• Tracks inventory continuously through automated systems.
• Provides real-time inventory levels.
• Minimizes manual counting but requires accurate data input.
• Effective for businesses with high-volume sales.

• Involves manual counting at regular intervals (monthly, yearly).
• Less frequent but requires significant effort during each count.
• Works well for smaller businesses or those with less complex inventory.

• Prioritizes inventory based on value or significance.
• Focuses efforts on high-value items (A), while low-value items (C) are counted less frequently.
• Efficient for businesses with varied stock, balancing cost and accuracy.

• A subset of perpetual inventory, where parts of the inventory are counted regularly.
• Less disruptive to daily operations as smaller portions are counted continuously.
• Suitable for maintaining inventory accuracy without halting business activities.

• Coordinate the stock-taking process, ensuring that roles and areas are clearly defined.
• Oversee the counting and reporting to ensure consistency and accuracy.

• Physically count inventory in designated areas using provided tools (barcode scanners, tally sheets).
• Double-check counts to minimize errors.

• Enter the counted inventory data into tally sheets or inventory systems.
• Ensure data is recorded legibly and matches item descriptions and quantities.

• Compare physical counts with inventory records and resolve discrepancies.
• Investigate potential reasons for differences (e.g., loss, theft, misplacement).

• Review the entire process to ensure adherence to procedures.
• Conduct spot checks to verify the accuracy of the counting.

• Formula: Assets = Liabilities + Equity.
• It is the foundation of double-entry bookkeeping.

• Resources owned by the company (cash, property, inventory).
• These are valuable and provide future economic benefits.

• Obligations to creditors (loans, accounts payable).
• Represent claims on the company’s resources by external parties.

• The owner’s residual interest in the company after liabilities are subtracted from assets (retained earnings, common stock).

• Every transaction affects both sides of the equation, keeping it balanced.

• Provides a clear snapshot of the company’s financial health and solvency.
• Helps in assessing the business's ability to meet financial obligations.

• Recognizes revenues when earned and expenses when incurred, regardless of when cash is exchanged.
• Provides a more accurate picture of a company’s financial performance by matching revenues and related expenses.
• Advantages: More accurate for assessing long-term profitability, better for companies with credit sales.

• Records transactions only when cash is received or paid.
• Simpler and easier to implement but can misrepresent financial health if significant receivables or payables are outstanding.

• First, all financial transactions are recorded as journal entries in the general ledger.

• Organize the accounts by assets, liabilities, equity, revenues, and expenses.

• Enter the closing balance of each account in the appropriate debit or credit column.

• Sum both the debit and credit columns.

• If the total debits equal the total credits, the trial balance is correct.

• If there is a mismatch, errors such as omissions, incorrect postings, or wrong amounts need to be corrected.

Advantages:

• Accuracy: Double-entry bookkeeping ensures that every transaction is recorded twice (debit and credit), maintaining the balance of the accounting equation.
• Error detection: The system automatically highlights discrepancies (e.g., when total debits do not match total credits), helping identify recording mistakes.
• Comprehensive financial tracking: It provides a complete picture of financial transactions, which can be categorized into assets, liabilities, income, and expenses.
• Facilitates financial statements preparation: Makes it easier to prepare essential financial documents, such as the income statement, balance sheet, and cash flow statement.
• Enables better financial control: By tracking every transaction, double-entry provides a clear view of a company’s financial health and operational efficiency.
• Supports audit and compliance: Double-entry records provide transparent documentation that can be audited or reviewed for compliance.

Disadvantages:

• Complexity: The system requires more time and effort to maintain than single-entry bookkeeping, especially for smaller businesses.
• Cost: Implementing and maintaining a double-entry system requires professional accounting software and trained personnel, which can be costly.
• Requires accuracy in entries: Mistakes in entering transactions (e.g., incorrect account classification) can affect the accuracy of the entire system, making it harder to trace errors.

• Assets and expenses increase with a debit and decrease with a credit.
• Liabilities, equity, and revenue increase with a credit and decrease with a debit.