Accounting for bills of exchange starts when the drawer draws a bill and the drawee accepts it. The drawer receives back the bill after the drawee accepts the bill and returns it to the drawer. The drawer becomes the holder of the bill accepted by the drawee. Once the drawer is the holder of the…
A book in which an account of bills of exchange and promissory notes, whether payable or receivable, is stated is known as bill book. There are two types of billbooks in accounting: A bill payable book is an accounting ledger that records and tracks a company’s outstanding bills and payment obligations. It helps businesses manage…
There are two different types of receipts that a business or a government generates during its financial activities. They are called capital receipts and revenue receipts. Capital receipts are funds that a company, organization, or government receives from non-operational sources, such as the sale of assets, borrowing, or equity investments. They are typically non-recurring transactions…
(This article explains various methods of Depreciation such as the Straight Line Method, Diminishing Balance or Written Down Value (WDV), Unit of production method, MACRS method, group depreciation method, etc. Advantages and Disadvantages of Straight Line Method, Advantages and Disadvantages of Written Down Value Method, Units of Production Method, Sum of the Years’ Digits Method,…
All industries make long-term capital investments for growth. These capital assets may be plant and machinery, or intangible assets like IT, or infrastructure assets. Irrespective of their nature, every asset has a lifecycle that demands careful attention whether to repair or replace certain assets. To decide between repairing and replacing an asset, the management of…
This article explains the meaning of Depreciation, Causes of Depreciation, Need for Depreciation, Factors of Depreciation, and revaluation of assets by Accounting Entries Depreciation is an accounting method that determines the monetary value of an asset over its useful life due to use, wear and tear, obsolescence, and Legal or other limits on its use.…
Before closing the ledger accounts, if the error is found you can rectify it without opening a suspense account. However, after closing the accounts, if the error is found you can record an accounting entry in the General Journal and post it to the relevant ledgers. If the amounts are significant, you can disclose the…
The errors in accounting take place due to wrong posting of transactions, wrong totaling or wrong balancing of the accounts, wrong casting of the subsidiary books, or wrong recording of amount in the books of original entry. All such errors in accounting can be classified into the following four categories: The error of commission: An…
When the trial balance does not tally due to the one-sided errors in the books, an accountant puts the difference between the debit and credit side of the trial balance on the shorter side as a suspense Account. As and when an error is located it has to be rectified. After rectification, the balance in…
Errors in Trial Balance are mistakes made during the accounting process that cannot always be detected by the trial balance. A trial balance can disagree due to a number of errors. Here we discuss the possibilities of how a trial balances differences. If there is a non-agreement of trial balance the possible reasons could be…