Accounting Miscellaneous

The estimated value at which an asset is expected to be sold after the end of its useful life is called Residual value, Salvage value and Scrap value.

The memorandum of association of a company is the charter and defines the limitation of the power of the company established under Companies Act. Memorandum of Association is the most important document of a company. It states the objects for which the company is formed. It contains the rights, privileges and powers of the company. Hence it is called a charter of the company. It is treated as the constitution of the company. It determines the relationship between the company and the outsiders.

A firm has not recorded the bad debts by mistake. Net profit would increase is the effect of bad debt ommission.

Trial Balance is commonly prepared at the end of an accounting period. It is usually prepared at the end of an accounting period to assist in the drafting of financial statements.

Current assets are also known as Gross working capital. Gross working capital is the sum of all of a company’s current assets (assets that are convertible to cash within a year or less).

Bank Reconciliation statement is the comparision of a bank statement (sent by bank) with the Cash book. In other words, the balance shown in the Pass Book given by the bank should tally with the balance of Bank Account Kept in his ledger or Cash Book (Bank Column).

Posting is the next step to Journalizing in accounting cycle. 10 Steps of Accounting Cycle are; Analyzing and Classify Data about an Economic Event. Journalizing the transaction. Posting from the Journals to General Ledger. Preparing the Unadjusted Trial Balance. Recording Adjusting Entries. Preparing the Adjusted Trial Balance. Preparing Financial Statements.

An employee dismissed from the job is not a transaction. A transaction is an agreement between a buyer and a seller to exchange goods, services or financial instruments.

Balance sheet financial statements shows the financial position of a business at a specific date. The balance sheet, sometimes called the statement of financial position, lists the company’s assets, liabilities,and stockholders ‘ equity (including dollar amounts) as of a specific moment in time. That specific moment is the close of business on the date of the balance sheet.

An overstatement in the value of closing stock overstates all of the following except Cost of goods sold.