When a business decides to give goods in charity it also needs to account for those goods in the appropriate financial statement(s), in this case, stock/purchases are reduced with the exact cost of goods donated. Journal entry

The Fictitious word, itself says “fake”. So Fictitious Assets are not an asset in the true sense but this is a huge amount of expenses or losses which are unclaimed in profit/loss account during the year in which they are incurred. Bind this to your memory fictitious assets are not assets they are fake or deceptive they are actually expenses & losses […]

Reduction in the value of an intangible asset by prorating its cost over a period of time (generally in multiple accounting periods) is called Amortization. Point worth remembering is that it can only be done for intangible assets such as copyrights, patents, trademarks, goodwill, etc. It is used for writing-off intangible assets whereas depreciation is used for tangible assets. If related to obligations, it can also […]

Not all goods purchased in beginning & during the accounting period are sold until the end of that period, this results in a remainder balance known as closing stock. Closing stock is a part of purchases & trial balance already includes purchases, hence if the closing stock is shown as a separate item it will double count and […]

What are the Three Golden Rules of Accounting? Golden rules are used to prepare an accurate journal entry which forms the very basis of accounting and act as a cornerstone for all bookkeeping. This is also known as the traditional rules of accounting or the rules of debit and credit. Easy Interpretation of 3 golden rules of accounting Real Account If the item (real […]