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As a General Accountant, you will:

• Perform a variety of accounting or auditing work;
• Receive and process for payment all invoices following established procedures and guidelines;
• Assist other processing STAFF as needed;
• Independently interpret terms of payment and EXERCISE sound judgement and decision making in processing vendor PAYMENTS;
• Establish long-term cooperative relationships with Purchasing staff, receivers of goods and other areas of the corporation who are Accounts Payable customers;
• Establish EXCELLENT working relationships with Manitoba Hydro's suppliers;
• Maintain current knowledge of CORPORATE policies, procedures and regulations related to the processing of invoices for payment;
• Practice continuous improvement by analyzing internal processes and being alert for innovative opportunities in daily work.

As a General Accountant, you will:

General accounting includes bookkeeping methods USED for recording of financial transactions of a business or a company. Companies use the DOUBLE entry BOOK keeping system for recording all financial transactions.
It includes maintaining and keeping a record of various accounting day books including:

• Purchase book
• Sales book
• Cash book
• General ledger
• Supplier's ledger
• Customer ledger

A book keeper writes up and maintains various "Daybooks" . He is responsible for making sure that correct transactions are recorded in the correct DAYBOOK. A trial balance is finally made with the help of these accounting books and ledgers.

General accounting includes bookkeeping methods used for recording of financial transactions of a business or a company. Companies use the double entry book keeping system for recording all financial transactions.
It includes maintaining and keeping a record of various accounting day books including:

A book keeper writes up and maintains various "Daybooks" . He is responsible for making sure that correct transactions are recorded in the correct daybook. A trial balance is finally made with the help of these accounting books and ledgers.

The COMMON set of accounting PRINCIPLES, STANDARDS and procedures that COMPANIES use to compile their financial statements. GAAP are a combination of authoritative standards (set by policy boards) and simply the commonly accepted ways of recording and reporting accounting INFORMATION.

The common set of accounting principles, standards and procedures that companies use to compile their financial statements. GAAP are a combination of authoritative standards (set by policy boards) and simply the commonly accepted ways of recording and reporting accounting information.

PERSONAL a/c - debit the receiver, credit the giver.
real a/c - debit what’s COMES in, credit what’s goes out.
nominal a/c - debit all expenses & losses, credit all INCOMES and GAINS.

personal a/c - debit the receiver, credit the giver.
real a/c - debit what’s comes in, credit what’s goes out.
nominal a/c - debit all expenses & losses, credit all incomes and gains.

Fund flow DEALS with TRANSACTION WITHIN financial year (One year) whereas CASH flow STATEMENT record only cash transaction.

Fund flow deals with transaction within financial year (One year) whereas Cash flow Statement record only cash transaction.

TDS (tax deducted at sources) .The person while making payments of income, covered by the SCHEME are responsible to deducted TDS and deposit the same in govt treasury with stipulated TIME . exp-salary, job work, rent, COMMISSION etc.

Sale Tax RETURN means annual return against your profit.

TDS (tax deducted at sources) .The person while making payments of income, covered by the scheme are responsible to deducted TDS and deposit the same in govt treasury with stipulated time . exp-salary, job work, rent, commission etc.

Sale Tax return means annual return against your profit.

journal VOUCHER is the voucher in which all the adjustment related entries and non cash non bank transactions are entered in journal eg-dep, some of them book the BILLS in journal and while they MAKE a PAYMENT they record in payment eg-contractor bill.

CONTRA appears two times in two sides of a account an account will be treated as contra when:

1. cash deposited in bank
2. cash with drawn from bank for office use
3. cheques deposited in bank
4. cheques withdrawn for office use
5. transfers from one account to another account.

journal voucher is the voucher in which all the adjustment related entries and non cash non bank transactions are entered in journal eg-dep, some of them book the bills in journal and while they make a payment they record in payment eg-contractor bill.

contra appears two times in two sides of a account an account will be treated as contra when:

An estimation of the revenue and expenses over a specified future period of time. A budget can be made for a person, family, group of people, business, government, country, multinational organization or just about ANYTHING ELSE that makes and spends money. A budget is a microeconomic concept that shows the tradeoff made when ONE good is exchanged for another.

Budgeting lies at the foundation of every financial plan. It doesn’t matter if you’re living paycheck to paycheck or earning six-figures a year, you need to know where your money is going if you want to have a handle on your finances. Unlike what you might believe, budgeting isn’t all about RESTRICTING what you spend money on and cutting out all the fun in your life. It’s really about UNDERSTANDING how much money you have, where it goes, and then planning how to best allocate those funds. Here’s everything you need to help you create and maintain a budget.

