Accounting From Scratch

Inventory accounting is one of the most important topics in financial accounting and business management. Every business that sells products must maintain inventory records to determine profit accurately and manage stock efficiently. Whether a company is small or large, inventory directly affects profit, operating efficiency, taxation, and financial reporting. For students of Financial Accounting and Analysis, understanding inventory concepts is essential because inventory impacts both the income statement and the balance sheet. Proper inventory accounting helps businesses calculate Cost of Goods Sold (COGS), value closing stock correctly, avoid inventory losses, and make better financial decisions. In this article, we will discuss the meaning and nature of inventory, Cost of Goods Sold (COGS), periodic and perpetual inventory systems, FIFO, LIFO, and weighted average methods, inventory valuation, inventory errors, gross profit method, retail inventory method, and inventory turnover ...

  The Complete Beginner-to-Advanced Guide to the Accounting Cycle (Simple, Clear & Exam-Ready) Introduction: To truly understand accounting, you must understand this flow: Accrual Accounting → Adjusting Entries → Adjusted Trial Balance → Closing Entries These steps form the backbone of accurate financial statements. Core Idea Accounting is not just about cash. It is about recording income and expenses at the right time so that profit is shown correctly. 1. Accrual Basis of Accounting What is Accrual Accounting? The Accrual Basis of Accounting means: Income is recorded when it is earned Expenses are recorded when they are incurred It does not depend on cash movement . Simple Definition Accrual accounting records transactions when they occur, not when cash is received or paid. Accrual vs Cash Basis Feature Accrual Basis Cash Basis Income Recorded when earned Recorded when received Expense Recorded when incurred Recorded when paid Accuracy High Lower Used by Companies & larg...