Sunflower Intelligence
Finance & Accounting

F01 · Introductory

Introduction to Financial Accounting

12 lessons

F01 · Introductory · 12 lessons in four modules · about 16 hours

Introduction to Financial Accounting

How a business records what happens to it: the accounting equation, debits and credits, journals and ledgers, adjustments, and the full accounting cycle.

What you will learn

  • Analyse a business transaction into its effect on assets, liabilities and equity.
  • Record transactions as balanced journal entries using the debit and credit rules.
  • Post entries to the general ledger and prepare a trial balance, and know which errors a trial balance cannot catch.
  • Explain the difference between accrual and cash accounting and record the adjusting entries for deferrals, accruals and depreciation.
  • Prepare an income statement, statement of changes in equity and balance sheet from an adjusted trial balance.
  • Close the books and complete the accounting cycle for a small business.

Prerequisites

How it works

Each lesson teaches the idea from first principles, works examples step by step, lets you explore it in an interactive, then has you practise with feedback. A lesson is complete when you have worked its guided problems and scored 80% on its knowledge check. Mastery is tracked separately and comes back for review before you are likely to forget. Each module ends with a test; the course ends with a project and a final assessment.

Fictional case

Lantern Coffee Co. A fictional coffee business founded by Ana Lim. It starts as a catering and barista-training service, opens its own cafés and an online shop for beans, and plans a canned cold brew. Every name and figure in it is invented for teaching.

Not sure where to start?

The diagnostic has 12 questions across the course. It doesn’t count toward anything; it suggests the module to start from. Take the diagnostic.

Modules and lessons

Module 1 The language of business

  1. What accounting is and why businesses need itAccounting turns what happens to a business into information that owners, lenders, investors and governments can act on. Learn who relies on that information, the four statements it produces, who writes the rules, and the concepts that make the numbers worth trusting.75 min · not started
  2. Accounts, terminology and classificationsAn account is where a business keeps every increase and decrease in one item. Learn the five kinds of account, how accounts are grouped as current or noncurrent and as permanent or temporary, and how a chart of accounts organises them.80 min · not started
  3. The accounting equationEvery business’s resources come from creditors or owners, so assets always equal liabilities plus equity. Learn to trace any transaction through that equation and to see how revenue, expenses and dividends change what the owners own.75 min · not started
  4. Module 1 test11 questions on this module. 70% passes.not taken

Module 2 Double-entry recording

  1. Debits, credits and normal balancesDebit means the left side of an account and credit means the right, nothing more. Work out from the accounting equation which side increases each kind of account, read normal balances, and calculate the balance of any T-account.85 min · not started
  2. Journal entriesEvery entry starts with a document and ends with a balanced record. Decide whether an event belongs in the books, analyse it in five steps, and write it in general journal form, including entries with more than two lines.80 min · not started
  3. Posting to the general ledgerThe journal tells the story in date order; the general ledger sorts the same amounts by account so that every balance can be read. Learn to post each journal line, cross-reference the two records so any amount can be traced, keep running balances, and check customer and supplier detail against its control account.85 min · not started
  4. The trial balanceList every ledger balance in a debit or a credit column and the two totals should agree. Learn to prepare a trial balance, to use the gap between the totals to track down mistakes, and to recognise the errors that a trial balance in perfect balance can still hide.75 min · not started
  5. Module 2 test12 questions on this module. 70% passes.not taken

Module 3 Accrual accounting and adjustments

  1. Accrual versus cash accountingProfit and cash run on different clocks. Learn when revenue and expenses belong to a period under the accrual basis, how that differs from the cash basis, and how deferrals and accruals set up the month-end adjustments.80 min · not started
  2. Adjusting entriesSome changes arrive without a transaction: insurance expires, wages build up, equipment wears. Learn to find, calculate and record the five kinds of month-end adjustment, and to prepare the adjusted trial balance that the financial statements are built from.95 min · not started
  3. Financial statements from the adjusted trial balanceTurn Lantern’s adjusted trial balance into an income statement, a statement of changes in equity, a classified balance sheet and a statement of cash flows, see how the four fit together, and read what they say about Lantern’s first month.75 min · not started
  4. Module 3 test12 questions on this module. 70% passes.not taken

