Commerce Aspirant

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

Methods of calculating depreciation amount There are two methods of calculating depreciation amount which are mandated by the law and implemented by professional accounting practice in India. These methods are known as the Straight line method and the Written down value method. Apart from these two main methods there are also other methods such as … Read more

Factors Affecting the Amount of Depreciation: The calculation of the amount of depreciation for an accounting period is influenced by the: Actual cost of the asset Estimated residual or scrap value of the asset. Depreciable cost Estimated useful life of the asset Out of these elements, two elements depend on just estimation and just one … Read more

Every organisation carrying on a business, profession or any other operation faces the need to charge depreciation on its fixed asset to present a true and clear picture of the financial position of the concern. To ascertain the actual capacity of assets at the end of each financial year, it becomes mandatory to state them … Read more