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The regulators do not permit a business organized as a C-corporation (in the United States) to use cash basis accounting. Instead, these companies must use accrual...
Ownership in a corporation is represented by stock certificates, which is why the owners are called stockholders. In some states, stockholders are called shareholders. Ownership interest...
In the business world, a partnership is an association of two or more persons to carry on a business as co-owners for profit. Many aspects of...
The primary objectives of the accounting function in an organization are to process financial information and to prepare financial statements at the end of the accounting...
Checking Accounts (Account 1000) is the account that you set up in the Chart of Accounts and the General Ledger as your operating account. This is...
You may think that two businesses that are identical in every financial respect and have identical transactions during the year would report identical financial statements. You’d...
The basic theory of depreciation accounting is unarguable: The amount of capital a business invests in a fixed asset, less its estimated future residual (salvage) value...
Recalling my other post about: Basic Accounting: Debit and Credit – Double Entry [a really basic accounting knowledge]. After reading the post you should know how T-accounts...
Businesses must expect to sustain some losses from uncollectible accounts and should therefore show on the balance sheet the net amount of accounts receivable, the amount...
A large portion of all business transactions are credit transactions. One way of extending credit is by the acceptance of a “promissory note“, a contract in...
Although a physical inventory is taken once a year, there are occasions when the value of the inventory must be known during the year. When interim...
Hopefully this post helps you understand the role and function of accounting record as source documents (such as: bills, invoices) and introduces the books of prime...
Businesses keep two types of account; Real Accounts and Nominal Accounts. What is Real Account? What is Nominal Account? The following explanations may deliver easier understanding for you....
In a financial report, the income statement may seem like a tub standing on its own feet, disconnected from the balance sheet and the statement of...
Many business owners think of bookkeeping as a necessary evil, but in reality if you make effective use of the data collected, bookkeeping can be your...
When setting up a business, the first major accounting decision that must be made is whether to keep the books using the cash-basis accounting method or...
I know many of you have been requesting for some posts to cover basic accounting for dummies topic, so here I am coming with the very...
An understanding of the principles of bookkeeping and accounting is essential for anyone who is interested in a successful career in business. The purpose of bookkeeping...