The cost of inventory includes the costs of purchase, the costs of conversion, and other costs of bringing the inventory to its present location and condition.
Last modified January 28th, 2020
Tag: Balance Sheet
Incorporation Expenses
LIFO Reserve
Debt Finance in Accounting
Accrued Interest Income Journal Entry
A business earns interest on its money deposits of 1,000 but does receive the amount into its bank account until after the month end. As the income has been earned but not received, it needs to be accrued for in the month end accounts.
The double entry bookkeeping journal entry to show the accrued income is as follows:
Last modified November 9th, 2022
Accounting Principles
Double entry bookkeeping is the first stage in producing a set of financial statements for a business.
For the financial statements to be useful the users (the bank manger, tax authorities, owners, investors, etc) need to have agreed and understand how they were compiled from the underlying information, these understandings form the principles of accounts.
Last modified October 28th, 2022
Factoring Receivables
When a business sells products and services to a customer on account, the goods are delivered and the sales invoice is created, but the customer does not have to pay until the invoice due date. The invoice is posted to the customers account and becomes an accounts receivable balance until the amount is paid by the customer.
In the meantime, the business has its cash tied up in the customer account receivables until the customer pays on the invoice due date. However, by using factoring, the business can release this cash by selling the invoices to a third party, normally called the factor.
Last modified December 18th, 2019
Revenue Received in Advance Journal Entry
Receive a Loan Journal Entry
Buy Equipment with Down Payment in Cash
A business buys networking equipment to the value of 12,000 and funds the purchase with a down payment in cash of 3,000 and the balance on credit terms form the supplier of the equipment.
The double entry bookkeeping is recorded using this equipment purchase compound journal entry.
Last modified July 16th, 2019
Equipment Purchase via Loan Journal Entry
Account Receivable Collection Journal Entry
Accounts receivable are amounts owed to a business by customers for credit sales.
When payment is received an account receivable collection journal entry ( ar journal entry) is required to record the cash received and to clear the balance on the accounts receivable account of the customer.
Last modified August 9th, 2019