basic accounting includes revenues, expenses, assets, liabilities, income statement, balance sheet, and statement of cash flows. and debits and credits.
Rectification of Error Every monetary event that occurs is recorded in financial accounting. Sometimes occurrences are not recorded, or they are documented in the wrong head of account, or the wrong amount is recorded in the correct head of account. Whatever the cause, there is always the possibility of an error in the books of …
Interest on Drawings Drawings are the funds pulled by partners from the firm, as opposed to capital invested. So, in order to maintain a fair profit allocation, a condition in the agreement that charges interest on the partners’ drawings may be included. Again, this can be applied to the whole amount or to a sum …
Control Accounts If the trial balance is not balanced, it indicates a mistake in the transaction recording. To discover this mistake, one must go through all of the transactions for the whole year. Now, if the company is tiny, it will be simpler to tell the difference. However, if the company is huge, it might …
What is Capital and Revenue Expenditures Capital Expenditure Capital Expenditures are those expenses that provide a benefit for more than one accounting period. For example, the company has purchased a vehicle. The vehicle will now be utilized for a long time. So, it is a capital expenditure. Capital Expenditure, in general, adds Fixed Asset Units …
What is Depreciation in Accounting Depreciation is a method of accounting that spreads the cost of a tangible or physical asset over its useful life or expected life. The cost of a fixed asset is charged to the profit and loss account in this procedure. Fixed assets are assets that: that have a lengthy life …
