Introductory paragraph: Every contractor should have enough information about the cash book, from these books he can know how much balance does he have to defiance his expenses and liabilities, and about details of receipts and payments of a specific period. The details of payments can help to ensure that whether the payments are of rational amount or not. So, if the expenses were unreasonably high, he might take action and try to monitor them. A contractor who is orderly check his accounts, specially the bank and cash account can always be aware of obstructions such as dishonor of cheque or cash crisis. If a contractor does not know how to differentiate about between his profit and revenue, he may spend all his receipts for his personal …show more content…
So it is appropriate to have separated books for each such class of good one for receipts and payments of cash, one for purchase of goods and one for sale goods. These books are called subsidiary books, “Cash book is a subsidiary book which records the receipts and payments of cash, with the help of cash book and bank balance can be checked at my point of time” (Ref.: T.S. Grewal, “Double Entry Book Keeping”) Simple cash book A simple cash book is designed like any normal account. The receipts are listed in the debit side and the payments are listed in the credit side of the cash book. A sample Performa of a simple cash book is like the bellow: Simple Cash Book Cr payments Receipts DR. Amt Particulars Date Amt Particulars Date Rs. …show more content…
if a debtor has to pay Rs. 10,000 and he is allowed 10% discount, now he will pay only Rs. 9000 to the firm. This is called discount allowed, it is a type of loss for the business so it is to be debited and recorded in Dr. Side of the cash book. Discount received is the concession received by the business man from the creditors. e.g. if a firm has to pay Rs. 50,000 to its creditors and discount received is 20% then the firm has to pay only Rs. 40,000 to the creditor. This is called discount received, it is a gain or profit for the firm so it is to be credited and recorded in the Cr. side of the cash book the specimen Performa of a two column cash Book is given as under
Despite this appealing advantage, the financial statements you prepare may not truly reflect your company’s performance for a given period since revenue and expenses related to the same transaction can be reported in two different periods. For example, if you pay most of the expenses related to a specific job at the end of one year but don’t receive payment from your client until the next, your income statements may indicate a big jump in profitability from one year to the next, which can lead to incorrect conclusions. Cash basis accounting tends to be simpler to understand than other accounting methods. If you choose to implement the cash method for your small business, it may not be necessary to seek the help of a professional accountant. The cash method most resembles a cash flow statement. It provides an accurate picture of how much cash your business actually has on-hand. Also, The cash method can be done with a simple single-entry system, so a complex accounting program is not always necessary. (Paychex,
inventories, property, plant and equipment, accrued expenses, non-current liabilities, and other income and expenses. Other notes
But in order the books should look a little acceptable and no one should come up on their fraud instantly and specially the lower level bookkeeping team by doing their day to day entries and knowing that utility expenses is not a capital improvement they had to do it in a professional way
Discounted cash flow is a valuation technique that discounts projected cash inflows and outflows to evaluate the potential value of an investment. There are three discounted cash flow methods: Net Present Value (NPV), Profitability Index (PI) and Internal Rate of Return (IRR). The net present value discounts all cash inflows and outflows at a minimum rate of return, which is usually the cost of capital. The profitability index refers to the ratio of the present value of cash inflow to the present value of cash outflows. The internal rate of return refers to the interest rate that discounts cash inflow projections to the present to ensure that the present value of cash inflows is equivalent to the present value of cash outflows (Brown, 1992).
During the audit 213 sales transactions were examined to test revenue controls; 82 deviations were found and are as follows:
This leads to the type of system that works to compare and analyse the amount of revenue going in any one direction to its counterpart. Cash Flow Comparison A sound bookkeeping system is structured to allow a comparison between revenue and spending for each line item in the books. The collection of data is further structured for weekly, monthly, or even daily analysis. Naturally, a more general outcome is provided for an annual inspection of past
The following content provided will include information regarding Nikes Inc. cash management strategies, which will include more in depth information from the previous group paper. In addition, working capital recommendations will be provided to senior management base on next year’s in the pro-forma financial statements.
Atiyah P, Adams J and MacQueen H, Sale of Goods (12th edn , Longman 2010) 145
Accounting is a human activity; therefore accounting theories should consider people’s behavior with respect to accounting information. (Deegan, 2009, p.4) Hendriksen (1977, p.1) defends that accounting theory should be logical in the form of broad principles. It provides a general framework of reference by which accounting practices can be evaluated and guides the development of new practices and procedures. According to SAC 1 paragraph 12 (CPA, 2009), user needs accounting information to making resource allocation decisions. In order to provide the high quality and relevant information to achieve user needs, researchers attempt at constructing accounting theory to improve accounting practice and the quality of accounting information. (Gaffikin, 2005, p.3) Consequently, financial accounting theories come into view.
The balance is made for the year (quarter) and identifies the structure of the capital, liabilities and assets of the company. Analysis of the financial balance discloses data on the cost of unfinished construction, equity, residual value of fixed assets and accounts payable. On the basis of the financial balance it can be concluded about the investment attractiveness and investment company.
It is always best to record, categorize and reconcile transactions soon after they occur, while you are still able to remember essential details. However, depending on the frequency and complexity of your business transactions, among other factors, bookkeeping can quickly become a bear. If you find yourself handling lots of expenses, multiple revenue streams or you are consistently tracking reimbursements to clients or employees, you may want to consider hiring someone to streamline the bookkeeping
The audit risk is consists of three elements which are inherent risk, control risk and detection risk. The audit model is important to the audit process. The audit risk model provides the basic for the current emphasis on the risk-based audit approach and it assists the auditor in determining the scope of auditing procedures for a particular account balance or class of transactions. Based on the assessed risk, the auditor may determine whether the use of more tests of control or substantive procedures is appropriate to address the
The management of cash is essential to the survival of any organization. Managing an organization’s financial operation requires knowledge of the economy and ways to maximize revenue. For any organization to operate on a daily basis adequate cash flow is required. Without cash management the organization will be unable to function because there is no cash readily available in case of inconsistencies in the market. Cash is also needed to keep the cycle of the company’s operations going.
Financial institutions vary in many ways from the traditional, non-financial organization. For many people, the inner-workings of financial institutions are complicated and difficult to understand. For accountants, the traditional rules and procedures used in non-financial institutions must be modified and extended when a financial institution is involved. Our focus in this paper is on one specific financial institution, the commercial bank. In this introductory manual, we will discuss the many reasons for the differences in bank accounting in attempt to give you, the accountant, a better understanding of accounting issues in this unique industry.
If your friend has ever operated a business and you saw him placing figures in ledgers, then you saw him doing bookkeeping. If you have worked at a service station or supermarket and have seen books with large sheets lined in green and red lying on the manager's table or desk, you saw books of accounting.