Financial Ratios and Its Importance to Decision Makers
Financial ratios are one of the most popular financial analysis tools. It works as a bridge between technical and non-technical users of financial statements. Financial ratios might be beneficial when evaluating the financial health of various companies. Several people are interested in studying financial reports such as annual and interim reports to decide whether or […]
What is a Trial Balance? | Objectives and Rules
A trial balance is a bookkeeping or accounting report that lists the balances in each of an organization’s general ledger accounts. Whenever a trial balance is prepared, its total on the debit side should tally with the total on the credit side. An agreement of both sides indicates a reasonable (but not conclusive) accuracy of […]
What Are Valuation Principles in Accounting?
Valuation refers to determining the fair value of an entity’s assets or liabilities, which is crucial in assessing its overall worth. Valuation principles are critical to the accounting profession, as they provide a foundation for measuring and reporting the financial health of businesses. These principles help to ensure that financial statements are accurate and consistent. […]
What is the Concept of Measurement in Accounting
Measurement in accounting process refers to determining the value of the transactions so that they are recorded and properly in books of accounts. Measurement is a very basic concept in accounting because it is the very basic foundation of the accounting system. Measurement in accounting describes and explains in what manner the financial transactions have […]
What is Dual Aspect Concept in Bookkeeping?
According to the dual aspect concept, there are two aspects of accounting, one represents the assets of the business, and the other is the claim against these assets (i.e. capital and liabilities). The concept states that these two aspects are ALWAYS equal to each other. Due to this reason, any accounting entry affects at least […]
What are the Various Subfields of Accounting?
Accounting extends far beyond the preparation of financial statements. At its core, it embodies a systematic approach to capturing, recording and analyzing financial information to facilitate informed decision-making by various stakeholders. This core function branches out into several specialized areas, each addressing specific needs and offering distinct career paths. To understand the meaning of accounting […]
What Are the Differences between Bookkeeping and Accounting?
Bookkeeping vs Accounting Many people think that bookkeeping is the same as accounting. It’s not! There are some similarities, but there are many, many differences. Bookkeepers track sales and expenses, while accountants analyze these records to create reports that summarize financial data. Accounting is more than bookkeeping and reporting. It also includes payroll, insurance, legal, […]
Default and Repossession in Hire Purchase
In this post, we will discuss default and repossession, which are two crucial elements of the hire purchase accounting system. Let’s understand them in detail. ‘Default’ is the failure to act, appear or pay, i.e., failure to meet the obligation. Under a hire purchase agreement, the hirer has an obligation to pay up to the […]
What are the Procedural Aspects of Accounting?
The recording of transactions through the creation of financial statements is a universal accounting procedure or procedural aspect of accounting. This procedure is performed by businesses all over the world as part of their standard operations. The timing and rate at which transactions are recorded and subsequently reported in the company’s financial statements are determined […]
The Rationale for Preparing Cash Flow Statement
Cash Flow Statement A cash flow statement is a report that measures and illustrates the company’s ability to generate revenues and meet its financial needs of the company. This tool helps to understand the level of uncertainty in the company’s financial position that can affect the ability to meet business requirements in the future. The […]