http://www.accounting-basics-for-students.com/accounting-basics-blog.html Welcome to the Accounting Basics Blog! Subscribe to this blog and you'll be notified whenever there's a new lesson, article, exercise or update to the Accounting-Basics-for-Students website. en-us accounting basics Tue, 08 May 2012 05:15:38 GMT Tue, 08 May 2012 05:15:38 GMT accounting-basics-for-students.com http://www.accounting-basics-for-students.com/-bad-debts-in-cash-flow-statement-.html http://www.accounting-basics-for-students.com/-bad-debts-in-cash-flow-statement-.html Q: Where is the writing off of bad debts entered on the cash flow statement? Thanks, Katrien A: It's not in the cash flow statement as it's not a flow Tue, 08 May 2012 05:15:31 GMT http://www.accounting-basics-for-students.com/-cash-flow-statement-balance-sheet-exercise-.html http://www.accounting-basics-for-students.com/-cash-flow-statement-balance-sheet-exercise-.html Use the cash flow statement above to construct a balance sheet Tue, 08 May 2012 05:11:43 GMT http://www.accounting-basics-for-students.com/-material-pricing-and-valuation-of-stock-fifo-lifo-weighted-average-cost-question-.html http://www.accounting-basics-for-students.com/-material-pricing-and-valuation-of-stock-fifo-lifo-weighted-average-cost-question-.html The following details are extracted from the stores ledger card of a small manufacturing company during the month of November 2009 (please note that Shs Tue, 08 May 2012 05:03:52 GMT http://www.accounting-basics-for-students.com/-manufacturing-costs-question-the-cost-of-raw-materials-purchased-during-the-year-.html http://www.accounting-basics-for-students.com/-manufacturing-costs-question-the-cost-of-raw-materials-purchased-during-the-year-.html Please help me with the following manufacturing costs question: Inventories Beginning Tue, 08 May 2012 04:50:51 GMT http://www.accounting-basics-for-students.com/-break-even-analysis-.html http://www.accounting-basics-for-students.com/-break-even-analysis-.html Please help me with the following break even analysis question: Particulars Shoes Socks Selling Price 645.00 36.00 Variable Cost 516.00 27.00 Fixed Cost Tue, 08 May 2012 04:46:36 GMT http://www.accounting-basics-for-students.com/-asset-classification-.html http://www.accounting-basics-for-students.com/-asset-classification-.html Q: I bought a business warehouse. How do I classify this asset if I paid the full amount with a cashier's check Fri, 04 May 2012 18:07:59 GMT http://www.accounting-basics-for-students.com/-common-size-income-statement-.html http://www.accounting-basics-for-students.com/-common-size-income-statement-.html 1. Prepare a common sizes income statement and balance sheet for McDonough product. The first column of each statement should present McDonough product Fri, 04 May 2012 18:03:58 GMT http://www.accounting-basics-for-students.com/-relation-of-profit-to-opening-closing-inventory-.html http://www.accounting-basics-for-students.com/-relation-of-profit-to-opening-closing-inventory-.html Q: Why is the gross and net profit directly proportional to the closing inventory? So if the stock is over valued, the profit increases, and vice versa. Sun, 25 Mar 2012 20:46:45 GMT http://www.accounting-basics-for-students.com/-contingent-liability-.html http://www.accounting-basics-for-students.com/-contingent-liability-.html Q: What do you mean by contingent liability Sun, 25 Mar 2012 20:33:41 GMT http://www.accounting-basics-for-students.com/-journal-entry-purchasing-goods-.html http://www.accounting-basics-for-students.com/-journal-entry-purchasing-goods-.html Q: What is the journal entry for the following? Purchase goods from KJ Mehta for cash 5,000 Rupee Sun, 25 Mar 2012 20:32:30 GMT http://www.accounting-basics-for-students.com/-control-accounts-exercise-general-ledger-.html http://www.accounting-basics-for-students.com/-control-accounts-exercise-general-ledger-.html The following balances are available from the books of Frema, a sole trader: Balances as at 1st July, 2009: - Dr. Balances in the Sun, 25 Mar 2012 20:31:12 GMT http://www.accounting-basics-for-students.com/-prepare-total-debtors-account-and-see-whether-the-balance-obtained-agrees-with-the-balance-as-per-schedule-.html http://www.accounting-basics-for-students.com/-prepare-total-debtors-account-and-see-whether-the-balance-obtained-agrees-with-the-balance-as-per-schedule-.html