General Ledger (Ledger) is the main consolidated accounting register, which reflects data for the reporting year for all accounting accounts used by the company. It consists of General Ledger Accounts. For each account in General Ledger are recorded from the corresponding registers (order logs, etc.):
- balance as of January 1 of the reporting year;
- debit (in correspondence with the credited account) and credit (one amount) turnover per month;
- balance at the end of the month.
The amounts of debit and credit turnover, as well as debit and credit balances for all accounts in General Ledger, must be equal, respectively. Accounts in the general ledger help to estimate the company’s expenses.
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A contra asset account is a type of counter account that is used to adjust the debit balance of the main asset account. The contra asset account is considered only in interaction with the main active account, and the latter can only be an asset, and the regulating contract account – liabilities. The credit balance of the contra liability account reduces the debit balance of the main asset account.
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A contra revenue account needs while the bookkeeper is preparing some important statements about finances. However, one should always remember that the contra revenue account must be analyzed not separately but together with the revenue account, to see and to calculate the difference between these two accounts.
Contra Revenue Accounts — Examples
It is useful to work with the contra revenue account in the following situations:
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Xero is a small software company operating in Australia and New Zealand. The company offers a SaaS accounting service similar to Russian Deal 24 or Elba solutions. There is a truth, and an exception Xero is focused on accounting companies. Even the minimum tariff plan requires simultaneous maintenance of 5 accounts. Currently, the company has 2,200 accounting companies in New Zealand and Australia.
The company offers three services:
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- online accounting;
- online banking management (the company offers connections to 1,500 banks worldwide).
A posting, pertaining to accounting, is the transferring of entry or multiple entries from a subsidiary accounting book or journal to a suitable ledger account.
An account post is usually done through a strict procedure that follows the creation of a journal entry from details of a particular transaction. Note that this is considered as the third step in the accounting cycle.
An account post will have to be completed before the finalization of the business’s annual financial statement. However, within that timeframe, an account post can be carried out at any time of day, depending on the nature and conditions of the business.
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Royalties refer to the payment paid in exchange for a license to issue a particular patented or copyrighted asset. Royalties involve two parties: the owner of the asset, also known as the licensor, and the other party that pays royalties in return for acquiring a license to it, also known as the licensee.
In royalties, the owner is not selling full legal ownership of the asset, but simply the right to manufacture it. If the rights to ownership of a property are sold, that would be called capital expenditure. This is how the two differ. There are actually three types of royalties in accounting, namely: Copyright, Patent, and Mining. For this article, we will focus on the first one.
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In accounting, accrual and deferral are two significant terms that define the systematic recording of expenses and revenue in their respective accounting periods. Accurate entry of accruals and deferrals is the key to a sound financial statement and adheres to the complex principles of accounting. This way, the truest financial health of the business is reflected as accruals, and deferrals fall perfectly into their places.
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QuickBooks Pro is a business software that will help you organize your finances in one place, which will significantly increase your work efficiency. Even though the program is not available in the Russian language, it is very easy to set up and use. With QuickBooks help, you will always be aware of all accounts, will be able to manage expenses effectively, will receive reliable financial reports, and much more. And if you have problems, you will use step-by-step instructions for creating accounts, accounting costs, etc. QuickBooks pricing is available and reasonable.
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Retention Rate (Plowback Ratio, retained ratio) in the field of finance refers to a percentage of the income received or a fixed amount of money that the business leaves at its disposal after all dividend payments to investors have been made. Sometimes this term can be referred to as a retention ratio or a plowback ratio. However, most often, this coefficient is set as a percentage.
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The concept of the balance sheet can be considered on the basis of two aspects: from a theoretical point of view – the balance sheet is interpreted as a relationship of characteristic features and ratios of indicators that are reflected in it as of a certain point in time.
From the point of view of use in the practical activities of business entities – the balance sheet is understood as a reporting form that contains information about the financial position of the business entity.
You can use the balance sheet to determine the company’s “health status.” It’s like a blood test. Only it records not the level of sugar or cholesterol, but financial indicators. For example, the amount of money that the company has or the amount of debt owed to creditors.
If you compare the balance sheet for different dates, you can see how things are going. Maybe your business got into debt, or, on the contrary, the company’s accounts have excess money that can be profitable to invest?
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