As explained, it is also very important for those who keep books of account to understand accounting concepts. By understanding such accounting concepts, it will then reinforce the skills of the bookkeepers.
Append below are some True Or False Questions on Accounting Concepts:-
True
False
1.
The business entity concept does not apply to a sole proprietorship concern
2.
If economic event [...]
Below are two questions and answers on topics on Accounting Equation:
Question No 1: Fill In The Blank for the following:
1.0
Assets
Liabilties
Capital
a
40,000
10,000
?
b
15,000
?
11,000
c
?
5,000
10,000
d
11,000
8,000
Answer:
1a $30,000 ($40,000-$10,000)
1b $4,000 ($15,000-$11,000)
1c $15,000 ($5,000+$10,000)
1d $3,000 ($11,000-$8,000)
Question No. 2:
The following is the summary data of XYZ Ltd for July presented in equation form. Describe each of the transactions that occurred [...]
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In bookkeeping, there are two essential flowcharts which must be properly understood namely the “ACCOUNTING CYCLE” AND THE INTER-RELATIONSHIP AMONGST the financial statements like the Income Statement, Balance Sheet, Statement of Owner’s and Cash flow statements.
As mentioned, the acccounting cycle enable us to have a snapshot of whats should be done from source documents to [...]
As discussed earlier on the two formats of Income statement, similarly we have two formats normally prepared by bookeepers for their companies.
Before preparing the format we need to understand that a Balance Sheet is called the Statement of Financial Position. as it is a snapshot of a company’s financial position at a particular point in time. The [...]
For bookkeeper, it is important to understand that there are a few ways of preparing the format of an Income statement. Basically, there are two formats namely the Single Step Format and Multiple-Step Income Statement.
Below are the format for both the Single step and Multiple-Step Format of Income Statement. Also mentioned are their advantages and disadvantages.
Format of A Single [...]
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Snapshot of how to prepare the Income statement,Owner’s equity statement and Balance sheet statement
Append below, a simple snapshot of preparing the following financial statements:
(a) How to prepare the Income Statement:
All temporary or nominal accounts relating to incomes and expenses are closed by using closing entries and transferred to the Income Statement/Summary
Journalize the closing entries as follows:
For all Revenue accounts:
Debit Revenue Account Credit Income Summary
For all Expenses accounts:
Debit Income [...]
CONCEPT OF AN ASSET
Resource controlled by the enterprise
Past event
Inflow of future economic benefits (probable)
CONCEPT OF A LIABILITY
Obligation of the enterprise
Past events
Outflow of future economic benefits (probable)
CONCEPT OF EQUITY
Residual interest
Assets – Liabilities = Equity
CONCEPT OF INCOME
Increase in economic benefits, inflows and enhancements of asset values, decreases in liabilities
Corresponding recognition of increases in assets and decreases in [...]
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