We need to at least learn the standard method to deal with incomplete records accounting test question which are summarized as follows: First establish the opening balance sheet and the proprietor’s interest Open up the normal four accounts: A trade receivables account A trade payables account A cash book, with two columns if cash … Read more
Below explained what is the continuous inventory record and the method of continuous count: What are continuous inventory records means: Where a business holds considerable quantities of varied inventory, there is a need to maintain continuous inventory records which is a “card” kept for every item of inventory, showing receipts and issues from the stores … Read more
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 CREDITS … Read more
A bank statement is a monthly statement send by your bank to you or your business.In a bank statement, it shows the following: The balance owed at the beginning of the month New debts incurred during the month Payments made during the month The balance owed at the end of the month This is similar … Read more
Below are tabulated the various basic steps to prepare cash flow statement using the indirect method: Basic steps using indirect method to prepare cash flow statement: Set out the proforma cash statement with the headings required by accounting standard. Leave plenty of space. Ideally use three or more sheets of paper, one for the main … Read more
Below are the reasons for certain items added and subtracted using the indirect method to prepare a cash flow statement:- Example of items added using the indirect method in preparing cash flow statement: DEPRECIATION is not a cash expense which was originally deducted from the profit figure in the income statement. Therefore it is logical … Read more
In accordance with international accounting standard, the following are the basic key terms used in depreciation accounting for fixed assets: DEPRECIATION is the allocation of the depreciable amount of an asset over its estimated useful life. Depreciation for the accounting period is charged over net profit or loss for the period either directly or indirectly … Read more
Tabulated below are the rules of double entry bookkeeping: Note the basic rule of double entry bookkeeping: every financial transaction gives rise to two accounting entries,one a debit and the other a credit. The total value of debit entries in the nominal ledger is always equal at any time to the total value of credit … Read more
It is important to know how to treat donations made to a non profit making organization: The treatment of donations and legacies , etc will depend upon the PURPOSE for which they are made. If the donation is intended to add to the club funds- credit to the Income and Expenditure account If the … Read more
Journals as part of the original or prime book of entry plays the following roles: The journal are used as a book of prime entry for: Correction of errors; Transfers between ledger accounts; Purchases and sales of fixed assets; Opening entries in new set of ledgers; and In bookkeeping, the journals are also used to … Read more