Advantages of Bill of Exchange

The advantages of a bill of exchange can be shown as follows: A bill of exchange is a legal document in which the debtor accepts that a certain sum of money is owed by him and he will make the payment of the same after the expiry of a certain period. Hence it is eviden…

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Bills of Exchange - Definition, Characteristics and types

Introduction Nowadays thousands of transaction occur in a business daily. These transactions are of two types Cash and Credit, truly speaking the majority of the transactions is based on credit nowadays. In the case of sales, goods are delivered to the purchaser immedi…

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Accounting for provision

Provision is a sort of a special reserve. Provision is made immaterial of profit or loss. Generally, provisions are made for the following purposes: Provision for Bad and Doubtful Debts Provision for Discount on Debtors Provision for Discount on Creditors Provision for…

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Meaning of Provision

Meaning of Provision When profit is set aside for a known liability, it is known as 'Provision'. Truly speaking, Provision is not an appropriation of divisible profit, rather it is a charge on Profit because, under it, the liability or loss is known, but the ex…

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Secret Reserve in Accounting

Meaning Sometimes, some such reserve which is not disclosed in the Balance Sheet is created. These are known as secret reserve. The actual financial condition is better than that disclosed. According to D. Poula "Secret Reserve is that reserve which is not disclo…

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Types of Open Reserve

Open reserves are the reserves which are disclosed in the balance sheet. So that users of Balance Sheet may know about them. Open reserves are of two types: Revenue Reserve  Capital Reserve Revenue Reserve Revenue reserve is created from general profits. These reserve…

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Reserves - Meaning, Features, Importance and Purpose

Introduction A business is always surrounded by uncertainty. It is impossible to predict when there will be a problem before a business. Hence it is essential for every business that a part of its profit must be set aside every year for the future so that the uncertain…

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