2 types of adjusting entries are (1) Advances, (2) Accruals. Advances adjusting entries are (1) advance payment of expenses and (b) unearned income. Accruals adjusting entries are (a) accrued income and (b) outstanding expenses.
Merchandise inventories are finished goods acquired for sale by retail or wholesale traders. Finished goods possessed for sale by manufactures are usually called finished goods inventory.
Accounting has a relationship with other disciplines management, economics, mathematics, computer science, statistics, law, political science, and engineering.
Trial balance errors are errors in accounting process that cannot be detected by the trial balance sheet. 2 types of limitations of trial balance are clerical errors, and errors of principles. Clerical errors are made by a human. Errors of principle happen when an accounting principle is not applied.
The main difference between bookkeeping and accounting is; bookkeeping is the primary stage of the whole accounting process and accounting is the second or final stage of the whole accounting process.
Constraints of accounting are actually the limit or boundaries that are necessary for providing information with the qualitative in characteristics. The 5 constraints of accounting are; cost-benefit, materiality, consistency, conservatism, timeliness, and industry practice principle.
On the basis of the data received from the history of evolution and the features of gradual development, history of Accounting can chronologically be classified into four stages; emergent stage, preanalytic stage, development i.e. analytic stage, modem age.
Bank reconciliation Statement shows differences between balance shown in bank statement and balance shown in depositor’s accounting record.