What are the final accounts? and how to prepare them?
After passing journal entries for events and transactions, posting them to ledgers, and preparing trial balances, the final step is to prepare final accounts. By final accounts, we mean manufacturing and trading accounts (only trading accounts in the case of non-manufacturing entities), profit and loss accounts, and balance sheet and cash flow statements. Other reports […]
Choosing the Best Accounting Books for Students
Some of the best accounting books that you can buy are books that will provide an overview and explain the basic concepts of the subject, such as the basics of business. These books also contain very valuable information on financial statements, bookkeeping, budgeting and business management. Many of the available books are also excellent resources […]
Net Present Value: Investment Appraisal Tool
What is the Net Present Value Method? Net present value is the total value of the expected future cash flows for a project or investment and deducts a return that the cash is expected to earn. Net Present Value (NPV) is one of the most used techniques of capital investment appraisal. Net Present Value Explained […]
What are Accounting Standards? | Benefits and Limitations
Accounting standards are a set of principles, rules and guidelines that companies must follow when preparing and presenting financial statements. In simple terms, accounting standards are the written documents issued by the expert institutes or other regulatory bodies covering various aspects of treatment, measurement, presentation and disclosure of accounting transactions. The basic objective of ASs […]
The concept of accruals and prepayments
Accruals and prepayments stand on the basis of the double-entry bookkeeping system and modern financial accounting. Accruals/Prepayments The accruals concept is often used to refer to both accruals (outstanding or unpaid expenses) and prepayments (payments in advance) (payments in advance). You may recall that previously in this section, we examined some of the accounting principles […]
What is the accounting process? Various Steps Explained
The accounting process is a methodical procedure that organisations employ to account, analyze, and interpret business transactions. In other words, the accounting process is a series of steps that businesses follow to record, classify, summarize, and report their financial transactions. It is a cyclical process that typically takes place over an accounting period, which is […]
What are accounting estimates in financial accounting?
We have learned how to measure a transaction that has already occurred or taken place and for which either some value /money has been paid, or some valuation principles are to be adopted for their measurement. But certain items can not occur and cannot be measured, but they are necessary to record in the books […]
Closing Entries to Prepare Trading Account
With the completion of an accounting period comes the important activity of preparing the financial statements. The first thing one does in doing this, particularly for those dealing in goods or commodities of buy and sell type, is preparing the Trading Account. It facilitates the establishment of the Gross Profit or Gross Loss arising out […]
What is the Importance of Trading Account in Final Accounts
The Trading Account forms one of the critically important components of a company’s final accounts as it will determine gross profit or loss from its core business activity. It would include the revenues from sales and direct expenses like purchases, wages, and manufacturing costs. In analysing the Trading Account, a business will be able to […]
What is Triple Bottom Line Reporting (TBLR)?
Triple Bottom Line Reporting (TBLR) is a new process that focuses on reporting, assessing and improving organisational performance for sustainability. This helps companies better understand and communicate their sustainability efforts. TBR’s method of communication is simple. It’s an extension of the good practice of communicating how you want to be seen and how you want […]