After accounting semester as a freshman at West Chester University, I now understand the importance of taking accounting as it relates to so many aspects of our lives. As a result, I think all students should be required that the accounting classes to gain a better understanding of their finances and better prepare for the real world, where mom and dad will be there to pay for everything forever. Some of the basic concepts which I will discuss the debt and loans, receivables and payables, because I think that they need not know that all responsible members of society should have at least a basic understanding.
I will first explain the concept of debits and credits. When you receive a cash debit it and when you spend money you loan. For example, if you buy jeans for $ 50 and will make a journal entry debit goods inventory, because you just add jeans to the closet, and you would credit cash for $ 50 because you just spent $ 50 that you no longer have to spend on other things. However, the clothing company that you bought $ 50 jeans from borrowing money order for $ 50 to account for the sales and credit of merchandise inventory and cost of goods sold in order to effectively journalize transaction. Because the company received payment for the cargo and the merchandise inventory and cost of goods sold is credited as the company no longer has possession of that traperice.Tvrtka on credit of merchandise inventory and cost of goods sold, as these two numbers equal to the Proceeds of jeans. Cost of goods sold refers to the amount of money that the company pays to get the jeans, which is not the same amount of money you paid to buy jeans. However, merchandise inventory refers to the difference between the cost of goods sold and the amount of money that a shop selling jeans for you the consumer.
In addition to debt and credit is necessary to understand the different between receivables and payables. Claims relating to the service already performed, but payment has not yet been collected. For example, if an electrician wire my house he has provided a service for which he deserves to be paid. Therefore, in his diary entry on the debit receivables and credit services revenue, because he had already served for which he needs to collect payments for. If the electrician received a cash payment as soon as he provided his services would not be calculated due to record, he would simply debit cash and credit transactions revenue. However, in the real world people do not always pay their electricians and other people at a time, which is why they must create an account receivable in order to track payments that need to be for services already provided for them.
In contrast to accounts receivable, accounts payable relating to the accounts must be paid. For example, when you go to the store and buy a $ 1,000 stereo with a credit card, if you were to journalize the transaction will debit stereo for $ 1000 and credit accounts payable for $ 1,000 because you bought a stereo on credit, then you are at the end of the have to pay cash for it, just not at the same time you bought at the store. When you finally pay cash for a stereo to pay your credit card, debit journal entries to accounts payable of $ 1,000 to get rid of the account and credit cash for $ 1000 because you will not have the money to spend on other items.
These are just basic accounting concepts that all students should be required to learn, so they can more effectively manage their money and become responsible members of society, instead of trying to scrounge from their parents for as long as I can. By understanding these basic concepts, students will be able to understand where your money goes and grasp the concept that if you pay by credit card, eventually the money will come from your pocket, because plastic does not actually buy things. In the end, taking accounting classes while in college can help people become more responsible with their money, instead of throwing it on useless things.
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