An estimation of the revenue and expenses over a specified future period of time. A budget can be made for a person, family, group of people, business, government, country, multinational organization or just about anything else that makes and spends money. A budget is a microeconomic concept that shows the tradeoff made when one good is exchanged for another.

Budgeting lies at the foundation of every financial plan. It doesn’t matter if you’re living paycheck to paycheck or earning six-figures a year, you need to know where your money is going if you want to have a handle on your finances. Unlike what you might believe, budgeting isn’t all about restricting what you spend money on and cutting out all the fun in your life. It’s really about understanding how much money you have, where it goes, and then planning how to best allocate those funds. Here’s everything you need to help you create and maintain a budget.

Spin off is CREATING NEW COMPANY by selling or distributing the SHARES of existing company.

Spin off is creating new company by selling or distributing the shares of existing company.

The techniques of INVENTORY CONTROL are:

• Economic Order Quantity
• FIXATION of Inventory Levels
• Maximum LEVEL
• Minimum Level
• Average Level
• Re-order Level
• Danger Level.

The techniques of inventory control are:

Weighted Average METHOD - is the method of calculation in which the weighted average of both the lot sizes as well as the prices of the lot. This method is best for VALUING material issues. This method is very useful where the prices and quantities of ITEMS vary. Practically, this method is very SIMPLE to calculate.

Weighted Average Method - is the method of calculation in which the weighted average of both the lot sizes as well as the prices of the lot. This method is best for valuing material issues. This method is very useful where the prices and quantities of items vary. Practically, this method is very simple to calculate.

AVERAGE PRICE Method - is the method by which the value of total ASSETS or expenses is assumed to be equal to the average cost of the total assets or expenses. Under this method, it is assumed that the cost of inventory is based on the average cost of the goods available for sale during the period. It is computed by dividing the total cost of goods by the total units which GIVES a weighted average unit cost for the units of the closing inventory.

Average Price Method - is the method by which the value of total assets or expenses is assumed to be equal to the average cost of the total assets or expenses. Under this method, it is assumed that the cost of inventory is based on the average cost of the goods available for sale during the period. It is computed by dividing the total cost of goods by the total units which gives a weighted average unit cost for the units of the closing inventory.

VALUATION of issues is a complex process because the material may be issued out of various lots which might have been purchased at various prices. Following METHODS are used for this purpose:

• First in First out(FIFO)
• Last in First out (LIFO)
• Average Price Method
• Simple Average Method
• Weighted Average Method
• HIGHEST in First out
• Market Price
• Specific Price
• Standard Price

Valuation of returns indicates the material RETURNED by the production department to stores department. This valuation is done on two basis:

• At the same price at which issued
• At the current price of issues.

Valuation of issues is a complex process because the material may be issued out of various lots which might have been purchased at various prices. Following methods are used for this purpose:

Valuation of returns indicates the material returned by the production department to stores department. This valuation is done on two basis:

Valuation of receipts is the price billed in the invoices by the supplier. Following points should be kept in mind for this purpose:

• The TRADE discount is deducted from the basic price and all other amounts as billed by the supplier are added, LIKE excise duty, SALES tax, octroi duty, etc.
• Joint costs may be distributed on the basis of the basic price of the material.
• In case of imported material, the cost of the material CONSISTS of a basic price, customs duty, clearing charges, transport chares, etc.

Valuation of receipts is the price billed in the invoices by the supplier. Following points should be kept in mind for this purpose:

The following can be the reasons for bin CARD and stores ledger for not getting reconciled:

• Arithmetical ERROR in calculating balances of the sheets.
• If posting of the transaction has been made on wrong bin card or stores ledger sheet.
• If issues transactions are treated as receipt transaction or VICE versa, then this may create the difference in both the balances.
• Non posting of CERTAIN amount in any of the sheets.

The following can be the reasons for bin card and stores ledger for not getting reconciled:

• Bin Card is a quantitative record of the individual item of its RECEIPTS, issues and closing balance WHEREAS Stores Ledger records both the quantity and cost of receipts, issues and BALANCES of item of material received.
• Bin Card is prepared by stores department whereas Stores Ledger is prepared by costing department.
• In Bin Card system, ENTRIES are made IMMEDIATELY after each transaction. In Store Ledger, entries are made periodically.
• In Bin Card, postings are made before a transaction. In Store Ledger, posting is made after a transaction.
• Bin Card is kept attached to the bins inside the store as to enable to identify the stock. Store Ledger is kept outside the store.

