The matching principle or expense recognition principle forms a necessary part of the accrual basis of accounting, and ensures that expenses are matched to revenues recognized in an accounting period.
Last modified September 29th, 2022
Tag: Income Statement
Barter Transaction Accounting
Advertising Expense and Prepaid Advertising
Branch Accounting System
Branch accounting is used by a business to assess the profitability of each of its branches. The simplest method is for the central head office to operate a single branch account for each branch. The method is sometimes referred to as the debtors system or direct method system.
Last modified February 9th, 2023
Partnership Appropriation Account
Departmental Accounting System
Manufacturing Account Format
The manufacturing account is a general ledger account used by a manufacturer to accumulate production costs such as direct materials, direct labor and manufacturing overheads. The account is used to calculate the manufacturing cost of goods completed during an accounting period.
Last modified October 14th, 2022
Trading Profit and Loss Account
The trading and profit and loss accounts are temporary accounts in the general ledger. The trading account shows the gross profit and is particularly useful for a trading business which buys and sells finished products as it allows the gross profit and gross profit percentage to be calculated.
Last modified September 29th, 2022
Purchase Allowance Journal Entry
Revenue Recognition Standard Accounting
A business expects to receive consideration for the sale of goods to its customers. Since accounting periods are for a defined time period a process is needed to allocate the correct amount of consideration to the correct period. This process is referred to as revenue recognition and is applied using a five step revenue model.
Last modified February 17th, 2021
Goods Given as Charity Journal Entry
A business records an bookkeeping entry for goods given to charity. Since the goods are given free of charge they have no sales value and cannot be recorded as sales and therefore the cost of goods needs to be removed from the purchases account and transferred to a charitable expenses account.
Last modified February 23rd, 2023
Goods Distributed as Free Samples
A business records an accounting entry for free samples given to customers. Since the free promotional samples have no sales value they cannot be recorded as sales and therefore the cost of the samples needs to be removed from the purchases account and transferred to a promotional expenses account.
Last modified March 15th, 2023