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Under an accrual accounting system, Accountants must conform to the matching principle and the revenue recognition principle to comply with GAAPs. Therefore, adjustments of accounts that have appreciated/depreciated in value, accrued interest, expired, or otherwise changed must be performed to give an accurate picture of profitability, even when no cash is exchanged. For example, if a company purchases a $1000 insurance policy that covers 5-years, it must make a $200 adjustment at the end of the first year to account for the amount of insurance that has expired over the course of a year. It must continue making $200 adjustments every year for the next four years after that so that the profit and loss statement accurately reflects the $200 cost to the business every year.
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What are the duties of the final accounts department in an organisation?
The finance department of a company is responsible for preparing final accounts. The prepare the Balance Sheets and the profit and loss account.
Who are the basic records used before preparing trading profit and loss accounts and balance sheet?
Basic records needed for preparing trading profit loss accounts and balancesheep is a trial balance.. A trial balance is the closing balances of each and every account entered in our ledger. Trading account shows us Gross profit while profit and loss account shows us net profit and in the end balance sheet shows us the Assets and Liabilities at the end of the financial year.. all direct expenses shown on trading accounts and direct income like sales shown in trading account while indirect exp and indirect income shown in p & L ac
Is a measure of income or profit divided by the investment required to obtain that income or profit?
Profit
Preparing departmental trading and profit and loss account?
When preparing departmental trading and a profit and loss account, expenses must be taken into account first. These include departmental expenses, and common expenses, including administrative expenses.
When did profit n loss sharing accounts introduced in Pakistan?
1981
Why do not for profit organization use funding accounts?
The fact they are not-for-profit makes no difference to the fact that they are still a business and thus have cash flows and funding which needs accounts to be able to track and manage properly and efficiently.
How do you calculate accounts up to profit an d loss?
purchese amount 100
Legal and Professional Charges comes under which group in accounts?
profit & loss
Evaluate Google Inc. Which theories of profit accounts for Googles economic profit How does opportunity cost relate to economic profit?
What therories are used in google Inc. for employee statisfactions and gains
When is the working capital adjustment used while calculating profit fee?
The working capital adjustment is used when calculating the profit fee to account for changes in a company's current assets and liabilities that can impact cash flow. This adjustment ensures that the profit fee reflects the true economic performance of the business by considering the necessary funds tied up in operations. It typically occurs during financial assessments or valuations, particularly in mergers and acquisitions, to provide a more accurate representation of profitability.
What is an accounting cycle and how does it help in the accounting process?
ACCOUNTING CYCLE : An accounting cycle is a complete sequence beginning with the recording of the transactions and ending with the preparation of the final accounts.The sequential steps involved in an accounting cycle are as follows : 1.jounalizing,2.posting,3.balancing.4.trail balance,5.income statement(trading & profit & loss account to ascertain the profit or loss for the accounting period),6.position statement(balance sheet) ACCOUNTING PROCESS IS ALSO CALLED ACCOUNTING CYCLE. ACCOUNTING PROCESS : It consists of the following stages/helps : 1.recording of entries for all business transactions in journal. 2.posting of entries into ledger. 3.balancing of accounts. 4.preparing of trail balance with the help of different accounts to know the arithmetical accuracy. 5.preparing final accounts with the the help of trial balance.----trading & profit and loss account to know the profit or loss.-----balance sheet to know the financial position (of a company for year end or a period)
Gain from disposal of fixed asset will less from cost of sales when preparing final accounts?
Yes it is income and income is deducted from expenses or expenses also shown alongwith income both have same effect on net profit or loss.
