Month: January 2022

The Accounting equation forms the basis of double entry and therefore it should always be maintained. Any change in assets, liabilities or capital will have a double effect such that assets will always be equal to liabilities plus capital. If Read More …

Initial capital refers to any funds and other assets invested into the business by the owner at the beginning of the trading period. Final capital refers to the business capital at the end of the trading period. Thus, final capital Read More …

The capital in a business does not remain intact but changes over time due to the following factors: additional investments, profits drawings or losses. 1) Additional investments (I)-occurs when the owner of the business brings in his personal cash or Read More …

A business can be set up in two ways: Owner supplying all the resources Owner supplying some of the resources and the rest being supplied by outside parties. The two cases bring out the accounting equation also called book- keeping Read More …

The four principal qualities of useful financial information are understandability, relevance, reliability and comparability. Understandability: an essential quality of the information provided in the financial statements is that it is readily understandable by users. For these reason users are assumed Read More …

Accounting information is produced in form of financial statement. These financial statements provide information about an entity financial position, performance and changes in financial position. Financial position of a firm is what the resources the business has and how much Read More …