Mr. Anmol started a retail outlet of food corner named Anmol Foods in his locality and doing well in his food business. His friend Atul asks him to record the transactions and assess his financial position. Mr. Anmol is not convinced on accounting of the information as he is not sure about the need of accounting when
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Mr. Anmol started a retail outlet of food corner named Anmol Foods in his locality and doing well in his food business. His friend Atul asks him to record the transactions and assess his financial position. Mr. Anmol is not convinced on accounting of the information as he is not sure about the need of accounting when he is earning good money.
You as Mr. Atul, help Mr. Anmol to get an understanding about the term accounting, uses of accounting information - so that he can record the financial information and assess his financial position.
Also, discuss any five accounting terms relevant to recording the financial information.
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