Accounting

Business source documents are the primary source of information. These documents contain valuable primary data for bookkeeping and accounting records. Business source documents can also be used as audit evidence and for tax compliance purposes. Let us discuss what are business source documents and the top 7 source documents used most widely. What are Business …

What are Business Source Documents? 7 Important Source Documents to Know Read More »

The business entity concept differentiates between the financial transactions of businesses and their owners. It requires maintaining separate accounting records for both. Let us discuss the business entity concept, how it works, and its importance for a business. What is Business Entity Concept? The business entity concept states that the transactions of a business and …

What is Business Entity Concept? – Definition, Examples, and Details. Read More »

Generally, capital expenditures are not recorded in the income statement. It’s because the income statement is relevant for a short period. On the other hand, the capital expenditure is incurred for more than on accounting period. Hence, if we classify capital expenditure in the income statement, it will violate the matching concept and lead to …

Where Does Capital Expenditure Go In Income Statement? Read More »

An investment income is recorded in the income statement. It’s a credit item that leads to an increase in profit for the business Most of the time, it’s non-operating income which means the business has not earned investment income through the normal way of earning. Instead, it’s an income that has been earned via activities …

Where does Investment Income Go In Income Statement? Read More »

Companies use assets for various purposes, primarily including the generation of revenues. These assets include resources owned or controlled by a company. Similarly, these resources result in an inflow of economic benefits in the future. They consist of inventories, cash, accounts receivables, and fixed assets. Of these, the fixed assets constitute a significant portion of …

Accounting for Borrowing Costs (Journal Entry and Example) Read More »

A bond is a debt instrument available to companies, municipalities, cities, and other organizations. These entities can gather funding by issuing this instrument. In exchange, the holder receives a promise from the issuer to get repaid in the future. Usually, this promise depends on the bond’s maturity date. On top of that, holders may also …

What is Included in a Bond Indenture? (Explanation) Read More »

Companies require assets to generate revenues. These include resources owned or controlled by a company that results in inflows of economic benefits. In accounting, these inflows may occur through the asset’s value or use. These resources are crucial in helping companies continue their operations. The assets companies use may differ based on their needs and …

What Are Biological Assets and How to Account for Them? Read More »