What is Accrual basis of accounting?
According to accrual concept or accrual principle or accrual basis of accounting revenues and expenses are recorded in books of accounts when they are earned or incurred and not when they are received or paid in cash. In essence events of business are captured in accounting system when they are actually happening and not when […]
What is Journal and how many types of journals are in accounting?
These are the first formal books in which information regarding transaction is recorded . For the same reason they are also named as books of prime entry or books of original entry or day books. While making a record certain format is followed that only summarizes the information but also keep the value of information […]
What is the difference between accounting concepts accounting principles and accounting rules?
These three are definitely different but connected and their connection is critical in accounting. Under International Financial Reporting Standards (IFRSs) IASB Framework sets out accounting concepts in terms of: Objectives of financial statements: it is simple financial statements should be prepared in a manner that users can use the underlying financial information relating to entity […]
What is meant by Accounting concepts and principles?
Accounting is one of the vital tools to collect financial information pertaining to business activities. The same information is used in economic decisions users make. The apex of accounting or specifically financial accounting is financial statements that puts the gives the accounting records meaningful shape so that it can be used. However, preparing financial statements […]
What is Retail Price method of inventory valuation?
Inventory is an important asset entity holds and its valuation is critical as it not only affects figures in statement of financial position but also profit calculation. There are several methods to value year end inventory. However financial statements prepared under International Accounting Standards have limited set of methods that can be used to value […]
What is the accounting treatment for sale of fixed asset?
First important thing to understand is that the tern fixed asset or non-current assets are such resources of assets which are not bought or sold as main activity of the business and are distinct from stock or inventory. Therefore sale or purchase of fixed asset in accounting perspective is NOT same as sale or purchase […]
What does favourable and unfavourable variance mean?
Variance analysis is a known quantitative technique that involves identification and evaluation of causes behind differences between actual costs/revenues and standard (or expected) revenues/costs. Variances are analysed in terms of being favourable or unfavourable for business and are monetized as a difference given a financial value it is more easier for the relevant authorities to […]
What is Variance analysis?
Any activity humans perform they do it for betterment and get the benefit in one or the other. In business environment basic motive is profit maximization and this is ensured in every decision they take. To aid their decision making process humans are using the technique of comparison since early ages. Comparison helps human decide […]
Differentiate between Goods Received Note (GRN) and Goods Despatch Note (GDN)?
In order to control the activities of the business and have operations running effectively management is responsible to have controls in place. Without controls accountantability will not be possible. One of the ways by which controls can be implemented is by using control documents (sometimes known as source documents as some are used to initiate […]
What is meant by Cost object?
Cost object is anything in relation to which user of cost information wants to measure cost. It can be a product or collection of products or even a unit of product. It can be an activity. It can be a cost center i.e. a department responsible to incur cost. It can even be an instance […]
