Accounting: Columnar Accounting Mechanics, and Journalising
A business transaction is first recorded in a journal, also called a Book of Original Entry. Journalising is the process of recording a business’s financial transactions in a journal. The transactions entered in a Journal are the basis for posting to ledgers. Journal entries are also used for cross-checking when the ledger balance is not…
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Concept of Debits and Credits
Debits and credits are accounting terms that represent the two sides of a financial transaction. Debit is notated “DR” and credit is notated “CR”. The word debit comes from the Latin word “debitum” meaning “what is due” and the word Credit comes from “creditum”, meaning “something entrusted to another or a loan.” A debit (DR)…
Read article Account Categories in accounting explained
There are three different types of accounts in accounting. They are Real, Personal, and Nominal Account. Real Account: A real account, or permanent account, is a general ledger account that does not close at the end of a period or at the end of the accounting year. There are five primary account categories in real…
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Explained: Recordkeeping in accounting
Recording in accounting refers to keeping a record of monetary business transactions, reflecting the correct picture of assets-liabilities, profits, loss, etc. Recordkeeping helps companies track each business transaction, including new equipment purchases, product sales, service costs, payroll expenses, etc. Accurate recordkeeping provides important information for legal and tax purposes. In addition, recording Transactions in the…
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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…
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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