Archive / 2.07 Accounting In Itself

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Payable for expenses

There are two things one can buy from a supplier – an item of inventory or an item of expense (be it service or an item charged directly to expenses). Whilst items of inventory are a topic on their own, with this post we’ll focus on expenses.    (more…)

Is it an accounting estimate or an accounting principle that’s being changed?

The thing with changes is that whilst they’re allowed under certain circumstances, it’s always the question of whether something really counts for a change in principle or it’s just a change in an estimate. An accounting estimate also results in a change sort of, either an impairment, a new model for calculating an allowance etc. […]

Everyday accounting principles to your routines

Your everyday accounting routines are essentially driven from your locally accepted accounting policies. Your local accounting policies lay the framework on which you base your reporting, your policy choices and how things ought to be.  (more…)

Definition of an intangible asset

An intangible asset is, to put it simple, an asset without physical substance. You cannot touch it. An intangible asset is something you only recognize within your accounts if your company can control the asset and you can determine the cost reliably.  (more…)

Non-current assets and their treatment

To define the term ‘non-current assets’ requires that we address the concept of liquidity. An asset is liquid if it can be realized within a short period of time and with ease without losing any of its value (normally assumed within a year). Liquid assets comprise your company’s ‘current assets’. However if an asset is […]

Accruals basis of accounting

Accounting in most countries and for most companies is based on subject matter of the transaction and not actual cash movement. Yes, there are certain forms of business which are allowed to still record transactions as the money is received or paid, however there are just a few of them.  (more…)

Importance of closing an accounting period

The importance of closing accounts for a determined period derives from understanding the importance of financial reporting in the first place. Financial reporting is for having accurate accounts about a company and it’s performance. Without those the business could possibly go into bankruptcy since it’s not in compliance with regulations (i.e. not paying taxes in due […]