27. Comparison of financial statements

There are two basic financial statements—viz. Income Statement and Balance Sheet. An income statement shows the net results of the business operations during an accounting period. A balance sheet is a statement of assets and liabilities indicating the financial position of an enterprise at a given date.Meaning and purpose of comparative financial statementsComparative financial statements …

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25. Funds flow statement

(on working capital basis) In the words of R. N. Anthony ‘Funds flow statement is a statement prepared to indicate the increases in the cash resources and the utilisation of such resources of business during the accounting period.’ Thus, funds flow statement is a report of financial operation of a business undertaking. It clearly indicates …

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17. Single entry system

According to Carter—“Single entry system is a method or a variety of methods, employed for the recording of transactions, which ignore the two-fold aspects and consequently fails to provide the businessman with the information necessary for him to be able to ascertain the position. Kohler defines it as system of book-keeping in which, as a …

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15. Bill of exchange

In business, a large number of transactions are made on credit basis. In case of credit sale of goods, buyer promises to make payment after a certain period. Under the circumstances, the seller likes to get a written undertaking from the purchaser to get the payment after a certain period. For this, the seller prepares …

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13. Depreciation

Depreciation may be described as a permanent, continuing and gradual shrinkage in the book value of fixed assets. It is the cost of assets consumed in business.DefinitionAccording to accounting standard VI, “Depreciation is a measure of the wearing out, consumption or other loss of value of a depreciable asset arising from use, effusion of time …

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