Commercial Accounting Essay Example for Free

Commercial Accounting EssayCommercial chronicle is an accurate account of air deeds, it ignore only be acquired if both cash and credit transactions ar performed, recorded, and recognized in such a way that there can be no duplication and the transactions are recorded under commercial accounting. The system known as double entry book tutelage or the commercial accounting system that records both aspects of transactions, also it records credit transactions in cash accounting the day of the receipt. The single entry in accounting for example there is a sale, where the transaction is complete after the exchange of cash for goods. In commercial accounting the date in which the transaction was made needs to be recorded regardless to whether it was paid or it wasnt. Generally Accepted Accounting Principles better known as (GAAP) is the collection of standards and practices that are required to be used by businesss to record and present the results of their financial activities a nd their records of what they owe, established by the Financial Accounting Standards Board (FASB).These accounting principles are standardized and used for the many private and publicly traded companies in America today. Every economic event within business must be associated with and recorded by a specific entity and business records must not include the personal assets or liabilities of the owner. If an idea holds no impact on a decision maker, investors, or creditors, then the relating (GAAP) principles do not have to be followed. (GAAP) requires the use of accrual basis accounting rather than cash basis accounting, this is oblige on businesses so that investors have a minimum level of consistency in the financial statements they use when analyzing businesses for investment purposes. The accrual basis of accounting everyplace the cash basis of accounting in commercial accounting and generally accepted accounting principles (GAAP) is different depending on whether you run a larg e subdue business or a small business.Cash basis is used mostly by small businesses where owners and creditors want a simple way to rede the financial statements and to understand whether there is a profit or loss in the business. Accrual basis is used by large businesses and when revenue is realize expenses are accrued. Cash basis gives you a clear picture of your cash flow, but does not give you a good idea of business in the long term because you are not recording income when it is essentially earned. Accrual basis accounting accurately matches your income and expenses and if not managed carefully you could lose track of your actual cash flow, with accrual basis transaction statements they are recorded in which the events occur. You dont have to wait until you see the money, or actually feed money out of your checking account, to record a transaction.References(Investopedia.com)(Wiley PLUS)