Finance Helping Hands

(1) Going concern assumption : This is an important concept of accounting method. According to this concept when a business is started, it is assumed that the business is going to continue for a long time in the future. Hence it is called assumption of ongoing generation. Following are some examples based on the current generation concept: (i) Fixed assets are stated in the balance sheet at their cost after depreciation. In other words, productive or permanent assets at market value are not shown in the consolidated balance sheet. Longer in permanent assets business Purchased for use and not for resale. Therefore, instead of showing its market price as expected by the current generation, the market value is shown in the market value. (ii) Prepaid expenses are shown on the asset side of the balance sheet on the basis of going concern concept that the business is to continue for a long period of time and it is expected that the benefit of such prepaid expenses will be realized in the fut...

Two systems of naming are in vogue  : (1) Binomial nomenclature (2) Desi nomenclature. Desi nomenclature is India’s ancient system of writing accounts. This system is older than the binary nomenclature. In terms of principles of nomenclature both the methods have some similarities. However, the desi nomenclature differs from other accounting systems due to some of its distinctive features. In this method the books of account are known as Vahi, hence this method is also known as Vahi Khata process . Books according to this method are written in the regional language. Although this method is very ancient, it is a scientific and thorough method. Accounts in native nomenclature are much easier to write and understand. Features of desi nomenclature are as follows: (1) Books: Deshinama books are red in color with cloth covers. The design is made with thick thread stitching on the top of the box. These books are vertical, white and black paper and tied with a string in between. Nowadays t...

  Quantity and supply are usually considered the same but they are different. Quantity is the ratio of all the units of a good that are ready to sell and those that are not ready to sell at the current price. Quantity and supply vary if the producer is not willing to sell all the units of the good at the current price. Eg, a manufacturer has 500 units of a commodity of which he is willing to sell 300 units at the prevailing price. So the supply is considered to be 300 units. Thus, the power of the producer (or trader) to sell the commodity is the quantity and the power and willingness to sell at the prevailing price is the supply. Thus, quantity means the proportion of total salable units of a good. Supply may be less than quantity. Quantity and production are different things. Because unsold units from previous production are also included in the quantity. Practically speaking, quantity means the number of salable units of a commodity a trader has in a shop or godown and the willi...

  The Indian money market can be divided into two parts: (A) Organized money market (B) Unorganized money market. (A) Organized Money Market: Being a formal money market, it is owned by the  Reserve Bank of India , commercial banks, mutual funds etc. The organized money market in India is controlled by the Reserve Bank of India. In order to maintain sufficient liquidity in the money market, the Reserve Bank of India changes the interest rate as per the need. Organized money market includes financial instruments like treasury bill, certificate of deposit, call money. The syndicated money market is systematically coordinated and regulated by the  Reserve Bank of India . (B) Unorganized Money Market: Since the unorganized money market is informal, it is not controlled by any central organization. The activities also run without any rules. This money market consists of moneylenders, landlords, mortgagors, country bankers, Shroff etc. All this lacks coordination. Unorganized m...

  (1) Meaning : An organization whose purpose is not to make profit; But for social service, upliftment of the members of the organization, promotion of interest of the members, promotion of sports and education, development of cultural activities is called non-commercial organization. Such organizations derive income from, and incur expenses from, their activities; But they do not aim to earn money. Such organizations include sports clubs, Rotary-Lions clubs, trade associations like chambers of commerce, political associations, labor unions, medical associations, public hospitals, paramedic institutions, libraries, educational institutions, associations for cultural activities, orphanages, religious institutions, etc. . (2) Characteristics : The characteristics of a non-commercial organization are as follows: (i) Service : The main purpose of these organizations is not profit; But it is of service. (ii) Trading Account : Since these institutions do not have the purpose of trading,...

(1) Capital Fund or Permanent Fund : Capital income or capitalized amounts received by an institution other than a special purpose fund are shown under this head, i.e. added to the capital fund. At output-cost the excess of output over expenditure’ is added to capital and the excess of expenditure over output’ is subtracted from capital. Sometimes instead of adding ‘increase in output over cost’ to capital and deducting ‘increase in output over cost’, the increase at ‘output-cost’ is shown separately on the liability side in the consolidated balance sheet. That year Increase in yield” is added. ‘Increase in cost’ is deducted from it. An increase in output is also known as an ‘increase’ and an increase in expenditure as a ‘decrease’. (2) Subscription or Membership Fees : Generally, the organization collects a fixed subscription or membership fee from its members on a regular basis every year for the continuation of membership. This is the main source of income for the organization. This...