Accountants are generally classified as private or public accountants. A public accountant is an accountant whose services may be hired on a fee basis by individuals or firms. Table 17.2 lists the four largest accounting firms in the United States and some of their major clients. The Accounting Equation. The accounting equation shows the relationship among the firm's assets, liabilities, and owners' equity.
Assets are the items of value that a firm owns.
Owners' equity is the difference between total assets and total liabilities. The Double-Entry Bookkeeping System. Double-entry bookkeeping is a system in which each financial transaction is recorded as two separate accounting entries to maintain the balance shown in the accounting equation. The Accounting Cycle. In the typical accounting system, raw data are transformed into financial statements in five steps.