Basic Points Of Accounting [ Part 5 ]

Basic Points Of Accounting [ Part 5 ]

Written By : Sakin17

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1. 11 The counting of Interest 

•   Interest = principal amount x interest rate x time

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1. 12 The Method of determining annual depreciation 

• Straight Line : Cost - estimated residual value / estimated life 
• Double Declining Method : Depreciation rate* x book value(cost-estimated residual value) at the beginning period 
• *Depreciation rate usually twice the straight line method rate(1/estimated life)

1. 13 The Adjusting of Net Loss(Profit) Use Indirect Method

• Increase/Decrease 

Net Loss(profit)............................................................................................................xxx

An adjusting to reconcile net profit become net cash flow from :

Operational Activities 

Depreciation of equipment..........................................................................................xxx

Amortization of intangible assets................................................................................xxx

Loss of assets removal...............................................................................................xxx

Profit of assets removal..............................................................................................xxx

Change of Current Operational Assets and Liabilities:

 

........................*to be continue [ part 6 ] (@_^)