tag:blogger.com,1999:blog-71691012421663351502024-03-28T20:29:54.818-07:00Business and Management StudiesAnonymoushttp://www.blogger.com/profile/05298549508656090035noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-7169101242166335150.post-15027985727567294312013-03-22T09:25:00.002-07:002013-03-22T09:25:50.969-07:00Purchase management and the steps involved in the purchase management.<div dir="ltr" style="text-align: left;" trbidi="on">
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<b><u><span style="font-size: 24pt;">Purchase Management</span></u></b><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<span style="font-size: 13.5pt;">Purchase Management is a process of managing the whole purchase
and related activities in an organization. The purchasing of an organization is
highly depends on the re order level of the stocks for
the further process of business activities. In the case of
manufacturing companies the purchase is about 70 percent of the turn over of
the business but in the case of service organizations it is limited to 40
percent of the turn over of the company. <o:p></o:p></span></div>
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<b><u><span style="font-size: 18pt;">Process or Steps involved in the purchasing</span></u></b><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<span style="font-size: 13.5pt;">Basically the purchase management process involves three major
things such as (1) Purchasing planning (2) Purchasing Tracking and (3)
Purchasing Reporting. the major process involved in the Purchasing are as
follow:-<o:p></o:p></span></div>
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<!--[if !supportLists]--><b><span style="font-size: 13.5pt;">1.<span style="font-size: 7pt; font-weight: normal;"> </span></span></b><!--[endif]--><b><u><span style="font-size: 13.5pt;">Purchase requisition<o:p></o:p></span></u></b></div>
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<span style="font-size: 13.5pt;">The process of
purchasing is stars when the purchase requisitions are generated from the
internal organizations. This is the indication of the managers that there is an
urgent need of purchasing of goods and services in an organization.<o:p></o:p></span></div>
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<!--[if !supportLists]--><b><span style="font-size: 13.5pt;">2.<span style="font-size: 7pt; font-weight: normal;"> </span></span></b><!--[endif]--><b><u><span style="font-size: 13.5pt;">Study of Market<o:p></o:p></span></u></b></div>
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<span style="font-size: 13.5pt;">The main
process of purchasing is depends on the market trends and technologies for a
particular product or services. The study of market and trends leads to the
decision regarding the purchase of the goods and services.<o:p></o:p></span></div>
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<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l0 level1 lfo1; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-size: 13.5pt;">3.<span style="font-size: 7pt; font-weight: normal;"> </span></span></b><!--[endif]--><b><u><span style="font-size: 13.5pt;">Making Purchase decision.<o:p></o:p></span></u></b></div>
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<span style="font-size: 13.5pt;">After the
selection of a particular market the next process is to take the purchase
decision for the particular concern. This is done through the effective
analysis of quotations from different companies.<o:p></o:p></span></div>
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<!--[if !supportLists]--><b><span style="font-size: 13.5pt;">4.<span style="font-size: 7pt; font-weight: normal;"> </span></span></b><!--[endif]--><u><span style="font-size: 13.5pt;"> Placing <b>orders<o:p></o:p></b></span></u></div>
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<span style="font-size: 13.5pt;">After the
finalization of the particular company with the analysis, the purchase order
will be placed to the proposed company.<o:p></o:p></span></div>
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<!--[if !supportLists]--><b><span style="font-size: 13.5pt;">5.<span style="font-size: 7pt; font-weight: normal;"> </span></span></b><!--[endif]--><b><u><span style="font-size: 13.5pt;">Receipting goods and services received <o:p></o:p></span></u></b></div>
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<span style="font-size: 13.5pt;"> The placing of an order is the final
decision for the purchase of goods and services in the company. After the
placing the next step is to the receipt of the same. This will happen the
effectively only after the continous follow up activity.<o:p></o:p></span></div>
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<!--[if !supportLists]--><b><span style="font-size: 13.5pt;">6.<span style="font-size: 7pt; font-weight: normal;"> </span></span></b><!--[endif]--><b><u><span style="font-size: 13.5pt;">Accounting goods and services.<o:p></o:p></span></u></b></div>
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<span style="font-size: 13.5pt;">After the
receipt of the goods and services it is necessary to account the number of
items received in the organization. This is the main duty of the store keeper
under the guidance of the accountant in the concerned organization.<o:p></o:p></span></div>
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<!--[if !supportLists]--><b><span style="font-size: 13.5pt;">7.<span style="font-size: 7pt; font-weight: normal;"> </span></span></b><!--[endif]--><b><u><span style="font-size: 13.5pt;">Receiving invoice and making payments<o:p></o:p></span></u></b></div>
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<span style="font-size: 13.5pt;">The receiving of invoice and making payments are the
responsibility of the accountant. This will be happen only after the
verification of goods and services along with the invoice received.<o:p></o:p></span></div>
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<!--[if !supportLists]--><b><span style="font-size: 13.5pt;">8.<span style="font-size: 7pt; font-weight: normal;"> </span></span></b><!--[endif]--><b><u><span style="font-size: 13.5pt;">Debit note incase of any defects in products.<o:p></o:p></span></u></b></div>
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<span style="font-size: 13.5pt;">Every
organization is liable to pay the bills immediately after the receipt of items
ordered. If there is any damaged goods they can return the goods and can be
avail of the reduction of the value of money along with the invoice received.<o:p></o:p></span></div>
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<span style="font-size: 13.5pt;">These all are
the process involved in the purchasing management of an organization.<o:p></o:p></span></div>
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Anonymoushttp://www.blogger.com/profile/05298549508656090035noreply@blogger.com7tag:blogger.com,1999:blog-7169101242166335150.post-70184645726197758102013-03-18T04:41:00.002-07:002013-03-18T04:41:51.836-07:00Strategic Business Planning and steps involved in the Strategic Planning process.<div dir="ltr" style="text-align: left;" trbidi="on">
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<b><u><span style="line-height: 115%;"><span style="font-size: large;"><br /></span></span></u></b></div>
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<b><u><span style="line-height: 115%;"><span style="font-size: large;">Strategic Business Planning</span></span></u></b><span style="font-size: 14.0pt; line-height: 115%;"><o:p></o:p></span></div>
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Strategic planning is a process of identifying the important
things which we need to accomplish in the future course of business as per the
priority basis. This planning will bring the entire organization in to a single
set of ideas for the effective execution of plans and procedures Strategic
planning helps to improves the performance of the organization and solves major
issues at a macro level.</div>
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Strategic planning should have the following qualities:-</div>
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<!--[if !supportLists]-->(1)<span style="font-size: 7pt;">
</span><!--[endif]--> It should
be Specific</div>
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<!--[if !supportLists]-->(2)<span style="font-size: 7pt;">
</span><!--[endif]-->It should be Measurable</div>
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<!--[if !supportLists]-->(3)<span style="font-size: 7pt;">
</span><!--[endif]-->Strategic planning should be Agreed upon</div>
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<!--[if !supportLists]-->(4)<span style="font-size: 7pt;">
</span><!--[endif]-->Strategic planning should be Realistic</div>
<div class="ListParagraphCxSpLast" style="mso-list: l0 level1 lfo4; text-indent: -.25in;">
<!--[if !supportLists]-->(5)<span style="font-size: 7pt;">
</span><!--[endif]-->It should be Time bound.</div>
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The strategic planning does not means any future decisions
or forecasting of business but emphasis on the basic plans which we need to
reach after 3 or 5 years of business life. The strategic planning is the result
of the study of where we are now which means over all assessment of the current position what we need to do for achieving better future for the business and
finally it is the understanding of how will close the gap or the threats for
attaining the objectives of the business. <br />
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<b><u>Significance of
Strategic planning<o:p></o:p></u></b></div>
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<!--[if !supportLists]--><b>1.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>Long term impact of decision<o:p></o:p></u></b></div>
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Strategic planning deals with the future
impact of the current decisions. It provides basic plans and ideas for the
future course of actions of the business organization. </div>
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<!--[if !supportLists]--><b>2.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>Strategic planning is a continuous process<o:p></o:p></u></b></div>
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Strategic planning is a continuous process
starts with the organizational objectives, then defines the strategies and
policies to achieve in the future and develops a detailed plans to make sure
that the strategies and plans implemented in the business to achieve a desired
output. <b><u><o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l3 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><b>3.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>It is a Philosophy<o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle">
Strategic planning is an attitude of the life
which leads to the effective planning process of the organization to achieve
the goals and objectives of the business in the current scenario.<b><u><o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l3 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><b>4.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>Strategic planning gives the Structure<o:p></o:p></u></b></div>
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In an organization Strategic planning gives
three major plans and it links the future planning process of the organization.
