deferred revenue expenditure

What is capital expenditure, revenue expenditure and deferred revenue expenditure? Give characteristics of each. When are revenue expenses treated as capital expenses. ( December- 2023 )

1. Capital Expenditure

Meaning:

Capital expenditure is the money spent on acquiring, improving, or extending the life of fixed assets that give benefit for many years. It means which expense gives benefit long term is called Capital Expenditure.

Examples:

Purchase of machinery, building, furniture
Cost of installation of machinery
Major repairs that increase life of an asset

Characteristics of Capital Expenditure:

Provides benefits for more than one accounting year.
Increases earning capacity or life of an asset.
Incurred to acquire or improve fixed assets.
Recorded in Balance Sheet (added to the asset value).
Not charged fully to Profit & Loss A/c in the same year (depreciation charged every year).

2. Revenue Expenditure

Meaning:

Revenue expenditure is money spent for the day-to-day running of a business and benefits only the current accounting year.

Examples:

Salary, rent, stationery
Repairs and maintenance
Electricity expenses
Cost of goods sold

Characteristics of Revenue Expenditure:

Benefits are short-term (within one year).
Helps in maintenance of assets, not in creating or improving them.
Charged fully to the Profit & Loss Account in the same year.
Necessary for daily operations.
Does not generate future economic benefits beyond the current year.

3. Deferred Revenue Expenditure

Meaning:

These are expenses that are revenue in nature but the benefit lasts for several years, so they are not charged completely in one year.
Earlier they were shown in the Balance Sheet, but now as per Accounting Standards most are written off within a short period. deferred revenue expenditure

Examples:

Heavy advertisement expenditure for launching a product
Major repairs for temporary benefit
Discount on issue of shares/debentures (old concept) deferred revenue expenditure

Characteristics:

Revenue nature but benefit spreads over multiple years. deferred revenue expenditure
Partly charged to Profit & Loss A/c every year. deferred revenue expenditure
Remaining balance shown as a fictitious asset (older practice).
Helps in increasing sales or achieving long-term advantages. deferred revenue expenditure

4. When Are Revenue Expenses Treated as Capital Expenses?

Revenue expenses are treated as capital when:

(i) They are incurred to acquire a fixed asset

Example:

Wages paid for installation of machinery
Transport charges for new furniture

Though wages/transport are revenue normally, here they are added to asset cost → capital expenditure.

(ii) They increase the efficiency or life of an existing asset

Example:

Major overhaul of a machine
Spending on rebuilding a building

Since it improves the asset, it becomes capital.

(iii) They bring a new advantage or long-term benefit

Example:

Special repairs that increase productivity
Expenses that create new capacity

(iv) They are necessary to bring the new asset to working condition

Example:

Trial run expenses
Testing expenses
Consultancy fees for asset purchase

These are added to the asset cost.

Conclusion

In conclusion, capital expenditure creates or improves long-term assets, revenue expenditure supports the day-to-day operations of the business, and deferred revenue expenditure gives benefits over several years though revenue in nature. When a revenue expense helps in acquiring or enhancing a fixed asset, or provides long-term benefit, it is treated as capital expenditure. Together, these expenditures help in correctly determining profit and presenting a true financial position of the business. deferred revenue expenditure

If you want to know the Syllabus of Financial Accounting you must visit on Gndu

👉 Note:- Important questions are following

What are Consignment Accounts? Explain accounting treatment of consignment transactions in the books of consignor and consignee.

Financial Accounting

Objective of branch Accounting

Gndupapers.com No Comments

What is the objective of Branch Accounting? Explain Debtor’s system and Stock and Debtors System of keeping books of dependent branches.

Meaning of Branch Account

A Branch Account is an account opened in the Head Office books to record all transactions relating to a particular branch of the business. Objective of branch Accounting

It is maintained to ascertain the profit or loss made by that branch and to keep proper control over its operations. Objective of branch Accounting

Key Points:

Maintained by Head Office:

The Head Office keeps the Branch Account to record all incomes, expenses, assets, and liabilities of the branch.
Purpose:

To find out how much profit or loss each branch makes during a particular period.Objective of branch Accounting
Type of Branches:

Usually maintained for dependent branches, which do not keep full sets of books.
Nature:
- If the branch makes a profit → Branch Account shows a credit balance.
- If the branch makes a loss → Branch Account shows a debit balance. Objective of branch Accounting

Example:

If the Head Office sends goods worth ₹50,000 and cash ₹10,000 to a branch, and the branch sends back ₹70,000 as sales proceeds, the Head Office records these in the Branch Account to determine the branch’s profit (₹10,000 in this case).

