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A Financial Statement shows the financial information of a business monetary activities whether it is related to banks, fi nancial institutions, suppliers, customers, etc., while a bank Statement shows only the summary of bank related Transactions such as cash deposited, cash withdrawals, bank charges, etc. A financial statement may be prepared monthly, quarterly, half yearly / semi annually, yearly / annually or on a specified time of a specified date such as preparation of a Balance Sheet while a bank statement is usually prepared on monthly basis.

Identifiable Liabilities are those Liabilities which are paid off during the existence time of the business or when the business is still existing or operating. We can also define identifiable liabilities as those liabilities which are paid off / disposed of before closing / shutdown of the entire business or before the business goes into liquidation.  Examples include paying off debts, paid Accrued / Outstanding Liabilities , etc.

Books of Accounts are the first phase of Accounting called Bookkeeping while Financial Statements are the second phase of accounting. In the books of accounts, two main types e.g., Primary and Secondary books of accounts i.e., Journals And Ledgers are prepared while 5 types of Financial Statements i.e., Income Statement, Statement of Financial Position ( B alance Sheet), Statement of Cash Flows, Statement of Retained Earnings and Statement of Changes in Equity are prepared. B ooks of accounts are inter n al records of the company’s business which are disclosed to internal management and not disclosed to public unless it is required by law to do so while financial statements are disclosed to the Users of Financial Statements / Information . Similarities Between Books of Accounts And Financial Statements Both are helpful for the proper mai ntenance of accounting data and information of a company’s business. B oth comp...

Closing / Ending Inventory Plus (+) Cost of Goods Sold Equal To (=) | Calculation of The Sum of Closing Inventory And Cost of Goods Sold (Cost of Sales) Here, we are concerned with the calculation of the sum of ending inventory / stock and Cost of Goods Sold / Cost of Sales with the help of a simple example. Ending Inventory is the unsold goods remain unsold at the end of current accounting period. At the beginning of the next accounting period, purchases of goods are made and the remaining goods which are not sold or returned by the customers is ending inventory. Purchases is related to goods purchased during the accounting cycle. Example: We are given Opening Inventory = Rs. 5000, Purchases = Rs. 8000, Closing Inventory = Rs. 3000. Cost of Sales = ? First of all, we calculate cost of goods sold and then the sum of cost of sales and closing inventory. As, we know that:                       C...

Expenses are the costs of producing goods, products or services while Revenues are the price of goods sold or services rendered to the customers of the business. There are two types / kinds of expenses. One type is Direct Expenses and second one is Indirect Expenses. Revenues are also divided into two types. One is Direct Revenues and the other one is Indirect Revenues. Expenses have normal or usual balance on debit side which is finally closed at the end of the accounting period as these are Temporary Accounts while revenues have credit favorable balance on a ledger account which is finally closed to Income Summary Account . If expenses are more than revenues, then the business suffers loss and if revenues are more than expenses, then the business gains or earns profit for the accounting period.feed In an Accounting Equation , expenses are deducted from Owner’s Equity while revenues are added to owner’s Equity as these are the ...

No, Bad Debt Expense is a actual loss or a n indirect expense account to the business against the Credit Sales made with customers. It is recorded in Income Statement Under Operating Expenses Section as a Selling and General and Administrative Expense. Some percentage of uncollectible accounts due may not be recovered from our customers in future is known as Estimated Bad Debts Expense or Doubtful Debts while bad debt expense is a actual loss to the business as it is certain and actually suffered by the business. So, bad debt expense is not a Contra Revenue Account which is a reversal of a revenue account in Income Statement or Profit And Loss Account.

N o, as Cost of Goods Sold or Cost of Sales is a direct expe nse account as it is directly related to the cost of production and it is recorded to find out the Gross Income or Gross Profit for the period. A Contra Revenue Account is the reversal of a revenue account while cost of sales is the direct expense account and it is deducted from Sales to calculate Gross Profit or Gross Income for the period.

