What is the difference between finance and accounts? most of the companies having a different section like finance and accounts. why they aren't had only single section neither finance nor accounts?

Correct Answer: In international accounting LIFO and extraordinary items are prohibited In international accounting, proposed dividend entry is made in the Year in which it is declared, but in Indian Accounting Standards Proposed Divided entry is passed in the year for which dividend is declared eg Dividend for 09-10 declared in AGM on 14 Sept 2010, Financial (Accounting) Year = 2009-10 In Indian Accounting entry would be passed in 2009-10 Accounts books, but in International Accounting entry would be passed in the year 2010-11 Accounts books

Correct Answer: A journal entry is recorded accourding to the rules of debit and creditfor example goods sold for Rs 50000 for cash ----to record this -- identify the accounts involved-- iegoods A/cand Cash A/cgoods is a real account and cash is also a real accountdebit and credit rule for Real accounts is DEBIT WHAT COMES IN CREDIT WHAT GOES OUT according to this--cash is coming to the organisation and goods is leaving from the organisation--Entry for this is Cash A/c Dr 50000 to Goods A/c or Sales A/c 50000 ( For Cash Sales )

Correct Answer: As sales occurs every customer is not able to pay the bills that's where A/R are occurs the goal of A/R is to maintain summarize & record all the transactions related to unpaid a/c or future collections or A/R

Correct Answer: Debtors are the main role of the business he is the entire back bone of the business The goodwill of the concern is in the hands of debtors because he is the person who takes our product or raw material to the customer or manufacture so he is takes the main role in the business in finance and business development

Correct Answer: An accrued receivable is either a trade receivable or a non trade receivable for which a business has earned revenue, but for which it has not yet issued an invoice to the customer You normally create an accrued receivable in either of the following scenarios: * Milestone A milestone has been reached in a contract with a customer, where you are clearly entitled to a specific, pre-defined amount, but the contract does not yet allow you to issue an invoice; or * Services The contract with the customer states that the customer will pay you for hours worked, rather than for a specific work product For example, there may be 10 hours of work that will eventually be billed at a rate of $80 per hour, so you accrue the receivable for $800 The journal entry to create an accrued receivable is a debit to an accounts receivable account, and a credit to the revenue account It may be useful to create a unique general ledger account for accrued receivables, rather than using the main trade receivables account, in order to clearly show these transactions In addition, you should set these journal entries to automatically reverse themselves in the next accounting period; you would then replace the accrual in the next period with the actual invoice (assuming that there is a billing event in the next period) If you are unable to create an invoice in the next period, then you should continue to accrue and reverse the revenue and accrued receivable in every period on a cumulative basis until you can eventually issue an invoice For example, ABC International has completed a milestone in a project to install a dam, though it is not allowed under the contract to issue an invoice more frequently than once a quarter It therefore accrues revenue and a receivable of $50,000 at the end of January The journal entry automatically reverses at the beginning of February ABC then earns another $30,000 on the next project milestone in February, but is still contractually unable to issue an invoice It therefore accrues revenue and a receivable of $80,000 in February The journal entry automatically reverses at the beginning of March ABC then earns another $70,000 on the next project milestone in March It is allowed to issue a quarterly invoice at the end of March, so it issues an invoice for $150,000 By using accruals, ABC has recognized $50,000 of revenue and receivables in January, $30,000 in February, and $70,000 in March, rather than recognizing all $150,000 in March, when it issues an invoice to the customer You should not use accrued receivables if you cannot justify to an auditor that there is a clear obligation by the customer to pay the company for the amount of the accrued receivable Otherwise, there is a presumption that the business has not yet reached the point where the customer has a clear obligation to pay If you use accrued receivables, expect auditors to pay particular attention to their justification For example, you should not accrue receivables in a case where a business is providing services under a fixed fee contract, and it earns revenue only when the entire project is complete and approved by the customer Revenue has not really been earned prior to completion, so there should be no accrual prior to that point

Correct Answer: After posting the all accounts in the Ledger a statement is prepared to showing debit and credit balancesDebit balances must be tally with the Credit side balance is called trial balance