In short:

A Branch Account is a summary account prepared by the Head Office to record and monitor the financial results of each branch.

Objectives of Branch Accounting

Branch Accounting refers to the system of maintaining accounts for different branches of the same business to know their financial performance and position. Objective of branch Accounting

The main objectives of Branch Accounting are:

To ascertain profit or loss of each branch:

Helps the head office determine how much profit or loss each branch has made.
To measure branch performance:

Enables comparison of efficiency and profitability among different branches.
To control branch operations:

Helps in monitoring stock, cash, and other assets to prevent misuse or fraud.
To determine branch financial position:

Shows assets and liabilities of each branch separately. Objective of branch Accounting
To assist in decision-making:

Helps management decide about branch expansion, closure, or improvement.
To ensure uniform policies:

Maintains consistency in accounting and control across all branches.

Systems of Keeping Books of Dependent Branches

Dependent branches do not maintain complete books of accounts. Their accounts are maintained by the Head Office. Two common systems are:

1. Debtors System

Under this system:

The Head Office opens one account for each branch, called Branch Account.
All transactions related to the branch are recorded in this account.
This system treats the branch as a debtor of the Head Office. Objective of branch Accounting

Steps / Features:

Goods sent to branch → Debited to Branch Account.
Cash sent to branch for expenses → Debited to Branch Account.
Cash received from branch (sales, remittances) → Credited to Branch Account.
Closing stock, furniture, etc. → Credited to Branch Account.

Profit or Loss Calculation:

If the Branch Account shows a credit balance, the branch has earned a profit.

If it shows a debit balance, the branch has incurred a loss. Objective of branch Accounting

2. Stock and Debtors System

This system is a more detailed and accurate method of recording branch transactions.

It is generally used when goods are sent at invoice price (cost + profit).

Accounts Maintained by Head Office:

Branch Stock Account – to record movement of goods.
Branch Debtors Account – to record credit sales and collections.
Branch Expenses Account – for expenses of the branch.
Branch Adjustment Account – to find out gross profit or loss.
Branch Profit & Loss Account – to ascertain net profit or loss. Objective of branch Accounting

Features:

It provides detailed control over stock and debtors.
Detects stock losses, surpluses, or thefts easily.
Suitable for businesses with large or multiple branches. Objective of branch Accounting

Difference between the Two Systems

Basis	Debtors System	Stock and Debtors System
Detail	Simple and less detailed	More detailed and accurate
Number of Accounts	Only one Branch Account	Several branch-related accounts
Goods sent at	Usually at cost	Often at invoice price
Control over stock	Limited	Strong and detailed
Usefulness	For small branches	For large branches

Conclusion:

Branch Accounting helps the Head Office evaluate each branch’s performance and maintain effective control.Objective of branch Accounting

The Debtors System is simple and suitable for small branches, while the Stock and Debtors System offers a complete and detailed picture for large or busy branches.

Note- Important questions of Financial Accounting

If you would like to know the syllabus of your class you must visit the Gndu.

Financial Accounting

Treatment of incomplete voyage account

Gndupapers.com No Comments

What is Voyage in Progress? How is it calculated ? Illustrate your answer. Or Treatment of incomplete voyage account

Voyage in Progress

Meaning:
“Voyage in Progress or incomplete voyage ” refers to a voyage (journey by ship) that has not been completed by the end of the accounting period. In shipping business, each voyage is treated as a separate unit for calculating profit or loss. When a voyage is still going on at the end of the financial year, it is called a Voyage in Progress.

Meaning of Work in Progress in Voyage Account

In other words-

Work in Progress (WIP) in a Voyage Account refers to the expenses incurred on a voyage that is not yet completed at the end of the accounting period.

In simple words —
When a ship’s voyage is still going on (for example, the ship has not yet reached its destination or returned), all the expenses already spent up to that date are called Work in Progress. Lets know the treatment of incomplete voyage account

Key Points:

Voyage not complete:
Work in progress arises only when a voyage continues beyond the balance sheet date.
Represents partial cost:
It includes all voyage expenses (like coal, stores, port charges, crew wages, etc.) incurred till the closing date.
Shown as an Asset:
Since these expenses will give benefit in the next accounting period (when the voyage completes), they are treated as Current Assets in the Balance Sheet under “Work in Progress.”
Carried forward to next period:
In the next accounting period, this Work in Progress amount is transferred back to the Voyage Account to determine the total profit or loss of the completed voyage.

