A trial balance is an accounting report that lists the balances in each of an organization’s Accounts. The purpose of a trial balance is to verify that the total of all Debits equals the total of all Credits for each accounting period. If the total of the Debits does not equal the total of the … Read more
The half-year convention for depreciation is an accounting method used to account for the depreciation of assets. Under this method, the depreciation expense is recorded in the financial statements for the first six months of the year, regardless of when the asset was purchased. This method is used when the asset is expected to have … Read more
The Financial Accounting Standards Board (FASB) is a private, not-for-profit organization that establishes financial accounting and reporting standards for public and private companies and not-for-profit organizations in the United States. The FASB is recognized by the Securities and Exchange Commission (SEC) as the designated accounting standard setter for public companies. The FASB develops and issues … Read more
The audit cycle is the process that auditors use to plan, execute, and report on an audit. The cycle typically starts with the auditor identifying the areas to be audited and then developing a plan for the audit. The auditor then executes the audit, which may involve testing the accuracy of financial records or assessing … Read more
A monetary item is any item that can be quantified in terms of money. This includes items such as cash, investments, receivables, payables, and fixed assets. Monetary items are important in accounting because they can be easily converted into cash, which makes them a key component in financial statements. What are monetary terms? Monetary terms … Read more
Contra Account: Types and Examples A contra account is an account that offsets another account on a financial statement. Contra accounts are used to record adjustments to the value of an asset or liability. For example, a contra account may be used to record the accumulated depreciation of an asset. There are two types of … Read more
A billing cycle is the period of time between two successive billings. For example, if a company bills customers on the first of every month, then the billing cycle is one month. The length of a billing cycle can vary depending on the type of business and the billing methods used. What is a statement … Read more
Accounting records are financial records that document a company’s transactions. These records can include invoices, receipts, bank statements, and other financial documents. The purpose of accounting records is to provide a record of a company’s financial activities. This information can be used to make decisions about how to run the business, track progress, and make … Read more
The term “Other Comprehensive Basis of Accounting (OCBOA)” refers to an accounting basis that is used in addition to, or in lieu of, generally accepted accounting principles (GAAP). OCBOA financial statements may be prepared using one of several methods, including the cash basis, the modified accrual basis, or the tax basis. OCBOA financial statements are … Read more
Auditing evidence is the information used by auditors in order to arrive at conclusions on which to base their opinions. This evidence is gathered during the audit process and used to support the auditor’s opinion on the financial statements. The types of evidence used by auditors include: 1. Physical evidence – this is tangible evidence … Read more
