Redeemable preference shares are those shares where the issuer of the share has the right to redeem the shares within 20 years of the issuance at pre-determined price mentioned in the prospectus at the time of issuance of preference shares …
Introduction to Prudence Concept in Accounting Prudence concept in accounting (also known as conservatism) is a fundamental accounting concept which is based on the conservative approach of estimating the liabilities, expenses losses (i.e. cash outflow side) in a proactive manner …
Bad debt provision is reserve made to show the estimated percentage of the total bad and doubtful debts that needed to be written off in the next year and it is simply a loss because it is charged to profit …
Provisions in accounting refer to the amount that is generally put aside from the profit in order to meet a probable future expense or a reduction in the asset value although the exact amount is unknown. Provision cannot be seen …
A promissory note is a financial instrument that contains a written promise by one party (the note’s issuer or maker) to pay another party (the note’s payee) a definite sum of money, either on demand or at a specified future …
Prime costs are a firm’s expenses directly related to the materials and labor used in production. It refers to a manufactured product’s costs, which are calculated to ensure the best profit margin for a company. The prime cost calculates the …
A prepaid expense is a type of asset on the balance sheet that results from a business making advanced payments for goods or services to be received in the future. Prepaid expenses are initially recorded as assets, but their value …
All expenses incurred before a company is formed i.e. cost incurred before the start of business operations is termed as preliminary expenses. They are a common example of fictitious assets and are written off every year from the profits earned by …
A company’s operating profit is its total earnings from its core business functions for a given period, excluding the deduction of interest and taxes. It also excludes any profits earned from ancillary investments, such as earnings from other businesses that …
Obsolescence is a notable reduction in the utility of an inventory item or fixed asset. The determination of obsolescence typically results in a write-down of the inventory item or asset to reflect its reduced value. Obsolescence can arise when there …