Category Archives: Accounting

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 […]

Rules of Debit and Credit, The Concept of Debit and Credit Entries

Rules of Debit and Credit

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 […]

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 […]

Classification of Errors, Types of Errors (Clerical Errors, Errors of Commission)

Classification of Errors

Classification of Errors or Types 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 […]

Users of Accounting Information, who can use accounting information

Users of Accounting Information

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 […]

Systems of Accounting, Basis of accounting (Cash & Accrual Basis)

Systems of Accounting, Basis of accounting

Systems of Accounting, Basis of accounting (Cash Basis & Accrual Basis). Difference between Accrual Basis of Accounting and Cash Basis of Accounting. Cash Basis of accounting: Cash Basis of Accounting is a method of recording transactions by which revenues, costs, assets and liabilities are reflected in the accounts for the period in which actual receipts or […]