Accounting Principles (Accounting Assumptions) are the various concepts and traditions which have been developed over a period of time and have become well-accepted by the profession. The Basic Accounting Principles accounting provide a foundation for the recording of transactions and…..
Aging of Receivables Aging of receivables is the last method of estimating doubtful accounts. In this method the ending balance of doubtful accounts is obtained by multiplying the various estimated percentages to the breakdown of ending receivables based on their…..
Percent of Receivables Another method of estimating the doubtful accounts is the percentage of receivables method. In this method the product of account receivable and the percentage of receivables is the ending balance of allowance for doubtful accounts. The ending…..
Percent of Net Credit Sales In the percentage of credit sales, the Net credit sales must first be obtained. This is computed by deducting the cash sales from the total sales to get the gross credit sales. The gross credit…..
What are Bad Debts? Credits are given to customers to encourage sales. However, not all receivables are collectible, there are some accounts which are considered as doubtful accounts also known as bad debt or uncollectible accounts. That’s why an allowance…..
A bank reconciliation is a process that accounts for the difference in the cash balance per bank statement and the cash balance per books of the company. There are 3 basic formats that can be used used in reconciling the…..
Every merchandising business has goods on hand that it holds for sale to customers. The amount of goods on hand at any one time is known as merchandise inventory. The Total Cost of Goods Available for Sale during the year…..
Based on the International Accounting Standards (IAS 7) and Philippine Accounting Standards (PAS 7), “Cash Equivalents” are short term, highly liquid investments that are readily convertible into cash, and are subject to an insignificant risk of changes in value because…..