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Financial Accounting Essentials You Always Wanted To Know

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  • Borishas quoted3 years ago
    Accounting system contains detailed plans and performance reports meant for decision makers within the company
  • Borishas quoted3 years ago
    Financial Accounting system contains financial statements and disclosures meant for decision makers external to the company. A Managerial Ac
  • Александр Чикиткинhas quoted5 years ago
    the expense is matched with revenue and recognized together
  • Александр Чикиткинhas quoted5 years ago
    there are two criteria that help determine when to recognize revenue. They are as below:
    a) The promised work must be done before revenue is recognized
    b) Cash collection should be reasonably assured before revenue is recognized
  • Александр Чикиткинhas quoted5 years ago
    Revenue Recognition
    There will be transactions that continue for long, starting from order generation to receiving the payment. But this period could see several income statements being created. In such a case it becomes difficult to decide whether the revenue for that transaction should be included (recognized) in the income statement. Following two criteria are used to determine when to recognize revenue:
    a) Before recognizing revenue, the promised work must be done, meaning that the goods should have been delivered or the service must have been provided
    b) Before recognizing revenue, cash must have been collected, or, at least, collection must be reasonably assured
  • Александр Чикиткинhas quoted5 years ago
    Most companies create an income statement at least quarterly.
  • Александр Чикиткинhas quoted5 years ago
    An income statement is a statement of the company’s revenues and expenses over a period of time – month, quarter, half-year o year.
  • Александр Чикиткинhas quoted5 years ago
    This forms the accounting equation and is as given below.
    Assets = Liabilities + Stockholders’ Equity
  • Александр Чикиткинhas quoted5 years ago
    Each year the company reports either profit or loss in its financial statements. These get added to or subtracted from the retained earnings in the balance sheet.
  • Александр Чикиткинhas quoted5 years ago
    Paid-in Capital
    When owners of a company invest cash or other assets in the business, they receive shares of stock in exchange. This gets added to paid-in capital
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