There are two types of account in accounting system, one is balance sheet account which carries remain balance to the next year and another one is profit & loss account which becomes zero at the end of each & every year.
Balance Sheet Account: Balance sheet account includes three ledger accounts i.e. asset, liability, capital/Equity.
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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.
Bill of supply is a type of invoice generated at the time of selling exempted goods or services exempted under GST by the seller. Businesses who registered under composition scheme can’t charge any tax sell by them, whereas a non-composite dealer also can’t charge any tax on exempted goods and services.
When and who should generate bill of supply ?
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It occurs when a deposit amount in an account is lower than the withdraw amount in the form of a cheque. It’s a negative remark for the respective account also bank will charge for overdraft. The account balance goes below zero if overdraft happens.
This negative remark will affect the credit score of the respective bank account.
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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.
We can calculate the depreciation amount in three different ways mentioned below:
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Shareholder’s equity is an asset for shareholders. It total amount left after deducting total liabilities from total asset. It reflects the net worth of a company.
Shareholders’ equity= Total Asset – Total liabilities
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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 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
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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.
Accounts Receivable is the total amount of money owed to a company by debtors for buying goods or services on credit. This amount reflects in the balance sheet as current asset.
Generally due amounts of the invoices that you gave to your customers will fall under this category.
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