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The purpose of accounting is to gather and
report information

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in order to measure an entity's
financial performance and position.

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Accounting, also referred to as
bookkeeping, today is by and

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large based on a process known
as double entry bookkeeping.

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This means that for
every journal entry, or

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recording of a transaction
into the books or accounts,

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that there has to be two entries, one in a
debit account and one in a credit account.

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We're not going to go into detail on that
aspect of accounting in this course,

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but I have included some resources
below in the teacher's notes,

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if you'd like to explore this more.

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In fact,

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we're really only going to scratch
the surface of accounting in this course.

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It's a massive topic with no
shortage of concepts to explore.

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What is important to understand though is
how these journal entries are made, and

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what accounts they are put in based on
a set of rules or accounting standards.

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In the United States,

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these are known as GAAP or
Generally Accepted Accounting Principles.

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These standards set rules around how
companies prepare their financial

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statements.

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Outside of the States, what these rules
are called would vary by country.

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Most likely, it will be the IFRS or

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International Financial
Reporting Standards.

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These rules are in place to make sure
that the way companies are preparing and

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presenting financial
statements are consistent.

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And accurately reflect the financial
position of a company.

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It sounds obvious now, but historically,
not all businesses were required, or

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needed to report something like sales or
revenue in the same way.

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That's a big reason why GAAP evolved, to
help make sure everyone is accounting for

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things consistently.