Episode 1
Insight Journal
Explore. Learn. Grow.
Articles and learning notes from Insight Academy of Commerce.
Episode 2
Why is Coaching Important?
Episode 3
Why Insight Academy is Different?
Blog 9 – – Cash flow statement
A cash flow statement shows the inflows and outflows of cash and cash equivalents during an accounting period. Operating activities relate to the main business operations; investing activities relate to long-term assets and investments; financing activities relate to capital and borrowings. The statement explains the change between opening and closing cash balances.
Blog 8 – – Revenue and expenses
Revenue is income earned from the ordinary activities of a business. Expenses are costs recognised in earning income during an accounting period. Under accrual accounting, revenue is recorded when earned and expenses when incurred. Revenue exceeding expenses results in profit, while expenses exceeding revenue result in a loss.
Blog 7 – – Capital and the owner
Capital is the owner’s residual interest in a business after its liabilities are deducted from its assets. The owner contributes resources and bears the risks and rewards of ownership. Under the business entity concept, the business is treated separately from its owner. Profits and additional contributions increase capital; losses and drawings reduce it.
Blog 6 – – Assets and liabilities
Assets are resources controlled by a business as a result of past events and expected to provide future economic benefits. Liabilities are present obligations arising from past events whose settlement requires an outflow of resources. The difference between total assets and total liabilities represents the owner’s capital in the business.
Blog 5 – – Bills receivable and bills payable
Bills receivable are amounts a business is entitled to receive under bills of exchange. Bills payable are amounts a business is obliged to pay under bills it has accepted. The same accepted bill is an asset for the party entitled to receive payment and a liability for the party required to pay.
Blog 4 – – Debtors and creditors
A debtor is a person or organisation that owes money to the business. A creditor is a person or organisation to whom the business owes money. Trade debtors arise from credit sales, while trade creditors arise from credit purchases. Amounts receivable from debtors are assets; amounts payable to creditors are liabilities.
Blog 3 – – Rules of debit and credit
Debit and credit are the two sides of an account. Debit is the left side, and credit is the right side. In the double-entry system, every transaction is recorded with equal total debits and credits.
| Traditional rule | Modern rule |
|---|---|
Personal accounts: Debit the receiver; credit the giver. Real accounts: Debit what comes in; credit what goes out. Nominal accounts: Debit all expenses and losses; credit all incomes and gains. | Assets: Debit increases; credit decreases. Liabilities: Credit increases; debit decreases. Capital: Credit increases; debit decreases. Expenses and losses: Debit increases; credit decreases. Income and gains: Credit increases; debit decreases. |
Blog 2 – – Accounting equation
In our first blog, we introduced accounting and its branches. Now, let us explore the accounting equation: a simple relationship that explains what a business owns and how it is financed.
Assets = Liabilities + Capital
Assets are resources the business owns or controls, such as cash, furniture, machinery, inventory and amounts receivable from customers. Liabilities are amounts the business owes to others, such as bank loans and amounts payable to suppliers. Capital is the owner's interest in the business after deducting liabilities from assets.
Blog 1 – – Accounting and its branches
Accounting is the process of recording, classifying and summarising financial transactions, and interpreting and communicating the results to help people make informed decisions.
The three main branches of accounting are:
1. Financial accounting: Records business transactions and prepares financial statements to show a business’s performance and financial position.
2. Cost accounting: Measures and analyses the cost of products or services to help control costs and improve efficiency.
3. Management accounting: Provides financial and non-financial information to managers for planning, decision-making and control.