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Bills of Exchange and Promissory Notes

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  Bills of Exchange and Promissory Notes 1. Definition and Key Features Bills of Exchange and Promissory Notes are essential instruments used in trade and accounting for the settlement of debts. Bills of Exchange A Bill of Exchange is a negotiable instrument in writing, containing an unconditional order, directing one person to pay a certain sum of money to another person or their order, at a future date. Parties Involved : Drawer : The person who writes and issues the bill (the creditor). Drawee : The person on whom the bill is drawn (the debtor). Payee : The person to whom the payment is to be made, which can be the drawer or a third party. Key Features : Unconditional Order : The drawer directs the drawee to pay a certain sum without any conditions. Payable on Demand or Future Date : It can be payable immediately or after a specified time. Transferability : Bills of exchange are negotiable instruments, meaning they can be transferred to another party. Example : A supplier (drawer
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Depreciation and it's Accounting

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Depreciation and it's Accounting: A Detailed Summary  1. Introduction to Depreciation Depreciation is a key concept in accounting that represents the gradual reduction in the value of tangible fixed assets over time. This decline is due to factors such as wear and tear, usage, or obsolescence. Depreciation is crucial for accurate financial reporting as it impacts both the balance sheet and the income statement. 2. Purpose of Depreciation The main purposes of depreciation are: Expense Matching : Depreciation spreads the cost of an asset over its useful life, matching expenses with the revenue generated by the asset. This aligns with the accrual accounting principle. Asset Valuation : It provides a more realistic value of the asset on the balance sheet. Tax Benefits : Depreciation reduces taxable income, as depreciation expense is deductible for tax purposes. 3. Depreciation Methods Different methods are used to calculate depreciation, each affecting financial statements in various w
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Bank Reconciliation Statement (BRS)

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  Bank Reconciliation Statement (BRS) Summary: A Bank Reconciliation Statement (BRS) is a document prepared to reconcile the balance as per the bank statement (or passbook) with the balance as per the cash book maintained by the company. Differences arise due to timing issues in recording transactions between the company’s records and the bank’s records. BRS helps identify discrepancies and ensures the accuracy of accounting records. Key Components of BRS: Deposits in Transit : Amounts deposited by the company but not yet reflected in the bank statement. Outstanding Cheques : Cheques issued by the company but not yet cleared by the bank. Bank Charges : Fees deducted by the bank but not recorded in the company’s cash book. Direct Deposits and Collections : Amounts collected or deposited by the bank on behalf of the company but not yet recorded in the company’s cash book. Errors : Mistakes in recording transactions by either the company or the bank. Process of Preparing BRS: Start with
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what are Accounting Principles? Types of Accounting principles .

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 what are Accounting Principles? Types of Accounting principles . 
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Golden rules of accounting #class11 #accounts #commercewallah

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Golden rules of accounting  are the rules for passing / making Journal Entries in the books of account. Requirement for applying golden rules of accounting :- First , recognize the type of account Then , apply the requisite rules to pass the journal entries. Account are classified into three different types , which are explained below :-    PERSONAL ACCOUNT  - An account which relates to the person which may be real ( e.g. Ram ) or artificial ( Any company or Firm ). REAL ACCOUNT - An account which relates to any assets or properties like Furniture , Building etc.         - Tangible real account ( e.g., Building )       - Intangible real account  ( e.g., Goodwill , patent , Trademark ) NOMINAL ACCOUNT - An account which relates to expenses or losses and incomes or gains         Rules for different accounts are :-  PERSONAL ACCOUNT DEBIT THE RECEIVER  CREDIT THE GIVER  E.g., - Ram paid ₹10,000 to Shyam Here , Giver or payer is Ram therefore Ram will be credited             Receiver is S
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What is Accounting Standard? How many Accounting standards are there?

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What is Accounting Standard?  Accounting standards(ASs) are written policy documents issued by the Government with the support of other regulatory bodies e.g., Ministry of Corporate Affairs (MCA) issuing Accounting standards for corporates in consultation with National Financial Reporting Authority (NFRA) covering the following aspects of accounting transactions in the financial statements : :- Recognition  :- Measurement  :- Presentation  :- Disclosure  The ostensible purpose of the standard setting bodies is to promote the dissemination of timely and useful financial information to investors and certain other stakeholders , having an interest in the company's economic performance .  Accounting Standard reduce the accounting alternatives in the preparation  of financial statements within the bounds of rationality , thereby ensuring comparability of financial statements of different enterprises .  Different Accounting Standards deals with different aspects of transactions in the fi
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Mudit, Sudhir and Uday are partners in a firm sharing profits in the ratio of 3 : 1 : 1. Their fixed capital balances are ₹4,00,000, ₹ 1,60,000 and ₹ 1,20,000 respectively. Net profit for the year ended 31st March, 2023 distributed amongst the partners was ₹ 1,00,000, without taking into account the following adjustments: (a) Interest on capitals @ 2.5% p.a.; (b) Salary to Mudit ₹ 18,000 p.a. and commission to Uday - ₹12,000. (c) Mudit was allowed a commission of 6% of divisible profit after charging such commission. Pass a rectifying Journal entry in the books of the firm. Show workings clearly.

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Mudit, Sudhir and Uday are partners in a firm sharing profits in the ratio of 3 : 1 : 1. Their fixed capital balances are    ₹4,00,000,   ₹  1,60,000 and   ₹  1,20,000 respectively. Net profit for the year ended 31st March, 2023 distributed amongst the partners was   ₹  1,00,000, without taking into account the following adjustments: (a) Interest on capitals @ 2.5% p.a.; (b) Salary to Mudit   ₹  18,000 p.a. and commission to Uday   -  ₹12,000. (c) Mudit was allowed a commission of 6% of divisible profit after charging such commission. Pass a rectifying Journal entry in the books of the firm. Show workings clearly.                                                                  👇 Answer👇
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