What is revenue recognition and accounting treatment for goods sold or sent on sale or return basis?
Before we discuss the recognition principle and accounting treatment for sales under sale or return conditions. First lets have ourselves clear about what is meant by sale or return? Under sale or return, the goods are sent by the supplier to the customer with an understanding that customer does not have to pay for such […]
What factors are considered in determining useful life of intangible asset?
Determining useful life of an intangible asset is not as easy as a tangible asset as most often intangible assets are of such nature that are unique and have no similar asset in the market through which can ascertain its value and useful life. And we cannot ignore determination of useful life aspect of the […]
Is Residual value of the asset calculated on Present value or Future value basis?
One of the reasons for charging depreciation against the historical cost of the asset, revalued amount or simply carrying value of asset is that asset’s book value should be reduced to such residual value which was expected at the time of purchase. For that, depreciation expense charged in an accounting period is adjusted accordingly. Residual […]
What is meant by Audit evidence?
Auditors objective or in simple words responsibility with respect to audit engagement is only to the extent of expression his opinion on financial statements whether they have been prepared in accordance with applicable financial reporting framework and giving true and fair view of entity’s business. Although expression of opinion might look like not much of […]
What is meant by Economic benefits and how they flow to the entity?
It is easy to understand that entities around the world hold different sets of machinery, plant, equipment, building, land and other kinds of assets through which it offers products or services to its customers and in return earn income and generate cash. Products are made through different machines and the value these machines and equipment add […]
How Goodwill is an asset?
If we look for the answer to the question that why goodwill is an asset, then there is no specific explanation given in two of the renowned accounting frameworks i.e. IFRSs and US GAAPs. Although, the term goodwill has been defined and accounting treatment of goodwill has been under heavy discussion but not much is […]
What is Depreciation?
Depreciation basically signifies a steady decline in the value of asset. Generally it is studied in terms of the period of time that such decline in the value took place. Therefore, it is also described as the value lost by the asset over useful life of the asset i.e.the period of time for which it […]
What is the difference between General Journal and General Ledger?
Journals, also known as Books of Prime Entry or Books of Original Entry are the first books of accounting in which transactions are recorded in a chronological order following certain rules and regulations of accounting that helps summarizing the information in a way that preserves the value and completeness of financial information. The term Entry […]
What are different causes of Depreciation?
Here are some of the reasons or causes of depreciation: Physical loss Any damaging change in the physical features of the asset or in the productivity, efficiency or effectiveness of the asset either because of the usage, perishability, or any mishap will result in the decrease in the value of asset and subsequent disposal will […]
What type of accounts are maintained under Purchases ledger?
i-ask! | Have a question? Ask Tutor! What type of accounts are maintained under Purchases ledger? What entries are posted in purchase ledger? Also what is the difference between purchases ledger and purchases account? First things first, we need to understand and be very clear that ledgers and accounts are two different things and are […]
