Appropriation of Retained Earnings

What is meant by the appropriation of retained earnings? A restriction of retained earnings that occurs when the board of directors transfers a portion of the retained earnings account into a separate appropriated retained earnings account in order to indicate to stockholders, and to others, that the balance in the appropriated retained earnings account is …

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Allowance Method Definition

What is the Allowance Method? Allowance method is a method of matching the uncollectible account expense and the sales as yet uncollected for the period with the sales for the period. Reqauires an estimate of the uncollectible account expense in the period of the sale.

Auditor’s Report

What is meant by Auditor’s Report? Auditor’s Report is a report by an independent CPA that accompanies the financial statements and the accountant’s opinion regarding the fairness of presentation of the financial statements.

Accrual Basis Definition

What is meant by Accrual basis? Accrual basis may be defined as the accounting system in which revenues, expenses, and other changes in assets, liabilities, and owner’s equity are accounted for in the period in which the economic event takes place, not when the cash inflows and outflows take place.

Articulation Definition

What is Articulation? Articulation is the relationship in which the income statement, balance sheet, retained earnings statement, and statement of changes in financial position are all linked together. For Example, the amount in one statement, such as net income on the income statement, is carried forward to another statement, in this case, the retained earnings …

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Accounting terms – British vs American

Although Basic Principles of Accounting are almost the same all over the world but the American Accounting practices differ to some extent from the British Accounting practices. Some American terms are given below which are equivalent to British terms: Sr. No. British Terms American Terms 1 Goods Merchandise 2 Stock Inventory 3 Purchases on credit Purchases …

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What are assets? – Definition and examples

Definition Those valuable things which are possessed by the business are called assets. OR Assets are economic resources that are owned by a business and are expected to benefit future operations. OR Properties, things and receivables having certain values owned by the business are called assets. Example The following are some examples of assets. Land, …

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