What is a joint venture? | Methods of Recording Transactions
A Joint Venture (JV) is a temporary form of business where two or more people join together to meet short-term objectives. It is quite similar to a Partnership firm but established without name or registration separately under any law. Generally, JVs are formed for some particular purpose of business objective, and once the objective is […]
What is the Just-in-Time Inventory System
The just-in-time inventory system is a method of stock control that involves a systematic approach to keeping accurate records of all the stock and inventory. A just-in-time (JIT) inventory system ensures that raw materials arrive at the business precisely when needed for manufacturing. It also helps in keeping track of every product in the inventory […]
Causes of disagreement in the Cash Book and Pass Book
1. (a) What is a Bank Reconciliation Statement? Explain the causes of disagreement in the balances shown by the Cash Book and Pass Book. (10) Solution: BANK RECONCILIATION STATEMENT Generally, all the transactions made through Cash or by cheque are not recorded at the same time in the Cash Book and the Pass Book regularly […]
Meaning and Treatment of Bad and Doubtful Debts
While preparing the financial statements, you will frequently reference bad and doubtful debts. Both these accounts are charges against the profit. However, they are not the same. Hence, it is essential to ensure you understand the difference between bad debts and doubtful debts. It is a commonly accepted accounting principle that debts which are considered […]
Audit, Assurance and Compliance – A case study of BHP Billiton
The report provides insight into the annual report of BHP Billiton for assessing, analyzing and evaluating the role, responsibilities and duties of the auditor. The report has developed the requirement for maintaining the independence and the nature of non-audit services. The report has also provided the reason for considering some matters to be key areas […]
Different systems of maintaining the accounts of a dependent branch
Question 1. Explain the different systems of maintaining the accounts of a dependent branch. How is profit ascertained under each system? Discuss. A dependent branch is one that is completely controlled by the headquarters in terms of its policies and administration.In such a circumstance, the headquarters keeps the branch’s financial records and determines the branch’s […]
Advantages and Disadvantages of Perpetual Inventory System
A perpetual inventory system automatically records and updates the inventory account whenever inventory is sold or purchased. You can think of this as “recording as you go” because each sale or purchase is recognised immediately after it occurs. A company using a perpetual inventory system keeps a continuous record of the physical quantities in its […]
What is Process Value Analysis? Meaning and Importance
Process value analysis is a systematic approach to identify, analyse and improve the value of specific processes within an organisation. Process Value Analysis’s (PVA’s) purpose is to cut back the number of redundant processes and prices within the value chain needed to deliver honest service whereas maintaining customer satisfaction. If an activity doesn’t give value […]
Ratios are mechanical and incomplete – Comment
Ratios are basically figures that represent an element’s value in terms of the other. These are some of the most used techniques of financial analysis. Typically, ratios are used to analyse performance or for comparison purposes. Several characteristics of ratio analysis make it one of the most popular financial analysis tools for newbies and professionals. […]
What is a Chart of Accounts | Meaning and Purpose
A chart of accounts is a systematic listing of all accounts employed to classify and record financial transactions in an organization’s ledger. It is a financial filing cabinet where every drawer is a category of account—assets, liabilities, equity, revenue, and expenses. This organised structure enables companies to keep orderly financial records, making analysis, reporting, and […]