Double-entry accounting is a method of recording accounting transactions in such a way that one account is debited while the other account is credited. It is also called bookkeeping and is the worldwide accepted method of recording transactions. This is…
In order to record transactions in financial accounting, the accountant has to make debit and credit entries. In order to make any item debit and credit, there are certain rules to be followed. These are called debit credit rules. An…
In order to generate revenue from business operation, the cost incurred is called the expense. It is also explained as the consumption of the assets of the company. In accounting, expenses are recorded irrespective of the cash outflow. It means…
When an entity sells services or products to customers, it records revenue. The point to be noted here is that revenue recognition is not dependent upon the receiving of cash. Revenue has to be recorded irrespective of the receiving of…
The interest of the owners in the assets of the entity is termed as equity. In the case of an entity going into liquidation, after paying for all sorts of creditors, shareholders are the persons who get the remaining assets…
Liability is the obligation of the entity which it needs to pay to settle its debts. When the obligations are settled, it results in the outflow of assets of the entity. Liabilities may be short-term and long-term. If liability is…
Assets in any item from which economic benefits could be derived by an entity. It is the property of the entity which can be converted into cash. It is estimated that assets will increase the firm value and will enhance…
Some accounting transactions are done repetitively and as a result, if we directly post these transactions into the general ledger, there will be increased chances of mistakes and complexity. In order to simplify that accounting process, we record such repetitive…
Subsidiary ledgers are the detailed register or records which provide details about the main general ledger. They are also called sub-ledgers. These subsidiary ledgers are very useful where the customers and suppliers are in big quantity. So, it becomes very…
The Contra account is the opposite of the normal account which is presented in the balance sheet. Normally, a contra account is created for an asset account such as provision for doubtful debt and allowance for depreciation. Both of these…