Example:

Suppose the following expenses have been incurred on an unfinished voyage as of 31 December:

Coal consumed – ₹40,000
Port charges – ₹10,000
Crew salaries – ₹20,000

Total = ₹70,000

This ₹70,000 will be treated as Work in Progress, because the voyage has not yet earned its full income.

Journal Entry:

Work in Progress A/c Dr ₹70,000

To Voyage A/c ₹70,000

(Being expenses of incomplete voyage carried forward)

Balance Sheet Presentation:
→ Asset side under “Work in Progress – Voyage Account ₹70,000.”

In short:
Work in Progress in Voyage Account means the expenses of an incomplete voyage that are carried forward as an asset until the voyage is completed. Voyage in Progress or Treatment of incomplete voyage account

How it is Calculated

When the accounts are to be closed but a voyage is not yet complete, all expenses and incomes relating to that incomplete voyage are recorded up to the date of balance sheet.

The Voyage in Progress or incomplete voyage amount is calculated as follows:

Voyage in Progress = Expenses incurred up to date – Income earned up to date

If the expenses are more than the income, the difference is treated as Work in Progress (Asset) in the Balance Sheet.
If the income is more than the expenses, the difference is treated as Profit in Progress (Liability). Treatment of incomplete voyage account

Illustration

A ship “S.S. Himalaya” started a voyage from Calcutta to Mumbai on 15th December 2024.
The accounts are to be closed on 31st December 2024, and the voyage is not yet completed.

Details:

Freight earned till 31st Dec = ₹1,00,000
Coal consumed = ₹30,000
Stores consumed = ₹10,000
Port charges = ₹5,000
Crew salaries = ₹15,000

Calculation:

Total Expenses: = ₹30,000 + ₹10,000 + ₹5,000 + ₹15,000
= ₹60,000

Income: = ₹1,00,000

Profit up to 31st Dec:
= ₹1,00,000 − ₹60,000
= ₹40,000

If this voyage continues after 31st December, this ₹40,000 will be treated as Profit in Progress, and the voyage account will remain open until the voyage is completed. Voyage in progress or incomplete voyage

In Short:

Voyage in Progress = Voyage not yet completed at balance date.
Shown as Work in Progress (asset) or Profit in Progress (liability).
Calculated by comparing voyage expenses and income up to the closing date.

Voyage in progress or incomplete voyage. Treatment of incomplete voyage account Note:- Important question of Financial Accounting Consignment Account Notes

If you would like to know the syllabus of Gndu concerning Bcom-1 go to Gndu.

Gndu

Treatment of incomplete voyage

Financial Accounting

Consignment account notes

Gndupapers.com No Comments

What are Consignment Accounts? Explain accounting treatment of consignment transactions in the books of consignor and consignee.

Meaning of Consignment:

A consignment refers to an arrangement in which the owner of goods (called the consignor) sends goods to another person or agent (called the consignee) to sell those goods on behalf of the consignor.

The ownership of the goods remains with the consignor, even though the goods are in the possession of the consignee. The consignee only acts as an agent and sells the goods for a commission.

Key Points:

Consignor → The person who sends the goods.
Consignee → The person who receives the goods to sell on behalf of the consignor.
Ownership → Remains with the consignor until the goods are sold.
Commission → The consignee earns a commission for selling the goods.
Risk of Goods → Lies with the consignor until the sale is made.

Example:

Suppose Ravi (consignor) sends 100 shirts to Amit (consignee) to sell in Delhi. Amit sells the shirts and sends the sales proceeds (after deducting his commission and expenses) to Ravi.

This arrangement is called a consignment.

Consignment Accounts

Meaning:

A Consignment Account is a special account prepared to find out the profit or loss on goods sent by the consignor (owner) to another person called the consignee (agent), who sells those goods on behalf of the consignor.

The Consignor = Owner of the goods
The Consignee = Agent who sells goods for the consignor and earns a commission

Ownership of goods remains with the consignor until they are sold. The consignee only acts as a selling agent.

Example for Understanding

Suppose A & Co. (consignor) of Delhi sends 100 bags of rice to B & Co. (consignee) of Mumbai to sell on its behalf.

B & Co. sells them and gets a commission. The profit or loss on this transaction will be known through the Consignment Account prepared by A & Co.

Accounting Treatment

Let’s see how consignment transactions are recorded in the books of both parties:

(A) In the Books of the Consignor

1. When goods are sent on consignment

Consignment A/c Dr.

