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General Accounting

Time period assumption in accounting that you need to know

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The accounting principle known as “time period assumption” says that time needs to be divided into distinct, consecutive periods and that accounting transactions can be … Read more

Categories General Accounting

What is the objectivity principle?

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According to the objectivity principle, financial and accounting data must be neutral and free of personal bias. This suggests that financial reporting, such as the … Read more

Categories General Accounting

What is the consistency principle in accounting?

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The consistency principle in accounting encourages accountants to prepare financial statements following the same accounting principles, techniques, practices, and procedures from one accounting period to … Read more

Categories General Accounting

Freight in vs Freight out

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The main difference between freight in vs freight out is that freight in is transportation expense incurred on purchasing the goods. On the other hand, … Read more

Categories General Accounting
realization concept

What is the Realization Concept in Accounting?

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Definition The realization concept or the revenue recognition principle in accounting is a method used by accountants for recording revenue earned by the business. This … Read more

Categories Accounting, General Accounting
substance over form

What is substance over form in accounting?

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Substance over form principle states that transaction should be recorded based on realism (substance). If there is a conflict between realism and form (legal aspects), … Read more

Categories General Accounting

Trading Account in Accounting

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The name trading account is given to a ledger account used by trading business firms to aid in the formation of income statement and balance … Read more

Categories Accounting, General Accounting

Accounting conventions (Definition, Importance, Examples)

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Definition Accounting conventions are the set of guidelines that companies use to record financial transactions. These conventions play a vital role in the entire accounting … Read more

Categories General Accounting

What are accumulated losses?

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Definition Accumulated losses are losses incurred by the business in the past. These losses are adjusted against shareholders’ equity. These losses lead to a decrease … Read more

Categories Accounting, General Accounting

What is a period cost?

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Definition Period cost is the cost that is not based on the one-time transactional event rather it is incurred over specific time. These costs are … Read more

Categories Accounting, General Accounting

Why is investment portfoilo diversification important?

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Investment Portfolio Diversification Meaning Investment portfolio diversification is a finance term used frequently by investors and businesses. The portfolio is a combination of financial investments. … Read more

Categories General Accounting

What is forensic accounting?

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Definition Forensic accounting is about investigating financial fraud/crime. It involves detailed understanding of the business processes, operations, working dynamics, background checks, and many more things … Read more

Categories Accounting, General Accounting

What is throughput accounting?

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Definition Businesses uses throughput accounting as an intelligent mechanism to plan production. The purpose of using this accounting approach is profit maximization. This concept is … Read more

Categories Accounting, General Accounting

Gross margin vs contribution margin – what is the difference?

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Gross margin vs contribution margin can be an excellent metric to understand business profitability potential. What is Gross margin? Gross margin is about profit strength … Read more

Categories Accounting, General Accounting
source documents

Source documents (detailed understanding)

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Original documents containing details about a business transaction are referred to as source documents. The source document contains vital information such as the date and … Read more

Categories Accounting, General Accounting
DRAWINGS IN ACCOUNTING

What are Drawings in Accounting?

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Definition Drawings in accounting refer to the withdrawal from a business by its owner in the form of cash or any other asset aimed to … Read more

Categories Accounting, General Accounting

What is an unpresented cheque/outstanding cheque?

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Unpresented cheque is the cheque that has not been presented to the bank. Although the business has written and accounted for the cheque in their … Read more

Categories General Accounting

What is an uncredited cheque/outstanding lodgment?

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Uncredited cheques are the cheques that have been collected by the business and recorded as the receipt of cash in the business books. However, the … Read more

Categories General Accounting

What is price level accounting?

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Definition and explanation Price level accounting seeks to adjust financial statements due to fluctuation in the value of the currency. The currency fluctuation may be … Read more

Categories General Accounting

Analyzing business transactions

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Analyzing business transactions is the basis of a strong financial reporting framework. The posting of accounting transactions in the accounting record leads to changes in … Read more

Categories General Accounting
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