Month: November 2010

Examples of some of the reports issued from Cost Accounting Department to executives are: Cost sheets Statement of material consumption Statement of labour utilization Statement of Variance analysis –actual vs planned figures Overheads incurred compared with budgets Sales effected compared with budgets Reconciliation of actual profit with estimated profit The total cost of inventory carried … Read more

Journal proper or general journal are for making the original record of such transaction for which no special journal are maintained. Examples of Entries normally recorded  are as follows: Opening entries Opening Entries are used at the beginning of the financial year to open the books by recording the assets, liabilities and capital appearing in … Read more

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 and … Read more

See earlier articles on what are self-balancing ledgers and the difference between self balancing ledgers and section balancing ledger. Below tabulates the advantages and disadvantages of using the self-balancing ledgers: Advantages of having self-balancing ledgers: Localizes the errors and facilitates in quick detection with minimum efforts; Facilitates division of work amongst different accounting staffs in … Read more

Earlier article explains what are self-balancing ledgers. Below distinguish the self-balancing and sectional balancing system used in bookkeeping:- (a)    Under self-balancing system, adjustment accounts are prepared in each ledger but in sectional balancing system control accounts are prepared only in General Ledger(b)   Under self-balancing system, separate trial balance in each ledger is prepared while in … Read more

A self balancing ledger is one: Whose balances when extracted form a complete trail balance. Under this system there are three ledgers namely: (1)    Bought Ledger which contains the accounts of individual trade creditors (2)    Sales Ledger which contains the accounts of individual trade debtors (3)    General Ledger which contains all the remaining accounts besides  … Read more

In earlier article, we understand the terms: accounting,accounts & bookkeeping, next is what are the major reasons for keeping accounts?Some major reasons for businesses to keep accounts are as follows:- Keeping track of money by showing where it came from and how it has been spent By producing accounting information, these accounting records are translated … Read more

The following terms are commonly used in the Accountancy profession:Accounting: which is the process of collecting, recording, summarizing and communicating financial information. whereas Accounts are the records in which this information is recorded. and Bookkeeping is the keeping of the most basic records { click here to the Content Page on Introduction to Accounting }

Refresh or test your accounting knowledge on Income And Expenditure Accounts : QUESTIONS: 1.0    List three differences between the accounts of a non-trading organization and those of a business 2.0    List five sources of income for a non-trading organization 3.0    What is a receipts and payments account? 4.0    Describe two ways of accounting for income from … Read more