Commerce Aspirant Maturity of Bill Maturity of bill is the date when the bill of exchange becomes due to be paid. To calculate this date, additional three days are added as a period of grace. Calculation of Due Date of Bill of Exchange Due Date of Bill of Exchange is calculated to find the date , on which … Read more
Advantages of Bill of Exchange: According to the Section 5 of the Negotiable Instruments Act, 1881, a bill of exchange is an instrument which is recorded in writing and which contains an unconditional order, which is signed by the maker, guiding someone in particular to pay a specific total amount of money just to, or … Read more
A promissory note is a signed document which contains a written guarantee or a promise to pay a specific amount to a specified individual at a specified date or on demand. In the Negotiable Instruments Act 1881, a promissory note is defined as an instrument recorded in writing (not being a currency note or a … Read more
Topic Bill of Exchange Subject Accountancy Category CBSE Class 11 Notes Bill of Exchange Under the Negotiable Instruments Act 1881, A bill of exchange is defined as a written instrument which contains an order, that is not moved by any conditions whatsoever, and it directs a certain person to pay a defined sum of money … Read more
Reserves Any amount set aside from the profits of a business is known as reserve. The amount so kept separate is retained in the business to help in meeting the future growth and expansion objectives or any other future contingencies that might arise like compensation for workmen. Since, reserves are maintained by deducting the amount … Read more
Provisions The books of accounts of an organisation are generally based on accrual basis of accounting, which is also known as the mercantile system of bookkeeping. The accrual concept of accountancy specifies that all expenses and losses relating to the current year should be booked in this year itself and similarly all incomes and profits … Read more
Effect of any Addition or Extension to Existing Asset Sometimes an existing asset does not function to its full capacity because it requires some additional asset to deliver the best results. Such additions or extensions are made for rendering the existing assets suitable for the business operations. These modifications either become an integral part of … Read more
Disposal of Asset Due to reasons like obsolescence or inefficiency or any other abnormal factor, a business organisation may dispose off an asset. The disposal of asset can be done either – (a) at the end of the useful life of the asset ,i.e., after utilising the asset fully or (b) during its useful life, … Read more
Methods of Recording Depreciation For recording depreciation on fixed assets there are two types of arrangements: Charging depreciation to the asset account or, Creating Provision for the depreciation/Accumulated depreciation account. (A) Charging depreciation to asset account: As per this arrangement, depreciation is directly deducted from the depreciable cost of the asset, i.e., book value of … Read more
Comparative Analysis – The two methods generally used to calculate depreciation are Straight Line method and Written Down Value method. An organisation can use either of the two depending on its policies and the prevalent law. The following points are noteworthy for a comparative analysis between the two methods. 1. Basis of Charging Depreciation: Depreciation … Read more