Category: FINANCIAL ACCOUNTING

DIFFERENCE BETWEEN CAPITAL EXPENDITURE AND REVENUE EXPENDITURE

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DIFFERENCE BETWEEN CAPITAL EXPENDITURE AND REVENUE EXPENDITURE To understand the difference between capital expenditure and revenue expenditure, the concepts of capital expenditure and revenue expenditure are as follows: CAPITAL EXPENDITURE The expenditure incurred by the business enterprise for the purchase of fixed assets or to repay the loan is known as Capital expenditure. This is…

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FINANCIAL ACCOUNTING, KEY DIFFERENCES

REVENUE EXPENDITURE

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REVENUE EXPENDITURE The amount spent to conduct the regular business activities is known as Revenue Expenditure. The benefit of this expenditure is received fully during an accounting period. All the revenue expenditures are debited to Trading and Profit and Loss account. These expenditures do not result in increasing the earning capacity of the business but…

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FINANCIAL ACCOUNTING

SCOPE OF ACCOUNTING

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SCOPE OF ACCOUNTING The scope of accounting is wide and extends in business, trade, government, financial institutions, individuals and families and every other avenues. ACCORDING TO RJ BULL The scope is as follows: The above diagram makes it clear that accounting data is prepared and processed by using various methods of accounts. In a later…

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11 ACCOUNTANCY, FINANCIAL ACCOUNTING

ACCOUNTING CONVENTIONS

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ACCOUNTING CONVENTIONS Accounting conventions are the guidelines based upon custom or usage or general agreement. The accounting conventions are used while maintaining the financial statements by the common consent of the accountants. In the adoption of accounting conventions, the personal judgment plays an important role. There is some kind of logic behind the usage of…

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11 ACCOUNTANCY, FINANCIAL ACCOUNTING

ACCOUNTING CONCEPTS

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ACCOUNTING CONCEPTS Accounting Concepts are the foundation of the accounting. These concepts are the assumptions which are generally accepted and followed while performing the recording of transactions and preparation of final accounts. The accounting concepts help in conveying the financial information in a same meaning to the various users of the accounting. By following the…

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11 ACCOUNTANCY, FINANCIAL ACCOUNTING

ACCOUNTING PRINCIPLES

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MEANING Principles are the general guidelines to action. Principles provide a base for performing some kind of task or action. Accounting Principles are the base as per which the books of accounts are maintained as well as accounting process is performed. ACCORDING TO AICPA “A general law or rule adopted or professed as a guide…

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11 ACCOUNTANCY, FINANCIAL ACCOUNTING

CASH AND MERCANTILE SYSTEM OF ACCOUNTING

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Cash and Mercantile System of accounting Cash and Mercantile system of Accounting is as follows: CASH BASIS OF ACCOUNTING Under cash basis of accounting, the transactions are recorded when actual cash is received or paid. It means, the income is recognized when cash is received and the expenses are recognized when the cash is paid….

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11 ACCOUNTANCY, FINANCIAL ACCOUNTING, KEY DIFFERENCES

BASIS OF ACCOUNTING – CLEAR EXPLANATION

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BASIS OF ACCOUNTING- MEANING The basis of accounting is a set of rules that are followed by the accountant for preparing the financially reports like profit and loss account, balance sheet and cash flow statement. The basis of accounting tells about when and which transaction is to be recognized and how to record those transactions…

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11 ACCOUNTANCY, FINANCIAL ACCOUNTING