Learn the approach on how to deal with incomplete records accounting test questions

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

Briefly explain what do we mean by continuous inventory records and "continuous" count

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

Explain what is a bank statement?

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

Explain briefly the steps in preparing Cash flow statements using the indirect method

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

In the Indirect Method of Cash Flow Statements, explain the reasons for certain items added and subtracted

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

Basic Key Terms Used in Depreciation Accounting

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

Learn what are the Rules of Double Entry Bookkeeping

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

In bookkeeping, explain in brief what are journals used for?

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