What is Credit note and when is it used?
A credit note is a source document providing evidence that a credit entry has been made in the financial records for specific reason which is explained on the face of this business document. Credit note is also known as credit memo or credit memorandum as it only notifies about the entry made in the financial […]
What is Source document?
In the business world buyers and sellers interact to exchange goods and services and other transactions like payment. A diligent accountant keeps the record of all such important transactions about which users must be informed. However, to have the information reliable the recording of such transaction is controlled by source documents. Source document is basically […]
What is meant by Sale or Return?
Buying and selling arrangements between sellers and buyers may take different forms and sales contracts can have some unusual terms agreed between the parties. However, one of the common arrangements between supplier and customer is ‘sale or return‘ also known as ‘sale and return‘. This term is also commonly used as an alternative term to mean consignment […]
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 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 […]
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 […]
