Accounting

Definition: Provisions refer to the practice of retaining an estimated fund out of the profit by the firm so as to cover an uncertain anticipated loss or to reduce the value of the asset in the future. It is a liability whose time of occurrence and the amount is not known. Liability here means liability for expenses. The funds are set aside for a particular purpose only and it … [Read more...] about Provisions

Definition: Source Document is the root document that bears the essential information related to the business transaction. When a business transaction takes place, a piece of written, printed, typed or electronic trail is generated which stores data relating to the transaction and acts as a formal or official record. This document is the source document. Basically, these … [Read more...] about Source Document

Definition: Subsidiary books are special-purpose accounting books that record transactions belonging to the same category in a particular book in a sequential manner. Also, the transactions are recorded in their original form, i.e. as and when the transactions occur, they are entered in the subsidiary book before posting them anywhere that is why they are also known as the book … [Read more...] about Subsidiary Book

Definition: Contingent Liability refers to an anticipated financial obligation that springs from events that happened in the past and whose existence is validated by the happening or non-happening of the uncertain future event, which is not under the control of the enterprise. Also, it can be a present financial obligation, whose payment is not likely or whose amount cannot … [Read more...] about Contingent Liability

Definition: Economic Order Quantity, popularly known as EOQ is the standard order quantity of materials which a firm should order at a given point in time with an aim of minimizing the annual inventory costs like holding/carrying cost, and order cost. It is a production scheduling model which was coined by Ford W. Harris in the year 1913 and has been updated with the passage … [Read more...] about Economic Order Quantity (EOQ)

Definition: Bookkeeping can be defined as the system of keeping records and classifying all the financial transactions on a day-to-day basis concerning the business operations, in a sequential manner. The term "transaction" refers to the business activity, in which the exchange of money or money's worth for goods or services is involved. It is the initial step to the … [Read more...] about Bookkeeping

Definition: Revenue Expenditure, also known as Operating Expenses or OpEx refers to the expenditure incurred in the course of the day-to-day business activities i.e. in the production of goods and services and its sale, which facilitates revenue generation of the company. Such expenses do not increase the profit earning capacity of the business, rather it helps to maintain … [Read more...] about Revenue Expenditure

Definition: Capital Expenditure or CapEx refers to the financial outlay made by the firm for an asset which is expected to stay in the business for a long time, so as to use the same for more than one financial year, which not only generates enduring benefits for the company but ensures the generation of revenue over the years. In finer terms, when the company uses its funds … [Read more...] about Capital Expenditure

Definition: Income Statement or otherwise called as statement of profit and loss, is the summary prepared by the company's management, reporting the revenues, expenses, gains and losses for the particular financial year. Simply put, it portrays the final result of the company's operations over a period. Income statement forms part of the company's financial statement along … [Read more...] about Income Statement

Definition: Budgetary control refers to a method of management control and accounting, wherein the budgets are established, by forecasting the activities beforehand to the maximum extent and a constant comparison is made between the actual results and the budgeted figures, so as calculate the variances (if any) and take corrective steps accordingly to ensure the achievement of … [Read more...] about Budgetary Control