Is Sales tax included in the cost of the asset?
General rule is that everything paid specifically for the asset will form part of the cost of the asset purchased by the entity i.e. any cost incurred specifically towards the asset until it is...
What is Trade discount?
In the business world while selling goods or services the price charged is often lesser than the list, retail or quoted price and the amount by which the price is reduced is called discount....
Is Drawings an expense account or a liability account?
In order to understand the nature of drawings account in accounting and why is it deducted from capital or equity total the better is that we look at the definitions of expense, liability and...
Is Accumulated depreciation an expense account or an asset account?
Before this question is answered specifically it will be good if we clear an important connected concept of historical cost.
According to historical cost concept, assets are recognized and reported in the financial statements at...
What is a non-cash expense?
Non-cash expenses are such expenses that do not involve real cash outlay or against which no real cash outflow has taken place at least in the period in which such expense has been reported....
What is the difference between depreciation account and accumulated depreciation account?
Capital assets also known as fixed assets are simply such assets which are used over a period longer than one year. Although real cash outflow takes place for the whole price at the time...
What is meant by Temporary accounts?
Temporary account is in simple words are such accounts that are maintained only until the end of particular accounting period (which can of any length of time i.e. a week, a month, two months,...
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...
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...
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...