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Growth & Empowerment Articles
Page 142 of 160
What are the different branches of accounting?
The different branches of accounting are explained below −Financial accountingRecords daily transactions and gives the financial picture of business.Preparation of trial balances, profit and loss accounts and balance sheets.Creditors, financial institutions, banks, etc., use this type of accounts.Cost accountingRecord, present and do the analysis of manufacturing costs.With the help of this account, management can control the production cost and prices.Forecast by analysing actual cost to budget cost.Management accountingGives information about business administration.Budgeting, cost analysis, decision making.AuditingPrepares tax reports using financial statements.External − Financial statements are scrutinized by external/independent parties.Internal − Focuses on the companies' internal structure.Tax accountingPrepares and files various ...
Read MoreCompute the correct cash book balance
ProblemXYZ Enterprise Company has a pass book balance of Rs. 58700/- and cash book balance of Rs.68500/- as on 31st march 2014. Compute the correct cash book balance for the transactions and prepare a reconciliation statement.The transactions are as follows −Cheque issued (personal account) of enterprise debited to firm's account of Rs.3500/-Cheque deposited and yet to collect by bank of Rs.1900/-Cheque deposited and collected from bank and not recorded in cash books of Rs.3800/-Customer cheque dishonored Rs.1800/-Bank direct payments of Rs.4200/-Cheque issued and yet to present for payments of Rs.12000/-Customer deposited Rs.2000/- into bankDiscounted bill is dishonored when presented on ...
Read MoreState the methods to prepare a bank reconciliation statement
ProblemAn enterprise company has an Rs.85700/- as passbook balance and Rs.95800/- as cash book balance as on 31st march 2004.The transactions are as follows −Cheque issued (personal account) of enterprise debited to firm’s account of Rs.5000/-Cheque deposited and yet to collect by bank of Rs.2500/-Cheque deposited and collected from bank and not recorded in cash books of Rs.4800/-Customer cheque dishonored Rs.2300/-Bank direct payments of Rs.3200/-Cheque issued and yet to present for payments of Rs.8500/-Customer deposited Rs.1500/- into bankDiscounted bill is dishonored, when presented on maturity Rs.9500/-Bank charges Rs.250/-Dividends and interest (collection) by bank Rs.2800/-SolutionThe bank reconciliation statement before adjusting cash ...
Read MoreExplain the steps involved in preparing a bank reconciliation statement
Following are the steps involved in preparing bank reconciliation statement (BRS) −Step 1 − Compare the opening balances of cash books and bank statements for any difference. The differences may arise due to uncredited cheques from before. Identify them and tick on bank statements. Now, opening balances are agreed.Step 2 − Now, compare the debit side of the cash book and the debit side of the bank statement and vice versa and tick on items that appear in both cash book and bank statement.Step 3 − Now, check for items that are not ticked on the bank statement (debit side) ...
Read MoreWhat are items in the cash book but not in the passbook and vice versa?
Following items will appear in cash book but not in bank pass book −Cheques which are issued, but not debited in the bank.In cash books, entries for cheques issued are recorded immediately (reduces bank balances in books). The reason for not appearing in the passbook may be the cheque, which is in under clearance or the payee did not submit it to the bank.Cheques that are deposited, but not credited by the bank.In cash books, firms immediately record the transactions (increases the balance in books).The reason for not appearing in the passbook may be that the bank is yet to ...
Read MoreHow are the same transactions entered in the passbook and cash book?
On March 1st − Mr. T opened a current account with ABC Bank with balance of Rs.100000/-On March 4th − T paid to Mr. N of Rs.5000/- by cheque.On March 9th − T received an amount of Rs. 10000/- from Mr. U by cheque and deposited it in the bank.On March 11th − Withdraw amount of Rs.3500/- for office use.On March 12th − Paid rent of Rs.8000/- by cheque.On March 17th − Bank charges of Rs.350/- is debited.On March 23rd − Paid Rs.2500/- to Mr. G by cheque.SolutionThe transactions entered in cash book and pass book respectively are as follows ...
Read MoreCompare return inward and return outward
The major differences between a return inward and a return outward are as follows −Return inwardReturn inward is defined as the seller returning the goods back due to various reasons (defective, incorrect goods etc.)Return inward transactions starts, when the seller receives sold goods back.It occurs next to return outwards.The journal entry for return inward is as follows −Return inwards A/c To customers AcDebit CreditIt is recorded in seller books of accounts.Impact − Reduces seller sales and creates liability.In financial statements, it is disclosed in reduction from sales in the seller trading account.The consequences are goods resale ...
Read MoreDifferentiate between purchase book and purchase account
The major differences between a purchase book and a purchase account are as follows −Purchase bookPurchase book is the book, which records all the credit transactions related to the goods purchased.Primary book of accounts.The purpose of a purchase book is to maintain all the credit transactions related to the goods purchased.Records only transactions related to credit business.Purchase book balance is not transferred to business financial statements.No separate credit column.Not dependent on other books.The format of purchase book is as follows −DateParticularsInvoice numberLedger folioDetailsAmountPurchase accountPurchase account is the ledger account that records all the credit and cash transactions related to business.Secondary ...
Read MoreHow to prepare to return an outward book?
Refer to the transactions given below and prepare a return outward book.On June 2 − Received note worth of Rs.800/- from V.On June 9 − Received note worth of Rs. 350/- from S.On June 15 − Received note worth of Rs. 600/- from M.On June 20 − Received note worth of Rs. 1200/- from N.SolutionThe return outward book for the above mentioned data is as follows −Return outward bookDateName of customerDebit noteFolioAmount02/06/2005V80009/06/2005S35015/06/2005M60020/06/2005N1200total2950For V account, the return outward book is as follows −DateParticularsAmountDateParticularsAmount02/06/2005Return outwards800For S account, the return outward book is as follows −DateParticularsAmountDateParticularsAmount09/06/2005Return outwards350For M account, the return outward book ...
Read MoreHow to prepare to return inwards book?
Let us consider two examples to learn how to prepare a return inwards book.Example 1Refer the transactions given below and prepare return inwards book.On December 4 − X return goods worth of Rs.1000/- on which trader allowed a discount of 5% (credit note # 233).On December 10 − Y allowed a reduction of Rs.1500/- (invoice issued earlier) (credit note #234)On December 12 − Z return goods worth of Rs.1175/- (credit note # 235).On December 20 − D was issued an invoice of Rs.2300/-, trader allowed a discount of 20%, after he pointed out a defect in goods for the same invoice (credit ...
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