Obsolete Inventory In Financial Statement

Posted by Ana Orwel on Tuesday, April 28, 2009

Obsolete inventory or dead inventory means the inventory that has reached near the end of the product life cycle, but has not been sold or used in the given time bracket set by the industry.

These inventories are to be written down and can cause great losses to a company. The obsolete inventory in financial statement must be reflected and is a sign for all the investors to refrain from investing on the company, if such value of inventory is significant.

A huge figure of obsolete inventory on the financial statements reflects poor quality of products, poor inventory management, poor standards of production etc. These all can serve as indicators to an investor of how the products of a company are presently selling or are going to sell in the future.

To reflect obsolete inventory in financial statement properly, it is necessary to claculate the value of such inventory and include this value into the income statement thus reducing value of inventory on the balance sheet and increasing expenses in the income statement. The accounting entry for such action should be as follows:

D Expenses  XXXXX

   C Inventory XXXXX

If such accounting entry is not recorded and obsolete inventory stays on the balance sheet, its value will be overstated and misleading to the users of financial statements.

Find more information on inventory accounting here.

Learn Accounting

Posted by Ana Orwel on

Accounting is the process of recording, reporting and analyzing the financial transactions of a company. The process of recording the accounts requires some special skills and one needs to have at least the basic knowledge of terms and definitions of accounting to start with it.

Other than the regular courses offered by the universities and educational institutes for learn accounting, there are also various online tutorials. You can enroll in the regular courses or online courses to get a good understanding about the nitty-gritty of accounting. The courses are offered for both professionals as well as students and one can opt for the basic or the advanced course depending on one’s needs.

Start to learn accounting today, why wait?

Learn Accounting Online

Posted by Ana Orwel on

Can you learn accounting online? Different people have different reasons behind learning accounting. For e.g. a student learns accounting for improving the grades, professional do so to upgrade their skills and businessman do so for better bookkeeping. Internet has made it possible for people to learn accounting from the comfort of their couch.

There are a lot of websites that provide the opportunity to learn accounting online. You can either opt for the basic or advanced module depending on one’s needs. These courses are really helpful, but you also need to be careful about the choice because there are some who flatter to deceive.

Explore accounting basics course today, click here.

How Useful Is Fair Value Accounting?

Posted by Ana Orwel on

Fair value accounting basically means to record the transactions at its fair value and not at the value which does not reflect the real situation of the financial position of business.

So how useful is fair value accounting? The main advantage of fair value accounting is that you get the exact position of the business from fair value data. In case if the transactions are recorded at market price then the amounts automatically gets inflated than its actual figures. But in case of fair value accounting the extra advantage is that the accounts are recorded in the exact figures in which the transactions take place. Besides it is also advantage for recording those assets for which you cannot determine the market value.

So you can see that fair value accounting is useful to reflcet the real and reliable financial position of the business.

Find more information on accounting theory and concepts here.

General Ledger Tutorial

Posted by Ana Orwel on

General ledger is a ledger that is maintained by the companies that follow the double-entry bookkeeping system. General ledger is the main ledger where all the financial transactions pertaining to a company are recorded. There are other subsidiary ledgers that support in making financial statements from a general ledger.

The general ledger is made from the various subsidiary ledgers like cash daybook, sales daybook, purchase daybook etc. There are a lot of tutorials that are available in the market and they can be availed through online courses and regular courses. The online general ledger tutorial can be used to get a complete knowledge of this concept.

Start exploring basics of general ledgee today.

General Ledger Templates

Posted by Ana Orwel on

General ledger is a core book where all the financial transactions of a company are recorded. The companies that have a double entry bookkeeping system use the general ledger. The various types of ledgers that are used in constructing a general ledger are cash daybook, purchase daybook, sales daybook etc.

General ledger templates that are available can be used directly for the entries. The templates allow one to make the entries without any hassles. The templates have already preset accounts structure for various categories that are in ready to use form.

To undersatdn what is general ledger and how to use it, with examples provided please click here.

General Ledger Reconciliation Example

Posted by Ana Orwel on

General ledger reconciliation example refers to the process of reviewing all the source documents with the corresponding entry in the general ledger. It is very important that everything matches, so as to indicate correct entries.

So how does one carry out general ledger reconciliation?

• Firstly, you must know the items that should be included in the general ledger and also go through the accounting policies of your company.
• Secondly, accumulate all the relevant documents. Now tally all the documents with their corresponding entries on the general ledger. Now, document all the things that are observed.

More information and examples of general ledger here.

General Ledger Numbers For Accounting

Posted by Ana Orwel on

General ledger numbers for accounting form the chart of accounts , which contains unique numbers that the accounting department of a company can use to account for business transactions. The financial operations and subsequently the transactions are recorded with respect to the unique number assigned to a particular transaction.

The general ledger numbers for accounting have the following attributes:

a) Account Number
b) Account Level
c) Account Title

A particular digit system is followed in a company for assigning the numbers to various accounts (for e.g. 4 digit, 6 digit etc.). This is to ensure the smooth flow of accounting information at any point of time.

More information on general ledger here.

General Ledger In Bookkeeping

Posted by Ana Orwel on

General ledger in bookkeeping system plays a very important role. It is main book where the financial data is specifically categorized into accounts.

The accounts are then divided into 3 categories:

• assets,
• liabilities and
• capital or equity.

Whenever a financial transaction occurs, it is entered into the general journal and after this the entries from general journal are posted into the general ledger under various accounts.

After this the account balance is calculated for the preparation of financial statements. The general ledger is generally used by the companies who have a double entry bookkeeping method. It is very helpful for the generation of financial reports in the bookkeeping system.

Find more information on general ledger here.

General Ledger Account Number Order

Posted by Ana Orwel on

General ledger is the main book of entry which is classified in the form of accounts. It is generally used by the companies which use a double entry bookkeeping.

In order to classify the accounts, each of them has general ledger account number order, i.e. account is assigned a unique number. In order to do so, the general ledger uses a set of digits, for e.g. 4 digit systems, 5 digit system etc. The entries made under each account are also further subdivided but all the accounts maintain a unique coding system. This account number orders help in facilitating the easy access to the details of all accounts.

List of all accounts with numbers composed chart of accounts, based on which it can be traced what kind of accounts the business has and what information can be found in one or another account.

Soon there will be more information on chart of accounts and numbering on www.bookkeeping-financial-accounting-resources.com. Sign to our newsletter or RSS feed to follow the news.