Materiality principle: This principle requires that the items or events having an insignificant economic effect or not being relevant to the user’s need not be disclosed. In other words, only significant items should be considered when preparing financial statements.
Chart of accounts is an index to the accounts in the general and subsidiary ledgers. Ledger account are classified into five group of account. Chart of accounts is an index to place these five group of of accounts into an order, to assist into locating ledger accounts which allow for the accounts to be easily accessed.
The double-entry system of bookkeeping refers to a system of accounting under which both of the aspects (i.e. debit and credit) of every transaction are recorded in the accounts involved. For each transaction, this means that a bookkeeping entry will have to be made to show an increase or decrease of the other item
Every debit has an equal amount … Read the rest
Journalizing is the act of recording transactions in the journal. The original information to be recorded is to be found in the source documents which include sales and purchase invoices, debit and credit notes for return, ban paying in slips and cheque counterfoil, receipts for cash paid out and received and correspondence containing other financial information.… Read the rest
A ledger is a set of accounts. It contains all the accounts of a specific business enterprise. It may be kept in any of the following two forms:
(i) Bound ledger and
(ii) loose-leaf ledger
A bound ledger is kept in the form of a book that contains all the accounts. These days it is common to keep the ledger … Read the rest