Cash Receipts Journal

cash receipts journal definition
Cash receipts journal in accounting

Cash receipts journal is a special type of ledger which records details of only cash receipts. This ledger reflects in the journal under the category “Cash Sales”.  Debit and credit both columns need to be recorded simultaneously. In debit side cash should be debited and in credit side sales need to be entered.

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Capital Budgeting

Accounting term - SlickAccount
Capital Budgeting – SlickAccount

Capital Budgeting is a process which analyzes the frequency of return on long-term & short-term investments to be made by a business. Capital Budgeting is same as Investment appraisal.

Capital Budgeting is an important & complex task as the analysis needs to be accurate to determine the return value of investments.

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Accounting Rate of Return

Accounting rate of return also called as Average rate return. Accounting rate return calculates the amount of profit company/entity incurred from the money invested. Accounting rate of return never considers the time value of money.

The formula to calculate accounting rate of return is: Average return during period / Average investment

Average Investment = Book value at the beginning of 1st year + Book value at the end of useful life /2

Average return during period = Profit after tax/ Life of investment

Accelerated Depreciation

Accelerated depreciation is a method to calculate the book value of a fixed asset over the years. In this method, the relative asset incurred higher expenses than last remaining years, unlike straight-line method.

There are two methods two calculate accelerated depreciation i.e. double declining balance method and Sum of the years’ digits method.

Double declining balance method formula

Annual Depreciation Expenses = Net Book Value x 2/Useful life in years

Sum of the years’ digits method formula

Depreciation Expense = Remaining useful life of asset / Sum of the years digits x Depreciable Cost

Why GST Compliance Rating is an advantage for tax payers?

What is GST Compliance Rating?

GST Compliance rating is one the most needed initiative taken by Government under GST. Compliance rating is a score card for tax payers under GST. It will provoke tax payers to comply with GST rules and regulations in order to be on good rating scale. It can be termed as a performance indicator for business owners, tax payers etc.

How GST compliance rating works?

As it’s a performance rating businesses so rating would be based on some parameters. The basic parameters would be:

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Why Cloud Accounting is better than traditional accounting?

Cloud accounting is widely accepted by small businesses. Cloud Accounting is termed as online accounting and manual accounting called as traditional accounting. Why we need cloud accounting? The best answer would be to save time, money and to reduce accounting errors. Also, cloud accounting is the best way to do accounting as you can save & edit all your data at any time and anywhere as data will be saved on server. These are some features which attract small businesses to use accounting software.

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Major changes announced on 23rd GST council meeting

On 23rd meeting of GST council Finance minister Arun Jaitley announced some major changes in tax rates which provide some relief to tax payers.
GST council also reduced GST tax rates for service sector (Restaurant, Handicraft & Aviation) to simplify taxation process and promote ease of doing business.

Relaxation for Service Providers:

Service providers within Rs.20 Lakh turnover are free from GST registration. This is also applicable on those who provide inter-state services and through any e-commerce portal.

There is no good news from this 23rd meeting for restaurants. Restaurants can’t avail any input tax credit with remaining tax rate of 5%.

Services export to Nepal and Bhutan are exempt from GST charges also they can avail input tax credit facility. Continue reading “Major changes announced on 23rd GST council meeting”

Step-by-step guide on GST Registration

GST marked as the biggest tax reforms in India since 1947. It’s a unified tax implemented by current BJP Government with an aim to erase all state or central government indirect taxes. GST subsumes 11 Indirect taxes that were levied on the sale of goods and services by central or state Government. GST made indirect taxation process simpler for small and medium scale enterprises. It will also boost economic growth in a long run. New small businesses will be benefited from this new tax law as they have to pay less tax under composition scheme (SMEs with Rs.20 – Rs.50Lakh turnover).

As we are saying that GST made taxation easier. So, let’s have a look at its registration process. In this article we will cover all details regarding GST registration with below-mentioned points:

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Revised GST – Why it’s a best Diwali gift for traders?

Since its implementation on 1st July, 2017 GST has been always in the news due to its high tax rates & bit complicated tax slabs also Govt faces lots of criticism for it.

Recently RBI forecast GDP growth rate at 7.3% (2017-18), which is lower than last year’s GDP growth rate. To main economic stability and for a higher GDP growth Government decided to revise tax rates.

On 6th October Finance Minister Arun Jaitley announced new tax rates after a long & fruitful discussion with GST council members.
The GST council slashed rates on 27 items and 12 services.

Here are the details of revised tax rates on goods:

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GST Council trims tax rates to ease the filing process

GST Rate revised

Since its implementation on 1st July, 2017 GST has been always in the news due to its high tax rates & bit complicated tax slabs also Govt faces lots of criticism for it.

Recently RBI forecast GDP growth rate at 7.3% (2017-18), which is lower than last year’s GDP growth rate. To main economic stability and for a higher GDP growth Government decided to revise tax rates.

On Friday Finance Minister Arun Jaitley announced new tax rates after a long & fruitful discussion with GST council members.

Continue reading “GST Council trims tax rates to ease the filing process”

Accounting Equation

The accounting equation is a rule or you can say formula to calculate the total asset of a company/entity. There are there accounting equations.

  • Assets = Liabilities + Owner’s Equity
  • Assets = Liabilities + Shareholder’s Equity (For Corporation )
  • Assets = Liabilities + Net assets (For Non-Profit Organizations like NGO)

The Balance sheet prepared using this rule. Double entry bookkeeping system formed on the basis of the accounting equation.

Accrued Liabilities

Accrued liabilities usually referred to those transactions which are incurred by an entity but yet not have been paid or receive an invoice.

There are two types of accrued liabilities i.e. short-term accrued liability and long-term accrued liability. Short term accrued liabilities are daily basis transactions which happen on a regular basis. Long-term accrued liabilities which happen very rarely but for a longer period of time.

Examples: Accrued wages, accrued pension liability, accrued interest on loan payable etc.

Balance Sheet

A balance sheet is an important financial statement prepared by a company at a specific date on a regular basis to showcase its financial situation.

The balance sheet includes cash-flow statement, income & expense statement, asset and liability details. In short, it shows all transaction details.

A balance sheet is the main point interest for a shareholder, company advisor, business partner etc.

The Balance sheet abides by the following rule:

Assets = Liability + Shareholder’s Equity

Financial Accounting

Financial accounting is the process of preparing financial reports for both internal and external use of a business. Financial report includes balance sheet, cash flow & income & expense, equity & liability statement.

This kind of report needs at the time of tax filing, company valuation etc.

Trial Balance

Trial balance is a way of bookkeeping to ensure all ledger inputs are correct. In trail balance all credit balances entry under credit balance head and debit inputs under ledger balance head. If credit and debit balance found to be identical then we could conclude that there is no error in accounting entries.

Trail balance prepared in a regular period to minimise accounting error. In companies point of view, it’s an important task needs to do regularly. It would help to prepare company’s financial statements with zero error.

Factory overhead costs

Factory overhead is also named as manufacturing overhead. Factory overhead cost is the total operational cost used for production or manufacturing in a factory. It’s not the direct cost associated with raw material and labor. Its also called an indirect cost.

Factory overhead includes in manufacturing cost category.

Bank Reconciliation

Accounting software, Small business accounting software

Bank reconciliation is a process of comparing company’s own financial record with bank record to maintain the accurate figure.

Bank reconciliation is very necessary as it helps to avoid any overdraft payments, duplicate charges etc. Double entry bookkeeping is one way to perform reconciliation. Bank reconciliation needs to be prepared for every month. Bank reconciliation is a way of finding errors in bank account and company’s ledger account.