Account 3 Marks Question

Classification is as follows:-
i. Assets: Bank balance, Debtors
ii. Liabilities: Bank overdraft, creditors
iii. Expenses: Salary to Manager, Discount to debtors, cost of goods sold
iv. Revenues: Sales

No, I do not agree. Cash Basis of Accounting is more appropriate for Mr. Abhinav Kumar because a medical practitioner receives his fee immediately after giving consultancy.

i. Comparability: It is the level of standardization of accounting information that allows the financial statements of multiple organizations to be compared to each other. This is a fundamental requirement of financial reporting that is needed by the users of financial statements.
Financial statements are more comparable when the same accounting policies and standards are applied across multiple reporting periods, as well as across multiple entities within an industry. For example, if a number of oil and gas firms consistently apply the same industry-specific accounting standards to their financial statements, then there should be a high level of comparability within that industry.
ii. Flexibility: using a philosophy that is based on the principles, instead of the rules, this set of standards will have the goal of arriving at a reasonable valuation with various ways to accomplish a task. Financial statements are more easy to reads and to use.
iii. Beneficial to small and new investors: IFRS can help new and small investors by making, reporting standards to have better quality and become simpler, putting these investors in a similar position with professional investors, which was not feasible with previous standards.

When discount ia allowed by seller to its customers at a fixed percentage on the list price of the goods it is called trade discount. It is not recorded in the books of accounts as it is deducted in the invoice itself from the gross value of goods.
Example: If a trader sells goods of the list price of ₹ 15000 at 20% trade discount to Ram. The following entry will be made:

The journal and the ledger are the most important books of the double entry mechanism of accounting and are indispensable for an accounting system. The following points of comparison are worth noting

Basis	Journal	Ledger
Nature of Book	The journal is the book of first entry (original entry).	The ledger is a book of secondary or final entry.
Chronological/Analytical	The journal is the book for chronological record.	The ledger is the book for analytical record.
Process of Recording	Process of recording in the journal is called journalising.	The process of recording in the ledger is known as posting.
Basis of classification	Transaction is the basis of classification of data within the journal.	Account is the basis of classification of data within the ledger.
Format	A journal has five columns- Date, particulars, ledger folio, debit amount, credit amount.	Ledger has four identical columns on debit and credit side-Date, particulars, journal folio, amount.