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Published date Dec 24, 2018

lash pash chatLash Pash Chat

22-10-2014 (Financial Accounting 1st semester BBA)

,

22-10-2014

Rules Regarding writher Transaction is cashed or credit.

Cash

Credit

Examples

According to 1st rule when transaction having word on cash this transaction in cash.

According to 1st rule when transaction having word on credit this transaction in cash.
  1. Mr. Aslam purchases goods rs. 10,000 on cash
  2. Mr. Aslam sales goods rs. 10,000 on credit.

According to 2nd rule when transaction having the party name mentioned in it.

According to 2nd rule when transaction having the party name is not mentioned in it.
  1. Mr. Aslam purchases goods rs. 10,000
  2. Mr. Aslam sold goods rs. 10,000 to Ahmed.

  Financial Accounting Rules:

  1. Conservatism rule
  2. Gull Disclosure rule
  3. Consistency rule
  4. Materiality rule

Conservatism rule: according to this rule we follow the L.C.M method.

L.C.M: Lower of cost or market value. We don’t consider a decision at the base of expected revenue but we consider a decision at the base of expected expenses. Expected gain never record but expected loss may be record.

Full Disclosure rule: according to this rule we maintain that all the Information fully shows to every person regarding to the book of accounting.

Consistency rule: According to this rule we adopt an accounting method for at least 1 accounting period.

Materiality rule: According to this rule we just record such information which may be important for the business while other useless things may not be record.

Types of Transactions:

  1. Internal transaction
  2. External transaction
  3. Cash transaction
  4. Credit transaction
  5. Paper transaction

Internal Transaction: Such type of transaction which occur between two or more than two Organizations.

External Transaction: Such type of transaction which occur within one Organization.

Cash Transaction: Such type of transaction in which payment pay or received immediately.

Credit Transaction: Such type of transaction in which payment pay or received after some time.

Paper Transaction: Such type of transaction in which some features of transaction exists while others absent. For example if we get loss due to fire or thief then there is no 2nd party but monetary deal occur & ownership also changed than such transaction are paper.

 

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