Class 11th Question 9 : distinguish between debto .. Answer
It gives information regarding how much goods have been purchased and sold, expenses incurred and amount earned during a year. Class 11 Accountancy NCERT Solutions Chapter 1, Introduction to Accounting provides students with the fundamentals of business financial management. Debtors are an integral part of current liabilities and represent the aggregate amount which a customer owe to the business. On the contrary, a creditor represents trade payables and is a part of the current liability. A creditor is a person or entity to whom the company owes money on account of goods or services received.
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Ans.There are various types of accounting. They can be classified into – Financial Accounting, Managerial Accounting, Cost accounting, Internal accounting and Tax accounting. Get answers to the most common queries related to the K-12 Examination Preparation. Debt can be referred to in a variety of ways depending on the sort of endeavour. A debtor is commonly referred to as a borrower if the debt is taken from a financial institution (e.g., a bank).
- It also consists of the cash in hand and cash in the bank.
- For example, goods costing Rs 1,00,000 are bought at Rs 1,20,000, then the sale proceeds of Rs 1,20,000 is the sales and 1,00,000 is the price to generate this sale.
- They can be classified into – Financial Accounting, Managerial Accounting, Cost accounting, Internal accounting and Tax accounting.
- Name the qualitative characteristics of accounting information denoted by this statement.
- Charlie Company is the creditor and Alpha Company is the debtor if Charlie Company sells items to Alpha Company on credit.
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Sundry Debtors and Sundry Creditors are the stakeholders of the company. For an efficient Working Capital cycle, every company maintains a time lag between the receipt from debtors and payment to creditors. So that, the flow of working capital will go smoothly. Creditors are the parties, to whom the company owes a debt. Here, the party can be an individual or a company which includes suppliers, lenders, government, service providers, etc. Whenever the company purchases goods from another company or services are provided by a person and the amount is not yet paid.
It’s worth noting that any corporate organization can be both a creditor and a debtor at the same time. A company, for example, may borrow capital to grow its operations (i.e., become a debtor), while also selling its goods to customers on credit (i.e., be a creditor). In other words, interest on capital is the interest paid to owners distinguish between debtors and creditors class 11 for providing a firm with the required capital to start a business.
It records the assets and liabilities of the business at the end of the accounting period after the preparation of trading and profit and loss accounts. A debtor is an individual or entity that owes money to a creditor. The concept can apply to individual transactions, so that someone could be a debtor in regard to a specific supplier invoice, while being a creditor in relation to its own billings to customers. Even a very wealthy person or company is a debtor in some respects, since there are always unpaid invoices payable to suppliers. The only entity that is not a debtor is one that pays up-front in cash for all transactions.
Balance Sheet – A balance sheet is known as a statement of financial position as it shows the position of assets, liabilities, and equity at the end of an accounting period. The net worth of a business can be determined by deducting the liabilities from the assets. A Ledger Book or more precisely Ledger Account is the primary and chief journal in the accounting of an organisation or a business entity. It includes complete information on all the aspects related to the financial transactions made by the business entity within the stipulated period.
If a partner introduces any further capital to the business, then the additional capital is also taken into account for providing interest. Wages – The hourly compensation paid to the employees for their work during a period of time in an organisation is called wages. The blue-collar workers are paid for the total number of hours that they work. These types of employees usually have a time card or time sheet to track their work on a weekly basis. If Alpha Company lends money to Charlie Company, Alpha takes on the role of the creditor, and Charlie is the debtor.
Liquid property – belongings that can be kept either in cash or coins equivalents are regarded as liquid belongings. These can be transformed into coins in a very brief period of time; for example, coins, financial institutions, bills receivable, etc. Fixed Assets – those are that property that is held for the long term and boom the income-earning ability and efficient capability of the business.
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Determining earnings earned or loss incurred – as a way to determine the net result on the stop of an accounting period, we need to calculate income or loss. For this reason trading and earnings and loss accounts are prepared. It offers statistics regarding how a lot of goods have been bought and offered, charges incurred and amount earned during a yr. Ans.Accounting requires the preparation of the 3 most important financial statements. They are – The Balance sheet, which is a summary of the financial position of a company including the assets, liabilities and capital. The Income Statement, which is a record of the revenues and expenditures; and The Cash Flow statement, which is the summary of the cash and cash equivalents flowing in and out of the business organisation.
The accounting facts help the government within the formula of numerous regulations and measures and to address diverse economic problems like employment, poverty and so on. Investors and capability buyers – They invest or plan to invest in the commercial enterprise. For this reason, to be able to verify the viability and prospectus of their investment, creditors want information approximately the profitability and solvency of the enterprise. Inner customers are typically referred for the employees of the enterprise. They have a direct right of entry to the monetary statements of a commercial enterprise. To predict and calculate the income earned or loss incurred all through an accounting duration via getting ready income and loss accounts.
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Give one point of distinction between book-keeping and accountancy.