Understanding Revenue Recognition and Realisation in accounting
Revenue Recognition and Realisation in accounting represent the profits companies and individuals make from selling assets. However, there are certain difference between Revenue Recognition and Realisation. Revenue recognition is an aspect of accrual accounting that stipulates when and how businesses “recognise” or record their revenue. The principle requires that businesses recognise revenue when it’s earned…
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What is Fair Value Accounting Practice?
Fair value accounting is the measurement of assets and liabilities of a business based on the estimation of current market values. It means the assets can be sold or a liability settled in an orderly transaction to a third party under current market conditions. Therefore this method of accounting is also known as ‘mark-to-market accounting…
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What is a principle of conservatism in accounting?
Conservatism Principle also known as the “Prudence Concept” states gains should be recorded if their occurrence is certain but losses with a remote chance are recognized. The conservatism principle in accounting is a guideline that requires accountants to be cautious and conservative when preparing financial statements. As per this guideline, when faced with two options,…
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What is a Double Entry System in Bookkeeping or Accounting?
Italian monk Luca Pacioli is known as “the father of accounting”. He published a textbook called “Summa de Arithmetica, Geometria, Proportioni et Proportionalita” in 1494. In the said huge math encyclopedia written by him he included an instructional section on double-entry bookkeeping. The three golden rules of accounting are (1) debit all expenses and losses,…
Read article Overview of IFRS: The International Financial Reporting Standards
IFRS Accounting Standards are developed by the International Accounting Standards Board (IASB) an independent, not-for-profit organization that develops and approves International Financial Reporting Standards (IFRSs). The IASB established in 2001 operates under the oversight of the IFRS Foundation. IFRS was created to establish a common accounting language that forms accounting rules for public companies to…
Understanding Generally Accepted Accounting Principles of USA (GAAP)
Accounting standards in the USA are a set of accounting guidelines known as Generally Accepted Accounting Principles (GAAP). These standards govern how companies in the United States record and present their financial statements to regulatory authorities, investors, and all stakeholders. The Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB) developed and…
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