IMPORTANCE OF ACCOUNTING
Every business requires its own performance examination, data, records, analysis etc which is why accounting is an integral part of every business. Accounting gives the management information regarding the financial performance (Statement of Comprehensive Income) and financial position (Statement of Financial Position) which is integral for the stakeholder to understand the health of the business. Accounting has basically 2 methods – Single entry and double entry. Double entry is the most widely used method whereas single entry is for very small scale businessmen where accounting merely means income less expenses.
Some of the areas accounting helps a business in are as follows:
- Planning and formulating strategies in the future based on past and current performances
- It helps in coordinating various business factors such as inventory procurement
- Brings better control of resources into the business
- It a medium of communicating the state of affairs of the business, in terms of numbers
- It helps in formulating budgets
- The accountant is the position to give valuable advice
- Comparison becomes easier
- Ensuring Law of land is adequately followed
The IASB (International Accounting Standards Board) is an independent, private-sector body that develops and approves IFRS (International Financial Reporting Standards) that provides certain principles for accounting. They specify how a business should maintain its books of records to ensure consistency, transparency, and comparability. It was established to create a common accounting language.
IFRS – Research and Development
Businesses incur research and development costs in order to bring product differentiation, the launch of a new product etc. Such R&D costs have a special treatment and cannot be entirely treated as normal expenses. As per IFRS, research costs are expensed, however, in case of development costs (including internal costs) are capitalized provided certain conditions are met. This gives rise to the importance of differentiating a research cost from a development cost.
Depreciation methods as per IFRS
Depreciation is the systematic allocation of the depreciable amount of a fixed asset over its useful life. A fixed asset is recognized in the books of accounts when:
COVID’19 – Tackling the challenges of Business today
With the advancement of COVID’19 the pandemic in the past few months, the commercial industry has seen a variety of challenges. A pandemic cannot be confined to merely a major health crisis, it has had a subsequent effect on businesses across the globe. Not only has it gotten businesses to rethink and restructure their ways of operations, it has made companies with high profits, in the pre-pandemic times, difficult to survive in the current market. It is safe to say almost all industries have taken a hit, but here let us look into some of the worst-hit industries:
Due diligence for mergers and acquisitions
Due diligence is a process of verification, investigation, or audit of a potential deal or investment opportunity to confirm all relevant facts and financial information and to verify anything else that was brought up during a mergers and acquisitions deal or investment process. Due diligence should be completed before a deal closes to provide the buyer with an assurance of what they are getting.
Bank Mergers in the UAE Market
Banks in Abu Dhabi are set to merge later in this quarter which is set to impact UAE in several ways. ADCB (Abu Dhabi Commercial Bank) and UNB (Union National Bank) are set to merge. The combined company is then to acquire Al Hilal bank which is still set to act as a separate Islamic bank entity in this new group. It is expected for the final merged and acquired company to remain under the name of ADCB. This is the most recent merge of banks after the merger of National Bank of Abu Dhabi and First Gulf Bank last year. In addition to this, there has also been recent news about a potential merger of some local banks in Sharjah.
The Ultimate Guide to New UAE FDI Law
The New UAE Foreign Direct Investment Laws which determine the nation’s business infrastructure has come into effect on 23rd September 2018.
China-UAE Trade Agreements
The Chinese President Xi Jinping’s recent visit to UAE is set to make gradual, yet large economic change in UAE. Both countries spoke about boosting different industries and have made 13 strategic agreements. These agreements include construction of embassies and cultural centers, advancing energy cooperation, e-commerce ties, numerous investments, and the infamous Belt and Road Initiative all of which the UAE government strongly supports, and would bring an inflow of income into the UAE.
Business Ownership Law To Boost Investments
UAE’s most recent investment law has become the talk of the town as it opens up business regulations further and allows 100 percent ownership to foreign investors in certain onshore business sectors. This law is currently awaiting the FNC’s approval and is planned to be introduced in the last quarter of this year.
Business Friendly Changes in Regulations
UAE has taken numerous steps recently for ease of business, by reducing visa requirements for businesses hiring expatriate