Show me some of the adjusting depreciation(closing entry) entries...

What is the difference between Reserves and Provisions

What is Treasury Stock or Treasury Share ?

What is the exact meaning of debit and credit in accounting?

Reserves are what you keep on hand just in case. Like a back up supply. Provisions are what is allotted to you.

Please follow this link

Debits and Credits | AccountingCoach.com

What is the difference between share and stock, is it same ?

Much the same!

Shares = each of the equal parts into which the ownership of a company or corporation is divided. Shares are usually in the form of transferable certificates of stock.
Ex. The ownership of this railroad is divided into several million shares. With borrowed money, they bought 59,100 shares... then agreed to resell the block (Newsweek). (Abbr:) sh.
Stock = 3a. The capital of a company or corporation, divided into portions or shares of uniform amount which are represented by transferable certificates. The holder of one of these is considered a part owner, rather than a creditor, of the company. b. the shares or portions of one such company or corporation. The profits of a company are divided among the owners of stock.
Ex. Father owns some stock in that railroad.

Treasury Stock is shares of stock of a company that have been issued and reacquired by the company.

Recording Depreciation will be an adjusting entry. The entry is:
Debit Depreciation Expense for the amount and Credit Accumulated Depreciation for the amount.

Closing entries are made to close out temporary accounts (Income Statement accounts) to permanent accounts (Balance Sheet accounts). You close out your revenues and expenses to your Income summary account, then close out your Income Summary account to Retained Earnings. The journal entry for depreciation expense will be: Credit Depreciation Expense for the amount in the account and Debit Income Summary Account for the amount.

No, the terms don't apply in accounting like that. That's just a plain old English definition, not accounting. You don't "provide provisions" to a company - they aren't the Army.

In my mind, the terms could be used interchangibly. However, I didn't answer this cause when I googled it I discovered (as I suspected) that different places use these terms in different ways.

If I purchased a machinery of Rs. 50,000 and Received a free printer of Rs. 3000 . What its Accounting entry? ( Both are assets but we have paid cash for machinery, can anyone explain this entry

The entry will be:

Debit Machinery 47,000
Debit Office Equipment 3,000
Credit Cash 50,000

The reason being the printer is an asset which will be used in the business and has a fair value at the time of acquisition.

The traders usually resort to offering such bargain options to boost their sales. Instead of giving trade discounts they offer some other goods that are not selling as fast as they want.

Goods destroyed by fire... can you explain the accounting entry?

Accounting entry can be explained if you had posted the accounting entry.

Try to understand the effect of the transaction and then think of the accounts involved for debit and credit

What is the invoice entry of an Asset was stolen.

What is Sensex

Can you please explain what are the Limitations of Ratio Analysis?

Why share capital shown in liabilities side of balance sheet?

Hi bheemaiah

The Bombay Stock Exchange Sensitive Index (Sensex)

See:
Bloomberg.com: Personal Finance

Difference between Reserve Capital and Capital Reserve

Reserve capital is the amount of unissued share capital that remains after the company has issued a certain amount of share capital out of its authorised capital.

Capital Reserve represents amount that can not be distributed as cash dividends such as share premium, revaluation surplus, capital redemption fund, etc.

First, you should post different questions in different threads. It can get confusing answering two questions in the same thread.

As to the first question, you need to check out our guidelines about submitting homework questions in the red print at the top of this forum. The "limitations of ratio analysis" is a typical homework question.

As for the second, the right side of the balance sheet is for both liabilities and equity. So I don't refer to it as the "liability" side. It's actually the financing side. The left side is the assets, the resources of the company. The right side is how those assets are financed, by either debt (liabilities) or equity (ownership).

Another way to put it is that all assets have a claim on them by someone. The liabilities are a claim by creditors, and the net value left over is the equity, the claim of the owners. So that right side has to equal the left side.

Can you please explain nature of Prepaid Expenses ? I mean is come under Nominal or Real account?

The necessity of prepaid expenses is brought about by the
PERIOD CONVENTION.

The period convention nominates the period when the accounting year ends.
If the timing of an expense does not fit in exactly with the accounting period, then it is necessary to adjust the accounts in such a way to recognise the
Amount of any part of an expense which is prepaid at balance date.

The examples are many, but the easiest to undersand is RENT ,
INSURANCE, etc.
That part of the expense that covers dates that are after the balance date have to be recognised by proportion and at balance date require an adjustment.
One would term this type of an account a nominal account.
A journal entry is required to adjust for these circumstances.
At the beginning of the following period , this adjustment is then reversed.
I hope this will help.

