PROVISION
Provisions are recorded when the group has a legal of
constructive obligation on the basis of a past event, the realisation of the
payment Publication is probable and the amount of the obligation can be
reliable is estimated. Provisions are measure at the present value of the
expenditure required to settle the obligation. If reimbursement for some or all
of the obligations can be received from a third party, the reimbursement is
recorded as a separate asset, but only when it is practically certain that said
reimbursement...
THE BALANCE SHEET
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The Balance Sheet
A balance sheet lays out the ending balances in a company's
asset, liability, and equity accounts as of the date stated on the report. The most common use of the balance sheet is
as the basis for ratio analysis, to determine the liquidity of a business.
Liquidity is essentially the ability to pay one's debts in a timely manner. The
information listed on the report must match the following formula:
...
SUBLEDGER
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Subledger
Definition: A subledger is a ledger containing all of a
detailed sub-set of transactions. The total of the transactions in the
subledger roll up into the general ledger. For example, a subledger may contain
all accounts receivable, or accounts payable, or fixed asset transactions.
Depending on the type of subledger, it might contain information about
transaction dates, descriptions, and amounts billed, paid, or received. A
summary-level entry is periodically recorded in the general ledger. If someone
is researching...
ACCOUNTING JOURNAL ENTRIES
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Accounting Journal Entries Definition
An accounting journal entry is the method used to enter an
accounting transaction into the accounting records of a business. The
accounting records are aggregated into the general ledger, or the journal
entries may be recorded in a variety of sub-ledgers, which are later rolled up
into the general ledger. This information is then used to construct financial
statements as of the end of a reporting...
WHAT IS THE PURPOSE OF ACCOUNTING..?
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What is the purpose of accounting?
The purpose of accounting is to accumulate and report on
financial information about the performance, financial position, and cash flows
of a business. This information is then used to reach decisions about how to
manage the business, or invest in it, or lend money to it.
This information is accumulated in accounting records with
accounting transactions, which are recorded either through such...
UNDERSTANDING ACCOUNTING BASICS (ALOE AND BALANCE SHEETS)
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Understanding Accounting Basics (ALOE and Balance Sheets)
In accounting, the math usually isn't worse than
multiplication. But accounting isn't about math -- it's about concepts, and
some had me confused. Accounting has simple and surprisingly elegant ways to
track a business.
So What's Accounting About, Anyway?
To be blunt, accounting is about tracking stuff (yes,
there's more to it, but hang with me). What kind of stuff can...
STANDARD COSTING
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Standard Costing Overview
Standard costing is the practice of substituting an expected
cost for an actual cost in the accounting records, and then periodically recording
variances showing the difference between the expected and actual costs. This
approach represents a simplified alternative to cost layering systems, such as
the FIFO and LIFO methods, where large amounts of historical cost information
must be maintained for items held in stock.
Standard costing involves the creation of estimated (i.e.,
standard) costs...
ACCOUNTING INVENTORY METHODS
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Accounting Inventory Methods
Inventory includes the raw materials, work-in-process, and
finished goods that a company has on
hand for its own production processes or for sale to customers. Inventory is
considered an asset, so the accountant must consistently use a valid method for
assigning costs to inventory in order to record it as an asset.
The valuation of inventory is not a minor issue, because the
accounting method used to create a valuation has a direct bearing on the amount
of expense charged to the cost...
THE CHART OF ACCOUNTS
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The Chart of Accounts
The chart of accounts is a listing of all accounts used in
the general ledger of an organization. The chart is used by the accounting
software to aggregate information into an entity's financial statements.
The chart is usually sorted in order by account number, to
ease the task of locating specific accounts. The accounts are usually numeric,
but can also be alphabetic or alphanumeric.
Accounts are usually...
CASH CONVERSION CYCLE
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CASH CONVERSION CYCLE
The
cash conversion cycle measures the time period required to convert resources
into cash. The intent behind the measurement is to determine how long it takes
for funds paid to buy resources to be converted into cash by selling the
resulting goods and being paid by customers.
The
factors used to derive the cash conversion cycle are as follows:
The
average time required to pay supplier invoices
The
average...
