The meaning and accounting treatment of: (i) Replacement of assets (ii) Tariffs and dividend control reserve (iii) Clear profits (iv) Reasonable returns and (v) Capital base. Disclaimer 8. Double-Entry Accounting “ Double-entry accounting is based on a simple concept: each party in a business transaction will receive something and give something in return. However, historically, accounting systems were a complex series of manual calculations and balances. The credit entry to accounts payable reflects the liability of the business to pay the electricity supplier for the amount of service consumed during the period. Content Filtrations 6. Accounting is a system meant for measuring business activities, processing of information into reports and making the findings available to decision-makers. Electricity Companies: Problem and Solution # 1. Disclaimer 9. However, the modern system of accounting based on the principles of double entry system owes it origin to Luco Pacioli who first published the principles of Double Entry System in 1494 at Venice in Italy. The business is ... of each transaction as considered in double entry system. In this article we will discuss about the top five problems on Electricity Companies with their relevant solutions. The Gurgaon Electricity Company Limited decides to replace one of its old plants with a modern one with a larger capacity. It means the cash balance of M/s Independent Trading Company will increase by a … Report a Violation, Replacement of an Asset under Double Entry System| Electricity Accounts, Accounting Problems on Inflation Accounting, 5 Accounting Problems on Electricity Companies. Double entry also means that one of the accounts must have an amount entered as a debit, and one of the accounts must have an … In cash accounting system, accounting entries are made when cash is received or paid, while in the case of accrual accounting, the transactions are recorded, as and when the amount is due. In 1458 Benedetto Cotrugli invented the double-entry accounting system, which revolutionized accounting. The earliest extant accounting records that follow the modern double-entry system in Europe come from Amatino … On a company's balance sheet, it shows that a company's total assets are equal to the sum of the company's liabilities and shareholders' equity. Image Guidelines 5. A call of Rs 20 per share was payable on 30th September, 2011 and arrears are subject to interest @ 15% p.a. An appropriate amount out of the new expenditure is charged to revenue or written off and the balance is capitalised. The Double Account System is a method of presenting the annual final accounts/annual financial statements of public utility undertakings, like Railways, Electricity, Gas, Water Supply, Tramways etc. Suppose further that between 1980 and 2012, prices of materials have risen to 700%, that labour rates have trebled and that the proportion of materials and labour in the old station is 4: 6. Quickly browse through hundreds of Utility Billing tools and systems and narrow down your top choices. The accounting equation is the foundation of the double-entry accounting system. The usage of double account system in public utility concerns such as water, gas, electricity. The accounts of the company are maintained under Double Account system. Accounting, Electricity Companies, Double Account System Maintained. The following further information is supplied to you: Provide for the undermentioned depreciation, and prepare a Receipts and Expenditure on Capital Account, Revenue Account, Net Revenue Account and Balance Sheet from the following Trial Balance. In the double-entry system, transactions are recorded in terms of debits and credits. The entries made into this system are called journal entries. DOUBEL ENTRY SYSTEM Double Entry System in Accounting The double-entry or duality is the basic/standard concept of accounting, which has been in use since 1494. Based on this double-entry system, the accounting equation ensures that the balance sheet remains “balanced,” and each entry made on the debit side should have a corresponding … Also, a Net Revenue Account is prepared which is like the ordinary Profit and Loss Appropriation Account. Depreciation to be provided for on: Building @ 5%, Machinery @ 15%, Mains @ 20%, Transformers etc., @ 10%, Meters and Electrical Instrument @ 15%. The old plant was scrapped and sold for Rs 7,50,000. The double-entry accrual accounting system is required for all utilities regardless of class. The Questions and Answers of tariff&reserves Related: Double Accounts System - Electricity Companies, Advanced Corporate Accounting are solved by group of students and teacher of B Com, which is also the largest student community of B Com. Financial Statement of Electricity Companies (IPCC Gr-II) Important Changes: The earlier syllabus (study material of ICAI) included the following, in this chapter: 1. It is ascertained that the costs of materials and labour have gone up by 40% and 80% respectively. In case of limited companies established under the Companies Act, 1956, fi rst … Just like you need ... Electric Service $100.00 Bank Charges $25.00 Credit Card Interest $30.00 Total Operating Expenses $1,040.00 Net Income(Loss) $(660.00) Income Statement Format Find and compare top Electrical Contractor software on Capterra, with our free and interactive tool. ... Not recognized method as per companies act. 2. there is that the earning power and not the cost is the basis for valuing a continuing business. The cost of the new plant as per improved design is Rs 60 lakhs and in addition, material recovered from the old plant of a value of Rs 2,40,000 has been used in the construction of the new plant. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from … Content Guidelines 2. Firstly, the account of the asset which is replaced is not affected at all. The capacity of the new works is double the capacity of the old works. Thus, the art of accounting has been ... An accountant designs the accounting system, supervises and checks the work of the book-keeper, prepares the reports based on the recorded data and interprets the … Electricity Companies: Problem and Solution # 2. A call of Rs 20 per share was payable on 30th September, 2011 and arrears are subject to interest @ 15% p.a. ... the system used by a company is generally automated and computer-based, using specialised software and/or cloud-based services. In case of electricity companies, however, the total of the expenditure as per Capital Account is shown on the assets side and the total of receipts is shown on the liabilities side. If any old materials have been used in the new construction: The logic behind the treatment outlined above is firstly, that additional amount should be capitalised only if there is additional capacity and, secondly, that when an old asset is replaced, the amount lost is the asset’s present value rather than its historical cost. Debit Replacement Account with the amount to be written off; Debit Works Account (new) with the amount to be capitalised; and Credit Bank with the amount actually spent. Electricity Companies: Problem and Solution # 5. Big companies keep double record by independent accountants. Electricity Companies: Problem and Solution # 5. ... ServiceTitan is trusted by more than 100,000 service professionals and by the world's best companies. Rs 20,000 is realised by the sale of old materials, and old materials worth Rs 10,000 are used in the construction of the new works and included in the total cost of Rs 5,00,000 mentioned above. Prohibited Content 3. The part of the old works thus superseded cost Rs 3,00,000. Accounting - Basic Concepts - The first two accounting concepts, namely, Business Entity Concept and Money Measurement Concept are the fundamental concepts of accounting. It is ascertained that the costs of materials and labour have gone up by 40% and 80% respectively. MANAGEMENT ACCOUNTING Contact: 0707 737 890 Page 129 Advantages of Interlocking Accounting System Main benefit of interlocking accounting system is for big companies. The chief features of the Double Account System are as follows: 1. Uploader Agreement, Read Accounting Notes, Procedures, Problems and Solutions, Learn Accounting: Notes, Procedures, Problems and Solutions, Advantages and Disadvantages of Double Account System | Accounting, Accounts of Electricity Companies | India | Accounting, Double Entry System and Double Account System | Accounting, Important Features of Double Account System | Accounting, Amalgamation: Meaning and Types of Amalgamation. Plagiarism Prevention 5. Every electricity company is required to maintain a contingencies reserve. 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