Category Archives: Accounting

Journal, What is Journal, Advantages of Journal, Functions of Journal

Advantages of Journal

Journal: A journal is often referred to as Book of Prime Entry or the book of original entry. In this book transactions are recorded in their chronological order. The process of recording transaction in a journal is called as ‘Journalisation’. The entry made in this book is called a ‘journal entry’. Journal is the book of […]

Features of the Ledger Account, What are the Features of Ledger Account

Features of the Ledger Account

Features of the Ledger Account: After recording the transactions in the journal, recorded entries are classified and grouped into by preparation of accounts. The book which contains all set of accounts (viz. personal, real and nominal accounts), is known as Ledger. It is known as principal books of account in which account-wise balance of each […]

Ledger – Principal Book of Accounts, Ledger Accounts, Ledger Posting

Ledger Book, Ledger Posting

Ledger – Principal Book of Accounts: All journals are posted into ledger chronologically and in a classified manner Ledger is the principal book of accounts where similar transactions relating to a particular person or property or revenue or expense are recorded. It is a set of accounts. It contains all accounts of the business enterprise whether […]

Accounting Principles, Accounting Concepts and Conventions (Detailed)

Accounting Principles

Accounting Principles : Accounting is a language of the business. Financial statements prepared by the accountant communicate financial information to the various stakeholders for decision-making purpose. Therefore, it is important that financial statements prepared by different organizations should be prepared on uniform basis. Also there should be consistency over a period of time in the […]

Journal : Books of Prime Entry, Functions and Advantages of Journal

Journal

General Journal: This is also known as Journal Proper or General Journal. It is used for making the original record of such transactions for which no special journal has been kept in the business. All transactions are first recorded in the journal as and when they occur; the record is chronological; otherwise it would be difficult to […]

Double Entry System (Definition), Advantages of Double Entry System

Double Entry System

Double Entry System: 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 […]

Deferred Revenue Expenditure, What is Deferred Revenue Expenditure

Deferred Revenue Expenditure

Deferred Revenue Expenditure: Deferred revenue expenditure is that expenditure for which payment has been made or a liability incurred but which is carried forward on the presumption that it will be of benefit over a subsequent period or periods. In short, it refers to that expenditure that is, for the time being, deferred from being charged […]

Difference between Capital Expenditure and Revenue Expenditure

Expenditure and Revenue Expenditure

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, benefts of which do not extend beyond that period. Capital […]

Revenue Expenditure, What is Revenue Expenditure with Example

Revenue Expenditure

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 […]

Capital Expenditure, understand what is capital expenditure with example

Capital Expenditure

Capital Expenditure: Capital expenditure is that expenditure which results in acquisition of an asset or which results in an increase in the earning capacity of a business. The benefit of such expenditure lasts for a long period of time. As we have already discussed, capital expenditure contributes to the revenue earning capacity of a business over more […]