In the financial statements which comprise balance sheet, income statement , statement of changes in equity, cash flow and notes to the accounts there are certain principles that are guiding the preparation namely: Aggregation. Each material class of similar items is presently separately. Dissimilar items are presented separately unless they are immaterial No offsetting. Assets … Read more
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 amount … Read more
Special classes of common stocks:-are created by a firm to meet special needs and circumstances. Let’s say we create two classes of common stock namely: Class A which has no voting rights but is entitles to receive dividends before dividends can be paid on Class B common stock Class B for stockholders who have the … Read more
Earlier article on errors of omission refers. What are errors of omission? Errors of omission:- pertains to transactions in primary books of accounts or in posting to the ledger can be total or partial errors of total omission WILL NOT affect the agreement of trial balance errors due to partial omission WILL affect the trial … Read more