Key Elements Of Accounting Information Systems Essay

725 Words Nov 10th, 2015 3 Pages
Title As a business owner, it’s important to feel confident in the tools you use to run your business. Tools, from your employees to the different types of business systems, help you run your business smoothly and efficiently. But trying to learn, on your own, about a concept or system that is completely new to you can turn up fruitless and be time consuming. This is unnecessary stress in addition to the expected amount of stress that comes along with running a business. So, to give you peace of mind, I will enlighten you through clear definitions and thorough explanations, on the basic accounting equation, the four basic financial statements and their key elements, and the purpose of accounting information systems, so that you will be able to make an educated decision on an accounting information system, which will enable you to run your business smoothly and efficiently. In accounting, there is a basic equation that shows the relationship between a company’s assets and claims to assets, which is fittingly called the basic accounting equation. Claims to assets is further divided into liabilities and stockholders’ equity (Communicating with Users). The basic accounting equation is as follows:
Assets = Liabilities + Stockholders’ Equity
Assets are the resources your business owns that can be used to provide value or service to the business. Resources such as cash, a car, building, or a patent are all assets to your business. Liabilities are obligations or debts of the…

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