Archive about 'Accounting Basics,Principles & Concepts'

Content Page On Basic Accounting Concepts, Principles and Regulatory Framework

Tweet Click to the respective topic: Content Page   Accounting Period Concept               Business Entity Concept      Consistency Concept                         Dual Aspect Concept   Full Disclosure Concept                     Going Concern Concept   Historical Cost Concept                      Matching Concept                 Materiality Concept                             Money Measurement Concept                      Prudence Or Conservative Concept    Substance Over Form More on Materiality concept Understand the […]

What do we mean by debit and credit balances when balancing the ledger accounts?

Tweet At the end of an accounting period, a balance is struck on each account in turn. This means that all the debits on the account are totalled and so are all the credits.If the TOTAL DEBITS EXCEED THE TOTAL CREDITS, there is said to be a DEBIT BALANCE on the accounts; If the TOTAL […]

Explain the alternative bases of measurement used to measure the assets and liabilities in the balance sheet.

Tweet Historical cost:  The amount of cash or cash equivalent paid to purchase an asset ( plus any cost of acquisition and/ preparation. If asset not bought for cash, historical cost is the fair value of whatever was given in order to buy the asset For liabilities, the historical cost basis of measurement is the […]

Simple Illustration of Profit And Cash Concept

Tweet It is important to understand the difference between Profit and Cash concept. Below a simple question to test you on this profit and cash concept: ABC sells computer on a retail basis. The firm began operations during December 2010 and sold computer for cash of $330,000. The computer that was sold by ABC was […]

Basic Bookkeeping double entry on dealing with WITHDRAWALS by Owner

Tweet Salient points: (a)    When an owner take goods, cash or other assets out for his private use, this is call DRAWINGS (b)   ANY drawings from business reduces the owner’s equity in the business (c)    A temporary account called DRAWINGS Account is open to record all drawings from the owner to ensure proper control and […]

Summary of Accounting Assumptions,Principles and Constraints

Tweet (Print this article in pdf.format) Whether in bookkeeping and or accounting, the accounting student must know the different types of accounting assumptions, principles and constraints. Below are tabulate in easy reference for those who want to have a quick review of these accounting concepts/principles,assumptions and constraints. ( PS:-You can print the article here or […]

Some consider Goodwill as a Fictitious Asset. Do you think this statement is correct.?

Tweet Some of us draw the conclusion that goodwill is a fictitious asset since it is an “ invisible” item – re: cannot be seen or touch.It might be true that goodwill is an intangible asset, but it cannot be called a fictitious asset because: Even though these intangible assets (examples beside goodwill are patents […]

Accounting treatment of Opening and Closing Balances of Stocks of a company

Tweet A stock account should be kept. This stock account is only ever used at the end of an accounting period, when the business counts up and values the stock in hand at the end of a period in a physical stock take. Accounting treatment: (a)    When a stock-take is made, the business will have […]

In Accounting, explain what is the Materiality Concept ( Part 2)

Tweet Earlier article describe the materiality concept. Append below more notes and details on the materiality concept: More notes on Materiality concept: (a) In audit term, an error is consider as immaterial when the error is too trivial to affect the proper understanding of the financial statement (b) The exercise of the Materiality concept is […]

Accounting Quiz or Test Your Accounting Knowledge on Role or Purpose of Accounting

Tweet Refresh or test your accounting knowledge by answering the following questions on Role or Purpose of Accounting. If you are unsure of the answer please click to { see article} to re-learn what you have missed. Questions: 1.  Briefly explain what is accounting 2.  Identify the users of accounting – see  {article} ; { […]