There are two CATEGORIES of MATERIAL discrepancies:
FIRST category INCLUDES:

• Quantity received in excess
• Quantity received in short
• Quantity damaged
• Receipt of incorrect quantity of material.

These discrepancies are normally caused by the transportation system.
Second category includes:

• Discrepancies in quality of material supplied.

These discrepancies are caused by the MANUFACTURER.

There are two categories of material discrepancies:
First category includes:

These discrepancies are normally caused by the transportation system.
Second category includes:

These discrepancies are caused by the manufacturer.

Single Tender : When only one source of SUPPLY is AVAILABLE then single tender is addressed to the SELECTED supplier.
Limited Tender : This type of tender is addressed to a limited number of suppliers, who are the reliable source of supply.
Open Tender : is open to all the suppliers within the country who can supply the required quantity and quality of materials. Such invitation is made by ADVERTISING in newspapers, journals etc.
Global Tender : is open to anybody from any part of the world to supply the required quantity and quality of materials.

Single Tender : When only one source of supply is available then single tender is addressed to the selected supplier.
Limited Tender : This type of tender is addressed to a limited number of suppliers, who are the reliable source of supply.
Open Tender : is open to all the suppliers within the country who can supply the required quantity and quality of materials. Such invitation is made by advertising in newspapers, journals etc.
Global Tender : is open to anybody from any part of the world to supply the required quantity and quality of materials.

The following can be the consequences of under stocking:

• Production process cannot be OPERATED EFFICIENTLY, resulting delivery schedules.
• Firm may end up paying an idle labour force due to the production HOLD UPS.
• Organisation may loose its important customers, due to the delay in meeting customers’ ORDERS.
• Unfavourable prices and quality Increased administration costs.
• Due to under stocking it will not be easy for the organization to meet the unexpected demands of customers.

The following can be the consequences of under stocking:

Due to the following consequences over stocking should be avoided:

• Funds get blocked which COULD be used elsewhere
• More STORAGE FACILITIES are required
• High costs of storage and maintenance
• Deterioration of quality and obsolescence of stock
• High INSURANCE cost More SECURITY and safety measures.

Due to the following consequences over stocking should be avoided:

Following are the steps in procurement of material:
Purchase Requisition is an indication to the purchase DEPARTMENT to purchase certain material required for the production. Following particulars appear in the purchase requisition:

• Material to be purchased
• When it is required
• How much to be purchased
• Selection of Source of Supply
• Single Tender
• Limited Tender
• Open Tender
• Global Tender
• Purchase Order
• Description of Materials to be supplied
• Quantity to be supplied
• Cash and trade discount Rates at which materials are supplied
• ADDITIONAL charges e.g. Excise DUTY, Sales tax, packing charges, insurance Instructions in respect of delivery
• Guarantee clause
• Inspection clause
• Method of settlement of disputes
• Terms of payment RECEIPT and Inspection
• After the receipt of materials, inspection of the material is done. Inspection of materials means that the quantity actually received is compared with the quantity ordered; also the QUALITY of the material is inspected.

Invoice received from the supplier is compared along with the purchase order, goods received note and inspection note.

Following are the steps in procurement of material:
Purchase Requisition is an indication to the purchase department to purchase certain material required for the production. Following particulars appear in the purchase requisition:

Invoice received from the supplier is compared along with the purchase order, goods received note and inspection note.

Net Profit/ Operating Profit Net profit, also KNOWN as operating profit is actual earnings of the company in a GIVEN period of TIME. It is a measure of the profitability after accounting for all costs. In simple terms, net profit is the money left over after paying all the expenses including taxes and interest. It is the calculated by subtracting total expenses from total revenues. Net income can be EITHER DISTRIBUTED among shareholders of the company or held by the firm as retained earnings for the future purpose .

Net Profit/ Operating Profit Net profit, also known as operating profit is actual earnings of the company in a given period of time. It is a measure of the profitability after accounting for all costs. In simple terms, net profit is the money left over after paying all the expenses including taxes and interest. It is the calculated by subtracting total expenses from total revenues. Net income can be either distributed among shareholders of the company or held by the firm as retained earnings for the future purpose .

Gross Profit is a company’s revenue minus its COST of GOODS sold. It is also known as gross margin and gross INCOME. It is calculated by subtracting all costs related to sales i.e. manufacturing expenses, raw materials, labour, SELLING and advertisement expenses from sales. It is an indication of the managements’ efficiency to use labour and material in the PRODUCTION process.

