26. What is working capital?
Working capital is calculated as current assets minus current liabilities, which is used in day-to-day trading.
In a simple accounting scheme, the concept of working capital focuses on the capital resources that a given company can count on in the short term to operate. These resources owned by the company are the cash, the portfolio of financial products, and other investments made by the company.
27. How do you maintain accounting accuracy?
Maintaining the accuracy of an organization’s accounting is an important activity as it can result in a huge loss.
Some of the most common ways of maintaining accuracy in accounting are:
- Identify revenue streams
- Keep a close eye on invoices and receipts
- Prepare tax returns to avoid penalty
- Prepare financial statements
- Keep tabs on deductible expenses
28. What is TDS? Where do you show TDS on a balance sheet?
TDS (Tax Deducted at Source) is a concept aimed at collecting tax at every source of income. In the Balance Sheet, TDS is always shown in the Liability Side, as it is a liability to the Government, the amount we used to collect on behalf of the Government in the business process from the others. And it will be shown on the Assets side when the amount has been deducted by others on this account.
29. What is the difference between accounts payable and accounts receivable?
Accounts receivable are assets – the company will collect this money in exchange for already sold goods or services.
Accounts payable are liabilities – the company owes this money to someone else for goods or services.
30. Define and explain the three financial statements.
The three types of financial statements are balance sheets, income statements, and cash flow statements.
For example:
- Balance sheets show liabilities, assets, and shareholder equity. A balance sheet shows a company’s financial position at a given moment. Assets should be equal to liabilities and shareholder equity, or, in other words, balanced.
- Income statements are typically quarterly or annual reports that break down a company’s operations. This statement shows a company’s revenue, expenses, and taxes, resulting in the net income or profit.
- Cash flow statements show a more detailed overview of a company’s incoming and outgoing cash than the income statement. This statement is useful for determining if a company can continue paying its bills and invest in growth down the line.
31. Income outstanding or income earned but not received or Income accrued
Income outstanding means income earned during the current year but the amount on which is not yet received is called income accrued. (added to the concerned income on the credit side and entered on the asset side)
32. intangible assets / fictitious assets.
An intangible asset is one that is not physical in nature. Since intangible assets have no shape or form, they cannot be held or manipulated. Common types of intangible assets include brands, goodwill, and intellectual property, copyrights, broadcast rights etc.,
33. tangible assets
Tangible assets are physical assets that have a clear, measurable value and can be seen, touched, and used in the operations of a business. They are often long-term (fixed) assets used to produce goods or services.
