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 [...]
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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The double entry bookkeeping has mainly been accredited to one Italian, Frater Luca Bartolomes Pacioli (1445-1517). Actually Pacioli did not invent double-entry bookkeeping,however, on November 10, 1494 he published the first complete textbook, “Summma de Arithmetica, Geometria: Proportioni et Proportionalita” (meaning “ Everything About Arithmetic, Geometry and Proportion”) describing the standard accounting system with such detail [...]
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For bookkeepers, one of the most recognized bookkeeping courses are from LCCI (London Chamber of Commerce and Industry International) Extracted from LCCI’s website the following Bookkeeping courses Book-keeping Level 1 ASE 1006 Level 1 Book-keeping tests the candidate´s knowledge and understanding of the basic principles underlying the recording of business transactions through the use of [...]
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:
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.
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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 [...]
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