Gross Profit is a company’s revenue minus its cost of goods sold. It is also known as gross margin and gross income. It is calculated by subtracting all costs related to sales i.e. manufacturing expenses, raw materials, labour, selling and advertisement expenses from sales. It is an indication of the managements’ efficiency to use labour and material in the production process.

Overheads are the aggregate of INDIRECT MATERIAL cost, Indirect Labour and Indirect Expenses. Thus, sum of all indirect COSTS are overheads. They are of three types:

• Factory Overheads
• Office and Administration Overheads
• SELLING and Distribution Overheads.

Overheads are the aggregate of Indirect Material cost, Indirect Labour and Indirect Expenses. Thus, sum of all indirect costs are overheads. They are of three types:

There are three elements of cost:

Material Cost: This is the cost of material or the commodity used by the organization for its production purpose. Material is the substance, from which a product is made. THUS, it may be in a raw or a manufactured state. It can be direct or indirect.
 Direct Material Cost forms an integral part of the finished product and is identified with the individual cost centre. It is ALSO described as process material, stores material, production material, etc. Example: Raw materials purchased or purchased primary packing material, etc.
Indirect Material Cost is used for ancillary purposes of the business and cannot be conveniently identified with the individual cost centre. Example: Consumable stores, OIL and waste, printing and stationery material etc.

Labour Cost: This is the cost, incurred in the FORM of remuneration paid to the employees or labours of the organisation. The workforce required to CONVERT material into finished product is called labour. It can be direct or indirect.
Direct Labour Cost is the cost incurred on those employees who directly take part in the manufacturing process and easily identified with the individual cost centre.
Indirect Labour Cost is the cost incurred on those employees who do not directly take part in the manufacturing process and cannot identified with the individual cost centre. Example: salary of foreman, salesmen, director’s salary, etc.

Expenses: are the costs of services provided to the organisation. It can be direct or indirect.
Direct Expenses are the expenses which can be directly identified with the individual cost centres. Example: hire charges of machinery, cost of defective work for a particular job or contract etc.
Indirect Expenses are the expenses which cannot be directly identified with the individual cost centres. Example: rent, lighting, telephone expenses, etc.

There are three elements of cost:

Material Cost: This is the cost of material or the commodity used by the organization for its production purpose. Material is the substance, from which a product is made. Thus, it may be in a raw or a manufactured state. It can be direct or indirect.
 Direct Material Cost forms an integral part of the finished product and is identified with the individual cost centre. It is also described as process material, stores material, production material, etc. Example: Raw materials purchased or purchased primary packing material, etc.
Indirect Material Cost is used for ancillary purposes of the business and cannot be conveniently identified with the individual cost centre. Example: Consumable stores, oil and waste, printing and stationery material etc.

Labour Cost: This is the cost, incurred in the form of remuneration paid to the employees or labours of the organisation. The workforce required to convert material into finished product is called labour. It can be direct or indirect.
Direct Labour Cost is the cost incurred on those employees who directly take part in the manufacturing process and easily identified with the individual cost centre.
Indirect Labour Cost is the cost incurred on those employees who do not directly take part in the manufacturing process and cannot identified with the individual cost centre. Example: salary of foreman, salesmen, director’s salary, etc.

Expenses: are the costs of services provided to the organisation. It can be direct or indirect.
Direct Expenses are the expenses which can be directly identified with the individual cost centres. Example: hire charges of machinery, cost of defective work for a particular job or contract etc.
Indirect Expenses are the expenses which cannot be directly identified with the individual cost centres. Example: rent, lighting, telephone expenses, etc.

While installing a COSTING System an ORGANIZATION MAY face the following problems:

• Lack of Support from TOP Management RESISTANCE and non cooperation from the Staff.
• Shortage of trained staff.
• Non suitability for the nature of product and nature of business.
• The cost involved in installing this system may be too high.

While installing a Costing System an Organization may face the following problems:

Following things should be taken into consideration while installing a costing system:

• Nature of the Product is a very important deciding factor in installing an EFFECTIVE costing system.
• Nature of the Organization should be CONSIDERED before installing costing system.
• Objectives of the Organization should be met with the installed costing system.
• Manufacturing Process: Before installing the costing system the technicalities of the manufacturing process should be studied carefully.
• Technical Details of the business must be studied before introducing NEW costing system.
• The system should be informative and simple. The system should be simple and easy to use in order to maintain various cost records.
• Reporting Systems: The costing system should be designed in such a WAY that reports are GENERATED in a proper way to facilitate the cost control decisions.
• The costing system should be elastic and capable of adapting according to the changing environment.

