It is removing items from the income statement or balance sheet that do not normally occur during the course of business to better estimate the value of a company.
Deferred Revenue Expenditure is a type of expenditure which does not result into the acquisition of any fixed asset and the benefits from such expenditure is not received during the period which they are paid for.
For example: Initial Advertisement Expenditure, Research and development Expenditure, Preliminary Expenses.
The journal is most commonly used to record corrections to errors that have been made in writing up the general ledger accounts
Accounting professionals, particularly those who have managed ledgers or had jobs as full-charge bookkeepers for more than a couple of years, should be able to speculate on this scenario. A candidate with more formal training specific to auditing or fraud analysis will likely explain this thoroughly and be able to provide examples.
Errors which affect the agreement of trial balance:
Accounting Management (Business) is the practical application of management techniques to control and report on the financial health of the organization. This involves the analysis, planning, implementation, and control of programs designed to provide financial data reporting for managerial decision-making. This includes the maintenance of bank accounts, developing financial statements, cash flow, and financial performance analysis. Accounting management is a mandatory knowledge module of any MBA program.
Accounting (IT) management: Accounting is often referred to as billing management. The goal is to gather usage statistics for users.
Using the statistics the users can be billed and usage quota can be enforced.
Examples:
The Cash Basis of accounting reports only transactions that have been completed in the current reporting period – or – what has “hit” the checking account (assuming all funds are deposited and disbursed only from that account) – The Accrual Basis of accounting reports all transactions that the entity has entered into and includes the asset, liability, income and expense related them.
In addition, the Cash Basis of accounting is considered OCBOA (Other Comprehensive Basis of Accounting ~ Other than GAAP) and the Accrual Basis (when implemented properly and fully) is considered GAAP (Generally Accepted Accounting Principles).
EDIT – The Accrual Basis is more desirable from a user's standpoint as it includes transactions that may exist were completed after the report dates that were initiated prior to the report date. It is generally more complete and more reliable than the cash basis – however, that does assume that the person preparing the statements has expertise of, not simply a cursory working knowledge of, GAAP and the accrual basis. For example, a set of financial statements printed out of QuickBooks are not necessarily GAAP compliant (or correct) although they may appear to be at first glance or to a layperson.
Debit note is an intimation sent to a person dealing with the business that his account is being debited for the purpose indicated therein. It is a note made out with a carbon duplicate. The original one is sent to the party to whom the goods are returned and the duplicate copy is kept for office record.
Credit note is an intimation sent to a person dealing with the business that his account is being credited for the purpose indicated therein.
Proper accounting for property that is entrusted to the fiduciary acting under the conditions set forth in a deed
Real Account is an account of assets and Liabilities.
Types of Real account
Nominal Account is an account of incomes or expenses.
Types of Nominal account
Yes, you’re looking for someone with numerical abilities, but not necessarily a mathematician. You also need someone with analytical know-how, who can communicate with others. Look for responses that show a recognition of the importance of general business knowledge, technology expertise, leadership abilities, customer service orientation and specialized experience that might apply to the role.
This convention proposes that while accounting for the various transactions, only those transactions will be considered which have material impact on profitability or financial status of the organization and other insignificant transactions will be ignore. In keeping with the principle of materiality, unimportant items are either let out or merged with other items. Sometimes, such items are shown as footnotes or in parentheses according to their relative importance.
Accounting is a method or system used to keep track of and determine the financial status of a person or company's income/assets and outlay of money/possessions. (An Accountant engages in Accounting: “The occupation of maintaining and auditing records and preparing financial reports for a business”
Most professionals, especially those with experience working for medium to large organizations, should have an answer for this. A response might include any of the following: Hyperion, Microsoft Dynamics GP or Oracle Enterprise Manager. For entry-level candidates, you might turn this into a discussion of accounting certifications and future training possibilities. For example, ask which ERP systems they would like to master. Discussion of these tools, how the applicants learned them and put them to work, and what applications your company uses will reveal how much, if any, training might be needed.
Trial balance is a list of balances from the ledger account while balance sheet is a statement of assets and liabilities.
Trial balance contains balances of all personal, real and nominal accounts, while balance sheet contains balances of only those personal and real accounts which represent assets and liabilities.
Trial balance is prepared before preparation of trading and profit and loss account, while balance sheet is prepared after the preparation of trading and profit and loss account.
Trial balance is prepared to check the arithmetical accuracy of posting into ledger while balance sheet is prepared to indicate the financial position of the business on a particular date.
Debt and credit balances are shown side by side while balance sheet is prepared on a T form basis, the left hand side showing liabilities while right hand side representing assets.
Closing stock does not appear in the trial balance while it is shown on the assets side of balance sheet.
An accounting transaction is the exchange of request/response messages to perform accounting. Accounting can be performed in the form of accounting transactions that report on resource usage by a session. Accounting transaction can occur during a session if accounting or charging indications are needed [p&l based acct] or only at the start and the end of the session.
Contingent liability is an obligation, relating to a past transaction or other event or condition, that may arise in consequence, as a future event now deemed possible but not probable. Thus such liabilities as may arise in future are called contingent liabilities. For example: guarantee to a bank for loan advanced to a third party, possible penalties, fines and penalties payable to the government or income tax authorities etc. Future losses from natural calamities are not contingent liabilities. They are not recorded in books of account. They do not appear on the liabilities side of the balance sheet. They are shown by way of a footnote at the bottom of the balance sheet.
Cost accounting is concerned with cost accumulation for inventory valuation to meet the requirements of external reporting and internal profit measurement.
Management accounting relates to the provision of appropriate information for decision-making, planning, control and performance evaluation.
