Bad Debts And Provision For Doubtful Debts

BAD DEBTS AND PROVISION FOR DOUBTFUL DEBTS

 

Bad debts

The amount of the debtors which cannot be recovered is known as bad debt. At the end the accounting year, the amount of bad debt is shown as an expense in the profit & loss account and deducted from the debtors. The double entry for recording the bad debt is:

                                Debit             Bad debt account

                                Credit            Debtors account

Read More

Company Accounts

COMPANY ACCOUNTS

Introduction

Company account is a fiinancial information that a company is required to produce at the end of every year, including details of its profits or losses.
 
The capital of a limited company is divided into shares. A person can become the   member of a company if he buys a share, then he is known as the shareholder. If the shareholder has paid in full for the shares he has taken, his liability is limited to the nominal value of those shares only. When the company loses its assets, it cannot ask the shareholders to pay anything out of their private property in respect of the company’s losses. If the shareholder has paid partly only for the shares, he can be forced to pay the balance owing on the shares.

Read More

Manufacturing Accounts

INTRODUCTION TO MANUFACTURING ACCOUNTS

Manufacturing of goods is the transformation of raw materials into finished goods. A manufacturing organization will acquire raw materials, engage labour and other inputs necessary to change the raw materials into finished goods. Manufacturing accounts are prepared to ascertain the cost of goods manufactured during the financial year. It is an extension of the grading account.

Read More

Concept Of Audit Program

Concept Of Audit Program

After selecting senior and junior staffs, allocating the jobs to them, mentioning when to start, how to do the work etc., an auditor prepares a plan. This plan is called audit program. An auditor needs to include all the procedures in written form, objectives of each sector and all directions which are to be given to the staff members which helps in controlling their works and helps in implementing such programs into action.

Read More

Partial Audit: Objectives, Advantages and Disadvantages

PARTIAL AUDIT

Introduction

A partial audit is an audit that is conducted considering the particular area of accounting. Under partial audit, audit of the whole account is not conducted. Only the audit of the particular area where the owner thinks it is essential to conduct an audit will be conducted. Normally, business transaction is concerned with cash, debtor, creditor etc.

Read More

Concept Of Single Entry System And Incomplete Records

SINGLE ENTRY AND INCOMPLETE RECORDS 

Introduction

Single entry system is an incomplete way of recording financial transactions. This system does not record two aspects (debit and credit) or accounts of all the financial transactions. Also, this system has no established or fixed set of rules in recording the financial transactions of the business.

Read More

Concept Of Delegation Of Authority

DELEGATION OF AUTHORITY

Delegation is the process of assigning specific works to individuals within the organization and giving them the right to perform those works. Delegation of authority is, of course, one of the most significant concepts in management practices that affects managerial functions. Management is the art of getting things done through others and delegation means getting things done through the subordinates.

Read More

Materials Control: Definition, Objectives, Needs and Essentials

Material Control

The systematic control over the purchase, store and consumption of materials is what we refer to as Material control. It helps in maintaining a regular and very timely supply of materials by avoiding both over and under-stocking. It ensures that the right quantity and quality of materials is available to the organization at the right time.

Read More

Financial Statement Analysis: Its Objectives, Methods, Users and Limitations.

Concept Of Financial Statement Analysis

Financial statement analysis is an analysis which highlights the essential relationship in the financial statements. Normally, financial statement analysis focuses on the evaluation of past performances of the business enterprise in terms of profitability, liquidity, operational efficiency and growth potentiality. Financial statements analysis, however, includes the methods used in assessing as well as interpreting the result of past performance and the current financial position as they relate to certain factors of interest in investment decisions. Thus, financial statement analysis is an essential means of assessing the past performance and also in forecasting, maintaining and planning future performance. 

Read More

Hire Purchase Accounting, How It Differs From Installments system And Its Accounting Entries

Hire Purchase Accounting

Introduction

Buying and selling of goods as for the system of hire purchase is different from the cash sales and credit sales. As for cash sales, the buyer pays a sum to the seller and the ownership is immediately passed along with the goods while as for credit sale, the payment is made in future. In the two cases the ownership of goods pass on the buyer.

Read More

Taxation Part 3

If you missed the first two parts, you can read them here by clicking Part 1 and Part 2.

TYPES OF TAX
There are two major types of tax. These are direct tax and indirect tax.

DIRECT TAX
Direct tax as the simply implies refers to the type of tax imposed directly on income of individuals or organizations by the government or its agencies. Such income would include wages, salaries, profits, rents and interests. The burden of direct tax is borne by the payers. The tax payers are usually aware of the payment of such tax.

Read More