Q: The following relate to a trader for the month ended 31 st January 2006 (rs = Rupees = Indian currency): Sundry debtors on 1.1.06 (Dr) rs 9,000 Sundry Sun, 25 Mar 2012 20:20:27 GMT http://www.accounting-basics-for-students.com/-journal-entry-for-shares-issued-.html http://www.accounting-basics-for-students.com/-journal-entry-for-shares-issued-.html Q: Make a journal entry for the following (assume that this occurred in the second half of 2009): a) issued additional shares for 1,200 in cash Sun, 25 Mar 2012 20:14:51 GMT http://www.accounting-basics-for-students.com/-accounting-for-donations-.html http://www.accounting-basics-for-students.com/-accounting-for-donations-.html Q: An organization recently got a donation of a Motor Vehicle purchased for $40,000. How does the receiving organization account for it? Sun, 25 Mar 2012 20:12:26 GMT http://www.accounting-basics-for-students.com/-balance-sheet-statement-of-owners-equity-and-income-statement-.html http://www.accounting-basics-for-students.com/-balance-sheet-statement-of-owners-equity-and-income-statement-.html Q1: The three primary financial statements that we have seen so far are the Balance Sheet, Statement of Owner’s Equity, and the Income Statement. Please Sun, 25 Mar 2012 20:11:33 GMT http://www.accounting-basics-for-students.com/-why-do-accountants-use-purchase-accounts-.html http://www.accounting-basics-for-students.com/-why-do-accountants-use-purchase-accounts-.html Q: Why do the accountants use Purchase accounts when inventory items are acquired in a periodic inventory system Sun, 25 Mar 2012 20:02:22 GMT http://www.accounting-basics-for-students.com/-taccount-labels-.html http://www.accounting-basics-for-students.com/-taccount-labels-.html Q: Which accounts are affected in each of the following transactions? 1. Invested cash in the business - $4,000 2. Bought equipment for cash - $500 3. Sun, 25 Mar 2012 19:54:28 GMT http://www.accounting-basics-for-students.com/-gross-profit-question-.html http://www.accounting-basics-for-students.com/-gross-profit-question-.html Q: How do you calculate the gross profit when you are given gross profit percentage? Sun, 25 Mar 2012 19:50:46 GMT http://www.accounting-basics-for-students.com/-cash-flow-statement-funds-flow-statement-.html http://www.accounting-basics-for-students.com/-cash-flow-statement-funds-flow-statement-.html Adjustments: During the year Mr. A (proprietor) has drawn 26,000 for personal use. The provision of depreciation against machinery as on 1st January was Sun, 25 Mar 2012 19:49:42 GMT http://www.accounting-basics-for-students.com/-weighted-average-method-.html http://www.accounting-basics-for-students.com/-weighted-average-method-.html Q: What are the advantages and disadvantages of using the weighted average method Sun, 25 Mar 2012 19:38:02 GMT http://www.accounting-basics-for-students.com/-financial-cash-flows-vs-statement-of-cash-flows-.html http://www.accounting-basics-for-students.com/-financial-cash-flows-vs-statement-of-cash-flows-.html Q: How do Financial Cash Flows and Accounting Statement of Cash flows differ Sun, 25 Mar 2012 19:35:16 GMT http://www.accounting-basics-for-students.com/-accounting-equation-exercises-.html http://www.accounting-basics-for-students.com/-accounting-equation-exercises-.html Q: Tom Jones is the owner and operator of Jones Enterprise, a motivational consulting business. At the end of its accounting period, December 31, 2009, Thu, 22 Mar 2012 04:25:50 GMT http://www.accounting-basics-for-students.com/-journal-entries-question-perpetual-inventory-system-credit-card-transaction-.html http://www.accounting-basics-for-students.com/-journal-entries-question-perpetual-inventory-system-credit-card-transaction-.html Q: Prepare journal entries for the following credit card sales transactions using the perpetual inventory system: Sold $10,000 of merchandise, that costs Thu, 22 Mar 2012 00:46:02 GMT http://www.accounting-basics-for-students.com/-rental-building-accounting-question-.html http://www.accounting-basics-for-students.com/-rental-building-accounting-question-.html Q: My question is whether a rental building is an asset for the person or company who pays the rent Thu, 22 Mar 2012 00:43:14 GMT