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Accounting standards are the guidelines that companies and other organizations must follow when disclosing financial information. These rules regulate the terminology and practices that accountants must use, which facilitates the analysis of financial data. 

Accounting financial statements are the fundamental tools used by management to communicate financial information and certain quantitative elements to the public. Accounting principles ensure that a company's financial statements are complete, consistent, and comparable, making it easier to examine and extrapolate information from them over time. 

List of Accounting Principles 

Accrual Principle 

Accrual systems are essential accounting rules for accurately understanding a business's financial situation. They record transactions in the period they occur, regardless of the actual cash flows received. Accrual systems are widely used by large-scale organizations to calculate cash flow, revenues, and associated costs. 

Consistency Principle 

The principle of consistent accounting involves an organization adopting a specific method for reporting or documentation to make financial statements comparable across industries. However, this principle faces two issues: improper implementation when recording data and compiling reports, and the potential for switching between financial reporting methods to manipulate data. To address these issues, organizations must establish a set internal method and implement effective data management strategies. 

An example of the consistency principle is that depreciation must be determined annually using the same depreciation method. It would be improper for a business to switch its depreciation methodology from one financial year to the next because doing so could distort the results. 

Conservatism Principle 

The idea that expenses and liabilities should be recorded as soon as practically possible encourages a realistic attitude toward unforeseen occurrences. When a receipt is guaranteed, earnings and possessions are indicated. According to the conservative principle's lowest cost or market rule, inventory should be recorded at the lower end of its purchase price or current market value. 

Cost Principle 

A firm should only record its assets, liabilities, and equity interests at the amount paid at the moment of acquisition, according to this theory. This principle is becoming less relevant as more accounting standards move toward valuing assets and liabilities at fair value. 

For example, if we spend $20,000 for a car that is worth $25,000 in total. The corporation will use $20,000 as the actual amount paid when recording on the balance sheet even though the car has a value of $25,000. 

Economic Entity Principle 

This accounting theory calls for treating companies as separate financial and legal entities. As a result, the business entity's documented activities must be maintained apart from those of the owner and other entities. A sole proprietorship, limited liability partnership, or general partnership are examples of these. 

Matching Principle 

This idea states that all expenses that are related to an income should be recorded at the same time. As a result, you record income from the sale of inventory items at the same time as you charge inventory to the cost of goods sold. The accrual basis of accounting is founded on this. The matching principle is not utilized in cash basis accounting. 

Eg, every transaction a salesperson makes in January earns them a 5% commission, but they won't be paid out until February. This implies that the business will pay them $5 in February if they sell $100 worth of goods in January. 

Materiality Principle 

The concept of materiality in accounting means that all significant items must be fairly disclosed in the financial statements. The term "material items" refers to those elements whose presence or absence significantly alters how business information users make decisions. 

The document management system or document management software that can free up the space in the file cabinets filled with financial documents.

Every firm has to deal with numerous transactions every day. Accounts payable include the amount of money that is owed by the organization to vendors or suppliers for the goods that are purchased on credit. In order to maintain the financial well-being of the firms, it is essential to have a document management system or document management software that can free up the space in the file cabinets filled with financial documents. Some of the ways in which how a document management software like Paperlez can help with managing accounts payable and finances at any organization are as follows.

Access documents from anywhere

Accounts payable tasks are likely to be done from on-premises, but this has drastically changed over the past months. With digitized documents, it is easy to manage all the invoices, financial records, and data that require more attention. Document management software like Paperlez comes with a smartphone application that allows working on documents on the go. Moreover, this document management system supports private document sharing along with permission access controls which ensures to preserve the confidentiality of financial documents.

Data security at its best

Effective document management system and document management software can simplify tasks and double the productivity in organizations. Every company has to deal with multiple tasks simultaneously to run a good business daily. The amount of document management that comes along with these tasks is huge. This is when an effective document management system and document management software can simplify tasks and double the productivity in organizations. Let’s look into some important features of Paperlez, a reliable document management system that can add up to the efficiency of each organization.

Document management system with powerful search

Effective document management system and document management software can simplify tasks and double the productivity in organizations.

Every company has to deal with multiple tasks simultaneously to run a good business daily. The amount of document management that comes along with these tasks is huge. This is when an effective document management system and document management software can simplify tasks and double the productivity in organizations. Let’s look into some important features of Paperlez, a reliable document management system that can add up to the efficiency of each organization.

Document management system with powerful search

Finding the right documents at the right time is very important whenever each person is handling tasks. The time taken for finding documents from file cabinets is more and also a very tiresome activity. Paperlez is an effective document management system that comes with powerful search along with task reminders. With this document management software, it is possible to save more time and effort simultaneously.

