Difference between Capital Expenditure and Revenue Expenditure: The following are the points of distinction between capital expenditure and revenue expenditure: The Revenue Expense relates to the operations of the business of an accounting period or to the revenue earned during the period or the items of expenditure, benefits of which do not extend beyond that period. … Read more
How to choose best Car Insurance Policy, Buying a car is like a dream for many in India. Selecting a good car with great features is hard to find. Many Indian car buyers often take loans to pay for the car. It very important to buy a good car insurance because of long term. Buying a car … Read more
Accounting Equation: The accounting equation that is the foundation of double entry accounting. The accounting equation displays that all assets are either financed by borrowing money or paying with the money of the company’s shareholders. Thus, the accounting equation is: Assets = Liabilities + Shareholder Equity. All business transactions are recorded as having a dual aspect. At any point of time, a firm … Read more
Capital Profit and Revenue Profit: Capital profit which is earned on the sale of the fixed assets, The profit which is earned during the ordinary course of business is called revenue profit. Following are the main differences between capital profit and revenue profit. Capital profit is earned by selling assets, shares and debentures at a price more than their book … Read more
Ind AS 40 Investment Property. The objective of IndAS 40 is to prescribe the accounting treatment for investment property and related disclosure requirements. Investment property is property (land or a building or part of a building or both) held (by the owner or by the lessee as a right-of-use asset) to earn rentals or for … Read more
Sub Fields of Accounting, Types or branches of accounting. Accounting is a system meant for measuring business activities, processing of information into reports and making the findings available to decision-makers. The documents, which communicate these findings about the performance of an organisation in monetary terms, are called financial statements. Find Everything you want to know … Read more
Accounting for Not for Profit Organisation, Check Accounting for non profit organisations, A Not for Profit Organisation prepares their financial statements in the following form: i) Income & Expenditure Account & ii) Balance sheet Generally, such organizations also prepare a Receipt & Payment Account. Accounting for Not for Profit Organisation Must Read – Various Types of Vouchers … Read more
Double Entry System Advantages & Disadvantages: Any business transaction involves at least two accounts which we call as Debit and credit. As said above , double entry system assumes every transaction has two aspects Debit and credit. Both of these aspects should be recorded in books if accounts. It is considered as a scientific system … Read more
Limitations of Accounting, What are the Limitations of Accounting: Accounting is not fully exact: Accounting is influenced by the personal judgment in respect of various terms.People are bound to have different ideas and the estimates will naturally differ from person to person. Thus this will lead to the different amount of profit shown by a different … Read more
Definition of Accounting: Accounting is used by business entities for keeping records of their monetary or financial transactions. A businessman who has invested money in his business would like to know whether his business is making a profit or incurring a loss, the position of his assets and liabilities and whether his capital in the … Read more
Balancing Ledger Accounts: Balancing of an account means the process of equalizing the two sides of an account by putting the difference on the side where amount is short. After Ledger Posting is completed the various accounts are balanced in order to know the exact position of a particular kind of transaction. Where the debit side of an account … Read more
What is Debit and credit explained with accounting equation. We often come across the words Debit and credit in many situations like while reading accounting theory or while applying this theory, means recording the accounting entries… If we ask someone about what’s a debit and what’s a credit then they may say that left had … Read more
Capital and Revenue Receipts: Capital receipts comprise of payments or contributions into the business by the proprietor, partners or companies towards the capital of the firm and also any sum received from debenture-holders, any loans and the proceeds of sale of any fixed assets of a business enterprise. Capital Receipts – Govt receipts which either create liability … Read more
Material Requisition – Meaning, Procedure and Problems. Meaning of Material Requisition, Everything you want to know about Material Requisition. Material requisition may seem like a petty matter, but in fact it plays a vital role in manufacturing process. Material Requisition is important role in production scheduling. This article will explain all about material requisition. What … Read more
Capital and Revenue Expenditure & Deferred Revenue Expenditure. Find Everything You want to know about Capital and Revenue Expenditure. Complete Guide of Capital and Revenue Expenditure. Find Difference between Capital and Revenue Expenditure. What is Capital Receipt and Revenue Receipt. Here we are providing all information related to Capital and Revenue Expenditure. Recently we also provide Basic Principles … Read more
