Accounting refers to an art of recording and compiling the financial transactions and events in a significant manner and interpreting the results. The term transaction is different from the event, in the sense that the former involves the exchange of values, but the latter may or may not involve the exchange of values. The term transaction can be understood as the business deal of buying and selling something for adequate consideration, carried out between two or more persons or entities. On … [Read more...]

The most common requirement of the majority of employees is security and maintenance for the later life. This can only be possible when the person gets financial assistance, for his/her survival. Gratuity is one of the old-age retiral benefits, in which an employee gets one-shot payment, from the employer, for the services rendered by him/her to the enterprise. Likewise, there is another retirement plan called as pension, which guarantees continuous payment of fixed sum to the person or his … [Read more...]

The term financial management is a part of accounting that deals with the management of finances of a business organisation, so as to meet the financial objectives. It is not exactly same as treasury management, which is all about the management of cash and funds of the firm. The main difference between treasury management and financial management lies in their level of activity. The financial management focuses on the long-term and strategic investments, but when it comes to treasury … [Read more...]

To determine the prices of products produced by the company, it is worthwhile for one to know the difference between cost sheet and production account. Cost sheet is a statement in which the details of expenses incurred on a particular product or job, during a specific period are presented. It is not exactly same as production account, which is nothing but an extended version of the statement of cost. When the cost sheet is presented in the form of account, it is known as Production account, … [Read more...]

Departmentalization can be understood as a process of creating departments such as machining, personnel, fabrication, maintenance, stores, accounts, etc., in an organization, for the purpose of allocation and apportionment of overheads in a convenient way. The term allocation of cost is concerned with the complete cost items, whereas the apportionment of the cost is all about the proportion of cost items. Based on the relation of the cost item with the cost center or unit, to which it is … [Read more...]

There are many industries such as sugar industries, chemical industries, agricultural product industries, etc., where more than one products of equal or differential importance are manufactured, either concurrently or during the production of the main product. In this context, joint products and by-products are often studied. Joint products are the products which are produced simultaneously, with the same raw material and process, and requires further processing to become a finished product … [Read more...]

Amalgamation implies a process of unification of two or more companies, which are involved in similar business to form a new company. As per Accounting Standard-14, Amalgamation can take place in two ways, i.e. in the nature of merger and in the nature of the purchase. When amalgamation is in the nature of merger the method of accounting used is the pooling of interest method, whereas is the amalgamation is in the nature of the purchase, purchase method of accounting is used. In pooling of … [Read more...]

Budgeting can be understood as the process of creating a budget, which is nothing but a quantitative statement of incomes and expenses, created and approved, for a specific period, which should be followed during that period, with the aim of achieving the objective. There are two types of budgeting techniques namely traditional budgeting - targets set in the previous year, budgeting is performed, by making certain additions and deductions, to reach the present budget and zero-based budgeting - … [Read more...]

Reconstruction is a process of the company's reorganization, concerning legal, operational, ownership and other structures, by revaluing assets and reassessing the liabilities. There are two methods of reconstruction which are internal reconstruction and external reconstruction. The former is the method in which the reconstruction is undertaken without winding up the company and forming a new one, while the latter, is one whereby the existing company loses its existence, and a new company is set … [Read more...]

Mutual funds can be described as a collective investment avenue. Investing in a mutual fund is like becoming a part-owner in the portfolio of investment. Based on the structure, a mutual fund is classified as open-ended and closed-ended. Open-ended funds, as the name suggests, are the type of mutual funds, wherein the investor can enter and exit anytime. On the other hand, closed-ended funds are the ones which the investor can buy during the IPO or from the stock exchange after they are … [Read more...]