Following things should be taken into consideration while installing a costing system:

Sunk Cost is the sum that has already been incurred and cannot be recovered by any decision made now or in future. This cost is also called STRANDED cost. Example: A special PURPOSE machine was bought by a company for RS. 100000. The machine was used to make the product for which it was bought and now it is obsolete and cannot be sold. And it will be unwise to continue USING that obsolete product to recover the original cost of the machine. In ORDER words, Rs. 100000 already spent on that machine cannot be recovered in future. Such costs are said to be sunk costs and should be ignored in decision making process.

Sunk Cost is the sum that has already been incurred and cannot be recovered by any decision made now or in future. This cost is also called stranded cost. Example: A special purpose machine was bought by a company for Rs. 100000. The machine was used to make the product for which it was bought and now it is obsolete and cannot be sold. And it will be unwise to continue using that obsolete product to recover the original cost of the machine. In order words, Rs. 100000 already spent on that machine cannot be recovered in future. Such costs are said to be sunk costs and should be ignored in decision making process.

OPPORTUNITY Cost is the cost incurred by the organization when one alternative is selected over another. For example: A person has Rs. 100000 and he has two options to invest his money, EITHER invests in fixed DEPOSIT scheme or buy a land with the money. If he decides to put is money to buy the land then the LOSS of interest which he could have received on fixed deposit would be an opportunity cost.

Differential Cost is the difference between the costs of two ALTERNATIVES. It includes both cost increase and cost decrease. It can be either variable or fixed. Example: Cost of first alternative = 10000; Cost of second alternative = 5000; Differential Cost = 10000 – 5000 = 5000.

Opportunity Cost is the cost incurred by the organization when one alternative is selected over another. For example: A person has Rs. 100000 and he has two options to invest his money, either invests in fixed deposit scheme or buy a land with the money. If he decides to put is money to buy the land then the loss of interest which he could have received on fixed deposit would be an opportunity cost.

Differential Cost is the difference between the costs of two alternatives. It includes both cost increase and cost decrease. It can be either variable or fixed. Example: Cost of first alternative = 10000; Cost of second alternative = 5000; Differential Cost = 10000 – 5000 = 5000.

Normal Cost are the normal or regular costs which are INCURRED in the normal conditions during the normal operations of the organization. They are the sum of actual direct MATERIALS cost, actual labor cost and other direct EXPENSE. Example: REPAIRS, maintenance, salaries PAID to employees.

Abnormal Cost are the costs which are unusual or irregular which are not incurred due to abnormal situations of the operations or productions. Example: destruction due to fire, shut down of machinery, lock outs, etc.

Normal Cost are the normal or regular costs which are incurred in the normal conditions during the normal operations of the organization. They are the sum of actual direct materials cost, actual labor cost and other direct expense. Example: repairs, maintenance, salaries paid to employees.

Abnormal Cost are the costs which are unusual or irregular which are not incurred due to abnormal situations of the operations or productions. Example: destruction due to fire, shut down of machinery, lock outs, etc.

Controllable Cost are the costs which can be influenced by the action of a specified MEMBER of the undertaking. They are incurred in a particular responsibility centers can be influenced by the action of the executive heading that responsibility centre. For example: Direct labor cost, direct material cost, direct EXPENSES controllable by the shop level MANAGEMENT.

Uncontrollable Cost are the costs which cannot be influenced by the action of a specified member of the undertaking. For example: a foreman in charge of a tool room can only control costs pertaining to the same department and the matters which COME DIRECTLY under his control, not the costs apportioned to other department. The expenditure which is controllable by an individual may be uncontrollable by another individual.

Controllable Cost are the costs which can be influenced by the action of a specified member of the undertaking. They are incurred in a particular responsibility centers can be influenced by the action of the executive heading that responsibility centre. For example: Direct labor cost, direct material cost, direct expenses controllable by the shop level management.

Uncontrollable Cost are the costs which cannot be influenced by the action of a specified member of the undertaking. For example: a foreman in charge of a tool room can only control costs pertaining to the same department and the matters which come directly under his control, not the costs apportioned to other department. The expenditure which is controllable by an individual may be uncontrollable by another individual.

