8 Accounting Assumptions Every Accountant Should Know

When it comes to preparing a financial report for any organisation or firm, there are some theoretical assumptions that all accountants must follow. Accounting assumptions are very important for laying the foundation of consistency so that they can be used for assessing the reliability of the financial documents of a business firm while ensuring that the financial health is described therein.   8 Accounting Assumptions That Help in Business   Attribution: The icons has been designed using resources from   Going concern With this assumption, accountants assume that a business should ensure ...Read More

September 15, 2021|Accounting, Basics of Accounting|

Types of Assets in Accounting Explained

A corporation or any business owns assets, and they are the source that produce revenue. In accounting, assets are either physical or non-physical. For example, a building is a physical or tangible asset, while stocks or shares in the market are non-physical or intangible assets. The opposite of an asset is called liability, and they share qualities such as physical and non-physical. The types of assets can fall under any of these categories: tangible and intangible, current and noncurrent, and operational and non-operational.   Attribution: The icons has been designed using resources from ...Read More

Different Types of Balance Sheets Explained

A balance sheet presents the sources of money (Liabilities and Owners’ Equity) and the uses (Assets) of a business.  In general, for public financial disclosers under standard accounting principles (like GAAP, IFRS) there is only one type of balance sheet. But companies whether they are private or public on the other hand, can establish various internal balance sheet based on their preferences. Management accountants generate internal financial records regularly, and are not regulated because the users are their management. There are many different types of balance sheets companies can pick from. The two key types ...Read More

5 Key Limitations of the Balance Sheet

The first  financial statement for any business is the balance sheet. When money comes in, owners/banks inject the money and the assets in the business increase. Such statement makes the balance sheet is an indispensable source for business decisions when it comes to allocating resources and funding. A balance sheet offers insight into a company's financial status as well as a piece of critical information regarding an entity's ability to continue to survive and operate its business operations for the foreseeable future. But the question in this post is what are the limitation of the ...Read More

What are the Objectives of Accounting?

As long as there are running businesses, there will always be growing demand for professionals who can prepare and analyse financial information. As a matter of fact, according to US BLS, the projected percentage growth in employment of auditors and accountants from 2019 to 2029 is 4%, which is a stable growth rate. Accounting main objectives are to identify, record, report and plan the outcome of financial transactions of the business. In summary, accounting systems enables companies to constantly provide accurate financial data.   5 Key Objectives of Accounting Accounting features a number of objectives ...Read More

October 15, 2020|Accounting, Basics of Accounting|

How to Learn Basics of Accounting – Getting Started Guide

Accounting is a skill every individual should be aware of, no matter what the profession. You do not have to know everything. However, understanding the basic concepts, and terminologies of accounting will prepare you to understand how business financials work. For example, let us say a small business owner had to review an income statement prepared by his accountant.  The business owner may end up wondering how come the sales are higher than the actual cash he received? understanding the accrual concept can make significant difference in improving your ability to learn accounting. My aim ...Read More

Common Components of Income Statements Explained

The components of income statements line items makes analysing business performance more organised. The income statement measures the business performance of its income and expense for a specific time period.   Generally, the income statement is separated into two parts which are operating, and non-operating related. We will discuss the common line items under each of these sections. You may not find  the word “operating” and “non-operating” in an income statement explicitly all the time.But it is good practice to think about it that way. Because then when analysing the components of income statements you ...Read More

The 3 Components of the Balance Sheet Explained

Companies use the balance sheet to keep track of their net worth. The balance sheet is a snapshot of the company sources of the money and how they used the money. Its components are Assets, Liabilities and Owner’s Equity. below is the formula that represent the balance sheet. Assets (uses) = Liabilities + Equity (sources)     The balance sheet should always be balanced where the uses (which is what the company own) and the sources (which is from where they get money from) has to be equal.   Why is the Balance Sheet Important? ...Read More

3 Types of Financial Statements Explained

To keep the financial aspect of our life under control, we have to keep track of our financial transactions. When it comes to business, the financial statements are the standard way to record and track your financial situation, performance, and money decisions. The main types of financial statements are the income statement, the balance sheet and the cash flow statement which are the three main statements required to be prepared by any business. To keep it short, balance sheet is used to record your financial position/situation. The Income statement presents your business performance. And cash ...Read More