Accounting Concept

Introduction The standard deviation, sometimes referred to as SD or represented by the symbol “σ,” shows the degree to which a value deviates from the mean. Values with a low standard deviation are frequently found to be within a few of the mean. A high on the other hand, suggests that the values are higher … Read more

Introduction  The interest charged on a loan or deposit amount is known as compound interest. The principal and interest accrued over time determine the compound interest for a given amount. The primary distinction between simple and compound interest is this. Assuming we look at our bank statements, we typically see that our account is credited … Read more

The standard requires presenting information about the historical changes in an entity’s cash and cash equivalents using a statement of cash flows. Information about the cash flows of an entity is useful in enabling users of financial statements to assess the ability of the entity to generate cash and cash equivalents and the needs of … Read more

The primary purpose of preparing a manufacturing account is to ascertain the manufacturing costs of producing finished goods. Non-manufacturing entities are involved in the trading of goods at a profit. Therefore, manufacturing entities prepare a manufacturing account in addition to a trading account, profit and loss account, and statement of financial position. The manufacturing account … Read more

Unlike a trading business, a manufacturing business buys products to use them as materials in making a new product. Thus, there is a transformation of the purchased products. A manufacturing business combines raw materials, labor, and overhead costs in its production process. The manufactured goods will be sold to customers. It is important to distinguish … Read more

The two main methods of recording inventory to calculate the cost of sales are Perpetual and Periodic methods. Each method uses a ledger account for inventory, but these have different roles. An entity may use the periodic system in its general ledger and use a different computer system outside of its general ledger to track … Read more

Net Realisable Value of inventories is the estimated selling price in the ordinary course of business less the estimated costs of completion and less the estimated costs necessary to make the sale. The estimated selling price may or may not be equal to fair value depending upon how the entity sells in the ordinary course … Read more

Inventories are defined by IAS 2 as assets that are kept for sale in the regular course of business, in production for such a sale, or as supplies or materials to be used in the creation of goods or provision of services. Inventories are assets: Goods in Transit Goods in transit are also categorized as … Read more

The objective of the International Public Sector Accounting Standards Board is to serve the public interest by developing high-quality accounting standards and other publications for use by public sector entities around the world in the preparation of general-purpose financial reports to enhance the quality, consistency, and transparency of public sector financial reporting worldwide. Public sector: … Read more

Account receivables, often referred to as “AR” or “receivables,” represent the outstanding payments owed to a business by its customers. These outstanding payments typically arise from the sale of products or services on credit terms, meaning the customer pays at a later date. In other words, Account Receivables represent the money expected to flow into … Read more