Access documents from anywhere anytime

Carrying multiple files in hand and roaming around the office can be very clumsy, but working with digital documents in a document management system makes these worries fade away. With document management software like Paperlez, it is possible for the employees to access documents from anywhere and this keeps them connected with the team wherever they are. Also, features like permission access control ensure that confidential files are handled by authorized individuals only.

Enhanced collaboration with document management system

Each business firm is actively investing in credible solutions aligning with futuristic technological enhancements.

Document management systems and document management software have become an inevitable part of many organizations in the global marketplace. Each business firm is actively investing in credible solutions aligning with futuristic technological enhancements. The transformation from paper files to paperless solutions has made document management software an essential part of firms. Let’s look in detail at how document management systems like Paperlez can be a value add-on to every business.

Smarter space usage with document management system

The piles of paper files have given way to the cloud-based document management system and document management software in many firms. This has also reduced the risk of data loss along with saving significant workspace which was once occupied with cabinets and paper documents. Paperlez is an effective document management software that helps to free up space and thereby avoid unwanted expenses in the organization.

Secure data with document management software

Every business involves day-to-day activities and numerous transactions on the products which are to be sold and returned. Debit notes and credit notes are used by businesses as formal records for sale return and purchase return transactions. These notes let the buyer know how much credit they have available to them or how much more they still owe the seller and inform merchants of the amount that customers owe them. Let’s get to know more about debit notes and credit notes in detail.

What are debit and credit notes?

A debit note is a document sent by one party to another that certifies that the recipient's account has been debited in the sender's books. In this accounting entry, the account due to which the debit note is issued is credited and the individual to whom the debit note is to be sent is debited. A credit note is a document sent by one party to another that certifies that the recipient's account has been credited to the sender's books. It is a straightforward accounting entry where the account due is debited and the individual to whom the credit note is to be issued is credited.

When a supplier or customer issues a credit or debit note

The basic purpose of business notes is to keep track of purchases and sales. If there is any sale mistake, debit notes also function as receipts for transactions. Among these, variations in the number of items or the buyer's return of goods can be considered. This note is crucial for the organization’s purchasing and selling transactions. Hence, it must be collected and stored.

When a buyer overpays for a good, the buyer provides a debit note to the seller or supplier. However, when this happens, the supplier issues a credit note to the former. A debit note is issued in the instance of purchase returns whereas a credit note is issued in the event of sales returns. In simple terms, the debit note helps in reducing the buyer’s outstanding trade obligations. The client issues a debit note and the supplier must issue the latter a credit note when the goods are returned to the supplier. A credit note is written in red ink, while a debit note is written in blue ink. A credit note never indicates a positive sum, while a debit note always does. While a credit note lowers account payables, a debit note lowers account receivables. Each of these aforementioned information is vital about debit notes and credit notes.

Debit/Credit Note According to GST

Debit or credit notes may be issued for the reasons listed in GST filings.

Sales Return

Post Sale Discount

Deficiency in services

Correction of invoice

Change in POS

Finalization of provisional assessment

Inventories and stocks are an imperative part of businesses and it is crucial to keep a track of them for making better decisions and strategies. Generating accurate and timely inventory aging reports can bring a massive shift in your business growth. When handled properly, inventory aging reports can aid in getting rid of outdated goods which opens up prospects for more sales resulting in satisfied customers. To know better about inventory aging reports, let’s go through the details shared below.

What is an inventory aging report

An inventory aging report or stock aging report represents the key metrics on the status of inventories utilized in the firms. In essence, it is a list of the inventory goods arranged by how long they have been in stock. The aged inventory report is the simplest tool for identifying slow-moving or obsolete inventory that needs to be revalued in order to accurately compute your cost of goods sold. The insights from inventory aging reports enable business owners to predict some of the potential occurrences that could affect the firm in business.

Key takeaways from inventory aging report

Inventory aging reports provide many crucial key takeaways which are significant while handling stocks and inventories in the organization. Following are some of the important key takeaways provided by the inventory aging report.

Inventory aging reports enable us to concentrate on slow-moving objects more effectively:

The inventory aging report shows you which products are slow to move or aren’t moving out of inventory at all. This is keen on figuring out why some products remain in stock for a longer period of time than others. The products you order in the future may be affected by this data.

The ability to make decisions regarding the quantity and timing of inventory purchases can be improved by inventory aging reports:

Inventory aging reports enhance the decision-making process for purchasing inventory. With knowledge on which products aren’t selling quickly out of stock enables the purchasing department to arrange orders for those that do and thereby removing slow-moving products.

Provides information about supplemental costs:

Non-moving items take up the space which can be utilized for items that sell quickly. Also, long-term product storage along with maintenance charges for the products to remain in saleable condition can be expensive.