Decentralization

Decentralization refers to the delegation of the decision making and other powers of higher authority to the lower units or sub units.

Decentralization allows higher authority to invest their time in other areas for expand and growth of the business.

Sometimes this became sub-units took decision which is better for them not for the business.

Accumulated Depreciation

It’s the total cost of depreciation of an asset in a regular period of time till it exists. It shows the decreasing value of an asset over the period of time. Accumulated depreciation reflects in the balance sheet under accumulated account and this amount never ends at the end of a financial year, it carry forward to the next year.

Calculation: 

We can calculate the depreciation amount in three different ways mentioned below:

Continue reading “Accumulated Depreciation”

Annuity

Annuity:  

Annuity is an amount of fund invested by an individual or a financial institution in order to receive equal amount of money at equal time intervals. It can be defined as a fixed income source for an individual.

It’s an opportunity for an individual to raise a huge amount by investing less. Continue reading “Annuity”

Input Tax Credit

Input tax credit can be defined as the credit claimed by business owners on raw materials purchased for further production of output (service/product). Through this scheme businesses will be able to reduce tax already paid on purchases.

Input tax credit is introduced by GST council and this can be termed as the backbone of GST. It’s a beneficial scheme for small businesses. Input tax credit can be claimed both on products and services.

 

 

 

 

 

How to claim ITC?

Below mentioned conditions need to be fulfilled in order to claim input tax credit:

  • A person or business must be registered under GST
  • Supplying of goods or services must be done only for business purposes
  • Invoice should be GST compliant
  • GST filing by supplier
  • Return filing should be done in time

Find other accounting terms …

What is Capital?

Capital is the total financial asset of a business. It includes cash-in-hand, cash-at-bank, building, furniture, machinery, land etc. Capital is categorized into two different types i.e. working capital, fixed capital.

Working Capital: Those assets or capital used or available for day-to-day operations are called as working capital.

To calculate working capital: working capital = current assets – current liabilities

Fixed Capital: Capital or assets like furniture, machinery is termed as fixed capital. Fixed capital is the biggest advantage for a business as these can be used in bad times to pay debts.