Accountancy

Cash account with normal balance is shown at the debit side of a trial balance.

Salaries of selling staff would NOT be considered as a component of ‘cost’ of stock. When investors purchase shares of stock, the price paid includes two components: the price of the stock and the fee charged by the brokerage firm, called commission.

Legal work on patent application is not considered as Research & Development costs. Research and development (R&D) expenses are associated with the research and development of a company’s goods or services.

Office equipment account will be credited when a typewriter is sold that has been used in the office.

X draws a bill on Y. X endorsed the bill to Z. Z will be the payee of the bill.

The assets which have a limited useful life are termed as Depreciable assets. The assets which are held by a business for the production and supply of goods and services, expected to be used for more than an accounting year and have a limited useful life are known as Depreciable Assets.

Discounting of bill by the drawer is done with Bank. An accepted draft or bill of exchange sold for early payment to a bank or credit institution at less than face value after the bank deducts fees and applicable interest charges.

A bill of exchange when drawn requires acceptance. By acceptance, the drawee engages himself to pay the amount from the bill of exchange to the person who will bear or hold it on the due term.

Long term liabilities consist of all debts, payabke after 12 months. Long-term liabilities are obligations not due within the next 12 months or within the company’s operating cycle if it is longer than one year.