Accrual Basis vs Cash Basis Accounting for Non Accountants

Accrual Basis vs Cash Basis Accounting for Non Accountants

There are two basic accounting methods available in business - Cash or Accrual.

With the cash method of accounting, income is recorded only when you receive cash from your customers. You record an expense only when you write the check to the vendor.

With the accrual method, income is recorded when the sale occurs, whether it be the delivery of a product or the rendering of a service on your part, regardless of when you get paid. On the other hand, you record an expense when you receive goods or services, even though you may not pay for them until later.

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Oracle General Ledger (OGL)

Oracle General Ledger (OGL)

Oracle Financial comprises of the following core Finance Modules:

1) General Ledger
2) Accounts Payable
3) Accounts Receivables
4) Fixed Assets
5) Cash Management

Oracle General Ledger (OGL) is accounting back bone for Oracle Financial Modules. It is the central repository of all financial transactions and can be called as the heart of the accounting system. OGL is a tool for integrating sub-ledger activity, consolidating group-wide accounts and releasing statutory/analytical financial reports.

Defining the Set of books (SOB) is the key setup task in Oracle General Ledger. Set of books has 3 key components - Chart of accounts, Currency and Calender (popularly called as 3Cs)

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Fixed Assets - Introduction

In simple terms, an asset is a resource having future economic benefit owned by an entity. Future benefit could mean in terms of contributing to the profit for profit oriented organizations and providing services for non-profit oriented organizations.

Assets are formally controlled and managed within larger organizations via the use of asset tracking tools. These monitor the purchasing, upgrading, servicing, licensing, disposal etc., of both physical and non-physical assets.

Assets may be classified in many ways.

1. Current assets (Current deposits, Inventory)
2. Long-term investments (Investments in securities)
3. Fixed assets (land,buildings, machinery, furniture, tools)
4. Intangible assets (patents, copyrights, franchises, goodwill, trademarks)

Fixed assets are those that are expected to keep on providing benefit for more than one year. Some common examples are: scientific equipment, office equipment, photo copiers, land and buildings, vehicles, Machinery, Property held for Investment purpose.