Module 4 Closing the books

  1. Closing entriesAt the end of a period, the revenue, expense and dividend accounts are emptied into Retained Earnings so that the next period starts from zero. Learn the four closing entries, record Lantern’s for March, and prove the result with a post-closing trial balance.80 min · not started
  2. The complete accounting cycleEvery period, every business runs the same nine steps, from analysing a transaction to proving that the ledger is ready for the next period. See the whole cycle at once, use the optional worksheet and reversing entries, correct errors after posting, and protect the records with internal control.85 min · not started
  3. Module 4 test10 questions on this module. 70% passes.not taken

Project and final assessment

  1. Project: One month at Brightwater Bike RepairRun a full accounting cycle for a fictional repair shop: journalise a month of transactions, adjust, prepare the statements and close the books.not taken
  2. Final assessment25 questions across the whole course. 70% passes.not taken

The course is complete when every lesson is complete, every module test is passed, the project is finished and the final assessment is passed.

Resources

  • Accounting Lab: Analyse transactions, post journal entries to T-accounts, and watch the trial balance and statements update.
  • Glossary: every term this course defines.
  • Formulas: every formula with its symbols and units.
  • Review: flashcards and the questions you missed, when they are due.

Sources used in this course

  1. Franklin, M., Graybeal, P. & Cooper, D. (2019). Principles of Accounting, Volume 1: Financial Accounting, section 1.1, “Explain the Importance of Accounting and Distinguish between Financial and Managerial Accounting”. OpenStax. openstax.org/books/principles-financial-accounting/pages/1-1…
  2. Financial Accounting Standards Board. Statement of Financial Accounting Concepts No. 8, Conceptual Framework for Financial Reporting, Chapter 1: The Objective of General Purpose Financial Reporting (issued September 2010; as amended, December 2021). storage.fasb.org/Concepts%20Statement%208%E2%80%94Chapter%20…
  3. IFRS Foundation. Conceptual Framework for Financial Reporting, issued by the IASB in March 2018. ifrs.org/projects/completed-projects/2018/conceptual-framewo…
  4. IFRS Foundation. Use of IFRS Accounting Standards by jurisdiction. ifrs.org/use-around-the-world/use-of-ifrs-standards-by-juris…
  5. US Securities and Exchange Commission (1999). Staff Accounting Bulletin No. 99: Materiality. 12 August 1999. sec.gov/interps/account/sab99.htm
  6. Financial Accounting Standards Board (2025). About the FASB. Fact sheet, June 2025. storage.fasb.org/About_FASB_June_2025.pdf
  7. Financial Accounting Standards Board (2021). Statement of Financial Accounting Concepts No. 8, Conceptual Framework for Financial Reporting, Chapter 4: Elements of Financial Statements. Issued December 2021 (copy hosted by PwC Viewpoint). viewpoint.pwc.com/dt/us/en/fasb_financial_accou/statements_o…
  8. Deloitte. Roadmap: Issuer’s Accounting for Debt, section 13.3, “General” (balance sheet classification, reproducing the ASC 210 definitions of current assets, current liabilities and operating cycle). DART. dart.deloitte.com/USDART/home/codification/liabilities/asc47…
  9. Australian Accounting Standards Board. AASB 18 Presentation and Disclosure in Financial Statements, “Statement of financial position”, paragraphs 96–106 (the Australian equivalent of IFRS 18). standards.aasb.gov.au/node/3717
  10. IFRS Foundation. IFRS 18 Presentation and Disclosure in Financial Statements (issued April 2024; effective for annual periods beginning on or after 1 January 2027). ifrs.org/issued-standards/list-of-standards/ifrs-18-presenta…
  11. Companies Act 2006 (UK), section 474, “Minor definitions” (definition of turnover). legislation.gov.uk/ukpga/2006/46/section/474
  12. McLeay, M., Radia, A. & Thomas, R. (2014). Money in the modern economy: an introduction. Bank of England Quarterly Bulletin, 2014 Q1. (Bank deposits as IOUs from banks to their customers; loans as assets of banks.) bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/201…
  13. Sangster, A. (2015). The earliest known treatise on double entry bookkeeping by Marino de Raphaeli. Accounting Historians Journal, 42(2), 1–33. abdn.elsevierpure.com/en/publications/the-earliest-known-tre…
