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LIMITATIONS OF ACCOUNTING Accounting is a service activity. Its function is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions. But it suffers from drawbacks which hinders its utility. The Limitations of Accounting are as follows: INFLUENCED BY PERSONAL JUDGMENTS Accounting is viewed…
WORKMEN COMPENSATION RESERVE TREATMENT ON DISSOLUTION Workmen Compensation Reserve is a reserve created out of firm’s profits to meet possible liability to pay compensation to employees, if it arises. It means, a claim may or may not arise. It also means that claim may be higher than amount of reserve. This Reserve represented by compensation…
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MEANING Realisation Account is a nominal account which is prepared at the time of dissolution of firm. It is prepared to find out the profit or loss realized by the firm on its closing or shutting down. Being a nominal account, it is credited with all the incomes and debited with all the expenses. Firstly,…
MEANING Debts are the loan for the firm or any individual. It is the claim the third party carries against any firm or individual. Private Debts are the debts which a partner owes in his personal capacity. The respective partner is liable to discharge these debts personally or from his own sources. FIRM’ S DEBTS…
BENEFITS OF ACCOUNTING Accounting refers to the mechanism of maintaining and keeping the records of the transactions and events and also its analysis and interpretation. It also includes the preparation of final accounts i.e. Trading and Profit and Loss Account and Balance Sheet at the end of the financial year. It is associated with communicating…
NATURE OF ACCOUNTING Accounting is art of recording, classifying, summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character and interpreting the results thereof. The Nature of Accounting can be defined in two ways: Quantitative Attributes of Accounting Qualitative Attributes of Accounting QUALITATIVE…
PROCESS OF ACCOUNTING The Process of Accounting involves the identification of transactions and events which are financial in nature; ensuring measurement of transactions in the monetary terms; recording the transactions in the journal; classifying the entries in ledger, summarizing the entries in final accounts i.e. Trading Account and Profit and Loss Account and Balance Sheet;…
DISSOLUTION OF PARTNERSHIP FIRM 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…
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OBJECTIVES OF ACCOUNTING Accounting is a system which involves the identification of transactions and events which are financial in nature; ensuring measurement of transactions in the monetary terms; recording the transactions in the journal; classifying the entries in ledger, summarizing the entries in final accounts i.e. Trading Account and Profit and Loss Account and Balance…
HISTORY OF ACCOUNTING The history of accounting dates back to the earliest days of human agriculture and civilization when the need to maintain accurate records of the quantities and relative values of agricultural products first arose. Simple Accounting is mentioned in the Christian Bible in the book of Mathew in the parable of the Talents….
