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 [...]
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. [...]
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 [...]
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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 [...]
In the Balance Sheet, one key category is the Share Capital. At times, we might get confuse with the various classification of share capital.
We alway think that as financial statements have recorded all the actual transaction of a business hence, this will be the most ideal/appropriate reports whether for external and internal users.
Continue reading about Limitation(s) Of The Financial Statements
Let understand what’s reserves:- RESERVES Reserves are appropriations of profit namely when profits have been ascertained after deducting all expenses which includes provision and others. Reserves are residual earnings after all expenses and taxation which belongs to the owners namely the shareholders. There are essentially two(2) types of Reserves: · Capital Reserves · Revenue Reserves [...]
Continue reading about Understanding Reserves in The Balance Sheet(Part2of2)
If you refer to below accounting equation, owner’s equity form one of the three key elements of a Balance Sheet. Let understand &/define Owner’s Equity:
Continue reading about Capital Side Of The Balance Sheet(Part1of2)
In this Part 3, let’s look at what are really long term liabilities in a typical Balance Sheet:
Continue reading about Long Term Liabilities Of The Balance Sheet(Part3of3)
In this Part 2, let’s understand what are current liabilities:
Continue reading about Current Liabilites In The Balance Sheet(Part2of3)
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