Archive for June, 2008

Three Most Common Types of Small Businesses – Sole Proprietorships, Partnerships and Private Limited Companies

Sole Proprietorships This is the type of business which legally the business entity is not separated from the owner. However, do not get yourself confused with the Separate Entity Concept in accounting. Usually the business is registered with government under ...

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Cash Basis Vs Accrual Basis of Accounting

Many small businesses use cash basis of accounting to record transactions, especially those who prepare the accounts once a year. Please refer to my post: Preparing Accounts of Small Businesses Once A Year – Tips and Pitfalls To Avoid for further illustr...

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Effective Interest? Simple Interest? Compound Interest? Nominal Interest?

Simple interest is usually discussed and compared with compound interest. Simple interest is named as such because the interest calculated is not compounded. In contrast, when compound interest is calculated, nominal interest rate and effective interest rate w...

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Preparing Accounts of Small Businesses Once A Year – Tips and Pitfalls To Avoid

Many small business owners started the businesses on their own or with minimal staff strength. Usually, the major focus of the businesses is on revenue generation and leaves the function of transactions record keeping and accounting to inexperience staff. Many...

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Dividend Imputation

In some countries, dividends are distributed to shareholders under dividend imputation system. The purpose of this system is to avoid imposing tax “2 times” on the same income is first generated by companies (taxed the first time when the income is...

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Separate Entity Concept

In accounting, a business entity is treated as a separate entity from the owner(s). Therefore, any capital injections made by the owner(s) are recorded as capital contribution from owners in the books of the business entity. The owner(s)’ private expenditure...

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