The u nadjusted balance in Allowance for Doubtful Accounts / Provision for Doubtful Debts of previous accounting period need to be adjusted in the current accounting period when we make credit sales and make an estimation of uncollectible accounts due on the basis of percentage of sales ( Income Statement-Apprach ) or percentage of closing balance of Accounts Receivable / Debtors ( B alance Sheet-Approach ). Here, we adjust the unadjusted balance of allowance for doubtful accounts with the help of an example. Suppose the unadjusted credit balance of allowance for doubtful accounts is Rs. 500 in the previous accounting period which is brought down to the current accounting period. Estimated Uncollectible Accounts Expense on Accounts Receivable ( B ased on Accounts Receivable Aging Report or B alance Sheet-Approach) is Rs. 900. Then what is the adjusted balance of allowance for doubtful accounts at 31 st December of the current accounting period. ...

Income Summary Account In Financial Statement Income Summary Account does not appear in any Financial Statement as it is a Temporary Account which is finally closed to Retained Earnings   at the time of recording Closing Entries which is a Step of Accounting Cycle . B asically, income summary is prepared on temporary basis after preparing Fina ncial Statements in order to calculate net income / net loss for the period or to close revenues and expenses. It is internally recorded by the company’s accountant. So, I ncome Summary Account does not appear on any financial statement b ecause, it is mai nly prepared o n temporary b asis after all fi nancial statements are prepared i n order to close all temporary accounts i.e., transfer t h e difference of revenues and expenses accounts to Retained Earnings Account for t h e period and also to find out t h e summary of revenues and expenses so t h at t h e net income calculated under t h is summary account must b ...

Here, we calculate the value of ending inventory / closing inventory without Cost of Goods Sold or Cost of Sales . It is possible to calculate the value of closing inventory / stock if we are given opening inventory (beginning inventory) and average inventory. Example: If we are given: Opening Inventory = Rs. 30000, Average Inventory = Rs. 20000, then find out closing Inventory / ending inventory for the current accounting period. Given: Opening Inventory = Rs. 30000, Average Inventory = Rs. 20000 Find Out: Closing Inventory = ? B y Applying Average Inventory Formula, we get:                            Average Inventory = (Opening Inventory + Ending Inventory) / 2                                             20000 = (30000 + Ending Inventory) /2     ...

How To Find Cost of Sales With Beginning And Ending Inventory Here, Firstly, we calculate Cost of Goods Sold (Cost of Sales) by giving the value of opening inventory and closing inventory and then without the beginning inventory and ending inventory with other giv en information. 1. Calculation of Cost of Goods Sold With B eginning Or Ending Inventory Calculate Cost of Goods Sold / Cost of Sales, If following are given: Sales = Rs. 108000, Opening Inventory or Stock = 50000, Purchases = Rs. 70000 and Ending Inventory or Stock = Rs. 70000                                                                   Rs. Sales                                                  ...

Comparison Between Sales Ledger Control Account And Purchases Ledger Control Account In Accounting The Sales Ledger Control Account shows each individual 's customers sales list at one place to whom the business made Credit Sales while Purchases Ledger Control Account shows each individual 's suppliers or vendors purchases list to whom the business made Credit Purchases . The closing balance of Sales Ledger Control Account is transferred to Income Statement as a Direct Revenue while the ending balance of Purchases Ledger Control Account is transferred to Income Statement as a Direct Expense for the period.

Purchase of Machinery And Plant Journal Entries | Sale of Machinery And Plant Journal Entries The journal entries related to purchase and sale of machinery and plant, which is a Fixed Asset / N on Current Asset depend upon whether the plant & machinery purchased and sold for business use or for resale purposes. If the machinery and plant is used for business use, then we record purchase and sale journal entries accordingly and if it is not purchased and sold for business use but for resale purposes, then we record the entries accordingly. 1. When Plant & Machinery Purchased & Sold For B usiness Use In that case, we debit Machinery & Plant Account and credit cash account if these sold for cash. The entry is shown below:                                               Machinery & Plant a/c  XXX ...