a) Traditional Method (Purchase-Based Accounting) In the traditional method, all purchases made during the year are treated as direct expenses in the Trading Account. Closing stock is valued at year-end and recorded through an adjustment entry, credited to the Trading…
A Cash Flow Statement is a financial report that provides a detailed summary of cash and cash equivalent transactions during a specific accounting period. It reflects how cash is generated and used through core operations, investments, and financing activities. By…
A Fund Flow Statement presents the movement of funds (working capital) between two accounting periods. It explains the sources of funds raised (like loans, share capital) and how they were applied (such as asset purchases, debt repayment). Unlike the cash…
An Income and Expenditure Account is a financial statement used by non-profit organizations to summarize their revenues and expenses for a specific period, typically one year. It determines whether the organization has a surplus (income exceeds expenditure) or a deficit…
Fixed costs are business expenses that do not change with variations in production or sales volume. These are incurred consistently over time, even if the company produces nothing. They are usually associated with time-bound obligations such as rent or insurance.…
Non-Integrated Accounting System is a method where financial accounting and cost accounting are maintained in two separate sets of books. Financial records are kept for external statutory reporting, while cost records are kept for internal cost control and decision-making. The…
Integrated Accounting System is a method where financial accounting and cost accounting records are maintained together in a single unified set of books. Each transaction records both its financial effect and costing effect simultaneously, enabling complete and real-time information without…