To Goods Sent on Consignment A/c

(Cost price of goods sent)

Note: If goods are sent above cost (i.e., invoice price), the excess (loading) is later adjusted.

2. When expenses are incurred by consignor

(e.g., freight, insurance, etc.)

Consignment A/c Dr.

To Cash/Bank A/c

3. When consignee incurs expenses

(on behalf of consignor)

Consignment A/c Dr.

To Consignee’s A/c

4. When consignee sells goods

No entry for the sale in consignor’s books at that time.

The consignee will later send an Account Sales showing the sale proceeds.

5. When consignee sends Account Sales and remits money

For amount due from consignee:

Consignee’s A/c Dr.

To Consignment A/c

For commission allowed to consignee:

Consignment A/c Dr.

To Consignee’s A/c

When consignee remits cash:

Bank A/c Dr.

To Consignee’s A/c

6. For unsold goods (Closing Stock on Consignment)

Consignment Stock A/c Dr.

To Consignment A/c

7. For profit or loss on consignment

After all entries, transfer balance of Consignment A/c:

If credit side > debit side → Profit

Consignment A/c To Profit & Loss A/c

If debit side > credit side → Loss

Profit & Loss A/c To Consignment A/c

(B) In the Books of the Consignee

1. When goods received

No entry — because the consignee is not the owner of goods.

2. When consignee incurs expenses

Consignor’s A/c Dr.

To Cash/Bank A/c

3. When consignee sells goods

Cash/Bank/Debtors A/c Dr.

To Consignor’s A/c

4. When commission is earned

Consignor’s A/c Dr.

To Commission A/c

5. When consignee remits balance to consignor

Consignor’s A/c Dr.

To Bank A/c

Summary Table

Transaction	Consignor (Owner)	Consignee (Agent)
Goods sent	Dr. Consignment A/c	No entry
Expenses by consignor	Dr. Consignment A/c	No entry
Expenses by consignee	Dr. Consignment A/c	Dr. Consignor’s A/c
Sale of goods	No entry (until report)	Dr. Cash/Bank To Consignor
Commission	Dr. Consignment A/c	Cr. Commission A/c
Cash remitted	Dr. Bank A/c	Dr. Consignor’s A/c
Closing stock	Dr. Consignment Stock A/c	No entry

Conclusion of Consignment Account

The Consignment Account is prepared to determine the profit or loss on goods sent by the consignor to the consignee for sale.

It is a special trading account showing all expenses, losses, and incomes relating to the consignment. The balance of this account represents the profit (or loss) made on the consignment, which is transferred to the Profit and Loss Account of the consignor.

In short:

It helps the consignor to find the result of each consignment separately.
The consignee does not own the goods — he only acts as an agent.
All expenses and losses are debited, and all incomes, sales, and closing stock are credited.
Profit or loss on consignment is finally transferred to the consignor’s Profit & Loss Account.

Final Conclusion:

The consignment account shows the true financial result of goods sent on consignment and ensures proper accounting between consignor and consignee for the entire transaction.

Consignment account notes

If you find the syllabus of financial Accounting of bcom-l. Then you have to visit on the

gndu http://gndu.ac.in

Financial Accounting

Concept of financial Accounting

Gndupapers.com No Comments

Discuss the concept of Accounting. Give their implications. ( December 2024 )

Meaning of Accounting

Accounting means the process of recording, classifying, summarizing, and interpreting all the financial transactions of a business in a systematic manner.

It helps in knowing the profit or loss of the business during a particular period and the financial position of the business at the end of that period.

In simple words, accounting means keeping proper records of money-related transactions and preparing reports like the Profit and Loss Account and Balance Sheet to understand how the business is performing.

Concept of Accounting

Accounting is the process of recording, classifying, summarizing, and interpreting the financial transactions of a business to provide useful information for decision-making.

In simple words, accounting is the language of business — it communicates the financial results and position of an enterprise to its stakeholders such as owners, investors, creditors, and management.

Definition

According to the American Institute of Certified Public Accountants (AICPA):

“Accounting is the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character, and interpreting the results thereof.”

Main Objectives of Accounting

Recording Transactions: To maintain a systematic record of all business activities.
Determining Profit or Loss: To ascertain the results of operations during a particular period.
Determining Financial Position: To show the assets, liabilities, and capital of the business on a specific date.
Providing Information: To supply useful financial data for decision-making.
Assisting in Control: To compare actual performance with planned performance and control costs.

