What is Statement of Cash Flows?
Statement of cash flows or simply cash flow statement is a financial statement reporting entity's cash inflows and outflows over a range of period which is either annual, quarter, month or any other length...
What is Double declining balance method of depreciation?
Before we discuss Double Declining Balance method, lets have a review of basic Declining Balance method and understand how it works.
Declining balance method: a type of accelerated depreciation method
Declining Balance method or reducing balance...
Is change in depreciation method a change in accounting policy or accounting estimate?
Depreciation method helps accountants in aligning the recognition of cost with the benefits rendered by asset as per the requirement of IAS 16 that requires rate of depreciation rate to match the rate at...
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...
What is Matching principle in accounting?
Accounting principle that requires costs to be recognized after matching with the revenues earned associated with such costs i.e. the amount of costs recognized must be on equal footings with the revenues recognized. In...
Is Drawings an expense account or a liability account?
In order to understand the nature of drawings account in accounting and why is it deducted from capital or equity total the better is that we look at the definitions of expense, liability and...
What is the difference between Revenue and Receipt?
Revenue, in simplest terms, the benefits entity receives on carrying out its main business activities. Though entity can earn income in many ways but not every activity is its main business activity and not every income...
What is meant by Carriage inwards and its accounting treatment?
Carriage inwards, transportation inwards, transport inwards, freight inwards or shipping cost are the cost borne by the buyer of the goods for moving the goods from supplier's place to his own place (usually raw...
What is Specific identification method of inventory valuation?
Specific identification method is just another method to value ending inventory of the business to be reported in the financial statements. IAS 2 permits the use of specific identification method.
According to this method each...
What is the recognition criteria of equity?
Framework for Preparation and Presentation of Financial Statements (Framework) issued by International Accounting Standards Board (IASB) is one of the important documents. Many of the basic concepts that also form the very foundation of...