Accounting

Natural loss norm: what is the difference between a shortage within the norm and above it?

It is natural for rice to dry out and sugar to spill, losing a little. But when is this loss charged to expenses as "within the norm", and when is it claimed from the person at fault as a shortage? The rules and a rice warehouse example.

How should spoiled or expired material be written off, and what happens if someone is found at fault?

Sugar spoiled by damp, expired glaze, vanillin that arrived defective: each is written off differently. The route through 5910, recovery from the person at fault at market value, and a confectionery workshop example.

Material has left the warehouse: which account is it charged to for production, the workshop, the office or sale?

Material in the warehouse is accounted for in 1010, but if it goes into bread, into cleaning the workshop or to the office, it is charged to different accounts. One month of issues and journal entries, using a bakery workshop as the example.

A surplus found in an inventory count: at what value and with what journal entry is it taken onto the books?

The warehouse holds more goods than the book says. This is not a gift but a sign of an error in the records. What to check before taking a surplus onto the books, which account is used, and a shoe shop example.

When is an inventory count mandatory? The complete list in NAS No. 19

Year end, a change of storekeeper, theft or fire, cash every month, fuel every quarter: in which cases an inventory count is not optional, according to the list in the standard, with an example covering one year.

How is an inventory count carried out: 7 steps from the order to the comparison statement

Counting is only one part of an inventory count. Before it come the order, the commission and the written statement; after it come the count sheet, the comparison statement and the head's decision. Every step, using a building materials warehouse as the example.

Repairing or modernising a fixed asset: when is the cost a period expense, and when does it increase the asset's value?

Not every sum spent on equipment is added to its value. Using three invoices at a sewing workshop, we separate repairs from modernisation and work out the journal entries and the new depreciation.

What journal entries are made when defective output (rejects) appears in the workshop?

Rejects are not simply written off as a "loss": they are first accumulated in 2610, then split into usable scrap, the amount recoverable from the person at fault and the net loss. The rules and a furniture workshop example.

If the price of goods falls, at what value is the inventory in the warehouse shown in the balance sheet?

Out-of-season sandals are selling below cost, and water-damaged sneakers need cleaning. Using a shoe shop as an example, we calculate how to write inventory down to its net realizable value under NAS No. 4.

If a significant event happens after the year is closed, should the statements be adjusted or is a note enough?

In January a customer went bankrupt, in February a fire broke out in the warehouse, and the annual statements have not yet been approved. Under NAS No. 16, which event changes the figures and which one is only disclosed in the notes?

From Pascal to Burroughs: what did mechanical calculating machines give the accountant?

The first famous calculating machine was built by the young Blaise Pascal to help his father, a tax collector. Later the machine learned to multiply, passed into the hands of insurers, acquired keys and began printing on paper tape. The road from Pascal to the electronic calculator and its main gift to accounting.

How was cost accounting born: from Wedgwood's pottery to the railways

Pacioli's ledger answered the question "how much money came in and went out". The Industrial Revolution posed a new question: "How much does a single item cost me?" We look at how the English potter Josiah Wedgwood and the American railway engineer Albert Fink sought an answer to this question.

Central Asian scholars and the science of calculation: an overview

Al-Khwarizmi, al-Bukhari, al-Biruni, Ulugh Beg: four names, six centuries. What unites them, and what can today's accountant, finance professional or statistician take from them? A short map without exaggeration, based only on confirmed facts.

Where does the word "algorithm" come from, and who gave rise to it?

Every app on your phone and every calculation in accounting software works on the basis of an "algorithm". The word comes from the name of al-Khwarizmi, a scholar from Khwarazm. We look at how a person's name became a scientific term and how much Hindu-Arabic numerals eased calculation.

From the abacus to artificial intelligence: what did accountants calculate with, and why did the abacus fall out of use?

Until quite recently the click of abacus beads could be heard in shops and offices. How did the arithmometer, the calculator, the first business computer and the spreadsheet come about? And why do we so rarely see an abacus today?

The 20th century: how did accounting become an international language?

What does it take for an investor in Tokyo or London to understand the financial statements of a company in Tashkent? A short road map of the international standards that emerged in the 20th century and of the national NAS system.

1494: how did Luca Pacioli's book spread double-entry bookkeeping?

Pacioli did not invent double-entry bookkeeping, and he said so himself. Why, then, is he often called the "father of accounting"? The answer lies in one printed book.

From al-Khwarizmi to the Genoa ledger: how did accounting change in the Middle Ages?

Today's accounting rests on two things: convenient numerals and double-entry bookkeeping. Both took shape in the Middle Ages. Along this path there is also a scholar linked with the name of Khwarazm.

Is accounting older than writing? The story of clay tokens in Mesopotamia

Did people first learn to write or to keep accounts? According to a widely known theory, writing itself was born of the need to count grain and livestock. We trace the path from clay tokens to today's electronic documents.

How do you correct a wrong journal entry: red storno, reversing entry or additional entry?

The amount was wrong, the account was wrong, or too little was recorded: each error has its own correction method. Using a plastic containers workshop as an example, we look at all three methods with their journal entries.

What journal entries are made when founders contribute to the charter capital?

A new LLC has been set up: one founder brought money, the other brought a computer. In which accounts and in what order is the charter capital recorded? Short key points and one example.

What journal entries are made when a customer pays in advance?

The money has arrived, but the product has not been delivered yet. Is it income or a liability? Using a sewing workshop as an example, we look at how account 6310 works.

How are a short-term bank loan and its interest recorded?

The loan itself is not an expense, but the interest is. Four basic journal entries with accounts 6810, 6920 and 9610, using a dairy plant as an example.

At what cost is material issued from the warehouse written off: FIFO or weighted average?

The same sugar was bought at three different prices. Which price is used when it is issued to production? We compare the methods of NAS No. 4 using a confectionery workshop as an example.

When the exchange rate changes, where is the exchange difference recorded in the accounts?

You sold in dollars, the money arrived a month later, and the rate changed. Brief key points under NAS No. 22 and one export example.

What journal entries are made when goods are sold?

A shop sold goods: in which accounts revenue, VAT, cost of goods and payment are recorded. A four-step example with a table.

What is a trial balance and how should it be read?

The accountant's "X-ray": balances and movements of all accounts in a single table. We learn to read the columns.

What should be done if an inventory count reveals a shortage?

There are fewer goods in the warehouse than in the records. What to do without panicking: the steps and the paperwork.