http://www.accounting-basics-for-students.com/-journal-entries-and-ledger-exercise-.html http://www.accounting-basics-for-students.com/-journal-entries-and-ledger-exercise-.html Q: Mr Robert commenced business on 1st January, 2011 with a capital of $100,000 in cash. On the same date he opened the bank account in ADCB and deposited Tue, 20 Mar 2012 06:48:18 GMT http://www.accounting-basics-for-students.com/-prepaid-rent-vs-rent-expense-.html http://www.accounting-basics-for-students.com/-prepaid-rent-vs-rent-expense-.html Q: How would I know if a certain transaction about rent would fall under Prepaid rent or rent expense? A: Look at the period (year) the rent expense is Tue, 20 Mar 2012 06:45:09 GMT http://www.accounting-basics-for-students.com/-balancing-taccount-miniexercise-.html http://www.accounting-basics-for-students.com/-balancing-taccount-miniexercise-.html Q: Balance the T-account shown above Tue, 20 Mar 2012 06:27:16 GMT http://www.accounting-basics-for-students.com/-best-way-to-study-accounting-.html http://www.accounting-basics-for-students.com/-best-way-to-study-accounting-.html Q: What is the best way to learn accounting? A: I published an article a while back in one of our free newsletters. Here it is again, it's called Why Tue, 20 Mar 2012 06:20:04 GMT http://www.accounting-basics-for-students.com/-cash-flow-statement-and-depreciation-.html http://www.accounting-basics-for-students.com/-cash-flow-statement-and-depreciation-.html Q: Depreciation charged during the year will come under which activities? A: None of them. Depreciation is an expense but not a cash expense. So it is Tue, 20 Mar 2012 06:12:04 GMT http://www.accounting-basics-for-students.com/-groff-profit-percentage-question-.html http://www.accounting-basics-for-students.com/-groff-profit-percentage-question-.html Q: The following information relates to 20.6/20.7 financial year of ABC: Sales 150,000 Purchases Tue, 20 Mar 2012 06:08:56 GMT http://www.accounting-basics-for-students.com/-negative-equity-.html http://www.accounting-basics-for-students.com/-negative-equity-.html Q: How can equity be negative? Shouldn't it be considered as a liability then? A: When the equity is negative it means the liabilities are greater than Tue, 20 Mar 2012 05:53:44 GMT http://www.accounting-basics-for-students.com/-financial-statements-and-investors-.html http://www.accounting-basics-for-students.com/-financial-statements-and-investors-.html Q: How are the balance sheet, income statement, statement of owner's equity and statement of cash flow useful for investors? Tue, 20 Mar 2012 05:43:28 GMT http://www.accounting-basics-for-students.com/-fifo-method-accuracy-.html http://www.accounting-basics-for-students.com/-fifo-method-accuracy-.html Q: What is the degree of accuracy of the FIFO method when using it in the balance sheet as well as the income statement? Tue, 20 Mar 2012 05:32:59 GMT http://www.accounting-basics-for-students.com/-importance-of-cash-flow-budgeting-.html http://www.accounting-basics-for-students.com/-importance-of-cash-flow-budgeting-.html Q: Why is it important for a business to forecast or budget for its inflows and outflows of cash Tue, 20 Mar 2012 05:13:57 GMT http://www.accounting-basics-for-students.com/-journal-entry-for-recovery-of-bad-debts-.html http://www.accounting-basics-for-students.com/-journal-entry-for-recovery-of-bad-debts-.html Q: What is the double entry of recording recovery of bad debts in control accounts? Tue, 20 Mar 2012 05:10:36 GMT http://www.accounting-basics-for-students.com/-capital-entry-cash-receipts-journal-.html http://www.accounting-basics-for-students.com/-capital-entry-cash-receipts-journal-.html Q: Which accounts are affected and what is the entry for the following: June 1: owner invested an additional capital of 20,000 in the business bank account. Tue, 20 Mar 2012 04:57:26 GMT http://www.accounting-basics-for-students.com/-debtors-control-credit-balance-.html http://www.accounting-basics-for-students.com/-debtors-control-credit-balance-.html Q: Is it possible for a debtor to have a credit balance? Tue, 20 Mar 2012 04:55:04 GMT http://www.accounting-basics-for-students.com/-creditors-control-and-creditors-list-question-.html http://www.accounting-basics-for-students.com/-creditors-control-and-creditors-list-question-.html Q: The information below was extracted