Following are the most popular questions of AccountingCoach's blog. We have reviewed its answers and written below. Read previous month's review at here.
Q: - 1 How do you balance a checkbook?
Ans. There is only single way of balancing a checkbook. In that way, you have to compare your bank statement with your bank check book. If there is mistake, we can find from them and will start to recognize without any delay. If you want to reconciliation of whole passbook with your bank account, you will get more reasons of not matching bank account’s balance with your passbook’s balance.
Q:- 2. What is the difference between residual value, salvage value, and scrap value?
Ans. Professor explained that all terms are used to know the value at the end of useful life of any fixed asset. Residual value is expected value of fixed assets which have been taken on lease by us. At the end of lease we calculate residual value.
Q:- 3. What is the difference between an accrual and a deferral?
Ans. Accrual means outstanding, both expenses and revenue may be outstanding. Accrual expenses means that expenses which is due but not paid and accrual revenue means income earned but not received. Deferral expenses means expenses paid in advance but due in future. So, it is related to next accounting period. Deferral revenue means income received in advance but it will earn in next accounting period.
Q:- 4. What is the difference between the cash basis and the accrual
basis of accounting?
Ans. Cash basis accounting and accrual basis accounting are different on the basis of record of transaction. In cash basis accounting, a transaction will be recorded when cash amount will be paid or will be received. But in accrual basis of accounting, it is not basic condition of recording of transaction. All expenses will be recorded when it will be due whether paid or not and all income will be recorded when income earned whether received or not under accrual basis of accounting.
Q:- 5. What is the difference between an implicit cost and an
explicit cost?
Ans. Implicit cost which we can not show as separated cost. Simple example of implicit cost is the cost of salary of businessman, if he works in his own small business. At that time, business will not pay him salary. So, it is implicit cost of business, but same time, if he works in his company type business, he has right to get salary and it will be explicit cost of his company type business. There is no need to record implicit cost in business but it is need to record explicit cost in books of business.
Q:- 6. What is a rolling budget?
Ans. A rolling budget is also known as a continuous budget. If businessman continues the business for next financial year, it will become rolling budget. In case capital expenditure, company can make 5 years rolling budget.
Q: - 1 How do you balance a checkbook?
Ans. There is only single way of balancing a checkbook. In that way, you have to compare your bank statement with your bank check book. If there is mistake, we can find from them and will start to recognize without any delay. If you want to reconciliation of whole passbook with your bank account, you will get more reasons of not matching bank account’s balance with your passbook’s balance.
Q:- 2. What is the difference between residual value, salvage value, and scrap value?
Ans. Professor explained that all terms are used to know the value at the end of useful life of any fixed asset. Residual value is expected value of fixed assets which have been taken on lease by us. At the end of lease we calculate residual value.
Q:- 3. What is the difference between an accrual and a deferral?
Ans. Accrual means outstanding, both expenses and revenue may be outstanding. Accrual expenses means that expenses which is due but not paid and accrual revenue means income earned but not received. Deferral expenses means expenses paid in advance but due in future. So, it is related to next accounting period. Deferral revenue means income received in advance but it will earn in next accounting period.
Q:- 4. What is the difference between the cash basis and the accrual
basis of accounting?
Ans. Cash basis accounting and accrual basis accounting are different on the basis of record of transaction. In cash basis accounting, a transaction will be recorded when cash amount will be paid or will be received. But in accrual basis of accounting, it is not basic condition of recording of transaction. All expenses will be recorded when it will be due whether paid or not and all income will be recorded when income earned whether received or not under accrual basis of accounting.
Q:- 5. What is the difference between an implicit cost and an
explicit cost?
Ans. Implicit cost which we can not show as separated cost. Simple example of implicit cost is the cost of salary of businessman, if he works in his own small business. At that time, business will not pay him salary. So, it is implicit cost of business, but same time, if he works in his company type business, he has right to get salary and it will be explicit cost of his company type business. There is no need to record implicit cost in business but it is need to record explicit cost in books of business.
Q:- 6. What is a rolling budget?
Ans. A rolling budget is also known as a continuous budget. If businessman continues the business for next financial year, it will become rolling budget. In case capital expenditure, company can make 5 years rolling budget.
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