The three major plans are as follows:-</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l2 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]-->a)<span style="font-size: 7pt;">
</span><!--[endif]-->Long range Strategic planning</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l2 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]-->b)<span style="font-size: 7pt;">
</span><!--[endif]-->Short range Strategic planning</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l2 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]-->c)<span style="font-size: 7pt;">
</span><!--[endif]-->Short range budget and operating plans<br />
<br />
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<b><u><span style="font-size: 14.0pt; line-height: 115%;">Steps of Strategic Business planning</span><o:p></o:p></u></b></div>
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The important steps involved in the strategic
planning process are as follows:-</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><b>1.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>Defining the Business<o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto;">
The
Strategic planning creates a clear plan about the business and this should
generate the future course of business ie, where will be the position of
business after 3 or 5 years.</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><b>2.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>SWOT Analysis<o:p></o:p></u></b></div>
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The
term SWOT stand for Strength, Weakness, Opportunities and Threats. </div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto;">
The
Strength and Weakness indicates the internal Assessments of the organization
which includes organizational assets, resources, people, systems, partnership,
suppliers and customers.</div>
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The
opportunities and Threats indicates the external Assessments of the organization
which includes market place, competitors, trends and technologies, economic
cycles, government rules and regulations etc. <b><u><o:p></o:p></u></b></div>
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<!--[if !supportLists]--><b>3.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>Creating Strategic Action Plan<o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto;">
The
strategic action plan includes the objectives of the business, initiatives for
the smooth running of the business and the real action plans to be implemented
in the business.</div>
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<!--[if !supportLists]--><b>4.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>Implementing the Strategy<o:p></o:p></u></b></div>
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The
action plans we are selected should be implemented at the right time in the
right place. The implementation of a strategy will leads to the trial and error
methods of the business.</div>
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<!--[if !supportLists]--><b>5.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>Implementation and Review of Performance<o:p></o:p></u></b></div>
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After
the implementation of the strategic plans we have to review the systems are
good or unfavourable to the conduct of the business. It will be done with the
help of suitable trial and error method.</div>
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These are the common steps involving in the process of strategic business
planning.</div>
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Anonymoushttp://www.blogger.com/profile/05298549508656090035noreply@blogger.com15tag:blogger.com,1999:blog-7169101242166335150.post-69888612774188516112013-03-04T04:59:00.000-08:002013-03-04T04:59:28.648-08:00Meaning of Financial Statements- Need or Importance and Limitations of Financial statements.<div dir="ltr" style="text-align: left;" trbidi="on">
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<b><u><span style="font-size: 18.0pt; line-height: 115%;"><br /></span></u></b></div>
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<b><u><span style="font-size: 18.0pt; line-height: 115%;">Financial Statements</span></u></b><span style="font-size: 18.0pt; line-height: 115%;"><o:p></o:p></span></div>
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<span style="font-size: small;"><span style="line-height: 115%;">Financial
statements are those statement which includes the income statement, balance
sheets, statement of retained earnings and the </span></span><span style="line-height: 17.77777862548828px;">statement</span><span style="font-size: small;"><span style="line-height: 115%;"> of sources and uses of
funds. The income statement includes the trading account and the profit &
loss account of the business concern and the balance sheet includes the assets
and liabilities of the business.<o:p></o:p></span></span></div>
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<span style="font-size: small;"><span style="line-height: 115%;">The
financial statement provides the vital </span></span><span style="line-height: 17.77777862548828px;">information</span><span style="font-size: small;"><span style="line-height: 115%;"> relating to the
profitability, liquidity and solvency of the business. The main aim of the financial statement is to
provide reliable information relating to the economic resources, business
obligations, changes in net resources etc.<o:p></o:p></span></span></div>
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<span style="font-size: 12.0pt; line-height: 115%;"><br /></span></div>
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<b><u><span style="font-size: 12.0pt; line-height: 115%;">Need or Importance of Financial
Statements.</span></u></b><span style="font-size: 12.0pt; line-height: 115%;"><o:p></o:p></span></div>
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<span style="font-size: small;"><span style="line-height: 115%;">The need or
importance of financial statement is to satisfy the needs of the users of the
financial statements and which provides relevant </span></span><span style="line-height: 17.77777862548828px;">information's</span><span style="font-size: small;"><span style="line-height: 115%;"> about the
business to the interested parties like Government, management, creditors,
share holders etc. The importance of Financial statements are as follows:-<o:p></o:p></span></span></div>
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<span style="font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="ListParagraphCxSpFirst" style="mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">1.<span style="font-size: 7pt; font-weight: normal; line-height: normal;">
</span></span></b><!--[endif]--><b><u><span style="font-size: 12.0pt; line-height: 115%;">Importance to Management<o:p></o:p></span></u></b></div>
<div class="ListParagraphCxSpMiddle">
<span style="font-size: small;"><span style="line-height: 115%;">In the competitive business environment, it is difficult to sustain the
business without any advanced planning or forecasting. The financial statements
helps the management to know about the current </span><span style="line-height: 17.77777862548828px;">position</span><span style="line-height: 115%;"> of the business as up
to date, accurate and systematic </span></span><span style="line-height: 17.77777862548828px;">information</span><span style="font-size: small;"><span style="line-height: 115%;"> relating to the business. It
enables the management to identify the current position, progress of the
business and the business prospectus which leads the managers to take necessary
remedies and plans to develop the business environment. <o:p></o:p></span></span></div>
<div class="ListParagraphCxSpMiddle">
<span style="font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">2.<span style="font-size: 7pt; font-weight: normal; line-height: normal;">
</span></span></b><!--[endif]--><b><u><span style="font-size: 12.0pt; line-height: 115%;">Importance to Share holders.<o:p></o:p></span></u></b></div>
<div class="ListParagraphCxSpMiddle">
<span style="font-size: small;"><span style="line-height: 115%;">In the case of companies, management is </span><span style="line-height: 17.77777862548828px;">separated</span><span style="line-height: 115%;"> from the ownership of
the organisation and the share holders are not </span><span style="line-height: 17.77777862548828px;">authorized</span><span style="line-height: 115%;"> to take part in the
day to day business activities of the concern. But in the Annual General Meeting,
the results and activities of the concern will be reported to the shareholders
in the form of financial statements. This financial statements enables the
shareholders to know about the performance of the management and it will give
the relevant </span><span style="line-height: 17.77777862548828px;">information</span><span style="line-height: 115%;"> of the effectiveness, efficiency and the current
financial </span></span><span style="line-height: 17.77777862548828px;">position</span><span style="font-size: small;"><span style="line-height: 115%;"> of the business also.<o:p></o:p></span></span></div>
<div class="ListParagraphCxSpMiddle">
<span style="font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">3.<span style="font-size: 7pt; font-weight: normal; line-height: normal;">
</span></span></b><!--[endif]--><b><u><span style="font-size: 12.0pt; line-height: 115%;">Importance to Leaders or Creditors<o:p></o:p></span></u></b></div>
<div class="ListParagraphCxSpMiddle">
<span style="font-size: 12.0pt; line-height: 115%;">The financial statements provides the useful information or guide to the
suppliers or the creditors of the company. This is done with the help of
critical evaluation of the financial statements and which provides the clear
idea about the liquidity, profitability and the solvency of the business
enterprises. <o:p></o:p></span></div>
<div class="ListParagraphCxSpMiddle">
<span style="font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">4.<span style="font-size: 7pt; font-weight: normal; line-height: normal;">
</span></span></b><!--[endif]--><b><u><span style="font-size: 12.0pt; line-height: 115%;">Importance to Labour<o:p></o:p></span></u></b></div>
<div class="ListParagraphCxSpMiddle">
<span style="font-size: 12.0pt; line-height: 115%;">The financial statement provides the profit and loss account of the
business. This enables the staff to identify the profit condition of the
business and helps to negotiate for the better salary because the profit of the
company depends on the salary for the staffs.<o:p></o:p></span></div>
<div class="ListParagraphCxSpMiddle">
<span style="font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">5.<span style="font-size: 7pt; font-weight: normal; line-height: normal;">
</span></span></b><!--[endif]--><b><u><span style="font-size: 12.0pt; line-height: 115%;">Importance to the public<o:p></o:p></span></u></b></div>
<div class="ListParagraphCxSpMiddle">
<span style="font-size: 12.0pt; line-height: 115%;">Every business is a social entity which includes the co- operation of the
various groups which includes lawyers, trade unions, financial analysts,
teachers, research scholars etc. These groups are intended to know the
financial position of the business and this will be available only through the
financial statements.<o:p></o:p></span></div>
<div class="ListParagraphCxSpMiddle">
<span style="font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">6.<span style="font-size: 7pt; font-weight: normal; line-height: normal;">
</span></span></b><!--[endif]--><b><u><span style="font-size: 12.0pt; line-height: 115%;">Importance to National Economy<o:p></o:p></span></u></b></div>
<div class="ListParagraphCxSpMiddle">
<span style="font-size: small;"><span style="line-height: 115%;">The economic development of a country is highly depends on the growth and
development of business environment. Financial </span></span><span style="line-height: 17.77777862548828px;">statement</span><span style="font-size: small;"><span style="line-height: 115%;"> discloses the relevant
details of the business to the needy and this is importance to the tax
authorities and other statutory aspects in the country.<o:p></o:p></span></span></div>
<div class="ListParagraphCxSpMiddle">
<span style="font-size: 12.0pt; line-height: 115%;">These all are the importance of the Financial Statements of a business
