Accounting Terms: Balance-sheet

Any business man is interested in knowing the position of its business as existing on a particular day. He may have many questions in his mind regarding his business like……………….. How much cash do I have in hand or at bank? How much amount has been invested in inventories? What amount third parties owe to the business? How much I have invested in fixed or long term assets like land and building,plant and machinery, furniture and fixture? How much expenses I have paid in advance? What is the amount of…

Double Entry System of Accounting

Earlier transactions in the books of accounts were recorded under single entry system. But this system had some shortcomings as there was not a complete record of all the transactions. Also problems were faced while preparing final accounts. Problems were also faced as there was no self balancing system of accounting which could guarantee, to some extent, the accuracy of the books of accounts. So a need was felt for some uniformly accepted system of accounting which could help in the verification of the accuracy of books to some extent.…

Need for Accounting in Business

Let us start our discussion with the help of a case study. Mr. X wants to start a business. He decided to set up a departmental store. He has $10 million with him which he can invest in the business. In addition to the cash he also has a plot of land worth $2 million. He also brings in furniture worth $20 thousands. Now as he has gathered all his sources the next step is to build a store on the plot of land. He spends $5 thosand on building…