Basic Accounting Concepts (or Principles)

Business Entity Concept:
The business and the owner are treated as separate entities. All business transactions are recorded from the firm’s point of view, not the owner’s.
Money Measurement Concept:
Only those transactions which can be measured in monetary terms are recorded. Non-financial items like employee skill or goodwill not purchased are not recorded.
Going Concern Concept:
It is assumed that the business will continue for a long time in the future. Therefore, assets are recorded at cost and not at liquidation value.
Accounting Period Concept:
The life of a business is divided into specific periods, usually one year, to ascertain results for that period.
Cost Concept:
All assets are recorded at their original cost, not at their current market value. This ensures objectivity and consistency.
Dual Aspect Concept:
Every transaction has two aspects — debit and credit. This is the basis of the double-entry system, expressed as:
Assets = Liabilities + Capital.
Matching Concept:
All expenses of a period are matched with the revenues of the same period to determine the correct profit or loss.
Realisation (Revenue Recognition) Concept:
Revenue is recognized when it is earned, not necessarily when the cash is received.
Accrual Concept:
Income and expenses are recorded when they are earned or incurred, whether cash has been received or paid or not.
Conservatism (Prudence) Concept:
This concept advises that all possible losses should be anticipated, but profits should not be recorded until realized. It prevents overstatement of income or assets.
Consistency Concept:
The same accounting methods should be followed year after year to make results comparable over different periods.
Materiality Concept:
Only significant information should be recorded and disclosed; very small or insignificant details can be ignored.
Objectivity Concept:
All accounting records should be based on verifiable evidence such as bills, vouchers, and receipts to ensure reliability.

Implications of Accounting

The concept of accounting has several practical implications, including:

Financial Decision-Making:
Helps management and investors make informed decisions regarding investments, expansion, or cost control.
Accountability and Transparency:
Ensures that managers and employees are accountable for their use of resources.
Legal and Tax Compliance:
Facilitates the preparation of reports required under law such as income tax returns, GST returns, etc.
Performance Evaluation:
Provides a basis to evaluate business efficiency and profitability.
Communication with Stakeholders:
Presents a clear financial picture to shareholders, creditors, and potential investors.
Planning and Forecasting:
Historical accounting data helps in preparing future budgets and strategies.Uniformity: Ensures consistency in accounting practices.
Reliability: Makes financial statements trustworthy.
Comparability: Allows comparison between periods and between firms.
Transparency: Builds investor and public confidence.
Regulatory Compliance: Ensures adherence to accounting standards and legal requirements.
True and Fair View: Ensures that the financial statements reflect the real financial position of the business.

Conclusion

The concept of accounting is not limited to recording transactions—it plays a vital role in analyzing, interpreting, and communicating financial information. Its implications reach beyond bookkeeping to include decision-making, control, compliance, and strategic planning, making it an indispensable part of every organization.

Discuss the concept of Accounting. Give their implications. ( December 2024 )

Meaning of Accounting

Accounting means the process of recording, classifying, summarizing, and interpreting all the financial transactions of a business in a systematic manner.

It helps in knowing the profit or loss of the business during a particular period and the financial position of the business at the end of that period.

In simple words, accounting means keeping proper records of money-related transactions and preparing reports like the Profit and Loss Account and Balance Sheet to understand how the business is performing.

Concept of Accounting

Accounting is the process of recording, classifying, summarizing, and interpreting the financial transactions of a business to provide useful information for decision-making.

In simple words, accounting is the language of business — it communicates the financial results and position of an enterprise to its stakeholders such as owners, investors, creditors, and management.

Definition

According to the American Institute of Certified Public Accountants (AICPA):

“Accounting is the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character, and interpreting the results thereof.”

Main Objectives of Accounting

Recording Transactions: To maintain a systematic record of all business activities.
Determining Profit or Loss: To ascertain the results of operations during a particular period.
Determining Financial Position: To show the assets, liabilities, and capital of the business on a specific date.
Providing Information: To supply useful financial data for decision-making.
Assisting in Control: To compare actual performance with planned performance and control costs.