OK! I'm a bookkeeper and I know what a prepaid expense is but your explanation rolcam confused even me! But it is a nominal account

I agree that it was confusing, and I'm an accountant. It seems the answer more dealt with how to do an adjusting entry than explaining what a prepaid means. However, mommasmom, you're incorrect about the nominal. Prepaids are real accounts. Real accounts are your balance sheet accounts, and since prepaids are assets, that makes them real accounts.

bheemaiah, I have a feeling that may have been a homework question, which we don't do for you. That's because most normal people don't say to "explain the nature of." That sounds like textbook talk. So hopefully you will re-write my explanation in your own words. (I'm more interested in you understanding the concept than how you answer your homework question.)

Remember first that an asset is something of value that the company has, or has claim to. Things like cash and land are easy cause it's easy to see the company owns those things. But it also includes things they have a claim on. Like accounts receivable represents what customers owe to the company, therefore the company has a claim on the customers.

A prepaid is when the company paid something up front. Insurance is indeed a good example and more easily understood than some other examples. If you paid your car insurance up front for six months, the money has gone out, but you don't yet have the coverage. The coverage will be coming to you over a period of six months into the future. So if you paid it at the beginning of January, you still have coverage for January to June coming in the future.

Therefore you have a "claim" on something - you have a right to this future coverage that you've already paid. It's not really here yet cause the time hasn't passed yet.

Therefore it's an asset cause you have a claim on something of value, insurance coverage.

Once the time has passed, the month gone by, then that portion expires. As it expires, it becomes an expense. If the month goes by, you no longer have claim on that portion cause it's gone away, so it's no longer an asset. That's the part that gets into the adjusting entry.

Quote:

---

Originally Posted by morgaine300

I agree that it was confusing, and I'm an accountant. It seems the answer more dealt with how to do an adjusting entry than explaining what a prepaid means. However, mommasmom, you're incorrect about the nominal. Prepaids are real accounts. Real accounts are your balance sheet accounts, and since prepaids are assets, that makes them real accounts.

bheemaiah, I have a feeling that may have been a homework question, which we don't do for you. That's because most normal people don't say to "explain the nature of." That sounds like textbook talk. So hopefully you will re-write my explanation in your own words. (I'm more interested in you understanding the concept than how you answer your homework question.)

Remember first that an asset is something of value that the company has, or has claim to. Things like cash and land are easy cause it's easy to see the company owns those things. But it also includes things they have a claim on. Like accounts receivable represents what customers owe to the company, therefore the company has a claim on the customers.

A prepaid is when the company paid something up front. Insurance is indeed a good example and more easily understood than some other examples. If you paid your car insurance up front for six months, the money has gone out, but you don't yet have the coverage. The coverage will be coming to you over a period of six months into the future. So if you paid it at the beginning of January, you still have coverage for January to June coming in the future.

Therefore you have a "claim" on something - you have a right to this future coverage that you've already paid. It's not really here yet cause the time hasn't passed yet.

Therefore it's an asset cause you have a claim on something of value, insurance coverage.

Once the time has passed, the month gone by, then that portion expires. As it expires, it becomes an expense. If the month goes by, you no longer have claim on that portion cause it's gone away, so it's no longer an asset. That's the part that gets into the adjusting entry.

---

Hi, this is bheemaiah, thank you for your explanation; really I am satisfied with your answer, I know prepaids are assets it’s come under current assets, but I have little bit confusion of it’s come under Nominal or Real, because it’s an expense we have to paid in advance, normally expenses are come under Nominal account, that is the reason I have confused here. Once again thanks for your explanation.

It doesn't turn into an expense until it's consumed/expired. But prepaids themselves are not expenses; they are assets.

What happens to something later is not relevant to where it is now. It's a little like saying I get to record a receivable as cash because I'm going to receive cash in the future - but I don't have it yet so no I can't.

The British authors have classified accounts into three sections:
1. Real - assets and liabilities
2. Personal - receivables, payables and owner's accounts
3. Nominal - income and expenses

If you can under stand these then Prepayments are assets and hence Real accounts

bheemaiah, PLEASE stop using this same thread to ask question after question after question. I didn't realize your last question was tagged onto the end of an old thread or I would have stopped you then.

I just spent a bunch of time scrolling through 5 pages worth of stuff trying to figure out where the new stuff started, and then got nothing but thoroughly confused over like 10 new questions all in one thread, with answers interspersed. No clue what was going on.

DO NOT keep doing this. I don't think you get how totally confusing this is. How is anyone to know what new question you're asking, or what's been answered and what hasn't? How is anyone supposed to follow that mess?

I've moved your other questions out into threads of their own. Post new problems or questions in their own thread.

CONSIDER THIS THREAD CLOSED.