Other Topics
Profit Sharing Ratio
Imagine that you and your friend own a grocery store together. The place was found by you, the supplies were arranged, and everything was...
Valuation of Goodwill
Meaning and Formula
Goodwill refers to the prestige or reputation attached to a brand name. Additionally, the goodwill of a firm is the result of...
What is an Invoice or a Bill?
Invoice or Bill
An invoice is a document created by the seller as evidence of a sales transaction between a buyer and the seller. It...
What is a Cash Memo?
Cash Memo
In accounting, all transactions are properly documented as evidence of the financial trail. Cash Memo is a source document used in case of a...
What are Notes to Accounts?
Notes to Accounts
Also known notes to financial statements, footnotes, notes to accounts are supporting information that is usually provided along with a company's final...
What are Off-Balance Sheet (OBS) Items?
Off-Balance Sheet (OBS)
Also known as Off-Balance sheet items, Off-Balance sheet assets or liabilities, and Incognito Leverage. They are either a liability or an asset...
What are Source Documents in Accounting?
Source Documents or Source Vouchers
Source documents are the first document to record a transaction which works as an evidence containing details of a transaction. They are...
What is a Bill of Exchange?
Meaning
Bill of exchange is a financial instrument in writing containing an unconditional order signed by the maker, directing another person to pay a specific...
How to Show Trade Discount in Purchase Book?
Trade Discount in Purchase Book or Purchase Journal
A discount granted by a seller of goods or services on the retail price is called a...
What are Different Types of Purchase Orders?
Different Types of Purchase Orders
A purchase order (PO) is an official document generated by a buyer of goods/services as an offer for the seller....
What is Three-Way Matching?
Three-Way Matching
Three-way matching is a procedure used in accounts payable to authenticate and verify the disbursal of payment to a creditor. This type of...
What is a Purchase Order (Meaning, Template, Example, Download)?
Meaning of Purchase Order
A purchase order (PO) is an official document generated by a buyer of goods or services as an offer for the seller....
What is a Promissory Note?
Promissory Note
A promissory note is a financial instrument, in which one party promises in writing to pay a pre-determined sum of money to the...
What is Provision for Discount on Debtors?
Definition and Meaning
In the business world, a lot of sales transactions happen on credit, i.e. after a specified period of time. In this scenario,...
What is Provision for Doubtful Debts?
Meaning and Example
Doubtful debts, as the name suggests, are those receivables which might become bad debts at some point in future. In other words, they are...
What is a Profit Center?
Profit Center
Profit Center is a section of a company that is treated as a separate sub-business within a company to which revenues can be traced....
What is Cost Center?
Definition of Cost Center
A function or department in the organization that does not directly add to the profit, but costs the organization money to...
What is Days Payable Outstanding (DPO)?
Days Payable Outstanding (DPO)
Days payable outstanding or DPO is the average number of days that a company takes to pay its outstanding suppliers after a...
What is a Service Center?
Service Center
A service center is an organizational unit which provides services to other departments within an organization. Its main task is to serve other...
How to Prepare a Trial Balance from Ledger Balances?
Prepare Trial Balance from Ledger Balances
Preparing a trial balance from ledger balances is the next step of posting and balancing ledger accounts. The trial...
Why is Depreciation Not Charged on Land?
Charging Depreciation on Land
If you're an accounting student or executive you might have been often asked: "Why is depreciation not charged on land?". The...
What is Days Sales Outstanding (DSO)?
Meaning
Days sales outstanding or DSO is also known as days receivables, it measures the average number of days that a company takes to collect...
What is SOX?
SOX or Sarbanes Oxley Act
The SOX act refers to a United States federal law that came into existence in 2002. It has set standards...
Why Closing Stock is Not Shown in Trial Balance?
Closing Stock Not Shown in Trial Balance
The reason why closing stock is not shown in trial balance takes into consideration whether or not the closing...
What is Accumulated Depreciation?
Accumulated Depreciation
Total cumulative depreciation of a tangible asset up to a specific date is called Accumulated Depreciation. It is the total depreciation already charged...
What is Honorarium?
Honorarium
An honorarium is a voluntary payment given to a person for services delivered. These are generally acts or services for which customs and traditions...
What is Grouping and Marshalling?
Grouping and Marshalling
Grouping
In accounting, Grouping refers to presenting similar items with similar qualities together. They are shown under a common head inside financial statements. For example,...
What is Inflation Accounting?
Inflation Accounting
As the name suggests, accounting techniques that are used during the times of high inflation are called Inflation Accounting. It is widely used to counter...
What is Bank Reconciliation Statement?
Bank Reconciliation Statement (BRS)
The word reconcile means "making one thing consistent with another". In case of business, a Bank Reconciliation Statement or BRS refers to...
What is Contra Entry?
Contra Entry
In the dual entry accounting system, a contra entry is an entry which is recorded to reverse or offset an entry on the...