Tag: reserve and fund

Net working capital  = current assets - current liabilities
Increase in notes payable and increase in creditors will increase current liabilities.
Decrease in provision for taxes and dividends will increase current assets.
Thus change in net working capital = (2500 + 40000) - (28000 + 76500) = -62000
i.e. there is decrease in net working capital by Rs.62,000.

Option B is the correct one.

Currency” includes all currency notes, postal notes, postal orders, money orders, cheques, drafts, traveler's cheques, letters of credit, bills of exchange and promissory notes, credit cards or such other similar instruments, as may be notified by the Reserve Bank.

Currency notes” means and includes cash in the form of coins and banknotes.

Accumulated depreciation a/c is an asset account with a credit balance ( also known as contra asset a/c ) ., this means that it appears on the balance sheet as a reduction from the gross amount of fixed assets reported. So acumulated dep. a/c is a real a/c.

Depreciation is the permanent and continuous decrease in the book value of a depreciable fixed asset due to use, effluxion of time, obsolescence expiration of legal rights or any other cause. Depreciation does not result in cash out flow. It is a non cash expenditure. As per the accounting rules, all incomes and gains and expenses and profits are included in nominal account.

Fixed assets are having its estimated working life too. Hence at the end of its working life or due to any other reasons, assets are being sold. 

Provisions are created against the anticipated losses and the expenses which are due but not paid for. 

The depreciation methods used, the total depreciation for the period for each class of assets, the gross amount of each class of depreciable assets and the related accumulated depreciation are disclosed in the financial statements along with the disclosure of other accounting policies. A change in the method of depreciation is treated as a change in an accounting policy and is disclosed accordingly.

Annual depreciation is the amount of depreciation charged against an asset or group of assets over the course of a financial year. hence, the annual depreciation charge is debited to concerned assets a/c.

The companies act 1956, States that  "Provision usually means any amount Written off or retained by the way of providing depreciation renewal or diminution in the value of assets or retained by the way of providing for any known liability of which the amount cannot be determined with substantial accuracy.