December 2024

Carriage inwards refers to the transportation costs incurred by a business when purchasing goods from suppliers. These costs are directly related to bringing inventory or raw materials to the business premises and are considered part of the cost of goods purchased. Properly accounting for carriage inwards in ledger accounting ensures that the total cost of inventory is accurately reflected, which in turn affects the cost of goods sold and overall profitability.… Read more

In ledger accounting, both carriage costs and goods returned are essential components that affect the cost of sales and overall profitability. Carriage costs refer to the expenses incurred in transporting goods, while goods returned represent items sent back either by customers or to suppliers. Proper recording of these transactions ensures accurate financial reporting and helps in evaluating business efficiency. This article explores how to account for carriage costs and goods returned with detailed ledger entries and examples.… Read more

The disposal of fixed assets in ledger accounting involves removing an asset from the books when it is sold, scrapped, or otherwise retired from use. The process includes eliminating the asset’s original cost, accumulated depreciation, and recording any gain or loss from the disposal. This example demonstrates detailed ledger entries for the disposal of fixed assets. 1. Scenario Overview XYZ Company purchased office equipment for $12,000 on January 1, 2019. The equipment is depreciated using the straight-line method over a useful life of 4 years, with no residual value.… Read more

The disposal of fixed assets in ledger accounting refers to the process of removing a fixed asset from a company’s books when it is sold, scrapped, or otherwise no longer in use. Proper accounting for asset disposal ensures accurate financial reporting and helps determine whether a gain or loss has occurred. This article explains how to record the disposal of fixed assets with detailed journal entries and ledger examples. 1. What Is the Disposal of Fixed Assets?… Read more

Depreciation is the systematic allocation of the cost of a fixed asset over its useful life. In ledger accounting, depreciation ensures that the declining value of assets like machinery, vehicles, and equipment is accurately reflected in both the income statement and the balance sheet. This example demonstrates how to record depreciation using detailed journal entries and ledger accounts. 1. Scenario Overview XYZ Company purchases a delivery van for $24,000 on January 1, with an estimated useful life of 4 years and no residual value.… Read more

Provision for depreciation is an essential concept in ledger accounting, ensuring that the gradual reduction in the value of fixed assets is accurately recorded over time. Depreciation reflects the wear and tear, obsolescence, or usage of assets such as machinery, vehicles, and equipment. The provision for depreciation is a contra asset account that accumulates the total depreciation charged on an asset, allowing businesses to maintain the original cost of the asset in the books while reflecting its reduced value.… Read more

Depreciation and the disposal of fixed assets are fundamental aspects of ledger accounting. Fixed assets, such as machinery, vehicles, and equipment, gradually lose value over time due to wear and tear, obsolescence, or usage. This reduction in value is accounted for through depreciation. When a fixed asset is sold, scrapped, or otherwise disposed of, specific ledger entries must be made to reflect the transaction accurately. This article explores how to record depreciation and the disposal of fixed assets with detailed ledger entries and examples.… Read more

Bad and doubtful debts are critical components of ledger accounting for businesses that offer credit to customers. Bad debts refer to amounts that are confirmed as uncollectible, while doubtful debts are amounts that might become uncollectible in the future. Proper accounting for these ensures accurate financial reporting and reflects the true value of accounts receivable. This example illustrates how to record bad and doubtful debts in ledger accounts with detailed journal entries.… Read more

In ledger accounting, recording doubtful debts is crucial for anticipating potential losses from customers who may not fulfill their payment obligations. A provision for doubtful debts reflects an estimate of the portion of accounts receivable that might become uncollectible. This example demonstrates how to create, adjust, and utilize provisions for doubtful debts with detailed ledger entries and explanations. 1. Scenario Overview XYZ Company has the following accounts receivable as of December 31: John Smith: $5,000 Mary Johnson: $3,000 David Brown: $2,000 Based on past experience, XYZ Company estimates that 10% of its total accounts receivable may become uncollectible.… Read more

Provision for doubtful debts is an essential concept in ledger accounting, ensuring that a business anticipates potential losses from customers who may default on payments. This provision reflects the estimated portion of accounts receivable that may become uncollectible in the future. By accounting for doubtful debts, companies provide a more accurate and realistic view of their financial health. This article explores the concept, importance, and ledger entries associated with the provision for doubtful debts, including practical examples.… Read more