Everything you need to know about the limitations of financial accounting. Financial Accounting is the father of accounting system. Cost Accounting is a branch of accounting and has been developed due to the limitations of financial accounting. Financial Accounting gives general information about the major functions of the business such as finance, administration, production and distribution. Financial accounting aims at [...]
This classification is based on the purpose for which an analyst computes these ratios. For easy understanding and to achieve the purpose of ratios effectively, ratios may be classified as:- 1. Profitability Ratios 2. Coverage Ratios 3. Turnover Ratios/Activity Ratio 4. Financial Ratios/Liquidity Ratio 5. Leverage Ratios/Long-Term Solvency Ratios. These are discussed one by one below: 1. Profitability Ratios: The [...]
The following points highlight the four main types of accounting. The types are:- 1. Adjusting Entries 2. Transfer Entries 3. Closing Entries 4. Opening Entries. Types # 1. Adjusting Entries: It is a normal practice to make entries in the accounting records on cash basis (revenues and expenses actually received and paid). However, there is a need to formulate accounting [...]