organization.<o:p></o:p></span></div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle">
<b><u><span style="font-size: 12.0pt; line-height: 115%;">Limitations of Financial Statements.</span></u></b><span style="font-size: 12.0pt; line-height: 115%;"><o:p></o:p></span></div>
<div class="ListParagraphCxSpMiddle">
<span style="font-size: 12.0pt; line-height: 115%;">The important limitations of financial statements are as follows:-<o:p></o:p></span></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">1.<span style="font-size: 7pt; line-height: normal;"> </span></span><span style="line-height: 17.77777862548828px;">In formations</span><span style="font-size: small;"><span style="line-height: 115%;"> provided through the
financial statements will be incomplete and inexact.<o:p></o:p></span></span></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">2.<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: small;"><span style="line-height: 115%;">The qualitative </span></span><span style="line-height: 17.77777862548828px;">information</span><span style="font-size: small;"><span style="line-height: 115%;"> may be
ignored in the financial statements.<o:p></o:p></span></span></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">3.<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 12.0pt; line-height: 115%;">Financial statements provides
historical data.<o:p></o:p></span></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">4.<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 12.0pt; line-height: 115%;">The financial statements are based on
the accounting concepts and conventions.<o:p></o:p></span></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">5.<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: small;"><span style="line-height: 115%;">Personal </span></span><span style="line-height: 17.77777862548828px;">judgments</span><span style="font-size: small;"><span style="line-height: 115%;"> will be affected
to the financial statements.<o:p></o:p></span></span></div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpLast">
<span style="font-size: 12.0pt; line-height: 115%;">These
all are the important unavoidable limitations of the financial statements.<o:p></o:p></span></div>
</div>
Anonymoushttp://www.blogger.com/profile/05298549508656090035noreply@blogger.com7tag:blogger.com,1999:blog-7169101242166335150.post-83813733677526681492013-02-26T21:29:00.001-08:002013-02-26T21:29:32.139-08:00Meaning of Depreciation in accounting with the Objectives, the causes and Methods of depreciation.<div dir="ltr" style="text-align: left;" trbidi="on">
<br />
<div class="MsoNormal">
<b><u><span style="font-size: 14.0pt; line-height: 115%;">Depreciation</span></u></b><span style="font-size: 14.0pt; line-height: 115%;"><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Depreciation
refers to the decline of the value of any kind of property due to use, normal
wear and tear, obsolescence or efflux ion of time. Depreciation of any kind of
assets or property are allocated so as to charge a reasonable proportion of the
depreciable amount in each accounting period during the expected useful life
time of the asset. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<b><u><span style="font-size: 12.0pt; line-height: 115%;">Objectives of providing Depreciation</span></u></b><span style="font-size: 12.0pt; line-height: 115%;"><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The main
objective of providing depreciation to the concerned property are as follows:-<o:p></o:p></span></div>
<div class="ListParagraphCxSpFirst" style="mso-list: l3 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">1.<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 12.0pt; line-height: 115%;">To ascertain true profit of the
business.<o:p></o:p></span></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l3 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">2.<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 12.0pt; line-height: 115%;">To show the proper value of assets.<o:p></o:p></span></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l3 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">3.<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 12.0pt; line-height: 115%;">To retain the capital In tact.<o:p></o:p></span></div>
<div class="ListParagraphCxSpLast" style="mso-list: l3 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">4.<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 12.0pt; line-height: 115%;">Provision of depreciation is a
statutory need for the business.<o:p></o:p></span></div>
<div class="ListParagraphCxSpLast" style="mso-list: l3 level1 lfo1; text-indent: -.25in;">
<span style="font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<b><u><span style="font-size: 12.0pt; line-height: 115%;">Causes of Depreciation of Assets</span></u></b><span style="font-size: 12.0pt; line-height: 115%;"><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The main
reasons for the depreciation of the value of assets are as follows:-<o:p></o:p></span></div>
<div class="ListParagraphCxSpFirst" style="mso-list: l1 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">1.<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 12.0pt; line-height: 115%;">Physical Deterioration which includes
normal wear and tear, rust of assets without using, wind, rain, sun and other
elements of nature.<o:p></o:p></span></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">2.<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 12.0pt; line-height: 115%;">Economic Factors like Obsolescence
and inadequacy.<o:p></o:p></span></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">3.<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 12.0pt; line-height: 115%;">Time factors which includes the reduction
of value simply by passing of time.<o:p></o:p></span></div>
<div class="ListParagraphCxSpLast" style="mso-list: l1 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">4.<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 12.0pt; line-height: 115%;">Depletion which means the lose of
value due to the use such as coal mines, ore and oil deposits etc.<o:p></o:p></span></div>
<div class="ListParagraphCxSpLast" style="mso-list: l1 level1 lfo2; text-indent: -.25in;">
<span style="font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<b><u><span style="font-size: 12.0pt; line-height: 115%;">Methods of Depreciation</span></u></b><span style="font-size: 12.0pt; line-height: 115%;"><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">To find out
the depreciation of assets or any kind of property, there are different forms
or kinds of methods are available. The different kinds of depreciation methods
are as follows:-<o:p></o:p></span></div>
<div class="ListParagraphCxSpFirst" style="mso-list: l0 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">1)<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><u><span style="font-size: 12.0pt; line-height: 115%;">Fixed Installment or Straight line
method.<o:p></o:p></span></u></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">2)<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><u><span style="font-size: 12.0pt; line-height: 115%;">Diminishing Balance or written down
value method.<o:p></o:p></span></u></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">3)<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><u><span style="font-size: 12.0pt; line-height: 115%;">Sums of the digit method<o:p></o:p></span></u></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">4)<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><u><span style="font-size: 12.0pt; line-height: 115%;">Annuity method<o:p></o:p></span></u></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">5)<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><u><span style="font-size: 12.0pt; line-height: 115%;">Depreciation fund or Sinking fund
method<o:p></o:p></span></u></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">6)<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><u><span style="font-size: 12.0pt; line-height: 115%;">Insurance policy method<o:p></o:p></span></u></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">7)<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><u><span style="font-size: 12.0pt; line-height: 115%;">Revaluation method<o:p></o:p></span></u></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">8)<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><u><span style="font-size: 12.0pt; line-height: 115%;">Activity method</span></u></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo3; text-indent: -.25in;">
<br /></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l4 level1 lfo4; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">1.<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><u><span style="font-size: 12.0pt; line-height: 115%;">Fixed Installment or Straight line
method.<o:p></o:p></span></u></div>
<div class="ListParagraphCxSpMiddle">
<span style="font-size: 12.0pt; line-height: 115%;">Under this method, an equal amount of the value of asset is allocated as
depreciation in each accounting year over a period of its effective life time.
The depreciation will be calculated up to the salvage of the value of assets.<o:p></o:p></span></div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l4 level1 lfo4; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">2.<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><u><span style="font-size: 12.0pt; line-height: 115%;">Diminishing Balance or written down
value method.<o:p></o:p></span></u></div>
<div class="ListParagraphCxSpMiddle">
<span style="font-size: 12.0pt; line-height: 115%;">Under this system, depreciation will be calculated as a certain
percentage of the value of the assets. This will be shown as reduced in the
books of depreciation.<o:p></o:p></span></div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l4 level1 lfo4; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">3.<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><u><span style="font-size: 12.0pt; line-height: 115%;">Sums of the digit method.<o:p></o:p></span></u></div>
<div class="ListParagraphCxSpMiddle">
<span style="font-size: 12.0pt; line-height: 115%;">Under this system, uses a constantly reducing rate to calculate the depreciation
of assets. This is similar to the straight line method which means, this uses a
constant system to calculate the value of assets. This uses some digits to find
out the amount of depreciation in each year.<o:p></o:p></span></div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l4 level1 lfo4; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">4.<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><u><span style="font-size: 12.0pt; line-height: 115%;">Annuity method.<o:p></o:p></span></u></div>
<div class="ListParagraphCxSpMiddle">
<span style="font-size: 12.0pt; line-height: 115%;">Under this system, the purchase amount is assumed as the investment and
the interest from that investment also will be considered in the case of
calculation of depreciation of assets.<o:p></o:p></span></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l4 level1 lfo4; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">5.<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><u><span style="font-size: 12.0pt; line-height: 115%;">Insurance policy method<o:p></o:p></span></u></div>
<div class="ListParagraphCxSpMiddle">
<span style="font-size: 12.0pt; line-height: 115%;">Under this system, an insurance policy will be taken for the assets and
this matures when the assets are replaced.<o:p></o:p></span></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l4 level1 lfo4; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">6.<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><u><span style="font-size: 12.0pt; line-height: 115%;">Revaluation method<o:p></o:p></span></u></div>
<div class="ListParagraphCxSpMiddle">
<span style="font-size: 12.0pt; line-height: 115%;">Under this system, the reduction of the value of assets will be treated
as the depreciation for the concerned assets.<o:p></o:p></span></div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l4 level1 lfo4; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">7.<span style="font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><u><span style="font-size: 12.0pt; line-height: 115%;">Activity method.<o:p></o:p></span></u></div>
<div class="ListParagraphCxSpMiddle">
