Question

-This question was submitted by a user and answered by a volunteer of our choice. Equity in accounting refers to the sum of money that is returned or paid to the owners/shareholders at the time of winding up of the company once all of the assets are liquidated and the liabilities are paid off. It […]

In simple words, all the expenses that are incidental to the incorporation or commencement of a business are known as preliminary expenses. For example, statutory fees, stamp duty, registration fees, etc. Treatment in Financial Statements In case the value of preliminary expenses is less we write off the same at once however, they are shown […]

-This question was submitted by a user and answered by a volunteer of our choice. Yes, inventory is a current asset. Before moving to the main part of the question. I would like to familiarise you with a few terms such as the meaning of inventory and current asset. I hope this answer will clear […]

-This question was submitted by a user and answered by a volunteer of our choice. Provision for Discount on Debtors The entity in order to encourage its customers to make a prompt payment allows a discount to its customers purchasing goods on credit. Thus, when the sales are made in the current reporting period on […]

-This question was submitted by a user and answered by a volunteer of our choice. Meaning of days sales outstanding Days sales outstanding (DSO) refers to the average number of days the receivables from credit sales remain outstanding in the books of accounts before they are converted to cash. A high DSO portrays that the […]

-This question was submitted by a user and answered by a volunteer of our choice. Short-Term Liabilities Meaning The term short-term liabilities refers to the short-term financial obligations of companies, firms or enterprises to make the payments to these loans within one accounting period(i.e., within a year). These loans are generally taken to meet day […]

-This question was submitted by a user and answered by a volunteer of our choice. Yes. Let’s take a set of transactions and prepare all the requisite information asked. Following are the transactions for the period April 20×1 to March 20×2 in the books of Michael Traders 1-Apr Michael started a business with cash 600,000, […]

-This question was submitted by a user and answered by a volunteer of our choice. Every entity deposits its idle cash in its bank account. Depositing cash in the bank account will fetch interest to the entity and also ensure the safety of the money. Cash deposit in the bank is one of the most […]

-This question was submitted by a user and answered by a volunteer of our choice. Cash Withdrawn from Bank for Office Use The cash withdrawn from the bank for office use shall be recorded in the books as; Journal Entry (Using modern rules of accounting)   Why is the cash account debited? When we withdraw […]

-This question was submitted by a user and answered by a volunteer of our choice. Commission Received refers to a percentage amount received by the company (or) an individual on the total sales incurred. It is an indirect income/revenue recorded on the credit side of the profit and loss account. The term “commission” is more […]

-This question was submitted by a user and answered by a volunteer of our choice. Outstanding Salary Example- Company A Ltd pays their employees a monthly salary of 25,000. The company has a policy that it pays the previous month salary to its employees on the 10th of next month. Salary for March is due […]

-This question was submitted by a user and answered by a volunteer of our choice. To begin with, three types of businesses can be commenced, i.e. sole proprietorship, partnership, and joint-stock company. As we all know, to start any business, a certain sum of money has to be invested by the owner that is known […]

In this modern business world, Banks performs various functions to an organization such as it accepts various deposits from the debtors, making payment to the creditors on the standing instructions of the company. Banks provide various agency and miscellaneous services to an organization. The Journal entry for cash withdrawn from the bank is a contra […]

-This question was submitted by a user and answered by a volunteer of our choice. In the modern business world, sales are made on a credit as well as cash basis. Even though there’s a high risk of bad debts in selling goods on a credit basis, the companies prefer the same to develop customer […]

-This question was submitted by a user and answered by a volunteer of our choice. Trial Balance Are you facing difficulty in understanding the crux of the trial balance? I would like to help you by providing the meaning followed by items to be included on either side of the trial balance. Meaning The term […]

-This question was submitted by a user and answered by a volunteer of our choice. It is believed that every organization requires goods for running its business. Goods can be purchased in two different ways i.e. on cash and credit. Most of the companies prefer credit purchase of goods over cash. I would like to […]

-This question was submitted by a user and answered by a volunteer of our choice. There are various operating and Non-operating expenses incurred by an organization in its ordinary course of business such as Salaries, Legal expenses, Electricity charges etc. Therefore, it is the primary responsibility of an accountant to record all these expenses in […]

-This question was submitted by a user and answered by a volunteer of our choice. Salary paid in advance The term salary paid in advance is also known as prepaid salary. salary paid in advance is initially recorded as an asset because it provides some future economic benefit and is charged at the time when the […]

-This question was submitted by a user and answered by a volunteer of our choice. A customer can purchase on two grounds: cash or credit. In the case of a cash purchase, the payment is made immediately by the customer however, in the case of a credit purchase, the payment is expected to be made […]

-This question was submitted by a user and answered by a volunteer of our choice. Meaning of Unbilled Revenue Unbilled Revenue refers to the revenue earned by an entity by rendering the goods or services in the current period ie. sale has been recognized but the entity has not yet issued the corresponding invoices to […]

-This question was submitted by a user and answered by a volunteer of our choice. A company incurs several expenses arising from its operating activities. For example, rent, rates, taxes, telephone bills, electricity bills, etc. It is important to record the same in the books of accounts to ascertain the true financial position of a […]

Overview of Interest received from Bank When a business has excess funds, it invests these funds by depositing them in the bank rather than keeping the money idle because banks provide interest on the money deposited. When the business deposits its funds in the bank they receive interest as a percentage of the amount deposited. […]

-This question was submitted by a user and answered by a volunteer of our choice. Salary is an indirect expense incurred by every organization as consideration for the efforts undertaken by the employees of the organization. It is one of the most recurring transactions because it is paid monthly. It is usually paid by cheque […]

-This question was submitted by a user and answered by a volunteer of our choice. Salary due is the amount of salary payable for a particular period but the related services corresponding to the amount of salary payable have already been availed by the business entity. It is also known as salary outstanding. It is […]

-This question was submitted by a user and answered by a volunteer of our choice. Need and Importance of Final Accounts Final accounts are considered as one of the essential elements of the organization. It is prepared at the final stage of the accounting process. I would like to break the explanation into two segments. […]