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 July 16th, 2019 by Michael Brown
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Partnership Appropriation Account

The net income from the profit and loss account is transferred to the partnership appropriation account in order that it can be adjusted for partner salaries, commissions, and interest. Any residual net income after adjustment is distributed to the partners.

Last modified July 16th, 2019 by Michael Brown
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Departmental Accounting System

Departmental accounting is used by a business to assess the profitability of each of its departments using either the gross profit, contribution, or net profit method.

Last modified July 24th, 2019 by Michael Brown
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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 August 22nd, 2019 by Michael Brown
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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 July 16th, 2019 by Michael Brown
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Purchase Allowance Journal Entry

A business receives a purchase allowance from a supplier in respect of faulty goods. The supplier issues a credit note for 1,500 and the amount is posted to the purchase allowance contra expense account.

Last modified November 8th, 2019 by Michael Brown
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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 July 16th, 2019 by Michael Brown
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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 November 8th, 2019 by Michael Brown
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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 November 8th, 2019 by Michael Brown
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Stock Option Compensation Accounting

Stock options are a form of equity based compensation. When a business purchases the services of key personnel and pays for those services using stock options, it must record the expense in the income statement over the vesting period using stock based compensation accounting journal entries.

Last modified November 11th, 2019 by Michael Brown
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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.

Last modified July 16th, 2019 by Michael Brown
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