Cash based accounting means, it records only those transactions relates to cash. That means transactions of revenue and expenses are recorded when payments are made or received through cash only. It is a single entry accounting.It is useful for simple accounting system.It is used, if inventory is to be valued.It ... Read More

Bookkeeping is keeping the record of business transactions on day to day basis. It includes identifying, measuring and recording of transactions. Bookkeeping is basis of preparing accounting statements. It records below transactions, but not limited to, Payments to suppliers.Loan payments.Invoice payments.Asset depreciation.Generating financial reports.In olden days, that means days before ... Read More

Accounting is process of recording financial transactions of a firm. These recordings are classified into assets, liabilities, revenue, expenses, transactions and reporting. Recording the transactions can be done into −System of book keeping.Tracking transactions.Making financial reports.Objectives of accounting are as follows −Maintain records.Utility resources.Profit and loss.Financial position.Decision making.Different types of ... Read More

Profit and loss statement tells about company’s revenues and expenses in a particular period. It tells whether, company gets profit or loss through cash flows. To invest in company investors will look for financial strength of the company. Profit and loss statement serve as one of the instrument to check ... Read More

Trading account is the account which maintains trading activities of the firm. The entries mainly include net sales, cost of goods sold. This tells whether final result is loss or profit.DebitCreditParticularsAmountParticularsAmountTo opening stockXXXXBy sales XXXXTo purchases XXXXLess: return inwards (XXX)XXXXLess: Return outwards (XXX)XXXXBy closing stockXXXXTo wagesXXXBy Gross LossXXXTo Carriage inwardsXXXTo ... Read More

The amount which is kept aside from profits to strengthen financial position of a firm. It is also called retained earnings. Reserves are used buy new assets, pay bonuses, spent for repairs and maintenance, pay off debt etc.They can also use for dividend payments, to meet contingencies, legal requirements, investing ... Read More

Provision is the amount which kept aside to cover future expenses. A provision is a separated fund which kept aside to cover certain expense. A provision is not a reserve. The main purpose is make balance sheet more accurate in accounting period or financial year.A provision can recognised if it ... Read More

A derivative is a financial instrument which measures the value of an underlying assets. The value is depending on market conditions. Most common derivatives are forwards, futures, options and swaps.Derivatives provide leverages.Derivatives makes profit.Derivatives mitigate risk.Derivatives create option ability.Hedgers, speculators, margin traders and arbitrageurs participates in derivatives market.Derivative categories are ... Read More

Foreign direct investment (FDI) is the investment made by a company (one country) with another company/corporation in another country, either to buy a company in specified country or to expand business in the specified country.If an investor obtains a 10 voting power in a firm is called lasting interest. If ... Read More

The types of factoring are explained below −Recourse factoring − In this, client had to buy back unpaid bills receivables from factor.Non – recourse factoring − In this, client in which there is no absorb for unpaid invoices.Domestic factoring − When the customer, the client and the factor are in ... Read More