Benefits and Drawbacks of Equity Method

Parent companies employ equity method of bookkeeping to take into account profit from their other companies into their statement of account.  The parent company should necessarily have at least twenty percent stock and be capable of exerting considerable influence for … Continue reading

Cost Method Vs Equity Method for Accounting of Stock Investments

Different ways like equity, cost and consolidated can be employed when accounting for investments. It’s the amount of ownership that decides the method of accounting.  Here’ how a distinction is made between cost method Vs equity method. When the ownership … Continue reading

Who Benefits by Accounting! – External and Internal Users of Accounting Information

Accounting can be described as a way for passing on of financial details of a business company to others including its managers and shareholders. External and Internal Users of Accounting Information – Who could use accounting information? The accounting information … Continue reading

Understanding External Financial Statements

Companies offer external financial statements for sharing information about their business to the outside world including prospective lender and investors. Generally, external financial statements provided by companies are not much different from its internal accounting, though these can be considerably … Continue reading

The Four Accounting Principles

Every profession dictates its own principles to follow and accounting is no exception. Though accounting principles are multifarious, their fundamentals are neither difficult to understand nor being put into practice. Accounting principles comprise of four essential assumptions, four essential principles … Continue reading

Comparing Manual and Computerized Accounting Systems

Every business essentially needs to keep an account of its daily financial transactions. This is achieved using a suitable system of accounting to ensure that all transactions are accurately and correctly recorded in its general ledger. Thankfully, technological developments have … Continue reading