Accounting Principle

Financial statements are final result of accounting work done during the accounting period. Financial statements normally include Trading, Profit and Loss Account and Balance Sheet.…

Recording Depreciation Depreciation is directly charged against the asset by debiting Depreciation account and crediting the Asset account. Depreciation account is closed by transferring to…

Revaluation Method of Calculating Depreciation Under this method, the assets like loose tools are revalued at the end of the accounting  period and the same…

Insurance Policy Method of Calculating Depreciation According to this method, Insurance policy is taken for the amount of the asset to be replaced. The amount…

A contra account offsets another, the related account with which it is paired. If the related account is an asset account, then the contra asset…

Types of leases are discussed below Financial Lease This type of lease which is for a long period provides for the use of asset during…

A legal document outlining the terms under which one party agrees to rent property from another party. A lease guarantees the lessee (the renter) use…

A conceptual framework establishes the concepts that underlie financial reporting. A conceptual framework is a coherent system of concepts that flow from an objective. The…

Compensating balance A minimum balance that must be maintained in an account. The compensating balance is often used to offset a portion of the cost…

A current liability is susceptible to precise measurement because the date of payment, the payee, arid the amount of cash needed to discharge the obligation…