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Oct 26, 2018 · Getting confused by T-accounts, nominal ledgers and sales ledgers? We explain the difference between some of the most commonly used and confused terms in accounting.
May 12, 2023 · Accountancy is the practice of recording and analyzing financial data, while accounting is the process of using that data to make business decisions. Accountants create financial statements, manage assets and liabilities, produce company performance reports, and monitor internal controls.
- Principles and Concepts of Accounting
- Going Concern
- Accrual Basis
- Materiality
- Consistency
- Prudence
- Duality
For the purposes of the FA2 exam, there is a list of principles and concepts of accounting which you need to be familiar with and which can be found in learning outcome A1(a) in the study guide: 1. Going concern 2. Accrual basis 3. Materiality 4. Consistency 5. Prudence 6. Duality (dual aspect) 7. Business entity 8. Historical cost What candidates ...
Definition: ‘Financial statements are normally prepared on the assumption that the reporting entity is a going concern and will continue in operation for the foreseeable future. Hence, it is assumed that the entity has neither the intention nor the need to enter liquidation or to cease trading. If such an intention or need exists, the financial sta...
The Conceptual Framework refers to ‘accrual accounting’, also known as ‘the accruals concept’ or simply as ‘accruals.’ Definition: ‘Accrual accounting depicts the effects of transactions and other events and circumstances on a reporting entity’s economic resources and claims in the periods in which those effects occur, even if the resulting cash re...
Definition: ‘Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial reports make on the basis of those reports, which provide financial information about a specific reporting entity.’ There are some key issues within this definition that...
Definition:‘The use of the same methods for the same items, either from period to period within a reporting entity or in a single period across entities.’ Consistency is a straightforward principle and is intended to enhance financial reporting by making it easier for users to make comparisons. In that sense it contributes to the achievement of com...
Definition: ‘The exercise of caution when making judgements under conditions of uncertainty. The exercise of prudence means that assets and income are not overstated and liabilities and expenses are not understated. Equally, the exercise of prudence does not allow for the understatement of assets or income or the overstatement of liabilities or exp...
‘Duality’ refers to the fact that every transaction has a ‘dual aspect’ and therefore requires the use of ‘double entry’ accounting. Double entry is often easier to do than to explain. For this reason, candidates would be wise to complete as many practice questions as possible before taking the exam. It is also the reason why the topic can only be ...
In the multifaceted world of accounting, professionals encounter an array of terms that can often be challenging to decipher. Understanding these complex accounting terms is essential for accurate financial analysis, effective decision-making, and compliance with regulatory standards.
Jul 26, 2021 · Accounting terminology can be confusing, especially for new business owners. Use this FinancePal guide to accounting terms to help you get some clarity.
Learn what an income sheet is, its components, and how it helps businesses track financial performance and profitability. Use our accounting definitions guide to discover terms, meanings, and how specific accounting words are used by bookkeepers and CPA's.
Mar 22, 2017 · Accounting: The act of entering and sorting financial data into the bookkeeping system used by the company or accountant. Accounting period: The time during which the business’ financial information is being tracked, usually done on a monthly basis.
