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The most basic identity in accounting is that the balance sheet must balance, that is, that assets must equal the sum of liabilities (debts) and equity (the value of the firm to the owner). In its most common formulation it is known as the accounting equation: Assets = Liabilities + Equity. where debt includes non-financial liabilities.
In computerized accounting systems with computable quantity accounting, the accounts can have a quantity measure definition. Account numbers may consist of numerical, alphabetic, or alpha-numeric characters, although in many computerized environments, like the SIE format, only numerical identifiers are allowed. The structure and headings of ...
The convention of disclosure requires that all material facts must be disclosed in the financial statements.For example, in the case of sundry debtors, not only the total amount of sundry debtors should be disclosed, but also the amount of good and secured debtors, the amount of good but unsecured debtors and amount of doubtful debts should be stated.
Resources, events, agents (REA) is a model of how an accounting system can be re-engineered for the computer age.REA was originally proposed in 1982 by William E. McCarthy as a generalized accounting model, [1] and contained the concepts of resources, events and agents (McCarthy 1982).
Generally Accepted Accounting Principles (GAAP) [a] is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC), [1] and is the default accounting standard used by companies based in the United States.
An example is an obligation to pay for goods or services received, where cash is to be paid out in a later accounting period. The amount is deducted from accrued expenses when it is paid. Accrued expenses share characteristics with deferred income (or deferred revenue ), except that deferred income involves cash received from a counterpart ...
Reference data is a catch all term used in the finance industry to describe counterparty and security identifiers used when making a trade. As opposed to market data the reference data is used to complete financial transactions and settle those transactions. The financial service industry and regulatory agencies have pursued a policy of ...
This method is also very hard to use on interchangeable goods. For example, relating shipping and storage costs to a specific inventory item becomes difficult. These numbers often need to be estimated, diminishing the specificity advantage of the specific identification method.