Correct Answer: Trade receivables are amounts billed by a business to its customers when it delivers goods or services to them in the ordinary course of business These billings are typically documented on formal invoices, which are summarized in an accounts receivable aging report In the general ledger, trade receivables are recorded in a separate accounts receivable account, and are classified as current assets on the balance sheet if you expect to receive payment from customers within one year To record a trade receivable, the accounting software creates a debit to the accounts receivable account and a credit to the sales account when you complete an invoice When the customer eventually pays the invoice, the accounting software records the cash receipt transaction with a debit to the cash account and a credit to the accounts receivable account Trade receivables vary from non trade receivables in that non trade receivables are for amounts owed to the company that fall outside of the normal course of business, such as employee advances or insurance reimbursements Also, most or all of the transactions passing through the main accounts receivable account are generated by the accounting system, as you create customer invoices and credit memos, whereas the transactions recording non trade receivables nearly always involve journal entries

Correct Answer: A bad debt provision is a reserve that you build up over time against the future recognition of specific accounts receivable as being uncollectible Thus, if a company has issued invoices for a total of $1 million to its customers in a given month, and has a historical experience of 5% bad debts on its billings, it would be justified in creating a bad debt provision for $50,000 (which is 5% of $1 million) It is impossible to know the exact amount of bad debts that will occur at some point in the future from the current account receivable, so it is entirely normal to continually readjust the bad debt provision, as you gain a greater understanding of how collectible the accounts receivable really are These adjustments may lead to future increases or decreases in the bad debt expense Since these adjustments can be viewed as a means of manipulating a company's reported profits, you should fully document your reasons for making the adjustments You would create a bad debt provision with a debit to the bad debt expense account, and a credit to the bad debt provision account The bad debt provision account is an accounts receivable contra account, which means that it contains a balance that is the reverse of the normal debit balance found in the associated accounts receivable account Later, when a specific invoice is found to be uncollectible, you create a credit memo in the accounting software for the amount of the invoice that is uncollectible The credit memo reduces the bad debt provision account with a debit, and reduces the accounts receivable account with a credit Thus, the initial creation of the bad debt provision creates an expense, while the later reduction of the bad debt provision against the accounts receivable balance is merely a reduction in offsetting accounts on the balance sheet, with no further impact on the income statement The reason for a bad debt provision is that, under the matching principle, you should match revenues with related expenses in the same accounting period Doing so shows the full effect of a billed sale transaction in a single accounting period If you were to not use a bad debt provision, and instead used the direct write off method to only charge bad debts to expense when you were certain that a specific invoice was not collectible, then the charge to expense might be many months later than the initial revenue recognition associated with the billing Thus, under the direct write off method, profits will be too high in the period of the billing to the customer, and too low in the later period when you finally charge some portion or all of an invoice to the bad debt expense

Correct Answer: An accounts receivable aging is a report that lists unpaid customer invoices and unused credit memos by date ranges A typical aging report lists invoices in 30-day "buckets," where the left-most column contains all invoices that are 30 days old or less, the next column contains invoices that are 31-60 days old, the next column contains invoices that are 61-90 days old, and the final column contains all older invoices The report is sorted by customer name, with all invoices for each customer itemized directly below the customer name, usually sorted by either invoice number or invoice date A sample report follows, though without the individual invoice detail that is usually found in such a report: Customer Name Total A/R 0-30 Days 31-60 Days 61-90 Days 90+ Days Abercrombie $15,000 $10,000 $5,000 Bufford Inc 29,000 20,000 9,000 Chesterton Co 83,000 47,000 21,000 12,000 3,000 Denver Brothers 8,000 8,000 Totals $135,000 $57,000 $46,000 $21,000 $11,000 If the report is generated by an accounting software system (which is usually the case), then you can usually reconfigure the report for different date ranges For example, if your payment terms are net 15 days, then the date range in the left-most column should only be for the first 15 days This drops 16-day old invoices into the second column, which highlights that they are now overdue for payment The report primarily contains invoices, but it may also contain credit memos that have not been used by customers, or which have not yet been matched against an unpaid invoice The aging report is the primary tool used by collections personnel to determine which invoices are overdue for payment, and which therefore require them to contact customers Given its use as a collection tool, the report may be configured to also contain contact information for each customer The aging report is also used as a tool for estimating potential bad debts, which are then used to revise the allowance for doubtful accounts The usual method for doing so is to derive the historical percentage of invoice dollar amounts in each date range that usually become a bad debt, and apply these percentages to the column totals in the most recent aging report An additional use of the aging report is by the credit department, which can view the current payment status of any outstanding invoices to see if customer credit limits should be changed This is not an ideal use of the report, since the credit department should also review invoices that have already been paid in the recent past Nonetheless, the report does give a good indication of the near-term financial situation of customers

Correct Answer: Accounts receivables help small businesses by providing quick-time period liquidity Additionally continued sales on credit provide the much-needed continuity for small companies