Analyzing the Balance Sheet and Income Statement Components
Understanding Core Financial Statements
The Balance Sheet: Definition and Components
The Balance Sheet is the primary accounting document that reflects the financial position of a company at a specific time. It adheres to the fundamental accounting equation.
Defining Net Worth (Heritage)
Net Worth (or Heritage) is defined as the set of goods, rights, and obligations of the company at any given time. This definition contains three key elements:
- Assets (Goods/Properties): The set of properties owned by
Essential Income Tax Definitions and Key Concepts
Core Income Tax Terminology and Definitions
Fundamental Definitions (Section 2)
Person (Section 2(31))
As per Section 2(31) of the Income Tax Act, a “Person” includes:
- An Individual.
- A Hindu Undivided Family (HUF).
- A Company.
- A Firm.
- An Association of Persons (AOP) or Body of Individuals (BOI).
- A Local Authority.
- Any artificial juridical person not covered above.
Assessee
An Assessee is a person by whom any tax or any other sum of money is payable under the Income Tax Act. This term also includes a person against
Read MoreFabris Accounting: Journal Entries and Year-End Closing Procedures
Fabris Daily Journal Entries
7. Bank Interest Income (December 28)
On December 28, the bank notifies the entry of 164 € into our bank account for interest income, after an 18% tax deduction.
| 164.00 | 572 | Bank Account (EUR) | to | Other Financial Income (1) | 769 | 200.00 |
| 36.00 | 473 | Tax Withholdings | (164 / 0.82) | |||
| (200 * 0.18) |
(1) Calculation: X – 0.18 X = 164. X = gross amount of interest = 200 euros.
8. Purchase of Tiles and Returnable Packaging (December 31)
On December 31, FABRIS purchases 4,000 PETRASA tiles at 10 €
Read MorePGC 2007: Marco Conceptual y Requisitos de Cuentas Anuales
Estructura y Fundamentos del PGC 2007
1. Marco Conceptual
El Marco Conceptual establece los principios y conceptos contables fundamentales cuya aplicación conduce, de forma lógico-deductiva, al reconocimiento y medición de los elementos de las Cuentas Anuales. Se divide en las siguientes etapas:
Objetivo de la Información Contable
La información debe ser comprensible y útil para los usuarios en la toma de decisiones económicas, y debe mostrar la imagen fiel del patrimonio, la situación financiera
Read MoreEssential Concepts in Financial Accounting
Single vs. Double Entry Accounting Systems
What is the Single Entry System?
The Single Entry System is an accounting method characterized by the following:
- It is an incomplete and unscientific method of accounting.
- Only one aspect of a transaction (usually a cash or personal account) is recorded.
- It is commonly used by small businesses.
- It does not provide a complete financial picture.
What is the Double Entry System?
The Double Entry System is a more robust accounting method:
- It is a scientific and systematic
Tally Prime Accounting: Features, Setup & Transactions
Tally Prime Software: Key Features
Tally is one of the most popular accounting software used by businesses for financial management and bookkeeping. Its latest versions offer many advanced features.
1. Accounting Management
- Handles all types of accounts: general ledger, payables, receivables, etc.
- Supports multi-currency and multi-accounting systems.
2. Inventory Management
- Tracks inventory levels, orders, sales, and deliveries.
- Helps with stock categorization, batch-wise tracking, and warehouse management.