  14. Keio University Library. Catalogue entry for Luca Pacioli, Summa de arithmetica, geometria, proportioni et proportionalita (Venice: Paganino de Paganini, November 1494), in Incunabula and the Keio University Library Collection. dcollections.lib.keio.ac.jp/en/node/205702
  15. Encyclopaedia Britannica. “Luca Pacioli”. britannica.com/biography/Luca-Pacioli
  16. Harper, D. Online Etymology Dictionary, entries “debit” and “credit”. etymonline.com/word/debit
  17. Public Company Accounting Oversight Board. AS 2401: Consideration of Fraud in a Financial Statement Audit, paragraphs .58–.62 (examining journal entries and other adjustments). pcaobus.org/oversight/standards/auditing-standards/details/A…
  18. IFRS Foundation. IFRS 15 Revenue from Contracts with Customers (issued May 2014; effective for annual periods beginning on or after 1 January 2018). ifrs.org/issued-standards/list-of-standards/ifrs-15-revenue-…
  19. Cooke, J. “Post to the Ledger”, in Financial Accounting. Lumen Learning (CC BY 4.0). courses.lumenlearning.com/suny-clinton-financialaccounting/c…
  20. Internal Revenue Service (2024). Publication 583: Starting a Business and Keeping Records, revised December 2024. irs.gov/publications/p583
  21. Companies Act 2006 (UK), c. 46, section 386, “Duty to keep accounting records”. legislation.gov.uk. legislation.gov.uk/ukpga/2006/46/section/386
  22. ACCA. “Suspense accounts and error correction”, technical article for Financial Accounting (FA/FFA), written by a member of the FA/FFA examining team. accaglobal.com/gb/en/student/exam-support-resources/foundati…
  23. “Preparing a Trial Balance”, in Financial Accounting. Lumen Learning, adapted from Edwards, J. D. & Hermanson, R. H., Accounting Principles: A Business Perspective (Global Text Project), CC BY 4.0. courses.lumenlearning.com/clinton-finaccounting/chapter/prep…
  24. Cambridge International Education. Cambridge International AS & A Level Accounting 9706: Syllabus for 2026, 2027 and 2028, topic 1.4.2 “Trial balance”. cambridgeinternational.org/Images/697417-2026-2028-syllabus.…
  25. Deloitte. Roadmap: Revenue Recognition, section 3.1, “Objective” (quotes ASC 606-10-10-2 and lists the five steps). DART. dart.deloitte.com/USDART/home/codification/revenue/asc606-10…
  26. Australian Accounting Standards Board (2019). Conceptual Framework for Financial Reporting, which incorporates the IASB’s Conceptual Framework for Financial Reporting (March 2018); paragraphs 1.17 and 5.5. aasb.gov.au/admin/file/content105/c9/Conceptual_Framework_05…
  27. Internal Revenue Service. Publication 538: Accounting Periods and Methods (revised January 2022), “Cash Method”. irs.gov/publications/p538
  28. US Securities and Exchange Commission. Beginners’ Guide to Financial Statements. sec.gov/about/reports-publications/beginners-guide-financial…
  29. IFRS Foundation. IAS 7 Statement of Cash Flows. Standard summary page (operating, investing and financing activities; direct and indirect methods; non-cash transactions; IFRS 18 amendments). ifrs.org/issued-standards/list-of-standards/ias-7-statement-…
  30. Deloitte. A Roadmap Comparing IFRS Accounting Standards and US GAAP, section 4.3, “Statement of Cash Flows”. DART. dart.deloitte.com/USDART/home/publications/deloitte/addition…
  31. KPMG. “IFRS 18 changes the statement of cash flows” (2026). kpmg.com/us/en/articles/2026/ifrs-18-changes-statement-cash-…
  32. Intuit. “Lock your books in QuickBooks Online”. QuickBooks Help (help article on closing dates and year-end retained earnings). quickbooks.intuit.com/learn-support/en-us/help-articles/how-…
  33. Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013). Internal Control — Integrated Framework: Executive Summary. May 2013. coso.org/_files/ugd/3059fc_1df7d5dd38074006bce8fdf621a942cf.…
  34. US Securities and Exchange Commission (2010). Internal Control Over Financial Reporting in Exchange Act Periodic Reports of Non-Accelerated Filers, Release Nos. 33-9142; 34-62914, 15 September 2010. sec.gov/rules/final/2010/33-9142.pdf
  35. IFRS Foundation. IAS 8 (originally “Accounting Policies, Changes in Accounting Estimates and Errors”; retitled “Basis of Preparation of Financial Statements” when IFRS 18 was issued in 2024), standard summary. ifrs.org/issued-standards/list-of-standards/ias-8-accounting…
  36. Deloitte. “ASC 250 Accounting Changes and Error Corrections”. Deloitte Accounting Research Tool (DART). dart.deloitte.com/USDART/tree/vsid/490038