Double entry bookkeeping is the method used to transfer our weekly or monthly totals from our books of original entry into the nominal ledger. Basic rule to remember is that:- EVERY FINANCAL TRANSACTION gives RISE TO TWO ACCOUNTING ENTRIES, ONE A DEBIT AND THE OTHER A CREDIT. Also note that: (a) An increase in an [...]
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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 [...]
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 [...]
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Earlier articles have discussed almost all concepts/ principles, however there is yet another very important one which is Substance Over Form concept which basically is to ensure that the financial statements reflects the complete, relevant and accurate picture of the transactions and events. Append below an article which explains the meaning of this concept and [...]
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Along the way, when we keep the books of account, there is a certain bookkeeping term called Contra account. Do we know what is this? In simple term, contra account is actually an opposite account to another account. The following are some of the examples of using a contra account:
As bookkeepers, we need to at least understand the following: ACCOUNTING ASSUMPTIONS: Economic Entity concept:- also known as Separate Business Entity Principle where a business is accounted SEPARATELY from other business entities, including its owner. The business records should be separated and distinct from personal records of business owner. For example, Mr A is the [...]
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Earlier, the accrual concept has been illustrated in details. It is very vital that in order to keep proper books of accounts, we need to know how to differentiate between the cash basis accounting method and the accrual method. Append below, in tabulated form, the characteristic of both methods and some salient points to understand [...]
Continue reading about Cash Basis Accounting Versus The Accrual Method/Concept (Part 2of2)
Earlier, the accounting period has been mentioned. Besides this concept, there is yet another equally important concept which is called the:
Continue reading about Accruals Concept-Its Importance(Part 1 of 2)
Accounting cycle is the basically the processes where the bookkeepers will strive to complete within each accounting period’s deadline/timeline. Hence, what’s in the accounting cycle must be fully grasped and executed. Append below is what we usually called the usual steps involved in the Accounting Cycle. This Accounting cycle is always repeating itself. When we [...]
There are some major accounting convention/principles. However, one extremely crucial convention is the Accounting Period Concept. Bookkeepers need to adhere to this accounting period otherwise penalty or fine might be imposed by authorities ( particularly in public listed companies where the books of accounts need to be properly kept and closed consistently and then financial [...]
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