Archive | Accounting

There may be certain incomes which have been earned during the year but not yet received till the end of the year. Income like interest on investments, rent and commission etc.

The benefit of some of the expenses already spent will be available in the next accounting year also.

The main objectives for which adjustments are made in the books of accounts are as follows:

Those transactions which relate to the accounting period for which final accounts are being prepared…

Some concerns like to ascertain the cost of goods manufactured by them during the year distinctly before they prepare the trading and ascertain the gross profit.

There is no doubt that every business prepares balance sheet at the end of each accounting period yet it suffers from the following limitations:

The preparation of Balance sheet gives following advantages:

A Balance sheet is prepared to achieve following objectives:

The Balance Sheet of a business possesses the following characteristics:

The difference between Profit and loss account and Balance sheet are;

The difference between Trial Balance and Balance Sheet are:

The main advantages of marshalling are as follows:

The main objectives of preparing a Balance Sheet is to ascertain the financial position of the business on a particular date.

A balance sheet is an accounting statement prepared from accounting balances at a given date.

The importance of Profit and Loss account lies in the fact that it provides accounting date which can be used for some managerial decisions as given below:

Depreciation is decrease in the value of assets due to getting old, wear and tear, accidents and other reasons.