Q. 56:
Provision:
A provision is
a liability of uncertain timing
or amount. For a provision following
points must
be kept in mind:
·Present obligation
·Arising from the past event
·Probable outflow
of resources in future
·Amount can be estimated reliably.
Provision is created for
two motives:
One to
reduce AssetsSecond to create a liability against losses
Provision that is created for reduction in assets is
of two types:
1. Provision against receivables (also known
as contra to receivables
Provision for
doubtful debts)
2. Provision against the expiry of economic benefits of fixed assets
(Provision for depreciation/amortization)
Q. No : 57
Cash Flow Statement:
1. Cash flow statement shows the movement in cash
resources of the business.
2. This statement shows the sources from which business
generated cash and its application.
Cash flow from investing activities includes cash
receipts and payments that arise from Fixed and Long Term assets of the
organization.
Examples of cash flows from investing activities are:
• Cash payments to acquire property plant and equipment.
These also include payments made for self- constructed assets.
• Cash receipts from sale of property plant and
equipment.
• Cash payments and receipts from acquisition and disposal
other long term assets e.g. Shares, debentures, TFC, long term loans given etc.
• If assets are held for trading purposes or in normal
course of business e.g. car / property dealers and loans given by banks, then
cash flows from them are included in Operating Cash Flow.
Q. No: 58
Historical cost
Consideration paid (payable) or received (receivable) at
the time of recording of transaction (no relation to current costs).
Current cost
The consideration that would have to be paid if a same or
an equivalent asset is acquired. The undisclosed amount of cash or cash
equivalents, that would be required to settle an obligation currently.
Realizable cost
The consideration that would be realized by selling an
asset in an orderly disposal
Q. No 60:
Administrative expenses are costs that are associated
with the management and general functions of an organization and are not
directly related to a specific department. Sometimes considered part of general
business expenses, these costs can be for basic needs such as rental space for
the business, utilities or office supplies. Administrative costs also can
include the salaries of people who are not involved in sales, production or
other departments within the company, such as senior executives, secretaries
and receptionists.
Comments
Post a Comment
Please give us your feedback & help us to improve this site.