Course Overview

Accounting Basics for Trading Companies

Introduction

Accounting is the language of business. Through accounting, trading companies can accurately track their financial transactions and make informed decisions. Without an organized accounting system, it becomes difficult to measure profits and losses or assess the financial position.

What is Accounting?

Accounting is the process of recording, summarizing, analyzing, and presenting financial information related to a company’s activities.
The main goal of accounting is to provide accurate information to management, investors, and creditors for decision-making.

Objectives of Accounting in Trading Companies

1. Accurately record financial transactions for record-keeping.

2. Measure business results to determine profits or losses.

3. Prepare financial statements such as the income statement and balance sheet.

4. Provide management with information for planning and control.

Basic Principles of Accounting

1. The Basic Accounting Equation:
   Assets = Liabilities + Equity

2. Accrual Principle: Revenues and expenses are recorded when they occur, not when cash is exchanged.

3. Going Concern Principle: The business is assumed to continue operating indefinitely.

Importance of Accounting for Trading Companies

• Facilitates sales, purchases, and inventory valuation.

• Helps management in expansion or cost-reduction decisions.

• Ensures compliance with laws and taxation.

• Provides a clear picture of the financial position to investors.

Conclusion

Accounting is not just numbers; it is a tool to understand and guide business activities toward success. By mastering the basics of accounting, trading companies can build a strong financial system that ensures sustainability and growth.

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