Accounting

Professional skepticism is a key component of the audit process that plays a vital role in enhancing audit quality. As auditors are tasked with providing an independent and objective assessment of a company’s financial statements, professional skepticism helps them to maintain a critical mindset and approach their work with a healthy dose of skepticism. Why […]

Financial instruments are contracts or agreements between two parties that have financial value and can be traded or used for investment purposes. They can take many forms, including stocks, bonds, derivatives, currencies, and commodities. Financial instruments are used for a variety of purposes, including hedging risk, raising capital, and investing for the purpose of generating

Overview of Joint Ventures A joint venture (JV) is a type of business relationship in which two or more companies join forces to achieve a common objective. The participating companies, called joint venture partners, pool their resources, including finances, expertise, and manpower, to work together on a specific project or business opportunity. Joint ventures can

Pre-operating expenses under International Financial Reporting Standards (IFRS) for Small and Medium Enterprises (SMEs) are expenses incurred before the start of the main operations of a business. These expenses are capitalized and recognized as assets when the business is ready to start operating. Examples of pre-operating expenses under IFRS for SMEs include: According to IFRS

When a company decides to terminate (either partially or completely) the business, it liquidates all of its financial and non-financial assets including inventory, buildings, and machines. The sole purpose is accumulating enough funds to pay back liabilities to all the secured and unsecured creditors. The remaining amount is then paid to the shareholders as liquidating

No doubt, selling products and services is the mainstream of revenue for businesses of all sizes. These businesses allow their customers to avail of discounts if they make early payments or pay the full amount upfront. Discounts allowed work like a charm in order to boost their sales, increase brand awareness, receive quick & early

Overview of Discounts Allowed A company may offer clients a discount if they pay their bills on time in business. When clients take advantage of the discount by making an early payment, the company must account for it with an appropriate journal entry. Because the company records the total amount as sales income when a

Overview Bank overdrafts is a popular feature of bank facilities that allow you to spend more than you have in your account. This is known as an “overdraft facility” and can be helpful if you need to make an urgent purchase that isn’t covered by your current balance. However, overdrafts come with fees and interest

Discounts are persistent in today’s corporate world. They are usually given in exchange for some consideration, ranging from prompt payment to market rivalry. The “Discount Allowed Account” is debited when a journal entry for a discount is posted. The discount allowed is a business expense that is recorded on the debit side of the profit

Freight-In When a company, as the buyer, is required to pay for the transportation of products purchased from suppliers, freight-in costs are incurred. Similarly, suppose the firm utilizes the perpetual inventory system. In that case, the company must record a journal entry for freight-in by recognizing this expense as a component of goods inventory or