Royalties in Accounting

Royalty accounts are used to record royalties paid by a licensee to a licensor for the use of a long term asset owned by the licensor.

Royalties in Accounting April 19th, 2017Team
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Rent Deposit Accounting Journal Entry

A rental deposit is paid by a business to a landlord when renting premises. The deposit is refundable but is held by the landlord as security in the event that the business has caused damage to the property or has rent outstanding when the property is vacated.

Rent Deposit Accounting Journal Entry April 13th, 2017Team
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Relationship Between Financial Statements

The four main financial statements are the income statement, statement of retained earnings, balance sheet, and cash flow statement. All four statements are interrelated and allow the user to more fully understand the financial performance of the business through the analysis of its financial statements.

Relationship Between Financial Statements January 26th, 2017Team
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Gross Profit Method Calculator

The gross profit method calculator works out a products net price after applying multiple trade discounts to its list price. This free Excel calculator also provides a summary showing the original price, total discount, and net price, together with a calculation of the single equivalent rate (SED).

Gross Profit Method Calculator November 6th, 2016Team
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Consumable Supplies Expense Recorded

Following a physical count, a business has consumable supplies on hand of 350. The accounting records before adjustment show supplies on hand of 500, and an adjusting entry is needed to record the amount of supplies used for the period.

Consumable Supplies Expense Recorded November 6th, 2016Team
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Effect of Inventory Errors

Errors in inventory impact the balance sheet and income statement of a business, but have no effect on its operating cash flow. In the cash flow the change in net income as a result of the inventory error, is compensated for by a change in the movement on working capital.

Effect of Inventory Errors November 6th, 2016Team
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Accrued Income Tax

A business has an estimated annual income tax expense of 14,000 due of profits for the accounting period. A demand for the amount has not yet been received from the tax authorities, and the expense has not been recorded in the accounting records. An accrued income tax adjusting entry is made in the accounting records.

Accrued Income Tax November 6th, 2016Team
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Fixed Deposit Journal Entry

A business uses term deposits to earn interest on surplus cash, and records a fixed deposit journal entry to reflect the transfer of cash from its current account to a fixed deposit account.

Fixed Deposit Journal Entry November 6th, 2016Team
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Goods Received Not Invoiced

A business operating a perpetual inventory system needs to record goods received into inventory even if it has not yet received an invoice from its supplier. Since the liability cannot be posted to the accounts payable account, a temporary posting is made to the goods received not invoiced account.

Goods Received Not Invoiced November 6th, 2016Team
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Basket Purchase Allocation

A business will often purchase a number of long term assets for a single combined purchase price. In order to record the assets in the accounting records and to allow depreciation to be correctly calculated, the basket purchase price needs to be allocated in proportion to the fair market value of the assets.

Basket Purchase Allocation November 6th, 2016Team
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Allowance Method

The allowance for uncollectible accounts method is used to estimate the bad debt expense required to reflect uncollectible accounts receivable at the end of an accounting period. The method complies with the matching principle and for this reason is preferred over the direct write off method.

Allowance Method November 6th, 2016Team
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Direct Write-off Method

The direct write-off method of accounting for uncollectible accounts is used to remove specific uncollectible amounts from the accounts receivable balance when they are identified. This debt write off method does not comply with the matching principle and can only be used for immaterial amounts.

Direct Write-off Method November 6th, 2016Team
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