What is double accounting system and its main feature?
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a system of accounting prescribed by British law for railway and public utility enterprises whereby permanent capital is offset against fixed assets purchased with monies contributed from permanent capital
(a) Generally, a public utility undertaking needs a large amount of capital which is invested in the acquisition of fixed assets. Therefore, fixed assets, fixed liabilities and current assets, current liabilities are to be separately dealt
(b) Revenue Account and Net Revenue Account are prepared instead of Profit and Loss Account and Profit and Loss Appropriation Account.
(c) Normally, no adjustment of asset is made in the Capital Account.
(d)Depreciation is not deducted from the asset concerned but the same is shown as a liability by way of a fund. And, as such, fixed assets are recorded at book value.
(e) Any kind of funds and reserve — e.g., Sinking Fund, Depreciation Fund, General Reserve, Capital Reserve, the Balance of Revenue/Net Revenue Account — are shown in the liabilities side of the General Balance Sheet.
(f) Discount and Premiums are permanently treated as capital items.
(g) Loan capital (debentures) Shares and Stocks are treated as capital items.
(h) Interest on Loan and Debentures (i.e., all fixed interests) are to be charged against Net Revenue Account.
(a) Generally, a public utility undertaking needs a large amount of capital which is invested in the acquisition of fixed assets. Therefore, fixed assets, fixed liabilities and current assets, current liabilities are to be separately dealt
(b) Revenue Account and Net Revenue Account are prepared instead of Profit and Loss Account and Profit and Loss Appropriation Account.
(c) Normally, no adjustment of asset is made in the Capital Account.
(d)Depreciation is not deducted from the asset concerned but the same is shown as a liability by way of a fund. And, as such, fixed assets are recorded at book value.
(e) Any kind of funds and reserve — e.g., Sinking Fund, Depreciation Fund, General Reserve, Capital Reserve, the Balance of Revenue/Net Revenue Account — are shown in the liabilities side of the General Balance Sheet.
(f) Discount and Premiums are permanently treated as capital items.
(g) Loan capital (debentures) Shares and Stocks are treated as capital items.
(h) Interest on Loan and Debentures (i.e., all fixed interests) are to be charged against Net Revenue Account.
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