Financial Account Basics

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What is the difference between Cash basis and Accrual basis accounting and which one is better?

By Hasaan Fazal on April 4, 2013

Accrual basis of accounting is one of the underlying assumption for preparing financial statements under International Accounting Standards. IASB Framework clearly demanded the financial statements to be prepared on accrual basis instead of cash basis of accounting. Among other notable benefits of usig accrual basis of accounting over cash basis is that it helps record the […]

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What is Credit note and when is it used?

By Hasaan Fazal on November 9, 2012

A credit note is a source document providing evidence that a credit entry has been made in the financial records for specific reason which is explained on the face of this business document. Credit note is also known as credit memo or credit memorandum as it only notifies about the entry made in the financial […]

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What is Source document?

By Hasaan Fazal on November 4, 2012

In the business world buyers and sellers interact to exchange goods and services and other transactions like payment. A diligent accountant keeps the record of all such important transactions about which users must be informed. However, to have the information reliable the recording of such transaction is controlled by source documents. Source document is basically […]

Posted in ACCA, ACCA - F3, Accounting Concepts & Conventions, Accounts & Ledgers, Accounts & Ledgers, Accruals and Prepayments, Audit Evidence, Audit Evidence - Substantive Procedures, Audit Evidence - Tests of Controls, Audit Planning, Audit Risk Assessment, Books of Prime Entry (Journals), CA, CAT - T1, CAT - T3, Control Accounts, FA1, FA2, FIA, Financial Account Basics, Financial Accounting, Module B, Module C | Leave a response

What is the difference between Purchase ledger and Purchase account?

By Hasaan Fazal on January 18, 2012

Quite a basic question in fact. A lot of students realize about these concepts as soon as they start studying Auditing especially when they have to apply different audit procedures where these basic concepts play pivitol role and thus we cannot escape them. To begin with, we need to clear one misconception that LEDGER is […]

Posted in ACCA, ACCA - F3, ACCA - F7, Accounts & Ledgers, Accounts & Ledgers, Books of Prime Entry (Journals), CA, CAT, CAT - T1, CAT - T3, CAT - T6, CIMA, CIMA C02, Control Accounts, FA1, FA2, FFA, FIA, Financial Account Basics, Financial Accounting, Financial Statements of Companies, Financial Statements of Companies, Financial Statements of Sole Traders, Financial Statements of Sole Traders, Interpretation of Financial Statements, Inventories and Construction Contracts, Inventory, Inventory, Module B, Module C, Tangible Non-current Assets, Tangible Non-current Assets, Tangible Non-current Assets | 1 Response

Can we capitalize Tax amounts?

By Hasaan Fazal on June 5, 2011

According to IAS 16 the purchase price of the asset includes the amount of non-refundable taxes i.e. such taxes which cannot be claimed back are capitalized and are included in the cost of the asset at the time of purchase. For example, when the asset is purchased or imported then buyer/importer is required to pay […]

Posted in ACCA, ACCA - F3, ACCA - F7, CA, Capital and Revenue Expenditure, CAT, CAT - T6, CIMA, CIMA C02, FFA, FIA, Financial Account Basics, Financial Accounting, Financial Statements of Companies, Financial Statements of Companies, Financial Statements of Sole Traders, Financial Statements of Sole Traders, IAS 16, Intangible Assets, Intangible Non-current Assets, Module C, Sales Tax, Tangible Non-current Assets, Tangible Non-current Assets, Taxation | Leave a response

What is the difference between Faithful representation and Fair presentation?

By Hasaan Fazal on May 30, 2011

IASB framework provides conceptual guidance regarding preparation and presentation of financial statements whereas IAS 1 sets out the principles and rules for preparation and presentation of financial statements. So the difference between these two documents must be clear as framework does not amount to standard and is separate from International Accounting Standards. The provisions stated […]

Posted in ACCA, ACCA - F3, ACCA - F7, Accounting Concepts & Conventions, Accounting Concepts and Policies, Basics of Consolidation, CA, CAT, CAT - T6, CIMA, CIMA C02, Conceptual and Regulatory Frameworks, FA2, FFA, FIA, Financial Account Basics, Financial Accounting, Financial Statements of Companies, Financial Statements of Sole Traders, IAS 1, IASB Framework for Financial Statements, Module B, Module C, Published Accounts | 2 Responses

What is Grouping and Marshalling in financial statements?

By Hasaan Fazal on May 29, 2011

While preparing financial statements, especially Statement of Financial Position (SoFP) also, known as balance sheet, two presentation concepts are applied which are termed as Grouping and Marshalling. Grouping means presenting similar items together as one figure i.e. by combining them at one place and presenting as a single item on the face of financial statement. […]

Posted in ACCA, ACCA - F3, ACCA - F7, Accounting Concepts & Conventions, Accounting Concepts and Policies, Basics of Consolidation, CA, CAT, CAT - T3, CAT - T6, CIMA, CIMA C02, Consolidated IS, Consolidated SoFP, Consolidation and Associates, FA2, FFA, FIA, Financial Account Basics, Financial Accounting, Financial Statements of Companies, Financial Statements of Companies, Financial Statements of Sole Traders, Financial Statements of Sole Traders, IAS 1, Module B, Module C, Partnerships, Published Accounts | Leave a response

What are the fundamental principles for the preparation and presentation of financial statements?

By Hasaan Fazal on May 14, 2011

Although the accounting treatments and provisions regarding presentations of different important transactions in the financial statements is dealt separate accounting standards. However, in the absence of any specific guidance, provisions of IASB Framework and IAS 1 provides overall guidance for preparation and presentation of financial statements. Before we discuss both documents lets clear out few […]

Posted in ACCA, ACCA - F3, ACCA - F7, Accounting Concepts & Conventions, Accounting Concepts and Policies, CA, CAT, CAT - T3, CAT - T6, CIMA, CIMA C02, FA2, FFA, FIA, Financial Account Basics, Financial Accounting, Financial Statements of Companies, Financial Statements of Companies, Financial Statements of Sole Traders, Financial Statements of Sole Traders, IAS 1, IASB Framework for Financial Statements, Module B, Module C, Published Accounts | Leave a response

What are the Elements of Financial Statements?

By Hasaan Fazal on May 10, 2011

The main purpose of financial statements is to provide financial information to the users to assist them in their economic decisions. The financial statements basically present the financial information in such form that it is not only understandable but also useable. That is why financial statements present the financial effects of different business events that […]

Posted in ACCA, ACCA - F7, Accounting Concepts & Conventions, Accounting Concepts and Policies, CA, CAT, CAT - T3, CAT - T6, CIMA, CIMA C02, Conceptual and Regulatory Frameworks, FA2, FFA, FIA, Financial Account Basics, Financial Accounting, IASB Framework for Financial Statements, Module B | 1 Response

Is cash a tangible asset or an intangible asset?

By Hasaan Fazal on May 8, 2011

In order to check the status of an asset whether it relates to a particular class or not, it is always a good idea that we go for the definitions provided in the relevant pronouncements first as they give the criteria whether a certain asset can be classified in one way or not. In this […]

Posted in ACCA, ACCA - F3, CA, Financial Account Basics, Financial Accounting, IAS 1, IAS 16, IAS 32, IAS 38, Intangible Non-current Assets, Intangible Non-current Assets, Module B, Module C, Tangible Non-current Assets, Tangible Non-current Assets | Leave a response

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