What is A Reconciliation Statement?

When we carry out a reconciliation exercise, we simply want to: verify the completeness and accuracy of a particular part of the accounting records by comparing it with another  record. The following table reflects some of the types of reconciliation normally performed:- Type of Reconciliation Records being compared Bank reconciliation Bank account Bank statement (external record) … Read more

Explain what is Cash Operating Cycle Of Business

EXPLAIN WHAT IS THE OPERATING CYCLE OF BUSINESS? Also called the Cash Operating Cycle of business This cycle normally involve five (5) stages starting from (i) the purchase of raw materials from suppliers, (ii) conversion of these raw materials into work-in-progress and then finally to finished goods; (iii) delivered and billed the finished goods to … Read more

Accounting For Partnership-“Partner's Current Account"

The capital account of the partners are normally fixed throughout the partnership. However, each partner’s profit, loss, drawing, interest on drawing, interest on capital and salary are taken up into a separate Current Account. Let’s look at a typical Partner’s Current Account: CURRENT ACCOUNT DEBIT SIDE CREDIT SIDE Drawings- cash, goods ,etc Interest on Capital … Read more

The Difference Between Financial Accounting and Management Accounting

This article is useful for those who would like to know a little more of the difference between Financial Accounting and Management Accounting. Financial Accounting Management Accounting Prepared more for  external parties. Prepared specifically for internal management uses. Subjected to GAAP No Need. Mainly on historical events like reports on past events on how income … Read more

The Difference Between Periodic Inventory System And Perpetual Inventory System

Tabulated below the major differences between Periodic Inventory System and Perpetual Inventory System:   Periodic Inventory System Perpetual Inventory System Inventory account and cost of goods sold are non-existent until the physical count at the end of the year. Account and the balance of costs of goods sold and inventory account exist all the time. … Read more

Answer Paper On CF No1:Statement of Cash Flow Classification

Answer to Test Paper CF No. 1 Test On Statement of Cash Flow Classification   (1) Operating activities Payment to suppliers of inventory (2) Financing activities Payment of cash dividends to shareholders (3) Investing activities Proceeds from the disposal of plant and equipment (4) Operating activities Receipt of interest on a note receivable (5) Investing … Read more

Question Paper CF No 1:On Statement of Cash Flow Classification

In the earlier article, we know that all the cash inflows and outflows in the statement of cash flow can be classified under the following categories: (a) Operating activities (b) Investing activities (c) Financing activities (d) non-cash flow adjustments To refresh your understanding, the below questions asked you to put in the proper category: Question … Read more

Answer To Financial Accounting Question Paper FA No 4: Test on Accounting Concept & Regulatory Framework

Answer to FA Test Paper FA No 4 Test On Accounting Concept & Regulatory Framework IDENTIFICATION OF THE VIOLATION OF THE FOLLOWING BASIC ACCOUNTING (1)     Historical Cost Company A reported its fixed assets on its balance sheet at fair market value (2)                    Matching Principle Company A paid $20,000 insurance premium which relates for … Read more

Question To Financial Accounting Question Paper FA No 4: Test on Accounting Concept & Regulatory Framework

Question to FA Test Paper FA No 4 Test On Accounting Concept & Regulatory Framework IDENTIFICATION OF THE VIOLATION OF THE FOLLOWING BASIC ACCOUNTING (1)  ? Company A reported its fixed assets on its balance sheet at fair market value (2) ? Company A paid $20,000 insurance premium which relates for a period of two … Read more