<span style="font-size: 12.0pt; line-height: 115%;">Under the activity method, usage of assets is given more importance than
the passage or efflux ion of time for assets of any kind of property. The
activity may take place in different forms or kinds they are as follow;<o:p></o:p></span></div>
<div class="ListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l2 level1 lfo5; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-size: 12.0pt; line-height: 115%;">Production
Unit Method<o:p></o:p></span></div>
<div class="ListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l2 level1 lfo5; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-size: 12.0pt; line-height: 115%;">Machine
Hour Method <o:p></o:p></span></div>
<div class="ListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l2 level1 lfo5; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-size: 12.0pt; line-height: 115%;">Service
Unit Method<o:p></o:p></span></div>
<div class="ListParagraphCxSpLast" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l2 level1 lfo5; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-size: 12.0pt; line-height: 115%;">Depletion
Method.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">These all
are the different kinds of Method of Depreciation.<o:p></o:p></span></div>
</div>
Anonymoushttp://www.blogger.com/profile/05298549508656090035noreply@blogger.com3tag:blogger.com,1999:blog-7169101242166335150.post-14809875501905886002013-02-21T05:09:00.000-08:002013-02-21T05:09:02.718-08:00Meaning of Balance sheet and Classifications of Assets and Liabilities.<div dir="ltr" style="text-align: left;" trbidi="on">
<br />
<br />
<div class="MsoNormal">
<b><u><span style="font-size: 12.0pt; line-height: 115%;">Balance Sheet<o:p></o:p></span></u></b></div>
<div class="MsoNormal">
Balance sheet is a statement of assets and liabilities as on
a particular date. The balance sheet
shows the sources and applications of capital. On the left hand side of the
balance sheet shows the liabilities and capital and the right hand side of the
balance sheet shows all the assets. Both sides of the balance sheet should be
always equal, that means, assets must be equals with liabilities.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><u>Format of Balnce sheet</u></b></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg5qZ7uAt_mY7o0ByYulEWtlgxTuWi6GDNH7f62db9NympuXrbUkCAE-tvzEfQx9fCc9YxR7gQ0uKUo4dG8MwYpu-pG1kRqsh3JxTEdch8u0owOq6g08v6vPwku2d9DObIFV0WRlNY_jNrt/s1600/Balance-Sheet-Template.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="474" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg5qZ7uAt_mY7o0ByYulEWtlgxTuWi6GDNH7f62db9NympuXrbUkCAE-tvzEfQx9fCc9YxR7gQ0uKUo4dG8MwYpu-pG1kRqsh3JxTEdch8u0owOq6g08v6vPwku2d9DObIFV0WRlNY_jNrt/s640/Balance-Sheet-Template.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Format of Balance Sheet</td></tr>
</tbody></table>
<div class="MsoNormal">
<b><u><br /></u></b></div>
<div class="MsoNormal">
<b><u><br /></u></b></div>
<div class="MsoNormal">
<b><u><span style="font-size: 12.0pt; line-height: 115%;">Classification of Assets and
Liabilities<o:p></o:p></span></u></b></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The
classification of different assets and liabilities are as shown below;</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<b><u>Classification of
Assets</u></b></div>
<div class="MsoNormal">
Assets represents the possession and properties of the
business. The assets are the valuable things which owns the business. Some of
the examples of the Assets are land & building,Furniture, plant &
machinery, stock, cash, debtors etc. As per the nature of assets they are
classified in to the following types.</div>
<div class="MsoNormal">
<br /></div>
<div class="ListParagraphCxSpFirst" style="mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><b>1.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>Fixed Assets<o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle">
Fixed Assets are those Assets which are acquired and held permanently and is used for the future with the intention of
earning profits. Land & building Furniture, plant & machinery are some
of the examples for fixed assets.</div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><b>2.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>Current Assets<o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle">
Current assets are those assets which can be
converted in to cash or can be used for the process of production of goods and
services. Cash, stock,debentures etc are some of the examples for current
assets.</div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><b>3.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>Liquid Assets<o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle">
Liquid assets are those assets which are in
the form of cash or can be easily converted in to cash. Cash, debenture, bills
receivables are some of the examples for Liquid assets.</div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><b>4.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>Tangible Assets<o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle">
Tangible assets are those assets which can be
seen and touch and have a definite volume such as cash, stock etc.</div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><b>5.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>Fictitious Assets<o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle">
These are assets which have no real value and
are losses for the business. Examples of fictitious assets are p&L a/c
debit balance, preliminary expenses etc. </div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><b>6.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>Wasting Assets<o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle">
Assets which have exhausted or reduces in
value by their workings are called Wasting Assets. Examples for Wasting assets
are mines , quarries etc.</div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><b>7.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>Contingent Assets<o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle">
These are assets the existence, value and
ownership of this is depends on the occurance and non occurance of a specified
act or an uncertain future event.</div>
<div class="ListParagraphCxSpLast">
<br /></div>
<div class="MsoNormal">
<b><u>Classification of Liabilities<o:p></o:p></u></b></div>
<div class="MsoNormal">
Liability is a claim in which the business owes. This
includes the credit balance of personal accounts, real account and the owners
capital. Liabilities are classified in four categories. They are as follows:-</div>
<div class="MsoNormal">
<br /></div>
<div class="ListParagraphCxSpFirst" style="mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><b>1.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>Fixed Liabilities<o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle">
Fixed liabilities are those liabilities which
are payable only on the termination of the business. This includes the owners
paid up capital, reserves and surplus etc.</div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><b>2.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>Long term Liabilities<o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle">
Long term liabilities are those awhich are
payable only after a long period of time say five to ten years.</div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><b>3.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>Current Liabilities<o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle">
Current Liabilities are those which will be
payable out of current assets within the next accounting period usually a year.</div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><b>4.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>Contingent Liabilities<o:p></o:p></u></b></div>
<div class="ListParagraphCxSpLast">
Contingent liability is one which is not an
actual liability but it will become an actual on the occurance of some future
uncertain event.</div>
<div class="MsoNormal">
These all are the kind or classifications of Assets and
Liabilities in the balance sheet of a business.</div>
</div>
Anonymoushttp://www.blogger.com/profile/05298549508656090035noreply@blogger.com8tag:blogger.com,1999:blog-7169101242166335150.post-30273957537737411802013-02-17T19:10:00.000-08:002013-02-17T19:10:03.139-08:00Meaning and Types of accounting Errors and procedure for rectifying accounting errors.<div dir="ltr" style="text-align: left;" trbidi="on">
<br />
<div class="MsoNormal">
<b><u><span style="font-size: 16.0pt; line-height: 115%;">Accounting Errors</span></u></b></div>
<div class="MsoNormal">
Accounting errors are those mistakes which occurs in the
book keeping or accounting, relating to a routine activity or relating to the
principle of accounting. The Accounting errors happens in entering the
transactions in journal or subsidiary books or at the time of posting of
entries in to the ledger. The accounting errors may happen because of the
omission, commission, principle or as a compensating of errors.</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_qUCnxTnRJl6TAzEp8gbF3IrZQDsbUIvxGTIQHPqoEJuxExpXB6VevDMZWPIH6Nu0n-IVp2TL3iKJ8M-tgK-b8D6ImTJEReJ88DR2ZKAhB7FxXb3pECs2arrejnf3tp6vXLu4dIEt3i79/s1600/6018604_f260.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_qUCnxTnRJl6TAzEp8gbF3IrZQDsbUIvxGTIQHPqoEJuxExpXB6VevDMZWPIH6Nu0n-IVp2TL3iKJ8M-tgK-b8D6ImTJEReJ88DR2ZKAhB7FxXb3pECs2arrejnf3tp6vXLu4dIEt3i79/s640/6018604_f260.jpg" width="640" /></a></div>
<br />
<br />
<br />
<div class="MsoNormal">
<b><u>Classification of Accounting errors</u></b></div>
<div class="MsoNormal">
Accounting errors are classified in to four types on the basis of nature of Errors. They are (1) Errors of Omission, (2) Errors of Commission, (3) Errors of Principles and (4) Compensating Errors.</div>
<div class="MsoNormal">
<br /></div>
<div class="ListParagraphCxSpFirst" style="text-indent: -0.25in;">
<b>(1)<span style="font-size: 7pt; font-weight: normal;"> </span></b> <b><u>Errors of Omission<o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle">
The Errors of Omission will occur when a transaction is not recorded in the books of accounts or omitted by mistake. The Errors of Omission may happen as partial or complete.</div>
<div class="ListParagraphCxSpMiddle">
The partial errors may happen in relation to any subsidiary books. This is the result of when a transaction is entered in the subsidiary book but not posted to the ledger. For example, cash paid to the suppliers has been entered in the payment side of the cash book but it will not be entered in the debit side of the suppliers account.</div>
<div class="ListParagraphCxSpMiddle">
The complete omission may happen the transaction is completely omitted from the books of accounts. For example, an accountant fails to enter a specific invoice from the sales day book.</div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle" style="text-indent: -0.25in;">
<b>(2)<span style="font-size: 7pt; font-weight: normal;"> </span></b><b><u> Errors of Commission<o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle">
When a transaction is entered in the books of accounts in wrongly, this may be entered as partially or incorrectly. This kind of errors are known as Errors of Commission. The Errors of Commission may happens because of ignorance or negligence of the accountant. This may be of different types, the main reasons are Errors relating to subsidiary books and Errors relating to ledger.</div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle" style="text-indent: -0.25in;">
<b>(3)<span style="font-size: 7pt; font-weight: normal;"> </span></b><b><u>Errors of Principles<o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle">
This kind of errors are occurs when the entries are made against the principle of accounting. These Errors are made because of the following reasons:-</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: 0.75in; text-indent: -0.25in;">
1.<span style="font-size: 7pt;"> </span>Errors happens due to the inability to make a distinction between the revenue and capital items.</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: 0.75in; text-indent: -0.25in;">
2.<span style="font-size: 7pt;"> </span> Errors happens due to the inability to make a difference between the business expenses and personal expenses.</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: 0.75in; text-indent: -0.25in;">