from the records of Mermaid Traders for May 2011. Creditors control balance on 30 April 2011 was 42,750. Transactions Tue, 20 Mar 2012 04:53:45 GMT http://www.accounting-basics-for-students.com/-which-accounts-are-affected-by-these-transactions-.html http://www.accounting-basics-for-students.com/-which-accounts-are-affected-by-these-transactions-.html Q: Which accounts are affected in each of the following transactions? April 3 Purchased office supplies on account, $300. April 4 Received prepayment Tue, 20 Mar 2012 04:44:23 GMT http://www.accounting-basics-for-students.com/-general-ledger-debit-rent-credit-what-.html http://www.accounting-basics-for-students.com/-general-ledger-debit-rent-credit-what-.html Q: Paid office rent is a debit to rent expense - what would the credit be Tue, 20 Mar 2012 04:42:03 GMT http://www.accounting-basics-for-students.com/-bamba-trading-prepare-trial-balance-income-statement-balance-sheet-question-.html http://www.accounting-basics-for-students.com/-bamba-trading-prepare-trial-balance-income-statement-balance-sheet-question-.html Question 1 1) The following list of balances was extracted from Bamba’s ledger at 31 March 2011. Bamba Trading: 1) Cash in hand 2,100 2) Fixture Fri, 16 Mar 2012 07:03:23 GMT http://www.accounting-basics-for-students.com/-stock-deficit-and-stock-loss-.html http://www.accounting-basics-for-students.com/-stock-deficit-and-stock-loss-.html Q: How do you account for stock deficit and stock loss on the general journal? Fri, 16 Mar 2012 06:52:30 GMT http://www.accounting-basics-for-students.com/-the-weighted-average-cost-method-.html http://www.accounting-basics-for-students.com/-the-weighted-average-cost-method-.html Q: How do I find the average cost per unit of inventory using the weighted average cost method? Fri, 16 Mar 2012 06:50:05 GMT http://www.accounting-basics-for-students.com/calculating-vat.html http://www.accounting-basics-for-students.com/calculating-vat.html Q: How do I calculate the VAT (Value-Added Tax) included on the debtor and creditor control account? A: Control accounts for debtors and creditors are Fri, 16 Mar 2012 06:48:16 GMT http://www.accounting-basics-for-students.com/-entry-for-sold-goods-.html http://www.accounting-basics-for-students.com/-entry-for-sold-goods-.html Q: What is the entry for the following? Sold goods to R. Botha on credit of R242,39. Issued invoice 001. Fri, 16 Mar 2012 06:43:08 GMT http://www.accounting-basics-for-students.com/-debit-in-credit-control-account-and-journalizing-cash-.html http://www.accounting-basics-for-students.com/-debit-in-credit-control-account-and-journalizing-cash-.html Q: Firstly, I found a debit balance in the creditor control account when I was closing the books of accounts. We opened the discussion with the finance Fri, 16 Mar 2012 06:39:25 GMT http://www.accounting-basics-for-students.com/-what-is-the-effect-of-each-of-the-following-postings-upon-the-assets-liabilities-and-owners-equity-of-a-company-.html http://www.accounting-basics-for-students.com/-what-is-the-effect-of-each-of-the-following-postings-upon-the-assets-liabilities-and-owners-equity-of-a-company-.html Q: What is the effect of each of the following postings upon the assets, liabilities, and owner’s equity of a company? 1. A debit to Wages, 2. A credit Fri, 16 Mar 2012 06:29:21 GMT http://www.accounting-basics-for-students.com/-valuation-of-work-in-progress-under-process-costing-.html http://www.accounting-basics-for-students.com/-valuation-of-work-in-progress-under-process-costing-.html Q: Under process costing, how do you find the cost per unit while using the FIFO method and the WAM method Fri, 16 Mar 2012 06:26:42 GMT http://www.accounting-basics-for-students.com/-four-ways-for-valuing-inventory-.html http://www.accounting-basics-for-students.com/-four-ways-for-valuing-inventory-.html Q: I have a question on my study guide for my final on Monday. It says What are the 4 ways for valuing inventory? I cannot find a definite answer to this Fri, 16 Mar 2012 06:20:13 GMT http://www.accounting-basics-for-students.com/accounting-exams.html http://www.accounting-basics-for-students.com/accounting-exams.html Here are some accounting exams you can use to test your knowledge of bookkeeping as well as financial and managerial accounting. Fri, 24 Feb 2012 06:25:16 GMT