FIXED Cost is the cost which remains constant or unaffected by variations in the VOLUME of output within a given period of time. Example: Rent or rates, Insurance charges, etc.

Variable Cost is the cost which varies directly in proportion with every INCREASE or decrease in the volume of output with a given a period of time. Example: Wages paid to labours, cost of direct material, consumable stores, etc.

Semi-variable Cost is the cost which is neither fixed nor variable in nature. These remain fixed at certain level of operations while may vary proportionately at other levels of operations. Example: maintenance cost, REPAIRS, power, etc.

Fixed Cost is the cost which remains constant or unaffected by variations in the volume of output within a given period of time. Example: Rent or rates, Insurance charges, etc.

Variable Cost is the cost which varies directly in proportion with every increase or decrease in the volume of output with a given a period of time. Example: Wages paid to labours, cost of direct material, consumable stores, etc.

Semi-variable Cost is the cost which is neither fixed nor variable in nature. These remain fixed at certain level of operations while may vary proportionately at other levels of operations. Example: maintenance cost, repairs, power, etc.

Direct Cost are all the expenses which can be identified with the individual product, service or job cost centre. In the manufacturing process of products, materials are purchased, labors are hired and WAGES are paid to them. All these TAKE active and direct part in the manufacturing process.

Indirect Cost are all the expenses which cannot be identified with the individual product, service or job cost centre. The totals of indirect costs are termed as OVERHEADS. EXAMPLE: salaries of storekeepers, foremen, work MANAGER’s salary etc.

Direct Cost are all the expenses which can be identified with the individual product, service or job cost centre. In the manufacturing process of products, materials are purchased, labors are hired and wages are paid to them. All these take active and direct part in the manufacturing process.

Indirect Cost are all the expenses which cannot be identified with the individual product, service or job cost centre. The totals of indirect costs are termed as overheads. Example: salaries of storekeepers, foremen, work manager’s salary etc.

Cost centre is defined as a location, machine, person, department, division, or any equipment or group of these, in relation to which direct and indirect costs may be ascertained and USED for the purpose of cost control. THUS, an organization for the costing PURPOSES is divided in convenient units and one of the convenient units is known as cost centre. Example: collecting, sorting, washing of clothes are the various activities which are separate cost centre in a laundry. The cost centre facilitates this function of cost control. Thus, correct identification of cost centre is a prerequisite for the successful implementation of cost accounting PROCESS. This ALSO facilitates the fixation of responsibility in the correct manner.

Cost centre is defined as a location, machine, person, department, division, or any equipment or group of these, in relation to which direct and indirect costs may be ascertained and used for the purpose of cost control. Thus, an organization for the costing purposes is divided in convenient units and one of the convenient units is known as cost centre. Example: collecting, sorting, washing of clothes are the various activities which are separate cost centre in a laundry. The cost centre facilitates this function of cost control. Thus, correct identification of cost centre is a prerequisite for the successful implementation of cost accounting process. This also facilitates the fixation of responsibility in the correct manner.

In case Trial Balance disagrees, following steps should be taken to locate the ERRORS:

• Totalling of all the subsidiary BOOKS and trial balance should be checked carefully.
• Opening balances of all the accounts are PROPERLY brought down in the current year’s books of account.
• Ledger accounts have been properly balanced and the balances of ledger accounts have been correctly shown in the trial balance.
• To locate some errors the difference in the trial balance in halved.
• Another way is dividing the difference in the trial balance by 9.
• If the difference GETS divisible without leaving any reminder that indicates the transposition of the amounts.
• To locate certain other errors, current year trial balance can be compared with the trial balance of the PREVIOUS year.

In case Trial Balance disagrees, following steps should be taken to locate the errors:

Following are the types of errors which do not AFFECT the Trial Balance:

• Compensating Error
• Errors of Principle
• Errors of Omission
• Errors of COMMISSION
• Wrong AMOUNT RECORDED in the subsidiary books.

Following are the types of errors which do not affect the Trial Balance:

Following are the types of ERRORS which affect agreement of Trial Balance:

• WRONG totaling of subsidiary books
• Posting on the wrong SIDE of the account
• Posting of the wrong amount
• OMISSION of posting an amount in the ledger
• Error of balancing.

Following are the types of errors which affect agreement of Trial Balance:

ERRORS in ACCOUNTING are PLACED in the following main groups:

• Error of Omission
• Error of Commission
• Error of Principle
• Compensating Error.

