Source Documents

What are the source documents in accounting? In order to complete the accounting records, a bookkeeper needs to have source documents to work from which show what the financial effect of the transactions is. Types of Source Documents The source documents themselves are introduced here. They come in many different shapes and sizes, but they …

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Cash-Basis vs Accrual Accounting

Cash-Basis v/s Accrual Accounting – Essential Aspects To Consider Before Choosing Accounting is an essential aspect of any business. There are primarily three methods of accounting – Cash basis, accrual accounting and modified cash-basis, and each method has its pros and cons in application. The two accounting methods that have a major difference in their …

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Statement of Affairs

What is Statement Affairs? – Definition A statement of Affairs like Balance Sheet is a statement of assets and liabilities, prepared to find out capital under single entry system. However, while calculating profit or loss under this method, the following things may also be kept under consideration: Fresh Capital or Additional Capital If fresh or …

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Single Entry System in Accounting

What is Single Entry System? Single entry system is a system under which sometimes both aspects of a transaction are recorded, sometimes only one aspect of a transaction is recorded and sometimes complete transaction is not recorded. Introduction to Single Entry System in Accounting In small businesses, there is a major problem that due to …

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Difference between Finance and Accounting

Introduction Finance and Accounting might sound like similar words but they are actually two different terms. These both have interesting career opportunities for youngsters and university graduates. Well if you are an undergraduate student or curious to know about these terms then this article will help you to increase your knowledge on the two topics. …

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Limitations of financial accounting

What is Financial Accounting? Financial accounting, which is historical in nature, is mainly concerned with the recording of day-to-day business transactions. It is simply a post-mortem of the past events. Under financial accounting, business transactions are first recorded in the books of original entry, then classified into ledger and finally summarised by preparing Trial Balance. …

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Accounting concepts and conventions

Accounting concepts These are the basic assumptions or ideas upon which the science of accounting is based. These are fundamentals to accounting practice. These include: Separate Entity Concept Going Concern Concept Money Measurement Concept Cost Concept Dual Aspect Concept Accounting Period Concept Matching Concept Realization concept Accounting Conventions The term “Accounting Conventions” includes those customs and …

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Purpose, characteristics and advantages of accounting

Purpose of accounting The primary purpose of accounting is to provide information which is useful for decision making. It provides reliable information about the sources & trends of revenues of an enterprise. It provides authenticate information about the economic resources & obligations of a business. It provides reliable information about the changes in financial and …

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Difference between bookkeeping and accounting

Those people, who have little knowledge about accounting, are often confused in understanding the difference between Bookkeeping and Accounting. Bookkeeping is a small part of Accounting. Bookkeeping represents the recording phase of an accounting system. So we can say that the process of Accounting begins where the process of Bookkeeping ends. Accounting not only includes …

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What is bookkeeping?

Bookkeeping Definition Bookkeeping is the art of recording business transactions in a systematic manner. However, bookkeeping has been defined in a variety of ways by different authors. Some of the definitions are given below: Bookkeeping is an activity concerned with the recording of financial data related to the business operations in a significant and orderly …

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What is accounting?

Definition of accounting The American Institute of certified public accountants has provided perhaps the most comprehensive definition of accounting. “Accounting is the art of recording, classifying and summarizing, in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character and interpreting the results thereof”. …

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Accounting cycle

The sequence of accounting procedure is frequently referred to as accounting cycle or phases of accounting. It is repeated in the same order in each accounting period. It begins with the journalizing of transactions and ends with the post-closing trial balance. The most significant output of the accounting cycle is the income statement and balance …

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Branches or types of accounting

Introduction The present age is the age of competition and it is noted that there is a struggle for existence in every field and more particularly in the field of business (which comprises trade, commerce, industry and direct services). It is necessary for every business concern to carry on its activities with utmost efficiency so …

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Difference between Financial and Management Accounting

Accounting is often divided into two categories i.e., Financial Accounting and Management Accounting. Financial Accounting Financial accounting information is designed primarily for use by persons outside the firm, as creditors, stockholders, owners, governmental agencies and the general public. Most companies publish the financial accounting data through a set of general purpose statements known as the company’s …

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Users of accounting information

Accounting information is used by two types of users: external users & internal users. This can be explained with the help of the following diagram: Internal users of the accounting information 1. Owners Owners are those persons who provide capital for the business. They need information about the financial performance & position of the business. …

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Who needs accounting information?

While this website primarily covers the accounting needs of a business unit, but the information made available by accounting and the manner of obtaining that information can be of considerable use for people in their personal lives as well. A large number of people have an interest in the financial well being of a business. …

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Double Entry system of accounting

Double Entry Accounting is the system of accounting in which each transaction has equal debit and credit effects, thus ensuring that the accounting equation remains in balance. History of Double Entry System of Accounting The double entry system of accounting was first introduced by an Italian mathematician “Fra Luca Pacioli” who wrote the first book …

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Introduction to accounting – Q & A

Test your learning about ‘introduction to accounting’ chapter by answering 29 short questions given below. We suggest you try to answer each question yourself before clicking on the ‘see answer’ button. If you find difficulty in answering these questions, read ‘introduction to accounting‘ chapter thoroughly from explanation section of the website.

Introduction to accounting – MCQs

Take a quick Multiple Choice Questions (MCQs) test about Introduction to accounting. These MCQs can help you to prepare for your exams, interviews and different tests. Just click the “start quiz” button and start the introduction to accounting MCQs quiz. If you find difficulty in answering these questions, read ‘Introduction to accounting‘ chapter thoroughly from explanation …

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