Accounting assumptions, accounting elements, debit and credit bookkeeping, accounting subjects and accounting accounts _ activities

Accounting assumption refers to the prerequisite for the normal accounting work of an organization.

1. Assumption of Accounting subject

Accounting subject hypothesis refers to the assumption that accounting is a specific business or unit of economic activity, rather than rambling. Generally, independent or relatively independent enterprises, companies, institutions, etc. are accounting entities. The accounting subject and the economic legal person are not the same concept, the accounting subject can be a legal person, or may not be, such as sole proprietorship and partnership enterprise.

2. Continuous Operation Assumption

Continue to operate the assumption that the normal production and operation of enterprises can be carried out forever, that is, in the foreseeable future, the enterprise will not go bankrupt.

3. Assumption of Accounting staging

The fiscal period is usually measured in "year", called the fiscal year. The accounting period hypothesis is the theoretical basis of accounting principles related to the proportion of income and expenses, accrual basis, income expenditure and capital expenditure.

4. Monetary measurement assumption

Monetary measurement refers to the main unit of measurement in accounting, which records and reflects the production and operation process and operating results of the enterprise. There are two layers of meaning:

First, the accounting should take the currency as the main measurement scale.

The second is to assume a stable currency.

5. Accrual Basis hypothesis

Accrual system refers to the accounting should take the occurrence of the right responsibility to determine the income, the cost of attribution period.

Ii. Elements of Accounting

Accounting elements include six items including assets, liabilities, owner's equity, income, expenses and profits.

The relationship between six major accounting factors: Assets = Liabilities + Owner's Equity income-cost = Profit

III. Debit and Credit accounting law

The debit and credit bookkeeping method is based on the accounting equation (asset = liability + owner equity). To "borrow" and "loan" for the accounting symbol, the use of "have to borrow, borrowing must be equal" accounting rules, in two or more than two accounts with equal amounts, a comprehensive, interrelated record of the economic business of a method.

Iv. Accounting Subjects

According to the different economic content, the accounting subject can be divided into five categories: asset class, Liability category, owner Equity category, profit and loss category and cost category, and the general ledger account, subheading and breakdown according to affiliation.

V. Accounting accounts

The accounting account is set up according to the accounting account, which includes three items, namely the name (accounting account), the direction of increase or decrease (debit record) and the amount (including the occurrence and balance of economic business).

1. Assets, liabilities and owners ' equity accounts

When an asset class account is added, the debit is credited, when the reduction is credited, the resulting balance of the asset class account is always reflected in the borrower; on the contrary, the increase in liabilities and owners ' equity accounts is credited and the amount reduced is debited, so that the balance of the debt and owner's equity account is always reflected in the lender.

The basic formula for calculating the closing balance is as follows:

Closing balance = Opening Balance + current increase-decrease in current period

2. Income, expense and profit account

Enterprises in the course of business to obtain the main business income and other business income at the same time, will inevitably occur a variety of costs, such as the main business cost, other business costs, management costs, operating costs and financial costs. When income is greater than all kinds of consumption, performance is profit, on the contrary, it is loss. When the income class account and the profit type account increase amount is credited to the credit, when the amount of reduction is debited, the resulting balance is always reflected on the lender; instead, the increase in the cost category account is debited, and the amount reduced is credited, so that the balance of the expense class account is always reflected in the borrower. For income and expense accounts at the end of the closing period, the balance of the two types of accounts shall be carried forward to the credit or debit of the "Current year" account, after which no balance is made.