3.<span style="font-size: 7pt;"> </span>Errors happens because of the inability to make a distinction between the productive expense and nonproductive expenses.</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: 0.75in; text-indent: -0.25in;">
<br /></div>
<div class="ListParagraphCxSpMiddle" style="text-indent: -0.25in;">
<b>(4)<span style="font-size: 7pt; font-weight: normal;"> </span></b><b><u> Compensating Errors<o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle">
Compensating Errors are those errors which compensates themselves in the net results of the business. This means, if there are over debit in one account which will be compensated by the over credit in some account in the same extent of the business. Like that, if there is a wrong debit in one account which will be neutralized by some wrong credit in the same extent of the business.</div>
<br />
<br />
<br />
<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjiewtiTZwqnfj3Oo6GHg-FXN1z7A0pTiZ0IUPTvjL6-EpUl8_7GERCIlJynOXPBT_ow30XKI65C9e8OoVmJRGhfX8t7mvjYe8TEqpOQ4AVo_TGZIJpFPVArV47VH_R71FMUS41TCzwA6_4/s1600/accounting-errors.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="424" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjiewtiTZwqnfj3Oo6GHg-FXN1z7A0pTiZ0IUPTvjL6-EpUl8_7GERCIlJynOXPBT_ow30XKI65C9e8OoVmJRGhfX8t7mvjYe8TEqpOQ4AVo_TGZIJpFPVArV47VH_R71FMUS41TCzwA6_4/s640/accounting-errors.jpg" width="640" /></a></div>
<div class="MsoNormal">
<br /></div>
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<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle">
The accounting errors will hardly affect the
accuracy of trial balance of the business because the trial balance is the
final proof of the books of accounts. There are some of the methods to rectify
the accounting errors happened in the books of accounts. The important two
methods for rectifying the accounting errors are as follow.</div>
<div class="ListParagraphCxSpMiddle">
<span style="font-family: Wingdings; mso-ascii-font-family: Calibri; mso-char-type: symbol; mso-hansi-font-family: Calibri; mso-symbol-font-family: Wingdings;">à</span>
Striking of the wrong Entry.</div>
<div class="ListParagraphCxSpMiddle">
<span style="font-family: Wingdings; mso-ascii-font-family: Calibri; mso-char-type: symbol; mso-hansi-font-family: Calibri; mso-symbol-font-family: Wingdings;">à</span>
Making appropriate entries to correct the errors.</div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle">
<b><u>Procedure
for rectifying Accounting errors.</u></b></div>
<div class="ListParagraphCxSpMiddle">
There are mainly three steps to rectify the
accounting errors in the books of accounts.</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l0 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]-->a.<span style="font-size: 7pt;">
</span><!--[endif]-->Ascertain the error occurred</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l0 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]-->b.<span style="font-size: 7pt;">
</span><!--[endif]--> Identify
the correct record of transaction which has to be done.</div>
<div class="ListParagraphCxSpLast" style="margin-left: .75in; mso-add-space: auto; mso-list: l0 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]-->c.<span style="font-size: 7pt;">
</span><!--[endif]-->Decide the rectification entry.</div>
<div class="MsoNormal">
These all are the different kinds of accounting errors and
the methods to rectify those errors.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
</div>
Anonymoushttp://www.blogger.com/profile/05298549508656090035noreply@blogger.com50tag:blogger.com,1999:blog-7169101242166335150.post-65731552956325147162013-02-15T06:47:00.000-08:002013-02-15T06:47:03.540-08:00Meaning and Types of Subsidiary books detailed study report.<div dir="ltr" style="text-align: left;" trbidi="on">
<br />
<div class="MsoNormal">
</div>
<div class="MsoNormal">
<b><u><span style="line-height: 115%;"><span style="font-size: large;">Subsidiary Books</span><span style="font-size: small;"><o:p></o:p></span></span></u></b></div>
<div class="MsoNormal">
<b><u><span style="font-size: 12.0pt; line-height: 115%;"><br /></span></u></b></div>
<div class="MsoNormal">
Most of the big companies are recording the business
transactions in one journal and the posting of the same to the concerned ledger
accounts are very difficult tasks and which require more clerical labour also.
For avoiding such kind of difficulties most of the business organizations are
subdividing the journal in to subsidiary journals or subsidiary books. Subsidiary books are those books of original
entry in which similar nature of transactions are recording in a chronological
order.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<u>Kinds of Subsidiary Books </u></div>
<div class="MsoNormal">
There are different kinds of subsidiary books which includes
purchase day book, Sales day book, purchase returns book, Sales returns book,
Bills receivable books, Bills payable books, Cash book.</div>
<div class="MsoNormal">
<br /></div>
<div class="ListParagraphCxSpFirst" style="mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->1.<span style="font-size: 7pt;">
</span><!--[endif]--><u>Purchase day book<o:p></o:p></u></div>
<div class="ListParagraphCxSpMiddle">
purchase day book is used for recording credit
purchase of goods only. This will not record any cash purchase or credit
purchase of any assets. The term goods means all the commodities and services
in which the company deals in day to day activities. The preparation of
purchase day book involves the Date column, Particulars column, Invoice number
column, Ledger folio column, inner amount column and Amount column. </div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->2.<span style="font-size: 7pt;">
</span><!--[endif]--><u>Sales day book<o:p></o:p></u></div>
<div class="ListParagraphCxSpMiddle">
Sales day book is mainly used for recording
credit sales of goods and services in an organization. This will not record any
cash sales or assets sales. The ruling for the preparation of this book is same
as like Purchase day book. This involves the Date column, Particulars column,
Invoice number column, Ledger folio column, inner amount column and Amount
column. </div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->3.<span style="font-size: 7pt;">
</span><!--[endif]--><u>Purchase returns book</u></div>
<div class="ListParagraphCxSpMiddle">
This is maintained to record the transactions
of goods returned to the supplier when purchase on credit. The ruling of the
preparation of purchase return book or returns outward book involves Date,
Particulars, Debit note number, Ledger folio and amount column. </div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->4.<span style="font-size: 7pt;">
</span><!--[endif]--><u>Sales returns book<o:p></o:p></u></div>
<div class="ListParagraphCxSpMiddle">
This book is used to record the goods returned
by the customer the goods sold on credit. The ruling of the preparation of
Sales return book or returns inward book involves Date, Particulars, credit
note number, Ledger folio and amount column. </div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->5.<span style="font-size: 7pt;">
</span><!--[endif]--><u>Bills receivable books<o:p></o:p></u></div>
<div class="ListParagraphCxSpMiddle">
It is used to record the transactions when the
bills received from the customer for credit sales. This provides a medium for
posting bills receivable transaction. The preparation of this book involves
Date when received, Drawer, Acceptor, Where payable, date of bill, term, due
date ledger folio, Amount, remarks columns.</div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->6.<span style="font-size: 7pt;">
</span><!--[endif]--><u>Bills payable books<o:p></o:p></u></div>
<div class="ListParagraphCxSpMiddle">
This is used to record the acceptances given
to the suppliers for credit purchase. The preparation of bills payable book
involves Date of acceptance, giver, payee, Where payable, date of bill, term,
due date, ledger folio, Amount, remarks columns.</div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->7.<span style="font-size: 7pt;">
</span><!--[endif]--><u>Cash book<o:p></o:p></u></div>
<div class="ListParagraphCxSpMiddle">
The cash book is used to record all the
receipts and payments of cash. For the preparation of cash book there are
different rules are available according to the nature of business. The
different forms of cash book are as follows:- </div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]-->a.<span style="font-size: 7pt;">
</span><!--[endif]-->Simple Cash book – This is the simple form of
cash book.<u><o:p></o:p></u></div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]-->b.<span style="font-size: 7pt;">
</span><!--[endif]-->Two column cash book – This type of cash book
have two columns like cash column and discount column.<u><o:p></o:p></u></div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]-->c.<span style="font-size: 7pt;">
</span><!--[endif]-->Three column cash book – This involves three
columns such as Bank column, cash column and discount column.<u><o:p></o:p></u></div>
<div class="ListParagraphCxSpLast" style="margin-left: .75in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]-->d.<span style="font-size: 7pt;">
</span><!--[endif]-->Petty cash book - This is used to record petty expenses like
postage, cartage, printing and stationery etc in the day to day business
activities.<u><o:p></o:p></u></div>
<div class="MsoNormal">
<br /></div>
<br />
</div>
Anonymoushttp://www.blogger.com/profile/05298549508656090035noreply@blogger.com10tag:blogger.com,1999:blog-7169101242166335150.post-70185332968762093452013-02-14T01:31:00.001-08:002013-02-14T01:31:25.920-08:00Rules for Double entry system of Accounting with examples.<div dir="ltr" style="text-align: left;" trbidi="on">
<br />
<div class="MsoNormal">
<b><u><span style="font-size: large;"><br /></span></u></b></div>
<div class="MsoNormal">
<b><u><span style="font-size: large;">Double Entry
System of Accounting</span></u></b></div>
<div class="MsoNormal">
<b><u><span style="font-size: large;"><br /></span></u></b></div>
<div class="MsoNormal">
Double entry system of accounting is based on the dual
aspect concept. It includes two aspects, they are Debit aspects and Credit
aspects.</div>
<div class="MsoNormal">
Debit Aspects- This includes either Receiving aspects,
incoming aspects or Expenditure aspects, these are known as Debit aspects.</div>
<div class="MsoNormal">
Credit Aspects- The another aspects may be Giving aspects,
outgoing aspects or income aspects. These are known as Credit aspects. </div>
<div class="MsoNormal">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJedkNNPcLkJK9Apnbnlo6Y-469IidL7Rsa8GwDhXZZEWk3kWmGOeWc4Je_SkBe2nJCSCF47WvDf_umv1-NkkKIy_uLu3FNGFbSD3qq2y1jsfwzD5e6uJS7siVU2nApyg6BNnlUy4imj6O/s1600/images.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="481" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJedkNNPcLkJK9Apnbnlo6Y-469IidL7Rsa8GwDhXZZEWk3kWmGOeWc4Je_SkBe2nJCSCF47WvDf_umv1-NkkKIy_uLu3FNGFbSD3qq2y1jsfwzD5e6uJS7siVU2nApyg6BNnlUy4imj6O/s640/images.jpg" width="640" /></a></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<u><b>Stages of Double Entry System</b></u></div>
<div class="MsoNormal">
There are three distinct stages are includes a complete
system of double entry.</div>
<div class="ListParagraphCxSpFirst" style="margin-left: .75in; mso-add-space: auto; mso-list: l3 level1 lfo2; text-indent: -.5in;">
<!--[if !supportLists]-->i)<span style="font-size: 7pt;">
</span><!--[endif]-->Recording of transactions in the journal.</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l3 level1 lfo2; text-indent: -.5in;">
<!--[if !supportLists]-->ii)<span style="font-size: 7pt;">
</span><!--[endif]-->Posting of journal entry in to the respective
ledger accounts and then preparing a trial balance. </div>
<div class="ListParagraphCxSpLast" style="margin-left: .75in; mso-add-space: auto; mso-list: l3 level1 lfo2; text-indent: -.5in;">
<!--[if !supportLists]-->iii)<span style="font-size: 7pt;">
</span><!--[endif]-->Closing of books of accounts and preparing final
accounts.</div>
<div class="ListParagraphCxSpLast" style="margin-left: .75in; mso-add-space: auto; mso-list: l3 level1 lfo2; text-indent: -.5in;">
<br /></div>
<div class="MsoNormal">
<u>Rules for Double Entry System</u></div>
<div class="MsoNormal">
An account is statement and it is a record of transactions
relating to a person, or a firm, or a property, or a liability, or an income or
expenditure. There are three kinds of rules for double entry system. They are
