PROVISION FOR DOUBTFUL DEBTS
Convention of Conservatism or Prudence is followed for recording transactions . The convention requires that provision for expected losses should be made while expected profits and gains should not be accounted . A firm , therefo…
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ACCRUED INCOME
Accrued Income is that income which has been earned during the accounting period but has not been received . Such income is also called Outstanding Income or Income Earned but not yet received . Examples of such incomes are com…
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PREPAID ( UNEXPIRED) EXPENSES
Prepaid expenses are future expenses that are paid in advance. On the balance sheet, prepaid expenses are first recorded as an asset. After the benefits of the assets are realized over time, the amount is then recorded as an expe…
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OUTSTANDING EXPENSES
Expense which have been incurred during the year and whose benefit has been consumed during the year but have not been paid are called Outstanding Expenses .At the end of the accounting year , such expenses must be accounted in t…
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SALES BOOK OR SALES JOURNAL
Credit sales of goods dealt in by the firm are recorded in a separate register called the Sales Book or Sales Journal . Cash sales are entered in the cash book and not in the Sales Book . Credit sales of item other than goods de…
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PURCHASE BOOK OR PURCHASE JOURNAL
Credit purchase of goods dealt in or of materials and stores used in the factory are recorded on the basis of the invoice in the Purchase Book or the Purchase Journal . It means cash purchases and purchases of goods other than go…
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DIRECT EXPENSES
Direct Expenses are those expenses which are incurred on the goods purchased , till they are brought to the place of business for sale. Examples of such expenses are freight inwards , insurance , customs ( import ) duty , clear…
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CLASSIFICATION OF LIABILITIES
Liabilities are shown in the Balance Sheet on the left - hand side . They may be divided as follows : 1. Non - Current Liabilities : These liabilities are those liabilities which are not payable by the business in the next year…
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CLASSIFICATION OF ASSETS
Assets in the Balance Sheet are divided into two parts as follows : 1. Fixed Assets : Fixed Assets are those assets that are required for continued use and not for resale , They may be tangible assets like land , building, plant …
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