December 05, 2019
Charles Lutwidge
Contra Expense Account
Businesses need to know what contra accounts are to keep accurate accounting records. They also allow us to follow the matching principle. Expense accounts have a normal debit balance, which means they increase with debit entries. A contra account reduces...
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December 03, 2019
Charles Lutwidge
Accrual to Cash Conversion
Businesses manage their finances using either cash or accrual basis accounting. One of the most complicated concepts to understand in accounting is converting a set of accrual-based books for a cash basis tax return. Accrual accounting is the standard for...
December 03, 2019
Charles Lutwidge
What is Accounting Transaction Analysis
The accounting transaction analysis is the process of translating the business activities and events that have a measurable effect on the accounting equation into the accounting language and writing it in the accounting books. This is the first stage in the...
December 03, 2019
Charles Lutwidge
What is the accounting cycle?
An accounting cycle is a system of actions for identifying, summarizing, and submitting reports on economic events and operations. The stages of the accounting cycle include maintaining transaction records in the ledger, drawing up a trial balance, reconciling accounts, drawing...
December 02, 2019
Charles Lutwidge
What Is a Contra Account: Definition and Example
Define Contra Asset Account A contra account is a type of asset account that has a credit balance, as opposed to the debit balance of a normal asset account. A contra account will naturally have an associated account, and the...
December 02, 2019
Charles Lutwidge
What is a contra revenue account and why is it important to my small business bookkeeping?
If you are a small business owner and you sell a product, you likely have instances of returns/refunds on items or you may provide reductions for items that are defective or damaged. If you provide either a product or a...
November 27, 2019
Charles Lutwidge
Royalties in Accounting
The concept of “royalty” came from the Latin language, where “regalis” meant “royal”. Today, the term has nothing to do with monarchs, but it directly relates to finances, money, making a profit. Royalty is a type of monetary reward for...
November 26, 2019
Charles Lutwidge
The Difference Between Accruals and Deferrals
When it comes to accounting, timing is everything. To allocate revenues and expenses to the right accounting period, accountants use accruals and deferrals. This approach also helps with comparing financial statements from different periods. Accruals and deferrals follow the Matching...
