The general ledger is the central ledger in the double entry bookkeeping system. It includes all the accounts a business lists in its chart of accounts and records accounting transactions by account and then date order. A trial balance can be extracted from the general ledger which forms the basis for the production of the financial statements.
Sale or return basis is a term used to refer to an arrangement whereby goods are sent by a business to a customer on the understanding that the customer will either approve and retain the goods or return then within a specified period of time.
Manufacturers who utilize a batch costing system need to determine the batch size which will minimize the total cost of production. The economic batch quantity formula can be used to calculate this value.
Batch costing can be used by both manufacturing and service industries. The purpose of the batch cost system is to allow a business to calculate the total cost of a batch of identical units in order that a unit cost, selling price and profitability can be determined.
A product warranty can either be embedded in the cost of the asset itself or sold as a separate extended warranty at an additional cost. The additional cost is not capitalized but treated as a deferred expense in the accounts.
Last modified December 13th, 2019 by Michael Brown
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.
As the number of bookkeeping transactions increases an accounting ledger needs to be split into various subsidiary ledgers. Self balancing ledger accounting is a method of entering two sided transactions in each ledger using adjustment accounts in order that a trial balance can be extracted from each of the subsidiary ledgers.
The sales volume variance has two components, the sales mix variance and the sales quantity variance. The sales mix variance shows the effect of the difference between the actual and budgeted sales mix. The sales quantity variance shows the effect of the difference between the actual volume sold at the budgeted mix and the budgeted volume.
The total sales variance sometimes referred to as the sales value variance is the difference between the actual sales and budgeted sales and can be split and analysed into the sales volume variance and the sales price variance.
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.