Accounting concepts are the basic assumptions on which the process of accounting is based.
Following are the accounting concepts
@Recording
@Classifying
@Summarizing
@Interpreting
Financial accounting encompasses all account presented on the face of the financial statement, its presentation, recognition, measurement and disclosures. Where as cost accounting is only focused on the cost of inventory.
‘Dr' means Debere in Latin stands for ‘what comes in' or in simple words whatever assets the business owns or the expenses it has to pay comes under debit.
While ‘cr' means credere in Latin means ‘what goes out', in simple words whatever liabilities business owns, or the income it earned during the year comes under credit.
Executive Accounting is designed for service type businesses that require a sophisticated accounting system, yet simple to use accounting system. Executive Accounting contains many advanced features such as three styles of invoicing (service, distribution and recurrent), multi-currency capabilities, multiple bank account capabilities and other powerful features. Executive is a single-user system that can be upgraded to an unlimited number of users.
Discuss the applications you have worked with. Focus on how you implemented the application, the steps taken during the conversion and integration of the accounting system and the training of staff to use the application.
Accounting ethics is primarily a field of applied ethics, the study of moral values and judgments as they apply to accountancy. It is an example of professional ethics.
Accounting entities are for example a business do not get these mixed up with legal entities
Adoption of international accounting standards is extremely costly. Developing counties usually use accounting standards that are most beneficial to them (based on who they trade with to ease accounting for transactions) or just another country's GAAP that works for the developing country. Ex. Mexico very closely resembles U.S. GAAP because of NAFTA and the quality of U.S. GAAP.
Should IFRS be implemented in developed counties, developing counties might be forced to adopt them as well in order to maintain trade relations. This could be extremely costly for smaller developing counties.
Normative Theory is a theory that prescribes how a process of accounting should be done. This theory is not based on observation and may suggest radical changes to current practices in accounting
Following are different branches of accounting:
1.Cost Accounting
@Financial Accounting
3.Management Accounting
Accounting involves the creation of financial records of business transactions, flow of finance, the process of creating wealth in an organization, and summarizing the financial position of a business at a given moment in time.
A account is the method used to visualize the debit credit accounting procedure. The account can represent any account regardless of expense, revenue, asset, or liability. The debits are placed the left side and the credits on the right.
External users of accounting information (especially investors) use accounting information like annual and quarterly reports to base their investing decisions on, and to compare different companies with one another.
Internal users of accounting (mostly managers) use internal accounting information in order to plan.
Bank reconciliation statement is a statement prepared at periodical intervals, with a view to indicated the items which cause disagreement between the balances as per the bank columns of the cash book and the bank pass book on any given date.
Follow the below steps to prepare a bank reconciliation statement
A transaction is an execution of a user program and is seen by the DBMS as a series or list of actions. The actions that can be executed by a transaction include the reading and writing of database.
Accounting is the method in which financial information is gathered, processed, and summarized into financial statements and reports.
The purpose of accounting is to provide information used in decision-making. Accounting may be viewed as a system (a process) that converts data into useful information.
Information processes include:
Every business has numerous processes. Some are simple, others complex and cumbersome. However, as the business grows, acquires new customers, enters new markets, and keeps pace with constant changes in statutory regulations… the company will need to maintain highly accurate and up-to-date accounting, inventory, and statutory records.
This is where a computerized accounting helps simplify, integrate, and streamline all the business processes, cost-effectively and easily.
Financial accounting relates to the information presented based on past events and records.
Cost and managerial accounting is the presentation of financial information to the management to be used in decision making while in managerial accounting projections are made based on past trends.
Financial accounting relates to the information presented based on past events and records.
Cost and managerial accounting is the presentation of financial information to the management to be used in decision making while in managerial accounting projections are made based on past trends.
Demonstrate your knowledge of this cycle – the length of time it takes the company to pay its accounts payable – and what the implications of the length of this cycle are for the company, for example cash flow.
Double entry bookkeeping follows the principle according to which every debit has a corresponding credit; hence total of all debits is always equal to the total of all credits. In this system, one account is debited and at the same time another account is credited by the similar amount.
It is when revenues are less than expenses.
Following are the common errors in accounting:
To locate the errors in the trial balance follow the below steps:
Taxpayers like to use accounting
EA stands for Enrolled Agent. It is a certification by the Internal Revenue Service given to those qualified to practice before them. To become an EA, one must pass a test given by the IRS, the purpose of which is to try to ensure that only qualified people practice before the IRS. You may not be a Power of Attorney for the IRS unless you are an EA or some other certified individual such as a CPA or an attorney.
There is one field of accounting, but there are many different jobs within the field such as auditor, bookkeeper, payroll accountant, cost accountant, tax accountants, etc. Accountants wear many hats and often do different tasks for different clients.
Cash discount is an allowance made by retailers to the customers for prompt payment. On the other hand, trade discount is an allowance made by the wholesaler dealer to retailers off the catalogue or invoice price. This allowance is made between purchasers and sellers engaged in the same class of trade.
Cash discount is always allowed or received when payment is made. Trade discount enables the retailers to sell the products to customers at catalogue or price list issued by the wholesaler.
Cash discount is an allowance in addition to the trade discount made by the seller to the buyer.
Cash discount is recorded in account books while trade discount is not shown separately.
The main purpose of allowing trade discount is to enable the retailers to sell the goods at list price while the purpose of providing cash discount is prompt payment by the debtor to the creditor.
The Accounting Principles are the assertion rules of accounting and the application of these rules, method, & procedures to actual practice of accounting.
These Accounting principles have been divided into
A. accounting concepts
B. accounting conventions