Errors in accounting are placed in the following main groups:

• Cheques DEPOSITED into the BANK but not yet collected
• Cheques ISSUED but not yet presented for PAYMENT
• Bank charges
• Amount collected by bank on standing instructions of the concern.
• Amount paid by the bank on standing instructions of the concern.
• INTEREST debited by the bank
• Interest credited by the bank
• Direct payment by customers into the bank account
• Dishonour of cheques
• Clerical errors.

Deferred REVENUE Expenditure is revenue expenditure, incurred to receive benefits over a NUMBER of years say 3 or 5 years. These EXPENSES are neither incurred to acquire CAPITAL assets nor the benefits of such expenditure is received in the same accounting PERIOD during which they were paid. Thus they don’t affect profitability statement as they are not transferred to the profitability statement in the period during which they are paid for. They are charged to profit and loss account over a number of years depending upon the benefit accrued.

Deferred Revenue Expenditure is revenue expenditure, incurred to receive benefits over a number of years say 3 or 5 years. These expenses are neither incurred to acquire capital assets nor the benefits of such expenditure is received in the same accounting period during which they were paid. Thus they don’t affect profitability statement as they are not transferred to the profitability statement in the period during which they are paid for. They are charged to profit and loss account over a number of years depending upon the benefit accrued.

Revenue Expenditure is the expenditure incurred in one accounting YEAR and the BENEFITS from which is also enjoyed in the same period only. This expenditure does not increase the earning capacity of the business but maintains the existing earning capacity of the business. It INCLUDED all the EXPENSES which are incurred during day to day running of business. The benefits of this expenditure are for short period and are not forwarded to the next year. This expenditure is on recurring nature.
As the return on revenue expenditure is received in the same period THUS the entries relating to the revenue expenditure will affect the profitability statements as all the entries are passed in the same accounting year, the year in which they were incurred.

Revenue Expenditure is the expenditure incurred in one accounting year and the benefits from which is also enjoyed in the same period only. This expenditure does not increase the earning capacity of the business but maintains the existing earning capacity of the business. It included all the expenses which are incurred during day to day running of business. The benefits of this expenditure are for short period and are not forwarded to the next year. This expenditure is on recurring nature.
As the return on revenue expenditure is received in the same period thus the entries relating to the revenue expenditure will affect the profitability statements as all the entries are passed in the same accounting year, the year in which they were incurred.

Capital Expenditure is an amount incurred for acquiring the long term assets such as land, building, equipments which are continually used for the purpose of EARNING revenue. These are not MEANT for sale. These costs are recorded in accounts namely Plant, Property, Equipment. Benefits from such expenditure are spread over several accounting years.
E.g. Interest on capital paid, Expenditure on purchase or installation of an asset, brokerage and commission paid.

No, Capital expenditure should not be considered while calculating profitability as benefits incurred from the capital expenditure are long term benefits and cannot be shown in the same financial years in which they were paid for. They need to be spread over a number of years to SHOW the true position in balance sheet as well as PROFIT and loss account.

Capital Expenditure is an amount incurred for acquiring the long term assets such as land, building, equipments which are continually used for the purpose of earning revenue. These are not meant for sale. These costs are recorded in accounts namely Plant, Property, Equipment. Benefits from such expenditure are spread over several accounting years.
E.g. Interest on capital paid, Expenditure on purchase or installation of an asset, brokerage and commission paid.

No, Capital expenditure should not be considered while calculating profitability as benefits incurred from the capital expenditure are long term benefits and cannot be shown in the same financial years in which they were paid for. They need to be spread over a number of years to show the true position in balance sheet as well as profit and loss account.

For the accounting purpose expenditures are CLASSIFIED in three types:

Capital Expenditure is an amount incurred for acquiring the long TERM assets such as land, building, equipments which are continually used for the purpose of earning revenue. These are not meant for sale. These costs are recorded in accounts namely PLANT, Property, Equipment. Benefits from such expenditure are spread over several accounting years.
E.g. Interest on capital paid, Expenditure on PURCHASE or installation of an asset, brokerage and commission paid.

Revenue Expenditure is the expenditure incurred in one accounting year and the benefits from which is also enjoyed in the same period only. This expenditure does not increase the earning capacity of the business but maintains the existing earning capacity of the business. It included all the expenses which are incurred during day to day running of business. The benefits of this expenditure are for short period and are not forwarded to the next year. This expenditure is on recurring nature.
Eg: Purchase of raw material, selling and distribution expenses, Salaries, wages etc.

