The Meaning of Books of Original Entry or Subsidiary Books Give the meaning of books of original entry or subsidiary books The ledger accounts of a business are the main source of information used to prepare the financial statements. However, if a business were to update their ledgers each time a transaction occurred, the ledger … Read more
The Balance Sheet Define the balance sheet The balance sheet, also called the statement of financial position, is the third general purpose financial statement prepared during the accounting cycle. It reports a company’s assets, liabilities, and equity at a single moment in time. You can think of it like a snapshot of what the business … Read more
The Balance Sheet Define the balance sheet The balance sheet, also called the statement of financial position, is the third general purpose financial statement prepared during the accounting cycle. It reports a company’s assets, liabilities, and equity at a single moment in time. You can think of it like a snapshot of what the business … Read more
Final accounts give a concise idea about the profitability and financial position of a business to its management, owners, and other interested parties. All business transactions are first recorded in a journal. They are then transferred to a ledger and balanced. These final tallies are prepared for a specific period. The final accounts consist of trading … Read more
Difference between Stock at Start and Stock at Close Distinguish between stock at start and stock at close Stock is the value of the goods that you have on hand to sell to your customers. If you sell services rather than goods, you won’t have any stock. Stock might include raw materials that you buy … Read more
Meaning of Trial Balance Define the Trial Balance Trial Balance is a list of closing balances of ledger accounts on a certain date and is the first step towards the preparation of financial statements. It is usually prepared at the end of an accounting period to assist in the drafting of financial statements. Ledger balances … Read more
Classification of Accounts It is necessary to know the classification of accounts and their treatment in double entry system of accounts. Broadly, the accounts are classified into three categories: Personal accounts Impersonal Real accounts Tangible accounts Intangible accounts Let us go through them each of them one by one. Difference between Personal and Impersonal Account … Read more
Description of a Business Transaction Describe what a business transaction is An accounting transaction is a business event having a monetary impact on the financial statements of a business. It is recorded in the accounting records of the business. Examples of accounting transactions are: Sale in cash to a customer Sale on credit to a … Read more
The Meaning of Book Keeping Define book keeping Book-keeping is an art of recording financial business transaction in a set of books in terms of money or money worth. Bookkeeping involves the recording, storing and retrieving of financial transactions for a company,nonprofit organization, individual, etc. Common financial transactions and tasks that are involved in bookkeeping … Read more