records of transactions that are kept in chronological order, used to record transactions initially occurred.
Liability – money or other financial means that are owed by the business to the third parties such as lenders, creditors, vendors.
Net Income or Profit – final result in the income statement remaining after expenses and taxes have been subtracted from revenue, i.e. the amount by which total revenue exceeded total expenses.
Nominal Account – temporary account that tracks revenue and expenses appearing on the income statement and which is being closed to the income summary account, i.e. retained earnings account.