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2. Business principles in entrepreneurship

The program provides an introduction to the basic concepts and principles of accounting, the
appropriate marketing strategies for a new product or startup, the development of a business plan
and its implementation, the application process for funds (public and private), strategies for
continuous innovation, and the skills necessary to manage change and conflict.

2.1. Accounting Concepts and Principles

The academic definition of accounting is given by the American Accounting Association: “The
process of identifying, measuring and communicating economic information to permit informed
judgments and decisions by users of the information.” Accounting not only records financial
transactions and conveys the financial position of a business enterprise; it also analyses and reports
the information in documents called “financial statements.” Recording every financial transaction
is important to a business organization and its creditors and investors. Accounting uses a
formalized and regulated system that follows standardized principles and procedures.

The job of accounting is done by professionals who have educational degrees acquired after years
of study. While a small business may have an accountant or a bookkeeper to record money
transactions, a large corporation has an accounts department, which supplies information to:

− Managers who guide the company;

− Investors who want to know how the business is doing;

− Analysts and brokerage firms dealing with the company’s stock;

− The government, which decides how much tax should be collected from the company.

2.1.1. Accounting Principles

Nowadays, companies have thousands of stakeholders who have invested millions, and they need
a uniform, standardized system of accounting by which companies can be compared on the basis
of their performance and value. Therefore, accounting principles based on certain concepts,
convention, and tradition have been evolved by accounting authorities and regulators and are
followed internationally. These principles, which serve as the rules for accounting for financial

transactions and preparing financial statements, are known as the “Generally Accepted Accounting
Principles,” or GAAP. The application of the principles by accountants ensures that financial
statements are both informative and reliable. It ensures that common practices and conventions are

Project 2019-1-BG01-KA204_062299
The content of this material does not necessary reflect the official position of the European Union.