Commerce Aspirant 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
Depreciation refers to the continuous decline in the book value of fixed assets. It does not occur because of any one specific reason but it is a combination of various factors that work together which eventually lead to depreciation. Depreciation occurs due to normal wear and tear, regular consumption, passage of time or obsolescence of … Read more
Depreciation Depreciation refers to the decline in the book value of fixed assets due to gradual wear and tear, consumption, effluxion of time or obsolescence due to technology or market related factors. Depreciation is charged every year so that the burden of the decline in the value of assets do not fall in any one … Read more
Rectification of Errors involves rectifying wrong or incorrect entries in books of accounts. Such errors could be : – Errors of omission, Errors of principle or Errors of commission. RECTIFICATION OF ERRORS OF RECORDING Recording of Transaction in Wrong Account In certain cases, while making the entries in the books of accounts, a particular payment or receipt, may be debited … Read more
One of the main objectives of preparing trial balance is that it helps in searching of errors committed by an accountant while posting entries in the books of accounts. Thus. a mismatched trial balance clearly indicates that one or more mistakes have been made. This early detection of errors makes the process of preparing the … Read more
Significance of Agreement of Trial Balance To prepare financial statements at the end of an accounting year, it is important that the trial balance should tally because it implies that both the debit and credit entries for each transaction have been posted correctly. The significance of the agreement of trial balance is the arithmetical accuracy … Read more
Theory Trial Balance Question 1 : A Trial Balance is prepared with the help of _________. Trial Balance Question 2 : What are the two methods of preparing a Trial Balance? Trial Balance Question 3 : What is Totals Method? Closing Balance of Assets,Liabilities, Expenses and Incomes Trial Balance Question 4 : Closing Balance of … Read more
The objectives of preparing a trial balance are: 1. To deduce the arithmetical accuracy of the ledger accounts. 2. To help in detecting errors. 3. To help in preparing the financial reports and statements. (profit and Loss account and Balance Sheet). 1. To deduce the arithmetical accuracy of the ledger accounts: As stated before, the … Read more