ACCOUNTING

Accounting Method An accounting method is a set of accounting principles, procedures, and practices used to record, summarize, and report financial data accurately and consistently. It is a framework that provides a common set of rules for preparing financial statements and other accounting records. Types of Accounting Methods: 1. Financial Statement Accounting Methods:– Generally Accepted […]

National Income Accounting National income accounting is a comprehensive process of tracking and measuring the economic activity of a country. It involves compiling data on various aspects of the economy, including: Key Concepts: Gross Domestic Product (GDP): The total value of all goods and services produced within a country’s borders in a particular time period. […]

Revaluation Reserve A revaluation reserve is an account used to record the difference between the book value and the market value of long-term assets at the time of revaluation. It is a mandatory reserve for certain banks and other financial institutions. Purpose: To ensure that financial statements accurately reflect the market value of assets. To […]

Operating profit is a measure of a company’s profitability from its core operations. It is calculated by taking net income and adding back interest expense and depreciation. Formula for operating profit: Operating profit = Net income + Interest expense + Depreciation Components of operating profit: Net income: The company’s total income minus total expenses from […]

A cash transaction is a financial transaction in which money is exchanged directly between two parties in the form of cash. Key characteristics of cash transactions: Instantaneous: Cash transactions are completed immediately, usually with the exchange of physical cash. Final: Cash transactions are irreversible, and the money cannot be recovered or reversed. Recorded: Most cash […]

Tangible Assets Tangible assets are physical assets that can be touched and seen. They include: Land: Plots of land, buildings, and other real estate. Structures: Buildings, bridges, roads, and other infrastructure. Machinery: Equipment, tools, vehicles, and other machinery. Inventory: Goods and materials that are held for resale or production. Investments: Assets such as stocks, bonds, […]

Definition: A voucher is a document that authorises a recipient to claim a benefit or special offer. It typically contains a unique code or serial number that is redeemed against the offer. Types of Vouchers: Retail vouchers: Offer discounts or benefits at specific retail stores. Restaurant vouchers: Provide discounts or free meals at restaurants. Entertainment […]

Reconciliation Reconciliation is the process of reconciling differences between two or more parties, groups, or individuals. It is a collaborative effort to resolve conflicts, build bridges, and create understanding and harmony. Key Principles of Reconciliation: Respect: Recognizing and valuing the perspectives and experiences of others. Empathy: Understanding the motivations and feelings of those involved. Non-violence: […]

A SKU stock keeping unit (SKU) is a unique identifier for a specific product or item in a company’s inventory management system. It is a code used to track inventory levels, order quantities, and other information related to each item. Key Components of a SKU: Item Code: A numerical or alphabetical code that uniquely identifies […]

Historical cost is the cost of an asset or liability at the time it was acquired or incurred. It is used as the basis for depreciation or amortization of the asset or liability over its useful life. Formula for historical cost: Historical cost = Cost when acquired or incurred Example: A company purchases a machine […]