What is Receipts and Payments Account?
A receipts and payments account is a type of financial statement, summarizing all cash and bank transactions of an organisation for an accounting period. Although it is often prepared by non-profit making organizations, clubs and societies, helps in recording cash inflows and outflows without emphasis on profit or loss. Its principal purpose is to offer […]
What are consolidated financial reports?
Consolidated financial reports are general statements of the parent company and all other subsidiaries in just one financial report. These statements serve to depict the consolidated position of a company overall, comprehensively describing its entire financial health, and encompassing all its different forms of entities and activities. Consolidated financial reports are most used by investors, […]
Key Differences Between Revenue and Income
Revenue and income are two common terms seen on the Profit and Loss account or income statement of a company. Most students non-accounting persons don’t usually understand the difference between both terms. These terms depict two different aspects of a company’s financial health for any person associated with finance or business management. While revenue and […]
Difference Between Net Profit and Gross Profit
Profit is one of the most significant measures of a company’s financial well-being, but profits differ. Two critical metrics—gross profit and net profit—serve distinct purposes when assessing a firm’s performance. Gross profit is the profit after excluding the direct costs of goods or services manufactured, whereas net profit is the actual profit after deduction of […]
What is the Going Concern Concept?
The going concern concept is a principle that assumes a business entity will continue operating for the foreseeable future, typically in the next 12 months. This signifies that the company doesn’t plan or anticipate ceasing operations, liquidating its assets, or significantly reducing its business scale. Why is the Going Concern Concept Important? This concept is […]
Difference Between Fixed and Floating Rate of Interest
Interest rates form a vital aspect of the financial landscape. Whether you are considering taking out a loan for a major purchase or investing in a bond, understanding the difference between fixed and floating rates of interest is crucial. Let’s explore the difference between fixed and floating rates of interest, their advantages and disadvantages, and […]
Benefits of Computerised Accounting Systems
In today’s fast-paced, technology-driven world, businesses need to keep up with the latest advancements to remain competitive. One area where embracing technology is crucial is in financial management. Gone are the days of manual bookkeeping and piles of paperwork. The advent of computerised accounting systems has revolutionised the way businesses handle their finances. There are […]
What is a Consolidated Financial Statement?
A consolidated financial statement is a report of financial position and performance of a parent company and its subsidiaries as a single entity. It is an essential tool for investors, analysts, and other stakeholders to assess the overall financial position and performance of a group. Consolidated financial statements are particularly significant in the context of […]
What does mean reporting period in accounting
The reporting period, also known as the accounting period, refers to the specific timeframe for which a company’s financial performance and position are measured and reported. This timeframe serves as the foundation for a company’s financial statements, including the income statement, balance sheet, and cash flow statement. Common reporting periods Annual: Most companies follow the calendar […]
What is Meant By Impairment of Assets
In simple terms, an impaired asset is one whose market value has fallen below its value listed on the company’s balance sheet. Think of it as a valuable painting fading or a fancy smartphone becoming obsolete. These assets, once prized possessions, no longer command the same price they used to. Similarly, companies hold various assets […]