as follows:-</div>
<div class="ListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->1.<span style="font-size: 7pt;">
</span><!--[endif]--><u>Personal Accounts<o:p></o:p></u></div>
<div class="ListParagraphCxSpMiddle">
Under this statement, a separate account will
be prepared for each person. It includes Natural peron’s account, Artificial
person’s account and representative personal accounts. Some of the examples of
personal account are Ramu’s account, Bank account, Any firms account, any
companies account, prepaid expense account, outstanding wages account etc.</div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle">
Rule for personal Account:-</div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle">
“<b><i>Debit
the receiver <o:p></o:p></i></b></div>
<div class="ListParagraphCxSpMiddle">
<b><i>
Credit the giver”<o:p></o:p></i></b></div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->2.<span style="font-size: 7pt;">
</span><!--[endif]--><u>Real Accounts<o:p></o:p></u></div>
<div class="ListParagraphCxSpMiddle">
Under the real account, a separate account
will create for each class of property or asset. There will have an account
relating to a property, an asset or a possession of property. Some of the
examples for real account are Cash account, Furniture account, Goodwill account
etc.</div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle">
Rule for Real Account:-</div>
<div class="ListParagraphCxSpMiddle">
“<b><i>Debit
what comes in <o:p></o:p></i></b></div>
<div class="ListParagraphCxSpMiddle">
<b><i>
Credit what goes out”<o:p></o:p></i></b></div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->3.<span style="font-size: 7pt;">
</span><!--[endif]--><u>Nominal Account<o:p></o:p></u></div>
<div class="ListParagraphCxSpMiddle">
These includes the expenses and losses or
incomes and gains of business. Some of the examples of Nominal account are
wages account, discount received account, interest account etc.</div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle">
Rule for Real Account:-</div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle">
“<b><i>Debit
all expenses and losses <o:p></o:p></i></b></div>
<div class="ListParagraphCxSpMiddle">
<b><i>
Credit all incomes and gains”<o:p></o:p></i></b></div>
<div class="ListParagraphCxSpMiddle">
<b><i><br /></i></b></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiY0H2k6mNBZJCluxD2OOCJF4ZDPajphIWUWXPZl0ti7NIdrW-CdAAviB_e5Xyhm6p5Wn_I6sotfBDOp7r4lX5nWZS8LIK6ssCpJOP02uEWddiQ_9IzU5JcS2PtusLOYSHTWnIw48f4A_aZ/s1600/Picture+025.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="465" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiY0H2k6mNBZJCluxD2OOCJF4ZDPajphIWUWXPZl0ti7NIdrW-CdAAviB_e5Xyhm6p5Wn_I6sotfBDOp7r4lX5nWZS8LIK6ssCpJOP02uEWddiQ_9IzU5JcS2PtusLOYSHTWnIw48f4A_aZ/s640/Picture+025.jpg" width="640" /></a></div>
<div class="ListParagraphCxSpMiddle">
<b><i><br /></i></b></div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle">
<i><u>Advantages
of Double entry system<o:p></o:p></u></i></div>
<div class="ListParagraphCxSpMiddle">
The important merits of Double entry system
are as follows:-</div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]-->1.<span style="font-size: 7pt;">
</span><!--[endif]-->Under Double entry system, keeps a complete
record of business transactions.</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]-->2.<span style="font-size: 7pt;">
</span><!--[endif]-->This provides complete information regarding the
business.</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]-->3.<span style="font-size: 7pt;">
</span><!--[endif]-->This has the facility of checking mathematical
accuracy of books of accounts.</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]-->4.<span style="font-size: 7pt;">
</span><!--[endif]-->It reveals the profit or loss of the business
for a given period.</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]-->5.<span style="font-size: 7pt;">
</span><!--[endif]-->This enables the business man to plan, control
and take necessary actions in his operations.</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]-->6.<span style="font-size: 7pt;">
</span><!--[endif]-->It avoids chances of fraud or misappropriation
of accounts.</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]-->7.<span style="font-size: 7pt;">
</span><!--[endif]-->This system is flexible according to the nature
of business.</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]-->8.<span style="font-size: 7pt;">
</span><!--[endif]-->This system is accepted by the tax authorities.</div>
<div class="ListParagraphCxSpLast" style="margin-left: .75in; mso-add-space: auto; mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]-->9.<span style="font-size: 7pt;">
</span><!--[endif]-->Actual net profit can be calculated directly.</div>
<div class="MsoNormal">
<br /></div>
<div class="ListParagraphCxSpFirst">
<i><u>Disadvantages
of Double entry system<o:p></o:p></u></i></div>
<div class="ListParagraphCxSpMiddle">
The important limitations of Double entry
system are as follows:-</div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l2 level1 lfo4; text-indent: -.25in;">
<!--[if !supportLists]-->1.<span style="font-size: 7pt;">
</span><!--[endif]-->It is not suitable to disclose all the
information of a transaction which is not properly recorded in the journal.</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l2 level1 lfo4; text-indent: -.25in;">
<!--[if !supportLists]-->2.<span style="font-size: 7pt;">
</span><!--[endif]-->If there is any errors in the transactions
recorded in the books, it is difficult to detecting the errors.</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l2 level1 lfo4; text-indent: -.25in;">
<!--[if !supportLists]-->3.<span style="font-size: 7pt;">
</span><!--[endif]-->This system required more clerical labour.</div>
<div class="ListParagraphCxSpLast" style="margin-left: .75in; mso-add-space: auto; mso-list: l2 level1 lfo4; text-indent: -.25in;">
<!--[if !supportLists]-->4.<span style="font-size: 7pt;">
</span><!--[endif]-->If there is any compensatory errors, it is not
suitable to find out by this system.</div>
<div class="MsoNormal">
These all are the Advantages and Disadvantages of Double
entry system of accounting.</div>
</div>
Anonymoushttp://www.blogger.com/profile/05298549508656090035noreply@blogger.com17tag:blogger.com,1999:blog-7169101242166335150.post-75849980000579069342013-02-13T05:21:00.000-08:002013-02-13T05:21:07.881-08:00Functions of financial management as well as financial manager.<div dir="ltr" style="text-align: left;" trbidi="on">
<br />
<div style="margin-bottom: .0001pt; margin: 0in;">
<b><u><span style="font-size: 18.0pt;"><br /></span></u></b></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<b><u><span style="font-size: 18.0pt;">Financial
Management</span></u></b></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
</div>
<div style="margin-bottom: .0001pt; margin: 0in;">
Financial management is a process
which involves planning, organizing, controlling and directing of
financial activities such as the procurement, development and maximum
utilization of the funds in an organization. Finance is the lifeblood of every
business and it is the study of how the investors allocate the assets in the
competitive business environment. In simply we can say that, financial
management is the process of applying general management principles to the
resources available in the business enterprises.</div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<b><u>Functions of Financial
management</u></b></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<b><u><br />
</u></b>Financial Management is the base for the success of every business
organizations and which includes all the managerial activities related to the
finance and other resources of the business. The main objective of the
financial management is concerned with the procurement, allocation and control of
financial resources in an organization. Some of the important functions of
financial management are as follows:-</div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj92Ar6DNgtA1ZgbaZ08rwxWA_WgEVtiK3UUwhhiGJ55upcaSr6zXiUw-dxk33PODehbp4-4IJGP3XSdKrPojkUx-KU-gdpv_dHDZE4sLslA2beauww9M2jkqMR6hMMdjYogW7qDW92SU1n/s1600/Picture+025.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img alt="" border="0" height="465" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj92Ar6DNgtA1ZgbaZ08rwxWA_WgEVtiK3UUwhhiGJ55upcaSr6zXiUw-dxk33PODehbp4-4IJGP3XSdKrPojkUx-KU-gdpv_dHDZE4sLslA2beauww9M2jkqMR6hMMdjYogW7qDW92SU1n/s640/Picture+025.jpg" title="Functions of financial management" width="640" /></a></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<ol start="1" type="1">
<li class="MsoNormal"><u>Estimation of Capital
requirements.</u></li>
</ol>
<div class="MsoNormal" style="margin-left: .5in; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
The estimation of capital requirements for the business is
the main responsibility of a financial manager. Capital is the indication of
the structure and future plans of the business. The capital requirements should
be depends on the nature and characteristics of the business. If the business
is a short term plan then it will have a small capital requirements or the type
of the business also will depend the capital requirements of the company.</div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l0 level1 lfo1; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]-->2.<span style="font-size: 7pt;">
</span><!--[endif]--><u>Determine the
capital composition</u><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in;">
Determination of the capital
composition involves the process of deciding the short term and long term
capital structure of the business along with the debt equity analysis. This process will depends on the proportion
of the companies equity capital as well as the additional funds in which the
company have to be raised from the outsiders. The estimation is the base for
fixing of capital structure for the business.<o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l0 level1 lfo1; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]-->3.<span style="font-size: 7pt;">
</span><!--[endif]--><u>Sources of Funds</u> <br />
Another important function of a financial manager is to analyze the external
environment and find out the favorable choices for procuring funds for the
future process of business activities. Some of the main choices of source of
funds are as follows:-<o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l1 level1 lfo2; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]-->a)<span style="font-size: 7pt;">
</span><!--[endif]-->Issue of shares and
Debentures.<o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l1 level1 lfo2; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 13.5pt;">b)<span style="font-size: 7pt;">
</span></span><!--[endif]-->Loans from banks and
other financial institutions.<span style="font-size: 13.5pt;"><o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l1 level1 lfo2; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 13.5pt;">c)<span style="font-size: 7pt;">
</span></span><!--[endif]-->Fund from Bonds.<span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<!--[if !supportLists]-->4.<span style="font-size: 7pt;">
</span><!--[endif]--><u>Investment of Funds</u><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in;">
Investment of funds is the
very important function in any business organization. This is the main
responsibility of the finance manager to analyze and study various profitable
ventures to invest the funds and it will help to get maximum return from the
investment. <o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in;">
<br /></div>
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<!--[if !supportLists]-->5.<span style="font-size: 7pt;">
</span><!--[endif]--><u>Disposal of surplus</u><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in;">
The finance manager is the
responsible person to take adequate decisions regarding net profit of the
company. It will be done in two ways, that is Dividend Declaration and Retained
profits.<o:p></o:p></div>
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<!--[if !supportLists]-->6.<span style="font-size: 7pt;">
</span><!--[endif]--><u>Management of Cash.</u><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in;">
The key function of a finance
manager is cash management and this depends on the future functions in an organization.
