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Accounting Basics

Depreciation of Fixed Assets

When a company buys an asset that will probably last for more than a year, the cost of that asset is not counted as an immediate expense. Rather, the cost is spread out over several years through a process known as depreciation. Straight-Line Depreciation The most basic

Debits and Credits

Most people (without knowing it) use a system of accounting known as single-entry accounting when they record transactions relating to their checking or savings accounts. For each transaction, one entry is made (either an increase or decrease in the balance of cash in the account). Likely the

Cash vs. Accrual

Individuals and most small businesses use a method of accounting known as “cash accounting.” In order to be in accordance with GAAP, however, businesses must use a method known as “accrual accounting.” The Cash Method Under the cash method of accounting, sales are recorded when cash is

What is GAAP?

In the United States, Generally Accepted Accounting Principles (GAAP) is the name for the framework of accounting rules used in the preparation of financial statements. GAAP is created by the Financial Accounting Standards Board (FASB). The goal of GAAP is to make it so that potential investors

Asset Class

To put assets into a class is simply grouping them into different investment types. Assest categorized in similar gropus or class will have almost same characteristics and will behave in same manner in marketplace. There are dofferent types of asset classes, just have a look. Types of

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