Finance Chhatra

The traditional accounting, known as single entry system of bookkeeping, was in vogue right from time immemorial. The beginning of modern accounting took the form of Financial Accounting based on the double-entry system. The scope of accounting was limited to keeping records of business transactions and to prepare Profit & Loss Account from the view of financial results and Balance Sheet from the view of financial position. Management Accounting is the term used to describe the accounting methods, systems & techniques which, coupled with special knowledge & ability, assist management in its task of maximizing profits or minimizing losses.                                                                                                ...

Depreciation refers to the decline in the value of fixed assets due to their usage or passage of time. It can be defined as the non-cash expense which is the assumed wear & tear to machinery. Being a non-cash expense it does not involve any cash outflow and is accounted in the debit side of P&L account. There are different methods which are used by the companies to calculate depreciation. Types of Depreciation Methods: Straight Line Depreciation Method Diminishing Balance Method Sum of year method Unit production method Straight Line Depreciation Method: Under this method, the fixed asset is depreciated by the same amount every year. With the straight-line depreciation method, the value of an asset is reduced uniformly over each period until it reaches its  salvage value .  Salvage Value is the residual or scrap value of the asset. It is calculated by simply dividing the cost of an asset, less its salvage value, by the useful life of the a...