Users of Accounting Information: Accounting is of primary importance to the proprietors and the managers. However, other persons such as creditors, prospective investors, etc. are also interested in the accounting information. Generally users of accounts are classifed into two categories, (a) internal management and owners; and (b) external users or outsiders. Management accounting is concerned with … Read more
Role of Accountant: An accountant performs financial functions related to the collection, accuracy, recording, analysis and presentation of a business, organization or company’s financial operations. An accountant has several roles and responsibilities to meet in their job, both in terms of their competence at carrying out accounting practices as well as their ethics and approach … Read more
Double Entry System of book-keeping has emerged in the process of evolution of various accounting techniques. It is the only scientific system of accounting. According to it, every transaction has two-fold aspects debit and credit and both the aspects are to be recorded in the books of accounts. For example, if a business acquires something … Read more
Petty Cash Book: Payments in cash of small amounts like traveling expenses, postage, carriage etc. are petty cash expenses. These petty cash expenses are recorded in the petty cash book. The petty cash book is maintained by separate cashier known as petty cashier. The firm may adopt Imprest System of maintaining petty cash. The petty cashier … Read more
Rules of Debit and Credit: The left hand side of an account is called the debit side; while the right hand side is called the credit side. An entry on the left side of an account is called a debit entry, or merely a debit, an entry on the right side is called a credit … Read more
Suspense Account: When a trial balance does not agree, efforts are made to locate errors and rectify them. However, if reason for disagreement of trail balance cannot be found, a new account called suspense account is opened in order to give trial balance an appearance of agreement. Then final accounts are prepared. Debit balance in … Read more
Net Present Value (NPV): Present value of cash flows minus initial investments, The Net Present Value (NPV) method as an investment appraisal or capital budgeting technique shows how an investment project affects company shareholders’ wealth in present value terms. Maximizing shareholders’ wealth is an important goal for management, and investment projects with positive NPV are … Read more
Should Professional Accountants Care about Culture? Yes!. Extensive rules and procedures alone are not enough to ensure appropriate conduct in the work place—the financial crisis of 2008 illustrated this. At the Association of Chartered Certified Accountants (ACCA), we believe that a healthy culture is a prerequisite for corporate governance and risk management to be truly effective. … Read more
Meaning of Accounting: According to AICPA Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character, and interpreting the results thereof. Scope of Accounting, Functions of Accounting, Type of Accounting, Used of Accounting, Limitation … Read more
Rectification of Errors: Every concern is interested in ascertaining its true profit and financial position at the close of the trading year. But inspite of the best efforts of the book-keeper and the accountant certain errors are committed in the recording of the transactions which affect the final accounts of the concern. It, therefore, becomes utmost … Read more
Difference between Capital Receipts and Revenue Receipts: Receipts which are not of revenue nature are capital receipts.The Receipts which are not received now and then can be treated as capital receipt. The distinction of transaction into revenue and capital is done for the purpose of placing them in Profit and Loss account or in the … Read more
Accounts and its Classification (Accounts Classification): The business transactions are recorded in accounts. An account is an individual record of a person, firm, or thing, an item of income or an expense. An account is prepared for each type of asset, liability, owner(s) equity, revenue and expense. For example, the account of cash would show the … Read more
Trial Balance methods: A trial balance is a schedule or list of debit and credit balances extracted from various accounts in the ledger including cash and bank balances from cash book. Since every transaction has a dual effect i.e. every debit has a corresponding credit and vice versa, the total of the debit balances and … Read more
Revenue Expenditure: Expenses whose benefit expires within the year of expenditure and which are incurred to maintain the earning capacity of existing assets are termed as revenue expenditure. Amounts paid for wages, salary, carriage of goods, repairs, rent and interest, etc., are examples of revenue-expenditure. Depreciation on fixed assets is also a revenue-expenditure. To the extent … Read more
Debt Ratio is one of the financial ratios which compares an entity’s total amount of debt to its total amount of assets, which is used to gain a general idea as to the amount of leverage being used by a entity. Know more about Debt service coverage Ratio from below. If you like this article … Read more