Cash is required for many purposes in every business organization which
includes payment of wages and salaries, purchases, Payment of bills, Meeting
current liabilities etc.<o:p></o:p></div>
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<!--[if !supportLists]-->7.<span style="font-size: 7pt;">
</span><!--[endif]--><u>Financial Controls</u><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in;">
The financial control is one
of the major function of the finance manager along with the procurement and
utilization of finance. The financial control is done through the clear forecasting
of future conditions, Ratio analysis techniques, forecasting of cost and profit
of the business etc.<o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in;">
These all are the major
functions of financial management as well as the financial manager.<o:p></o:p></div>
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Anonymoushttp://www.blogger.com/profile/05298549508656090035noreply@blogger.com66tag:blogger.com,1999:blog-7169101242166335150.post-64079459345893680192013-02-12T03:44:00.000-08:002013-02-12T03:44:18.976-08:00Systems of Accounting : single entry and double entry system of Accounting<div dir="ltr" style="text-align: left;" trbidi="on">
<br />
<div class="MsoNormal">
<b><u><span style="font-size: large; line-height: 115%;">Systems of Accounting</span></u></b></div>
<div class="MsoNormal">
There are mainly two kinds of system of accounting for
recording business transactions. They are Cash System of accounting and
Mercantile system or Accrual system of Accounting.<br />
<br /></div>
<div class="ListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><b>1.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>Cash System of Accounting<o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle">
Under the cash system of accounting, only
actual cash transitions are recording in to the account. That means actual cash
received and cash paid are recoded properly and no entry for any due of
receipts and outstanding expenses.<b><u><o:p></o:p></u></b><br />
<br /></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><b>2.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>Mercantile system or Accrual system of
Accounting<o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle">
Under Mercantile system of accounting, all the
cash transactions and credit transactions of the business are recorded in the
books of accounts. This will create the entries not only for actual cash receipts
and payments but also for amount due and outstanding expenses. This is the
system which all the commercial business organizations are follows.</div>
<div class="ListParagraphCxSpMiddle">
<br /></div>
<div class="ListParagraphCxSpMiddle">
Along with the above shown systems of
accounting we can record the business transactions in two other important
systems also. They are Single Entry System and Double entry systems.<br />
<br /></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><b>3.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>Single Entry System<o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle">
Single Entry System is a system which records
only the personal and cash aspects of the business. Under this system of
recording ignores impersonal aspects of transactions. This is not based on the
Dual aspect Concept so it will be incomplete account or inaccurate
account. <br />
<br /></div>
<div class="ListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><b>4.<span style="font-size: 7pt; font-weight: normal;"> </span></b><!--[endif]--><b><u>Double Entry System<o:p></o:p></u></b></div>
<div class="ListParagraphCxSpMiddle">
This is a dual aspect concept of business
transactions that is receiving aspects (debit) and giving aspects (credit) are
recorded in the books of accounts. This is the most common system of book
keeping used for recording every business transactions. Double entry system is
the method of making all transactions in the account in an opposite side for
equal value. This system of accounting provides more accurate data with
scientific system of accounting.<br />
<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgcORMWLld_CGtSbGcVcQ1iVqzo57LYwIGvsnUbW0Ilsg9BZYPMvyrAB5K-3BStObcPwEkdNp59IkrblUNZSIGTjrJ0DKr_yx-vCTXHhLhsyq2UHUeOp9wBR73m0Y__YowOEeSoMgHVO7JB/s1600/debitandcreditsm.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgcORMWLld_CGtSbGcVcQ1iVqzo57LYwIGvsnUbW0Ilsg9BZYPMvyrAB5K-3BStObcPwEkdNp59IkrblUNZSIGTjrJ0DKr_yx-vCTXHhLhsyq2UHUeOp9wBR73m0Y__YowOEeSoMgHVO7JB/s1600/debitandcreditsm.jpg" /></a></div>
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<b><i>Difference between Single Entry System and
Double Entry System of Accounting are as follows:-<o:p></o:p></i></b></div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l1 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]-->1)<span style="font-size: 7pt;">
</span><!--[endif]-->In Double Entry System of Accounting, the double
aspects of the transactions are recorded. But in the case of Single Entry
System, only single aspects is recorded.</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l1 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]-->2)<span style="font-size: 7pt;">
</span><!--[endif]-->In Double Entry System of Accounting, For every
debit aspect will have an equal amount of credit aspect. But in the case of
Single Entry system, there will have a debit without a corresponding credit and
vice versa.</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l1 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]-->3)<span style="font-size: 7pt;">
</span><!--[endif]-->In Double Entry System of Accounting, there are
personal and impersonal accounts (ie, real and nominal accounts). But in the
case of Single Entry System, there are personal and cash accounts only.</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l1 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]-->4)<span style="font-size: 7pt;">
</span><!--[endif]-->Under Double Entry System of Accounting, a trial
balance can be prepared to check the accuracy of accounts While in the single
entry system, it cannot prepare the trial balance.</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l1 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]-->5)<span style="font-size: 7pt;">
</span><!--[endif]-->Under Double Entry System of Accounting, the
Trading, profit and loss account and balance sheet can be prepared directly.
