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Petty Cash and the Imprest System

Petty cash involves expending small amounts of cash for small owed amounts where it would not be prudent to write a check. For such a small amount, the added cost and inconvenience of writing and cashing a check would not be preferred. Petty cash is involved in payments such as small amounts of office supplies, […]

Bank Reconciliation

In bank reconciliation, financial statements are reviewed to be certain that all information is accurate, covering amounts spread across accounts. In this process, the balance in a bank statement is compared to the balance listed in a business’s general ledger. If there are any differences between these two amounts, the reason for this must be determined. To reconcile a […]

Links between the Balance Sheet and Income Statement

Comparing a company’s balance sheet and income statement assures that the net income listed in the income statement is accurate. When utilizing the double entry method of accounting, the links between the two become clear. Revenues increase net income, while expenses decrease net income. Positive net incomes increase stockholders’/owner’s equity, as reported in the income statement. Negative net incomes […]

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