Some would presume that the value of a fixed asset in the balance sheet namely: (a) Cost less accumulated depreciation; or at (b) Revalued amount less accumulated depreciation Is equal to or represent its current “market value” The answer is that generally the net book value of a fixed asset is NOT necessarily remotely similar … Read more
It is wrong to think that way due to: (a) By charging depreciation on fixed assets, it does not mean that a business will set aside the same amount of cash in a bank account to provide for the replacement of the asset. It is important to understand that depreciation is NOT a way of … Read more
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 a … Read more
Refresh or test your accounting knowledge on Partnership Accounts : QUESTIONS:1.0 What is “ joint an several liability? 2.0 Describe two ways in which the accounts of a partnership differ from those of a sole trader 3.0 What are the differences between a partner’s current account ad his capital account? 4.0 Interest paid on loans made … Read more
BALANCING LEDGER ACCOUNTS:Balancing ledger accounts is normally done at the end of an accounting period where it is a routine process to have a balance struck on each account in turn. This means that all the debits on the account are totaled and so are all the credits. If the total debits exceed the total … Read more
IMPERSONAL ACCOUNT:In the accounts of the nominal ledger, we have different types of expenses for different purposes like rent, insurance, telephone and others. As these expenses are related NOT to the person to whom the money is paid and more concerned towards the reason for payment these are known as IMPERSONAL accounts. PERSONAL ACCOUNT: In … Read more
Nominal Ledger: The nominal ledger is an accounting record which summarizes the financial affairs of a business. It contains details of assets, liabilities and capital, income and expenditure and so profit and loss. It consists of a large number of different accounts, each account having its own purpose or “name” and an identity or code. … Read more
Reasons include the following: Assets stolen or damaged Obsolete New assets not yet recorded in the register Improvements not yet recorded in the register Errors in the register
Some major details which should be included in an Assets Register:- Date of purchase Description Original cost Depreciation rate and method Accumulated depreciation to date Date and amount of any revaluation Value of improvement to the asset
Depreciable assets are assets which: are expected to be used during more than one accounting period have a limited useful life and are held by an enterprise for use in the production or supply of goods & service, for rental to others or for administrative purposes. Therefore these assets are normally non-current assets like fixed … Read more