But the single entry system those statements cannot prepared directly.</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l1 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]-->6)<span style="font-size: 7pt;">
</span><!--[endif]-->In double entry system we can directly calculate
actual net profit of the business. But in the case of single entry system it is
not easy to calculate actual net profit of the business directly.</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l1 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]-->7)<span style="font-size: 7pt;">
</span><!--[endif]-->In Double Entry System of Accounting, it
involves more clerical labours, But there are only less numbers of clerical
labours in the case of Single entry system.</div>
<div class="ListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto;">
<br /></div>
<div class="ListParagraphCxSpLast" style="margin-left: .75in; mso-add-space: auto;">
These
all are the difference between Single entry system of Accounting and Double
entry system of accounting.</div>
</div>
Anonymoushttp://www.blogger.com/profile/05298549508656090035noreply@blogger.com12tag:blogger.com,1999:blog-7169101242166335150.post-34649486728748106942013-02-01T10:42:00.001-08:002013-02-01T10:42:44.983-08:00Financial Accounting.Principles- Concepts and conventions of Accounting, Meaning, Definition and objectives of Accounting.<div dir="ltr" style="text-align: left;" trbidi="on">
<b><u>Accounting- Meaning and Definition</u></b><br />
<b><u><br /></u></b>
Accounting is a process of communicating the results of business operations to various parties who are interested or connected with the business, which includes the owners, investors, creditors, government, bank and other financial institutions etc. Accounting is associated with everybody who is interested to keep the accounts of finance or monetary transactions.<br />
<br />
The American Institute of Certified Public Accountants has defined accounting as ''the art of recording, classifying and 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 above mentioned definition shows the following aspects of accounting.<br />
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<br />
<br />
<ul style="text-align: left;">
<li>Accounting involves both art and science.</li>
<li>This includes recording, classifying and summarizing of business transactions.</li>
<li>This records the transactions in terms of money.</li>
<li>It records the financial things and events only.</li>
<li>Accounting is the process of interpreting the results of financial operations.</li>
<li>This communicates the results of analysis and interpretation to the management or to the concerned party.</li>
</ul>
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<b><u>Main Objectives of Accounting</u></b></div>
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<b><u><br /></u></b></div>
<div>
The main objectives of accounting is as follows:-</div>
<div>
<ul style="text-align: left;">
<li>To evaluate the operating results of the enterprise.</li>
<li>To disclose the financial position of the business</li>
<li>To ensure necessary control over the operation as well as the resources of the business.</li>
</ul>
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</div>
<div>
<b><u><span style="font-size: large;">Accounting Principles</span></u></b></div>
<div>
Accounting principles are the norms or rule of actions adopted while recording business transactions which will ensure the uniformity, clarity and understanding of business. The accounting principles are mainly classified in to two categories. They are Accounting Concepts and Accounting Conventions. </div>
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<div>
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<div>
1. <b><u>Accounting Concepts</u></b></div>
<div>
Accounting concepts are basic assumptions or conditions which the accounting system is based. The important accounting concepts are Business Entity Concept, Going Concern concept, Dual Aspect Concept, Cost Concept, Money measurement Concept, Realization Concept, Accrual Concept and matching Concept.</div>
<div>
<br /></div>
<div>
<ul style="text-align: left;">
<li><b>Business Entity Concept-</b> Business entity concept states that the business and business man are two separate entity. Under this, business is treated as a separate unit distinct from its owner. The transactions between the proprietor and the business will be recorded separately in the books of business and shown separately under the heading 'Capital account'.</li>
<li><b>Going Concern concept- </b>As per this concept business unit has a perpetual succession or a continued existence and the transactions are are recorded from the point of view. The concept says that the business will continue in operation long enough to charge the cost of fixed assets over the useful life time against the income from business.</li>
<li> <b>Dual Aspect Concept- </b>Under this concept each business transaction has two aspects they are receiving aspects and giving aspects. The receiving aspect is known as Debit aspect and the giving aspect is known as the Credit aspect of the business.</li>
<li><b>Cost Concept- </b>Cost Concept is based on the Going concern concept. According to this concept, assets purchased will be entered in the business book as per the cost price in which they are purchased and this will be the base for further accounting of assets.</li>
<li><b>Money measurement Concept- </b>This concepts states that, the transactions which will treat only in the terms of money.</li>
<li><span style="font-family: 'Times New Roman', serif; font-size: 13.5pt;"><b>Realization concept-</b> According to this Revenue is recognized only when the sale is made.</span></li>
<li><span style="font-family: 'Times New Roman', serif; font-size: 13.5pt;"><b>Matching Concept-</b> This matches the cost along with the revenue.</span></li>
</ul>
<div>
2. <b><u>Accounting Conventions</u></b></div>
</div>
<div>
This is method or custom in which the accountants are following for the preparation of accounting statements. This includes mainly three types of conventions. They are as follows:-</div>
<div>
<ul style="text-align: left;">
<li>Convention of conservatism</li>
<li>Convention of consistency</li>
<li>Convention of material Disclosure.</li>
</ul>
<div>
These all are the accounting concepts and conventions.</div>
</div>
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<b><u><br /></u></b></div>
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Anonymoushttp://www.blogger.com/profile/05298549508656090035noreply@blogger.com43tag:blogger.com,1999:blog-7169101242166335150.post-76145038227747270872013-01-29T10:00:00.000-08:002013-01-29T10:00:11.044-08:00Meaning and Functions of Management Accounting Detailed study report<div dir="ltr" style="text-align: left;" trbidi="on">
<b><u>Management Accounting</u></b><br />
<b><u><br /></u></b>
Management accounting is the process of assist in management for doing the managerial activities more efficiently and effectively. It is concerned with the accounting information which will be used for proper functioning of management.<br />
<br />
The American Accounting Association defines "Management accounting is the application of appropriate techniques and concepts in processing historical and projected economic data of any entity to assist management in establishing plans for reasonable economic objectives in the making of rational decisions with a view towards these objectives".<br />
<br />
The management accounting provides the managerial information to the managers of the concerned organization which helps them to work effectively according to the accounting information available in the right time. This information is the base for planning and decision making for the future course of business.<br />
<span id="goog_1529736501"></span><span id="goog_1529736502"></span><br />
<br />
<b><i>Scope of Management Accounting:</i></b><br />
<b><i><br /></i></b>
The purpose of management accounting is to provide adequate information to the business. For this, they are collecting qualitative and quantitative information from the accounting as well as non-accounting areas and submit to the managers. The following are the major scope of management accounting.<br />
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</div>
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<ol style="text-align: left;">
<li>Financial Accounting - Management accounting is highly depends on the financial accounting because the arrangement of financial data is one of the main function of management accounting.</li>
<li>Cost Accounting - Cost accounting is a process which provides necessary information like standard costing, budgetary control, inventory control etc. these all data helps to co-ordinate the basic managerial functions like planning, decision making, controlling and other important activities for the future course of actions.</li>
<li>Operations Research - Now a days the business managers are handling complicated functions in the business activities. This is helps to identify some basic tools of Linear programming, queuing theory, decision theory etc and which will help the managers to do their activities properly in the current complicated business scenario.</li>
<li>Statistical Methods- The planning and forecasting of the business activities are very important aspect in the course of business activity. These planning and forecasting can be done with the use of statistical tools such as graph, charts, diagrams, index numbers, time series, regression analysis, sampling techniques etc.</li>
<li>Revaluation Accounting- This is mainly concentrate to ensuring the capital is maintained in real terms and the profit is calculated on that basis. The revaluation method is also known as the replacement value method.</li>
<li>Taxation- Taxation is an unavoidable aspect in the current business scenario. The taxation includes tax planning, computation of tax, filing of returns and making tax payments.</li>
<li>Office Services- The office services includes maintenance of proper data processing, communication to the concerned parties, use of technical services and the use of all other managerial services.</li>
<li>Law- All the management decisions are taken with the help of legal environment. The following are the acts which influence the management decisions such as The companies Act, MRTP Act, FEMA, SEBI Regulations etc.</li>
<li>Internal Audit- This is done for the development of the internal control of the business activities.</li>
<li>Internal Reporting- Reporting is the very important action in any course of business. This can be categorized as the preparation of quarterly report, half yearly report, other interim reports, Scrap reports, Cash flow statements, Fund flow statements, income statements etc.</li>
</ol>
<div>
These all are the functions of management accounting for the smooth running of a business organization.</div>
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Anonymoushttp://www.blogger.com/profile/05298549508656090035noreply@blogger.com3tag:blogger.com,1999:blog-7169101242166335150.post-82485111352793632472013-01-23T07:29:00.003-08:002013-01-23T07:29:54.396-08:00Scope of Business and management studies- Meaning, elements, steps, scope with picture gallery<div dir="ltr" style="text-align: left;" trbidi="on">
<u style="font-weight: bold;">Business</u><br />
<br />
Business is a process of exchanging goods and services between the buyers and sellers. Business is an economic system in which goods and services are exchanged for money from one party to another. Business is an economic activity that deals the production and distribution of goods and services with the aim of earning profit.<br />
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<tr><td class="tr-caption" style="text-align: center;">Process of Business</td></tr>
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The main characteristics of business is as follows:-</div>
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1) Business is a process of exchange of goods and services for the purpose of earning money.</div>
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2) Earning profit is the main aim of every business..</div>
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3) Business is a continuous transactions between the buyers and sellers.</div>
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4) It is a process which consists of risk and uncertainty due to the fire or theft.</div>
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5) Every business is a contract or agreement between two parties that is the buyer and the seller.</div>
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6) Business is the result of the production of goods and services.</div>
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7) Every business has its own social responsibility to their customers in the modern scenario.</div>
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8) Business involves two kinds of goods that is Consumer goods and producer goods.</div>
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<b><u>Management</u></b></div>
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Management is the art of getting things done with the help of others. It includes Planning, Organizing, Directing, Staffing, Co-ordinating, Reporting and Budgeting. These are known as the PODSCORB of the management.</div>
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The important Elements of Management are as follows:-</div>
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<li>Planning- It is the process of getting things done through others.</li>
<li> Organizing- Organizing is a process of arranging all the process of activities for the effective management.</li>
<li>Directing- it is a continuous process which includes decision making and execution of the decisions with the help of others.</li>
<li>Staffing- Staffing is a very important activity which involves the protection and the work allotments to the staffs in an organization.</li>
<li>Co-ordination- This is an inter related activity which co-ordinates all the works in an organization.</li>
<li>Reporting- Reporting is an another important activity which connects the superiors with their subordinates every day. This is very essential to report the day to day activities to the superiors by directly, telephone call, message or e-mail etc.</li>
<li>Budgeting- Budgeting is doing as planning and controlling of the future business. </li>
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<tr><td class="tr-caption" style="text-align: center;"><b>Elements of Management</b></td></tr>
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<b><u> Business and Management</u></b><br />
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Business and management are the very important thing which an entrepreneur should have a well knowledge about this. The study of business and management will enable us to identify the trends and techniques which can be use in the day to day business. As a part of the Business and Management study, we will get a clear idea about how things works in business and management and also enable to study about the Markets, finance, Information system, operations management, dealings with the external world etc.<br />
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The proper study of the business and management gives a confidence to start the business in any competitive environment. Study of the business and management also enable to the following:-<br />
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<li>To start a business with clear idea of the internal as well as external environment of the business.</li>
<li>It enable to apply business strategy and directions to the business.</li>
<li>This gives the general rules and regulations to start a business</li>
<li>It gives the clear idea of law for starting a business in other countries too.</li>
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<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small; text-align: left;">Business and management</span></td></tr>
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<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small; text-align: left;">Business and management</span></td></tr>
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<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small; text-align: left;">Business and management</span></td></tr>
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<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small; text-align: left;">Business and management</span></td></tr>
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