Accounting

Definition Reconciliation is an accounting process carried out by businesses in which they compare two data sets and ensure that they match. To carry out this task, businesses usually compare their own data records to external data received through a bank, a customer, or a vendor. In the process, each value on a specific date …

Types of Reconciliation in Accounting (Definition, Purpose, Explanation, and Example) Read More »

Companies periodically create their accounting records and financial statements, after a fiscal period to present a direct, precise, and comprehensive summary of their financial performance. The reports are crucial not just for corporate strategizing, but also for auditors, who depend on the businesses they assess to be accurate. Ensuring that the assertions in the financial statements …

What are the Assertions in Accounting? (Explanation and Example) Read More »

A balance sheet is an essential tool for investors and businesses alike. It is also known as a sheet of financial position because it contains a business’s financial position. It contains everything required to evaluate a company’s financial position. It contains every bit of information about the assets that the company owns, all the liabilities …

What is the Basic Format of a Balance Sheet? Read More »

Overview: Accounting entries, which are also more commonly known as simply journal entries, are one of the most important parts of an accountant carrier. The accounting or journal entries play a crucial role in the bookkeeping of every business, a small business or a huge business. Account entries are done by using the double entry …

What are the Accounting entries? (Definition, Example, and Explanation) Read More »

Definition: Accounts payable are the payments that a business owes to its supplier as a result of purchasing a product or service from that supplier. Account payables are noted in the balance sheet of a company as liabilities because they are the obligations that are yet to be cleared. Account payables are normally classified as …

Accounting for Account Payable: Recognition, Journal Entries, and Example Read More »

A chart of accounts or COA is just like an organizational chart, but with one major difference and that is it shows financial accounts instead of the position of people in an organization. A chart of accounts provides great details of each of the accounts in a company’s balance sheet. It divides and sub-divides assets, …

What Is the Chart of the Accounts? And How Does It Work? Read More »

Introduction It comes from the source, meaning the source of the document. Source accounting documents or simply source documents are financial documents that provide financial details about a company. Consider this, whenever there is a financial purchase or a slip from the supplier, it creates a financial trial, referred to as a source accounting document. …

What Are the Five Source Accounting Documents? (All You Need To Know) Read More »

The income statement is also sometimes referred to as a profit and loss statement or statement of financial performance. The three basic components of an income statement are revenues, expenses, and, net income. It is a must for public companies listed on a stock exchange to file the income statement along with another statement such …

The Three Basic Components of Income Statement (Detailed Explanation) Read More »

Definition Rule 407 was a law that required a letter which requires an employee working in Financial Industry regulatory authority or FINRA, which allowed the employee to hold investments in equities or bonds in personal accounts. The employees must disclose personal bank account information about the account in which they are holding the security. It …

What is the Rule 407 letter? – Definition, Explanation, Example, and More Read More »

What is Activity-Based Costing? Activity-based costing is a process for computing production costs. It distributes overhead costs into different production-related activities. ABC is a procedure that applies overhead allocation to the products that utilize those activities, allowing it to be more exact than traditional allocation. ABC works effectively in complex processes where there isn’t a single …

What is Activity-Based Costing and How Does It Work (Explained) Read More »