Definition: Reserve, as the name suggests is a part of undistributed profit retained in the business so as to provide for specific future needs like growth and expansion, or to meet any known or unknown expenditure or contingency, liability, or reduce the value of the asset. This means that profit is kept in the business and not distributed otherwise, which helps in future … [Read more...] about Reserves
Provisions
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
Source Document
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
Overdraft
Definition: Overdraft refers to open-ended financial assistance which the bank offers to the current account holders, in which the individuals and entities are allowed to withdraw funds from their accounts more than the amount standing in the credit of his/her current account or when the account has zero balance or even when the account shows debit (negative) balance. Hence, … [Read more...] about Overdraft
Subsidiary Book
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
Quasi Contract
Definition: Quasi Contract is a retroactive agreement, determined by a judge with an aim of correcting a situation wherein one party obtains something at the cost of another party. It stops one party from getting an unfair advantage from the situation. It takes place when a dispute exists against the payment of goods and services. Thus such arrangements rely on the court's … [Read more...] about Quasi Contract
Contingent Liability
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
Contract of Guarantee
Definition: Contract of Guarantee refers to a contractual arrangement in which one party gives a guarantee for another regarding the fulfillment of a promise or repayment of the debt when the latter fails to discharge the liability or perform the undertaking. That is to say, guarantee means to stand for another person and in a contract of guarantee, the surety assures … [Read more...] about Contract of Guarantee
Negotiable Instrument
Definition: Negotiable Instrument implies a financial document used for fund transfer from one person to another. Basically, it is an instrument that bears the signature of the maker, promising payment of a specified sum to the person whose name is written on it, or the assignee, either on-demand or on a future specified date. Further, the negotiable instrument creates a … [Read more...] about Negotiable Instrument
Conciliation
Definition: Conciliation is a process in which the third party persuades the parties in dispute to amicably settle the claims. It is one of the effective and private methods of dispute resolution, in which the conflicting parties take the help of a conciliator voluntarily, who discuss the matter with them, with an aim of settlement of the dispute without going to the … [Read more...] about Conciliation