Basic Accounting Concepts (or Principles)

Business Entity Concept:
The business and the owner are treated as separate entities. All business transactions are recorded from the firm’s point of view, not the owner’s.
Money Measurement Concept:
Only those transactions which can be measured in monetary terms are recorded. Non-financial items like employee skill or goodwill not purchased are not recorded.
Going Concern Concept:
It is assumed that the business will continue for a long time in the future. Therefore, assets are recorded at cost and not at liquidation value.
Accounting Period Concept:
The life of a business is divided into specific periods, usually one year, to ascertain results for that period.
Cost Concept:
All assets are recorded at their original cost, not at their current market value. This ensures objectivity and consistency.
Dual Aspect Concept:
Every transaction has two aspects — debit and credit. This is the basis of the double-entry system, expressed as:
Assets = Liabilities + Capital.
Matching Concept:
All expenses of a period are matched with the revenues of the same period to determine the correct profit or loss.
Realisation (Revenue Recognition) Concept:
Revenue is recognized when it is earned, not necessarily when the cash is received.
Accrual Concept:
Income and expenses are recorded when they are earned or incurred, whether cash has been received or paid or not.
Conservatism (Prudence) Concept:
This concept advises that all possible losses should be anticipated, but profits should not be recorded until realized. It prevents overstatement of income or assets.
Consistency Concept:
The same accounting methods should be followed year after year to make results comparable over different periods.
Materiality Concept:
Only significant information should be recorded and disclosed; very small or insignificant details can be ignored.
Objectivity Concept:
All accounting records should be based on verifiable evidence such as bills, vouchers, and receipts to ensure reliability.

Implications of Accounting

The concept of accounting has several practical implications, including:

Financial Decision-Making:
Helps management and investors make informed decisions regarding investments, expansion, or cost control.
Accountability and Transparency:
Ensures that managers and employees are accountable for their use of resources.
Legal and Tax Compliance:
Facilitates the preparation of reports required under law such as income tax returns, GST returns, etc.
Performance Evaluation:
Provides a basis to evaluate business efficiency and profitability.
Communication with Stakeholders:
Presents a clear financial picture to shareholders, creditors, and potential investors.
Planning and Forecasting:
Historical accounting data helps in preparing future budgets and strategies.Uniformity: Ensures consistency in accounting practices.
Reliability: Makes financial statements trustworthy.
Comparability: Allows comparison between periods and between firms.
Transparency: Builds investor and public confidence.
Regulatory Compliance: Ensures adherence to accounting standards and legal requirements.
True and Fair View: Ensures that the financial statements reflect the real financial position of the business.

Conclusion

The concept of accounting is not limited to recording transactions—it plays a vital role in analyzing, interpreting, and communicating financial information. Its implications reach beyond bookkeeping to include decision-making, control, compliance, and strategic planning, making it an indispensable part of every organization.

Financial Accounting

1. Capital Expenditure

Meaning:

Examples:

Characteristics of Capital Expenditure:

2. Revenue Expenditure

Meaning:

Examples:

Characteristics of Revenue Expenditure:

3. Deferred Revenue Expenditure

Meaning:

Examples:

Characteristics:

4. When Are Revenue Expenses Treated as Capital Expenses?

(i) They are incurred to acquire a fixed asset

(ii) They increase the efficiency or life of an existing asset

(iii) They bring a new advantage or long-term benefit

(iv) They are necessary to bring the new asset to working condition

Conclusion

Share this to your friends

Like this:

Meaning of Branch Account

Key Points:

Example:

Objectives of Branch Accounting

Systems of Keeping Books of Dependent Branches

1. Debtors System

Steps / Features:

Profit or Loss Calculation:

2. Stock and Debtors System

Accounts Maintained by Head Office:

Features:

Difference between the Two Systems

Conclusion:

Share this to your friends

Like this:

Meaning of Work in Progress in Voyage Account

Key Points:

Example:

How it is Calculated

Illustration

Details:

Calculation:

In Short:

Share this to your friends

Like this:

What are Consignment Accounts? Explain accounting treatment of consignment transactions in the books of consignor and consignee.

Key Points:

Example:

Consignment Accounts

Meaning:

Example for Understanding

Accounting Treatment

(A) In the Books of the Consignor

1. When goods are sent on consignment

2. When expenses are incurred by consignor

3. When consignee incurs expenses

4. When consignee sells goods

5. When consignee sends Account Sales and remits money

6. For unsold goods (Closing Stock on Consignment)

7. For profit or loss on consignment

(B) In the Books of the Consignee

1. When goods received

2. When consignee incurs expenses

3. When consignee sells goods

4. When commission is earned

5. When consignee remits balance to consignor

Summary Table

Conclusion of Consignment Account

In short:

Consignment account notes

Share this to your friends

Like this:

Meaning of Accounting

Concept of Accounting

Definition

Main Objectives of Accounting

Basic Accounting Concepts (or Principles)

Implications of Accounting

Conclusion