Deferred Revenue Expenditure is a revenue expenditure which has been incurred during an accounting year but the benefit of which may be extended to a number of years. And these are charged to profit and loss account.
E.g. Development expenditure, ADVERTISEMENT etc.

For the accounting purpose expenditures are classified in three types:

Capital Expenditure is an amount incurred for acquiring the long term assets such as land, building, equipments which are continually used for the purpose of earning revenue. These are not meant for sale. These costs are recorded in accounts namely Plant, Property, Equipment. Benefits from such expenditure are spread over several accounting years.
E.g. Interest on capital paid, Expenditure on purchase or installation of an asset, brokerage and commission paid.

Revenue Expenditure is the expenditure incurred in one accounting year and the benefits from which is also enjoyed in the same period only. This expenditure does not increase the earning capacity of the business but maintains the existing earning capacity of the business. It included all the expenses which are incurred during day to day running of business. The benefits of this expenditure are for short period and are not forwarded to the next year. This expenditure is on recurring nature.
Eg: Purchase of raw material, selling and distribution expenses, Salaries, wages etc.

Deferred Revenue Expenditure is a revenue expenditure which has been incurred during an accounting year but the benefit of which may be extended to a number of years. And these are charged to profit and loss account.
E.g. Development expenditure, Advertisement etc.

Convention of Consistency: 
This accounting convention PROPOSES that the same accounting PRINCIPLES, PROCEDURES and POLICIES should be used consistently on a period to period basis for preparing financial statements to facilitate comparison of financial statements on period to period basis. If any changes are made in the accounting procedures or policies, then it should be disclosed explicitly while preparing the financial statements.

Convention of Consistency: 
This accounting convention proposes that the same accounting principles, procedures and policies should be used consistently on a period to period basis for preparing financial statements to facilitate comparison of financial statements on period to period basis. If any changes are made in the accounting procedures or policies, then it should be disclosed explicitly while preparing the financial statements.

Convention of Materiality: 
This accounting convention proposed that while accounting only those transactions will be CONSIDERED which have material impact on financial status of the ORGANIZATION and other transactions which have INSIGNIFICANT effect will be ignored.. It GIVES relative importance to an item or event.

Convention of Materiality: 
This accounting convention proposed that while accounting only those transactions will be considered which have material impact on financial status of the organization and other transactions which have insignificant effect will be ignored.. It gives relative importance to an item or event.

Convention of Conservation:
This accounting convention is generally expressed as to “anticipate all the FUTURE losses and expenses, without considering the future incomes and PROFITS unless they are ACTUALLY realized.” This concept emphasizes that profits should never be OVERSTATED or anticipated. This convention generally applies to the valuation of current assets as they are VALUED at cost or market price whichever is lower.

Convention of Conservation:
This accounting convention is generally expressed as to “anticipate all the future losses and expenses, without considering the future incomes and profits unless they are actually realized.” This concept emphasizes that profits should never be overstated or anticipated. This convention generally applies to the valuation of current assets as they are valued at cost or market price whichever is lower.

Matching Concept:
According to this concept, while calculating the PROFITS during the accounting period in a correct manner, all the expenses and costs incurred during the period, whether PAID or not, should be MATCHED with the INCOME GENERATED during the period.

Matching Concept:
According to this concept, while calculating the profits during the accounting period in a correct manner, all the expenses and costs incurred during the period, whether paid or not, should be matched with the income generated during the period.

Money MEASUREMENT Concept:
According to this concept, only those transactions find PLACE in the accounting records, which can be expressed in TERMS of money. This is the major drawback of FINANCIAL accounting and financial statements.

Money Measurement Concept:
According to this concept, only those transactions find place in the accounting records, which can be expressed in terms of money. This is the major drawback of financial accounting and financial statements.

Cost Concept:
According to this concept, an ASSET is RECORDED at the cost at which it is acquired instead of taking current MARKET prices of VARIOUS assets.

Cost Concept:
According to this concept, an asset is recorded at the cost at which it is acquired instead of taking current market prices of various assets.

ACCOUNTING Period Concept:
According to this concept, the indefinite period of time is divided into shorter time periods, each one being in the FORM of Accounting period, in order to facilitate the preparation of financial statements on periodical basis. Selection of accounting period depends on characteristics LIKE business organization, STATUTORY requirements ETC.

Accounting Period Concept:
According to this concept, the indefinite period of time is divided into shorter time periods, each one being in the form of Accounting period, in order to facilitate the preparation of financial statements on periodical basis. Selection of accounting period depends on characteristics like business organization, statutory requirements etc.