We apply the conservatism principle and use LCM to reduce inventory to a more realistic value and, at the same time, recognize the loss in value that has incurred.
There are Limitations of accounting in practice and businesses must record, analyze and present accounting information in way to avoid them.
Accounting is important in business, it provides the financial information of business to aid managers to take decision and run it successfully.
In Double Entry System, debit and credit of each account properly determined by Golden Rules and Accounting Equation Method.
In accounting, cash includes coins; currency; deposited negotiable instruments such as checks, bank drafts and money orders; amounts in checking and savings accounts and demand certificates of deposit.
Account is is used to classify and summaries measurements of business activity an element in accounting system and there are 4 types of Accounts.
Accounting Transaction is a is recorded to maintain liabilities, owner’s equity, revenue or expense of event and there are several types of Transaction.
In Accounting, clear conception of events classification is required and and events are divided in monetary events and Non-monetary events.
Accounting Equation indicates that for every debit there must be a equal credit. assets, liabilities and owners’ equity are the three components of it.
Income Statement are 2 types, Single step income statement and Multiple step income statement for finding net profit or loss an accounting period.