Invoicing
Invoicing is an activity where a company bills customers for goods and services. Often, the services will be sold on credit. For this...
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Ratios
Ratios can help a user interpret a financial health of a company. Most common financial ratios are: Inventory Turnover Ratio: ...
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Chart of Accounts
A Chart of Accounts is a list of all accounts in the general ledger. Usually, the accounts are organized into Assets, Liability, Revenue,...
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Foreign Currency Transactions
Foreign currency conversion takes place in a gain (loss) account. If an entity stores equities or liabilities in a foreign currency,...
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Reconciliation
During normal bookkeeping operations errors are made. In order to insure integrity of the accounts a reconciliation must take place....
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Closing Entries
At the end of each fiscal year all temporary accounts must be cleared. This is done so that company can track those accounts as they...
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Warranties
When a seller provides a warranty, an estimate is required to be recorded in the seller's liability account. This entry must reflect...
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Gain (Loss) on Sale
A gain or loss on sale is recorded when there is a difference between carrying value of the asset and a purchase price. Example: Asset...
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Depreciation
Depreciation is intended to reflect change in the value of the asset over time. Assets such as specialized machinery are physical assets...
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Accruals - Realize and Recognize
In an accrual method of accounting transactions or portion of transactions are recorded to the period that they belong to. This is done...
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Cash Flow Statement
Cash flow statement (CFS) shows details on how cash position has changed. The statement is derived from balance sheet (BS) and shows...
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Contra Account
A contra account can be either contra asset or contra liability account. Contra asset account means that although an account is under...
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Debit/Credits
Debit accounts are: Assets Expenses To increase a debit account a debit is required; to decrease it a credit is required. Credit accounts...
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Income Statement
The purpose of income statement (IS) is to show expenses and profits incurred by the company during its operation for the period. Unlike...
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Balance Sheet
Balance sheet (BS) is broken down in three segments: 1. Assets 2. Liabilities 3. Owners Equity The purpose of this statement is to...
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