SOME GENERAL TOPICS
WHY IS DEPRECIATION A CHARGE AGAINST REVENUE ?
Some people say that depreciation is an approraition of profit.Because no outside people are associated with depreciation and it is not a result of any transaction.But their claim is not valid on following grounds:
No outside people are necessary to constitute transaction.Depreciation as an internal transaction.As a result of depreciation fixed assets are converted into current assets.
Depreciation must be charged to provisions of law and should be charged according to buisness principle to get accurate result of operational activities undertaken during the year whether there is profit or not.
Charging depreciation is necassary to keep the capital intact.So,it is seen that deprecaiation is a charge against profit net an appropriation of profit.
WHAT DO YOU MEAN BY AN ACCOUNT SALES ?
Account sales is statement sent in by the consignor stating various particulars like sales made by him,expenses incurred,commission earned.Money paid to consignor in adavance value of goods destroyed insurance claim received.From thevalue of sales,expenses,commission,advance of conignee is deducted to show amount due to Consignor and final payment to be made.
WHAT IS BANK RECONCILIATION STATEMNT ?
to avoid some troubles of handling of cash trader keeps his recorded money in the custody of bank.Transactions relation to Bank are recorded by two parties by trader in his cash book and by Bank in Passbook.Has any party makes a mistakes there will be disagreed through there is no mistake error in any of the books this is due to time gap that exists in recording transactions by both parties.So,it becames necessary to judge mathematical accuracy,detect and prevent frauds and errors.To fullfill these object a statement is prepared showing reasons of disagreement between loan balance per cash book and Passbook such statement is called Bank Reconciliation Statement.
WHAT IS DEFFERED REVENUE EXPENDITURE ?
Expenditure of a revenue nature the benefit of which extends beyond the accounting period in which it is incurred,is generally written off over a number of yeras during which it is expected to benefit the business.The unwritten portion of such expenditure which is carried forward to the subsequent years is refferred to as defferred revenue expenditure and is shown on the assets side of balance sheet.
Discount allowed on issue of debentures,development expenditure of mines and minerals expenditure on an advertisement campaign or on a scientific experiment are example of defferred revenue expenditure.
WHEN IS BANK RECONCIATION STATEMENT PERPARED ?
Every Bank sends a statement to each customer stating the amount deposited or overdrawn in the account,on receipt of such Bank Statement,the trader checks the balance shown in such statement with Bank Balance shown by his Cashbook.If there is any discrepancy a bank reconciation statement is perpared to find the reasons of disagreement.Generally Bank Statement is perpared at the end of which month.However,it may be prepared at any point of time whether at the end of a week,fornight,quater,half year or a year.