Management of $$$

by Carol Posted on September 11, 2011

Money sense is an important skill that anyone of us should acquire. A businessman need the skill to analyse his expenses and profits to make decision while a housewife need the skill to decide how much to spend on groceries and how much to save for a rainy day. For both groups, it is a skill to invest so as to grow money for our younger generation. Thus, financial literacy is introduced to many, especially teenagers in schools. Students learn to identify needs and wants and better management of money. Principles of accounts is an elective subject in secondary schools in Singapore. It is well received by students, those who intended to further their studies in accounting and financing as well as those who appreciate it as a life skill, knowing they can apply it in their daily lives. Things such as savings, spendings, loan, credit cards and interest etc are covered to help individuals improve in the management of their money.

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Control accounts

by mrsooi Posted on August 31, 2011

Contra is the deduction from both debtor and creditor control account. It is done because a debtor happens to be a creditor at the same time. Instead of maintaining 2 T accounts for the same person in 2 different ledgers, the smaller amount is off set from both accounts. 1 account is closed with zero balance and the other account with balance carried down.

Posted in Terms and Definition, Topic 20: Control Accounts | Comments Off

Amalgamation

by mrsooi Posted on August 25, 2011

Goodwill refers to the purchase price above the net worth of the business.

It is good reputation due to various factors such as good location, branding strategy, quality service etc.

Hence it has the ability to earn future profits.

The reason for amalgamation is small companies are unable to survive on their own. The advantages of merging is more resources such as capital and expertise and most importantly less or no competition when two companies joined.

Disadvantage is disagreement in decision making between the owners.

When amalgamation takes place, assets are revalued and liabilities are to be settled.

Posted in Topic 23: Amalgamation | Comments Off

Accounting concepts

by mrsooi Posted on August 19, 2011

1. Matching principle states that all expenses earned must match with all revenue earned in the same accounting period.
2. Prudence concept states that we must not overstate profit or assets.
3. Historical Cost concept states that we must record all fixed assets at original cost.
4. Consistency concept states that same method is used for calculating depreciation so as to ensure accurate comparison.
5. Objectivity states that all transactions require evidence such as receipts, invoice and payment voucher etc.
6. Going concern states that a business is assumed to continue indefinitely.
7. Accounting entity states that we must separate what belongs to the business with what belongs to the owner. That is why drawings are recorded.
8. Materiality concept states that big and expensive items such as computer, photocopier etc are classified as fixed assets while small
items such as stapler, pen, paper etc must be classified as expenses.
9. Duality states that all transactions are recorded with a debit and a credit entry.
10. Accounting period is the time frame for recording transactions, usually one year.

Posted in Topic 02: Accounting Concepts | Comments Off