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TRANSACTIONS Transactions refer to any exchange of goods and services on cash or credit basis by the business with the outside parties i.e. other business or customer. Transaction is an economic activity. It has an effect on the net worth or financial position of the business. FEATURES OF TRANSACTION The following are the features of…
USERS OF ACCOUNTING Accounting provides the information to the users of the business. Various users are interested to know about the financial position of the business, which they get from the accounting records kept by the business and provided to them by way of publishing final accounts. The users of accounting are as follows: INTERNAL…
GARNER VS MURRAY RULE Dissolution of Partnership Firm means the firm closes down its operations and comes to an end. On the dissolution of the firm, the assets of the firm are sold and liabilities are paid off. The balance, if any, is paid to the partners in settlement of their accounts. If there is…
DIFFERENCE BETWEEN HIRE PURCHASE AND INSTALMENT Before understanding the difference between Hire purchase and Instalment, both concepts must be understood: HIRE PURCHASE SYSTEM Hire Purchase system is a system in which the goods are delivered to the purchaser at the time of agreement before the payment of instalments but the title of the goods is…
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DIFFERENCE BETWEEN PROVISIONS AND RESERVES Before understanding the difference between Provisions and Reserves, the two concepts must be understood: PROVISIONS Provisions meaning states the amount set aside by charging to the Profit and Loss Account, to provide for any known liability, the amount of which cannot be determined with accuracy. ACCORDING TO COMPANIES ACT 2013:…
The difference between Departmental and Branch Accounting is as follows: DEPARTMENTAL ACCOUNTING Departmental Accounting refers to maintaining accounts for one or more departments of the company. Revenues and expenses of the department are recorded and reported separately. The departments are then consolidated into the accounts of the head office to prepare the financial statements of…
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INCORPORATION OF BRANCH TRIAL BALANCE Branch and Head office belongs to the same owner. It is must to prepare the consolidated accounts of both. To prepare the consolidated accounts of the head office, the branch trial balance is incorporated in the books of the Head Office. The Incorporation of Trial Balance means the recording or…
METHODS OF BRANCH ACCOUNTING Branch Accounting means recording of business transactions of a branch for the purpose of calculating its profit or loss for an accounting period. OBJECTIVES OF BRANCH ACCOUNTING TO ASCERTAIN PROFIT OR LOSS AT BRANCH: Every business house wants to measure the performance of its branches separately. Hence, separate records for each…
DIFFERENT TYPES OF BRANCHES Branches are the various divisions of business located in different places either in the same town or in different towns. Main business house can be called Head Office which controls the affairs of the branches. Branches may be opened for the purchase of raw materials, production of goods, purchase of goods,…
INTER-DEPARTMENTAL TRANSFERS The goods transferred by one department to another department is called inter-departmental transfers. The rule applies to inter-departmental transfers is: Debit the Receiver Credit the Giver The department sending the goods is debited and the account of receiving department is credited. Inter-departmental transfers is made on the following basis: INTER-DEPARTMENTAL TRANSFER AT COST…
