Treatment of Depreciation in Profit and Loss Accounts and Balance Sheet
Financial Accounting SSS1 Third Term
WEEK 8
Treatment of Depreciation in Profit and Loss Accounts and Balance Sheet
Performance Objectives
- Treatment of Depreciation in Profit and Loss Accounts and Balance Sheet
Content
The value of fixed assets reduces after year because of usage and passage of time. It is well known that fixed assets are used for earning revenue. Therefore, a decrease in their value is considered as an expense or loss incurred in earning revenue and like other expenses or losses, is charged to the Profit and Loss Account. Otherwise, profit will be overstated. The value of the fixed asset should also be 'educed by the depreciation amount. It is important to note that depreciation is not recognized on a day to day basis but is charged at the end of an accounting period. Depreciation is usually computed on the basis of the life of the asset. Suppose, a machine costs Rs. 10,.... View More
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- Preparation of Bank Reconciliation Account
- Preparation of Bank Reconciliation when there is Bank Overdraft
- End of Year Adjustments in Profit and Loss Account
- Provision for bad Debt and Provision for Discount Allowed and Received
- Bad Debts Recovered
- Depletion of Fixed Assets
- Straight Line and Reducing Balance Methods of Depreciation
- Treatment of Depreciation in Profit and Loss Accounts and Balance Sheet
- Chapters 8
- Category SSS1
- Author ClassNotes Edu
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