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Frequently Asked Questions

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Here are some of the most requested sources for information.

Here are some of the most requested sources for information.

The debit abbreviation is “dr”, and the credit abbreviation is “cr”.

There are two main types of transactions in accounting – Revenue and Capital.

It is a statement that states all the assets and liabilities of the company at a certain point.

TDS stands for Tax Deduction at Source. It is introduced to collect Tax from the company from where the employee income is generated.

GST stands for Goods and Service Tax. It is an indirect tax other than the income tax. It charges on the value of the service or product sold to a customer. The customer pay the GST, and the seller deposits the GST with the government. Some countries have sales service tax which works more or less the same as GST.

A reconciliation statement is prepared when the passbook balance differs from the cash book balance.

There are three main branches of accounting:

  • Financial accounting
  • Management accounting
  • Cost accounting

Double-entry book-keeping includes five types of accounts:

  • Income accounts
  • Expense accounts
  • Asset accounts
  • Liability accounts
  • Capital accounts

The general ledger records all the company’s financial data, including debit and credits.

The most important cost controlling techniques are:

  • Budgetary control
  • Labour control
  • Material control
  • Standard costing
  • Overheads control

The cash flow statement shows the cash generated and used during the year or months. Various activities that are involved in the cash flow are

  • Operating activities: Business activities accounting for cash
  • Investing activities: Sale and purchase of equipment or property
  • Financial activities: Purchase of stock and own bonds
  • Supplemental information: exchange of significant items that don’t involve cash

A short term amount due from buyers to a seller who has purchased goods or services from the seller on credit is referred to as an account receivable.

A ledger can be referred to as an accounting book that keeps the record of journal entries in chronological order to individual accounts. The process of recording these journal entries is known as posting.

Liability can be defined as an obligation towards another company or party. It may consist of delivering goods, rendering services, or paying money. They are the opposite of assets, and they may include:

 

  • Account payable
  • Interest and dividends payable
  • Bonds payable
  • Consumer deposits
  • Reserves for federal taxes
  • Short term loans

Double-entry bookkeeping is a principle of accounting where every debit entry has a corresponding credit. Therefore, the total debt is equal to the total credit.

Working capital is calculated as current assets minus current liabilities used in day-to-day trading.

Some of the popular ways of estimating bad debts are – the percentage of outstanding accounts, aging analysis, and percentage of credit sales.

Retail banking or consumer banking involves a retail client, where individual customers use local branches of larger commercial banks.

These are the bills generated against each transaction. It is a part of the documentation procedure for all types of transactions.

The current liability account is responsible for interest payable.

Perpetual inventory is a methodology that involves recording the sale or purchase of inventory instantly using enterprise asset management software and computerized point-of-sale systems.

Executive Accounting is specifically designed for service-based businesses. It is popular in finance, advertising, and public relations businesses.

A compound journal entry is like other accounting entries; the only difference is that it affects more than two account heads.

Provisions: This refers to keeping the money for a given liability. In short, EXPENSES.

Reserves – Refers to retaining some amount from the profit for future use. In short, PROFITS.

Bad debt expense is asset accounts receivable of a company and is considered uncollectible accounts expense or doubtful accounts expense.

The most popular accounting concepts are –

  • Accounting Period Concept
  • Business Entity Concept
  • Cost Concept
  • Dual Aspect Concept
  • Going Concern Concept
  • Matching Concept
  • Money Measurement

A credit note is a receipt given to a buyer who has returned a product by the seller/shop. This intimation suggests that the buyer’s account is credited for the indicated purpose.

All entries related to accounts receivable:

Accounts receivable = 20,000

Income from selling CCTV camera = 42,000

Billed Fixing services = 10,000

Accounts receivable = 60,000

Hence, here is the total calculation of accounts receivable:

20,000 + 42,000 + 10,000 + 60,000 = 1,32,000

We will include the following things:

  • Closing inventory
  • Bank and cash value
  • Supplies
  • Account Receivables