In accounting, transactions are categorized into different types of accounts based on their nature and purpose. Two primary categories are personal accounts and impersonal accounts, each serving distinct roles in the financial reporting process. Understanding these accounts, along with the function of the Sales Ledger and Purchase Ledger, is crucial for maintaining accurate financial records. These classifications are not merely theoretical concepts taught in accounting textbooks. In practice, they underpin how businesses control receivables, manage payables, assess credit risk, comply with accounting standards, and prepare reliable financial statements.… Read more

The Nominal Ledger, also known as the General Ledger, is the core accounting record that summarizes all of a company’s financial transactions. It contains a comprehensive set of accounts that track a business’s assets, liabilities, equity, revenues, and expenses. The nominal ledger forms the foundation for preparing financial statements and provides an accurate picture of a company’s financial position. This article explores the structure, function, and importance of the nominal ledger in accounting.… Read more

A ledger is much more than a simple accounting record—it is the central nervous system of the entire financial reporting process. In every organization, from small family-run enterprises to multinational corporations operating under IFRS, US GAAP, or other national standards, the ledger acts as the ultimate repository where every financial event is sorted, classified, and summarized. Accurate ledger maintenance is fundamental to producing trustworthy financial statements, supporting regulatory compliance, powering financial analysis, and enabling informed business decision-making.… Read more

Bookkeeping is far more than simply writing down numbers; it is the heartbeat of every organization’s financial system. It is the systematic process of recording, organizing, and maintaining financial transactions of a business. It forms the backbone of accounting, ensuring that financial records are accurate, up-to-date, and reliable. Without proper bookkeeping, no business—regardless of size or industry—can prepare financial statements, comply with tax law, or understand its true financial performance. Effective bookkeeping helps businesses track income, expenses, assets, and liabilities, enabling informed financial decision-making and long-term sustainability.… Read more

Recording financial transactions is the central pillar of accounting, forming the basis of every financial report, audit trail, and strategic business decision. Whether a company is a small startup or a multinational corporation operating under IFRS or US GAAP, the integrity of its financial system depends on how accurately and consistently it records transactions. A single error in recording can ripple into misstated financial statements, incorrect tax filings, inaccurate performance evaluations, and flawed decision-making.… Read more

Ledger accounting is the backbone of modern financial management, forming the structural framework that allows businesses to record, organize, verify, and analyze every financial event. While journal entries represent the chronological sequence of transactions, the ledger transforms those entries into structured account categories—revealing patterns, profitability, solvency, and operational performance. The ledger is not merely an administrative archive; it is a decision-making engine, a compliance tool, and the foundational system upon which all financial statements are built.… Read more

When a business disposes of a fixed asset, it may result in a profit or a loss, depending on the difference between the asset’s Net Book Value (NBV) and its selling price. Proper accounting treatment ensures that the gain or loss is recorded correctly in financial statements. This article provides a step-by-step example of how to calculate and account for the profit or loss on disposal of a fixed asset. Disposals of fixed assets occur frequently across industries and play a central role in how organizations manage their long-term resources.… Read more

When a business disposes of a fixed asset, it may result in either a profit or a loss, depending on the difference between the asset’s net book value (NBV) and its selling price. The gain or loss on disposal is recorded in the financial statements and affects net income. This article explores how businesses calculate and account for profit or loss on disposal, including journal entries and examples. Disposal of fixed assets is a significant accounting event because it affects not only profitability but also compliance with financial reporting standards such as IAS 16 (Property, Plant and Equipment), IAS 36 (Impairment of Assets), and IFRS 5 (Non-current Assets Held for Sale).… Read more

Fixed assets, such as machinery, vehicles, and buildings, are used in business operations for extended periods. However, there comes a time when a company must dispose of these assets due to obsolescence, inefficiency, or business restructuring. The disposal of fixed assets involves removing them from the company’s financial records and accounting for any gains or losses. This article explores the various methods of disposal, the accounting treatment, and financial implications. In accounting and finance, the disposal of fixed assets is more than a simple “sale” or “write-off.”… Read more

Many people assume that the Net Book Value (NBV) of a fixed asset represents its current market value. However, this is a misconception. The net book value is an accounting figure that reflects the historical cost of an asset minus its accumulated depreciation and any impairment losses. It does not necessarily indicate how much the asset would sell for in the open market. This article explores why NBV differs from market valuation and the key factors influencing both.… Read more