What are Accounting Transactions? Accounting transactions refer to any business activity that results in a direct effect on the financial status and financial statements of the business. Such transactions come in many forms, including: Sales in cash and credit to customers Receipt of cash from a customer by sending an invoice Purchase of fixed assets and movable assets Borrowing… Read More »
Financial statements refer to a specific set of reports produced in an entity’s accounting system. The objective of these reports is to provide information about the entity. A complete set of financial statements includes 5 components. 1. Statement of Comprehensive Income The Income Statement, also known as Profit and Loss Statement (P&L Statement), shows the results of… Read More »
Doing business without a solid understanding of relevant accounting information is like going on a new trip without a map: It’s not a good idea. Financial statements provide a road map of a business’s journey by distilling the accounting information needed to make an informed decision. However, just as a topographic map will not be… Read More »
What is double-entry accounting? Double-entry bookkeeping is an accounting method where you equally record a transaction in two or more accounts. A credit is made in at least one account, and a debit is made in at least one other account. The double-entry bookkeeping method is based on the idea that every business transaction has… Read More »
Introduction to accounting principles Accounting is an integral part of every business regardless of business size. With modern-day business requirements, business and accounting are simply inseparable. By recording all the financial transactions, accounting helps in determining the financial performance of the business by preparing financial statements. These financial statements are used by both internal stakeholders as… Read More »
In drawing up accounting statements, whether they are external “financial accounts” or internally-focused “management accounts”, a clear objective has to be that the accounts fairly reflect the true “substance” of the business and the results of its operation. The theory of accounting has, therefore, developed the concept of a “true and fair view”. The true… Read More »