Characteristics of corporate finance includes −Financial activity − This kind of duties are done by financial manager and consists activities like planning, raising, investing and monitoring the finance of the company.Raising the finance − It is raised through shares, debentures, bank loans etc. New companies will face difficulties to raise ... Read More

Companies in finance are classified as follows −Based on liabilities − Company limited by shares, company limited by guarantee, unlimited companies.Based on members − One-person company, private companies, and public companies.Based on control − Holding and subsidiary companies, associate companies.Based on liabilitiesCompanies limited by shares − Shareholders of company will ... Read More

Amortisation means distribution of cost of intangible asset over a periods of time. Only intangible assets (assets which don’t have physical existence) are amortised, tangible assets (assets which have physical existence) can’t be amortised.Steps to record amortisation in a journal are as follows −Identify initial value of the asset.Life span ... Read More

Fictitious assets are the assets which has no tangible existence, but are represented as actual cash expenditure. The main purpose is to create this account for expenses which are not placed in any account headings.In other words, fictitious means fake or not real, these are not assets at all but ... Read More

Bank reconciliation concept is comparing of balance sheet with bank statement. There is no fixed date for preparing bank reconciliation so its prepared periodically to check the balances and adjustments are made, if needed.It helps in detecting errors, cash manipulations, frauds etc. One thing we have to remember is that, ... Read More

Trial balance is a worksheet which consists of all ledger balance in a single sheet. All ledger balances are compiled into credit and debit columns (total should match). In other way, it can also be explained by the following steps −Recording of business transaction in a journal entry.Summarise and categorise ... Read More

Journal is called as book of original entry. Journal is a detail record of business transactions that are made in a date. The word JOUR means a day, so it is a day book or daily book of accounting.Journal entry has following structure −A header line (journal entry number and ... Read More

Ledger is a summary of all transactions in a journal. A ledger is a record of all business transactions made by a firm. This is often called as chart of accounts.General ledger has three account types namely assets, liabilities and equity accounts. Most of the firms have almost same accounts ... Read More

Accounting is a process of making a financial report which consists of business transactions and preparing income statements, profit and loss accounts and balance sheets. The system which maintain these financial records are known as accounting system.There are different types of accounting systems, each has its own functionality. The main ... Read More

Matching concepts tells about expenses incurred during a period to be recorded in the same period in which revenues are earned. Revenues and expenses in income statement are matched for a period of time. Investors get a better idea about economics of the business.Product cost − These are tied directly ... Read More