I. VALUATION OF INVENTORY Inventory may include any of: -Finished goods -Work in progress -Material The prudence concept requires that profit are not anticipated, but losses are accounted for as soon as they are known. For this reason, IAS2 Inventories states that inventory is valued in the statement of financial position at the lower of cost and net realisable value
Continue reading I. PARTNERSHIPS-BASIC PRINCIPLES Definition: a partnership is two or more individuals jointly carrying on business with a view to making profit. A, partnership agreement, which need not necessarily be in written form, will govern the relationships between the partners. Important matters to be covered include: -Capital to be introduced by partners -How profits are shared between partners -Drawings by partners
Continue reading I. Provision A provision is a liability of uncertain timing or amount. Uncertainty is what distinguishes a provision from another type of liability ( such as a trade payable or an accrued expense). If a business has a trade payable or a bank overdraft, its management know that there is a liability. Management also knows the amount that the business
Continue reading I. COST OF GOODS SOLD Cost of goods sold (Dr)= beginning inventory (Dr)+ purchase(Dr) – ending inventory(Cr) Entry for cost of goods sold accounts: Purchase account Dr. Purchase account……………………………………………………..….xx Cr. AP/cash at bank account……………………………………………….xx Opening inventory account: Dr. opening inventory account/cost of good sold ( in income statement)………..xx Cr. Inventory account ( in BS )………………………………………..……xx Closing inventory Dr. Inventory account
Continue reading I. THE NATURE OF PURCHASE AND SALES LEDGER CONTROL ACCOUNTS The balance on the control account should equal the sum of the individual balances on the relevant personal ledgers. An important method of checking errors is to reconcile the balances on the purchase ledger control account and the sales ledger control account to the total of the individual balances in
Continue reading I. IAS 16 PROPERTY, PLANT AND EQUIPMENT IAS 16 property, plant and equipment provide the rules relating to accounting for non-current assets, including depreciation. Definition depreciation is measure of the cost of the economic benefits of the tangible non-current asset that have been consumed during the period. This consumption may arise because of any of the following factors. Use-i.e. Plant
Continue reading The income statement is a financial statement that shows the financial performance of a business for an accounting period. ……………………… Download CHAPTER 2 introduction to final account
Continue reading Accounting: Accounting records a business’s transactions to produce financial statements such as income statement (IS) and statement of financial position (SFP). Accounting Equation: Asset = Capital + Liabilities Or Capital = Asset – liabilities Assets: An asset is a resource controlled by the entity as a result of past events and from which economic benefits are expected to flow to
Continue reading Chapters for FA2 Maintaining Financial Records as follows:
Continue reading Accounting Differences between Public Accountability Company & SME (Small and Medium Entity) In July 2009, the International Accounting Standards Board (IASB) issued the IFRS (International Financial Reporting Standards) for Small and Medium-Sized Entities. There is no universally agreed definition of SME (small and Medium Entities). No single definition can capture all the dimensions of a small or medium-sized business, or
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