Name and explain different types of reserves in detail.
Types of Reserves are as follows:-
1) Revenue Reserves:- These reserves come into existence out of profits which have been earned in the course of day-to-day business operations. Therefore, the revenue reserves represent undistributed profits and as such are available for the distribution of dividends.
Revenue reserves may be of the following two types:-
(A) General Reserve:- Usually, the businessmen do not withdraw the entire profits from the business but retain a part of it in the business to meet unforeseen future uncertainties.
(B) Specific Reserve:- Such a reserve is created for a specific purpose and can be utilised only for that purpose.
2) Capital Reserves:- In addition to the normal profits, capital profits are also earned in the business from many sources. The reserves created out of such capital profits are known as Capital Reserves. Such reserves generally, are not available for distribution as cash dividend among the shareholders of a Company. Profits received from the following sources are termed as Capital profits:-
(A) Profits on the sale of fixed assets.
(B) Profits on the revaluation of fixed assets and liabilities.
(C) Premiums received on issues of Shares or Debentures.
(D) Profit on redemption of Debentures.
(E) Profit from the reissue of forfeited shares.
(F) Profit prior to the incorporation of a Company.
(G) Profit on the purchase of a running business.
State whether the following statements are true or false:
State briefly the need for providing depreciation.
Give four examples each of ‘revenue reserve’ and ‘capital reserves’.
Explain the concept of depreciation. What is the need for charging depreciation and what are the causes of depreciation?
Give four examples each of ‘provision’ and ‘reserves’.
What are the effects of depreciation on profit and loss account and balance sheet?
State with reasons whether the following statements are True or False ;
(i) Making excessive provision for doubtful debits builds up the secret reserve in the business.
(ii) Capital reserves are normally created out of free or distributable profits.
(iii) Dividend equalisation reserve is an example of general reserve.
(iv) General reserve can be used only for some specific purposes.
(v) ‘Provision’ is a charge against profit.
(vi) Reserves are created to meet future expenses or losses the amount of which is not certain.
(vii) Creation of reserve reduces taxable profits of the business.
Discuss in detail the straight line method and written down value method of depreciation. Distinguish between the two and also give situations where they are useful.
Basaria Confectioner bought a cold storage plant on July 01, 2014 for ₹ 1,00,000. Compare the amount of depreciation charged for first three years using:
Distinguish between ‘general reserve’ and ‘specific reserve’.
Name any two types of commonly used negotiable instruments.
Why is it necessary to record the adjusting entries in the preparation of final accounts?
State the meaning of incomplete records?
Briefly state how the cash book is both journal and a ledger.
State the meaning of a trial balance?
State the four basic requirements of a database applications.
Define accounting.
State the different elements of a computer system.
Why is it necessary for accountants to assume that business entity will remain a going concern?
State the need for the preparation of bank reconciliation statement?
What is contra entry? How can you deal this entry while preparing double column cash book?
Write the process of preparing ledger from a journal.
What is the money measurement concept? Which one factor can make it difficult to compare the monetary values of one year with the monetary values of another year?
What is meant by maturity of a bill of exchange?
Give two examples of errors of principle?
Explain errors of principle and give two examples with measures to rectify them.
Which qualitative characteristics of accounting information is reflected when accounting information is clearly presented?
a. Understandability
b. Relevance
c. Comparability
d. Reliability
Give example of the relationship between a Human Resource Information System and MIS.
Explain, using examples, the relationship between the organisational MIS and the other functional information system in an organisation. Describe how AIS receives and provides information to other functional MIS.
State the limitations of trial balance?