Topic 2. Financial position and the Accounting Equation - Erhan

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Topic 2. Financial position and the Accounting Equation 2.1. Financial Position and Basic Accounting Equation 2.2. Assets classification 2.3. Liabilities and Owner’s Equity classification 2.4. Revenues, Expenses and Cost In this section, we begin to study of the measurement aspects of accounting. 1. Financial Position and Basic Accounting Equation Accounting is an information system that measures processes and communicates financial information about economic activity of an entity. Financial position is the state of and the relationships among the various financial data found on an entity's balance sheet. For example, a company with fairly valued and relatively liquid assets, combined with a small amount of debt compared to owner's equity, is generally described as being in a strong financial position. Also called financial condition.