Joint Ventures | Corporation, Partnership, or Undivided Interest

A joint venture may be organized as a corporation, partnership, or undivided interest. An undivided interest exists when each investor-venturer owns a proportionate share of each asset and is proportionately liable for its share of each liability…
Internal Users of Accounting Information

Every internal employee of the enterprise uses accounting information. From basic labor categories to the chief executive officer, all employees are paid, and their paychecks are generated by the accounting information system…
Working Capital

Working capital is a measurement often used to express the relationship between current assets and current liabilities. Working capital is the excess of current assets of a company, organization or any other entity over it’s current liabilities. Every business industry has it’s own standards for working capital, in some industries there should be more working capital available to the company while in some industries a little working capital is enough to smoothly run the company…
Income Statement

Income statement presents the results related to revenue and expense transactions for the current period. This is the 4th and major step in the accounting cycle…
Accounting Equation

The accounting equation is the base of double entry bookkeeping and the double-entry bookkeeping is the base of the whole of the modern accounting system. Therefore accounting equation is the starting point to understand double entry bookkeeping…
External Users of Accounting Information

External users of accounting information are individuals and other enterprises that have a financial interest in the reporting enterprise, but they are not involved in the day-to-day operations of that enterprise…
Debit and Credit

Most of the readers get confused when an accountant debit or credit a transaction. Readers who don’t have accounting background ( even with little accounting background) generally think that a debit means an increase in the account and a credit means a decrease in the account. This thought is totally wrong…
Consolidated Financial Statements

Each of the consolidated financial statements is prepared as if it is taken from a single set of books that is being used to account for the overall consolidated entity. There is, of course, no set of books for the …
Intercompany Inventory Transactions

Affiliated consolidated entity is an aggregation of a number of different companies. The financial statements prerequisite the individual affiliates are consolidated into a single set of financial statements representing the financial position and operating results of the entire economic entity as …
Accounting Cycle

An accounting cycle is a systematic process of recording, classifying and summarizing business activities/transactions, so that the accounting information can be transformed into a more readable/understandable format for internal as well as external users of accounting information. That format is …
Push Down Accounting

The term “push-down accounting” refers to the practice of revaluing acquired subsidiary assets and liabilities (current liabilities and long-term liabilities) at their fair values directly in the books of this subsidiary at the time of acquisition. If this practice is …