What is the difference between Cost and Expense?
Most of the time the difference between the terms Cost and Expense is ignored and are used interchangeably. However, the difference is significant from accounting perspective and being an accountant it is good if we keep these two terms separate to cause lesser confusion and clearer communication of financial information. Cost can be defined as […]
What is Contra account?
Accounts in any business hold important information regarding different aspects of the entity and its operations. And to keep the information relevant and reliable these accounts needs to be updated to record all such transactions that relates to particular account. For example, funds deposited in the bank account and withdrawn are recorded in the Bank […]
What is Ledger?
In accounting, especially in financial accounting, the term ledger is discussed many times. However, use of ledger is not limited just to financial accounting as we do have ledger accounting in cost accounting as well. Ledger simply means collection of related accounts at one place i.e. a set of accounts mean ledger. Usually accounts with […]
How POSSESSION and CONTROL of an asset are different in financial acconuting?
Possession of an asset might mean just having a physical control of the asset. The party who holds the asset is the possessor of such asset. But the word control holds special meaning in the business world. Especially in financial accounting. And understanding the meaning of control and ability to differentiate between the possession and […]
What is meant by Substance over form?
“Substance over form” if said in a complete phrase, from this term is extracted, then it will be something like this: Economic substance of the transaction will be preferred over the legal form of transaction for accounting purposes. Economic substance refers to the economic benefits and economic losses or any kind of economic implications related […]