Archive for May, 2008

Inventories or Stocks – Part 2, Methods of Recording in General Ledger

There are two common methods of recording inventories or stocks in the General Ledger of business entities:- 1. The Periodic Method 2. The Perpetual Method The choice of the method used will directly determine the double entries for the recording of inventorie...

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Inventories or Stocks – Part 1, Introduction

  Inventories or stocks are one type of assets to many business entities. Inventories or stocks could be in the form of trading goods/merchandise for those business entities principally engaged in purchasing the goods from suppliers and resell those goods to ...

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The Income Statement

  Remember in my previous post on the Balance Sheet? The Balance Sheet shows the “position” of an entity at a certain point in time. However, the Income Statement shows a different picture than the Balance Sheet – Income Statement or Profit and Loss...

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The Balance Sheet

  As discussed in my earlier posts, the balance sheet shows the financial position of an entity. In addition to the example introduced earlier whereby the owner contributed $10,000 cash at bank as capital (please refer to my post titled Debits and Credits), t...

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Debits and Credits

  These two words are typical to the world of accounting and they relate to the Accounting Equation: – Assets = Liabilities + Owners’ Equity Under what we called double entry system in accounting, each transaction must be recorded TWO times. For ...

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The Accounting Equation

  You can find a lot of materials on-line about what accounting is about and you will not miss them mentioning The Accounting Equation: – ASSETS = LIABILITIES + OWNERS’ EQUITY Assets are simply those things that are valuable to an entity and they ...

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