A3 INSTALLMENT PURCHASING SYSTEM

A3 HIRE PURCHASING SYSTEM VS INSTALLMENT PURCHASING SYSTEM:

S.No	Hire-Purchase	Instalment Purchase
1.	Title in the goods transfers only after the last installment is paid	Title in the goods passess to the purchaser immediately after the agreement
2.	The installment paid before the last installment would be treated as hire charges	Each installment is treated as payment towards principal and interest.
3.	The agreement can be cancelled anytime before the last installment is paid	There is no such right to the purchaser
4	The seller has the right to repossess the goods in case the purchaser is in default of installment	The sell has no such right but he can file a suit for process of the goods and damages
5.	The hire purchaser cannot sell the goods, as he has no title	The hire purchaser can sell the goods, as he has titles.

SELF BALANCING AND SECTIONAL BALANCING - I

OBJECTIVES OF SECTIONAL/SELF-BALANCING SYSTEMS:

1.To ensure the accuracy of the ledger accounts,

2.To detect the accounting errors, if any, and pinpoint the place of error without much waste of time and energy.

3.To exercise proper internal control and,

4.To help in the preparation of final accounts within a short period.

Scope of Sub-Divided Ledgers:

Debtors Ledger - The Ledger is used for recording the personal accounts of trade debtors only.
Trade debtors are the persons to whom goods are sold on credit also called as sales ledger, sold Ledger or Customers Ledger.
Accounts other than trade debtors are not recorded in this ledger.

Creditors Ledger - Maintained for recording the personal account of trade creditors only.

General Ledger- Main ledger from which trade debtors and trade creditors are now taken out.

SECTIONAL BALANCING SYSTEM:

In this system the ledger is divided into there sections and the accuracy of the each section can be proved as follows:

1. General Ledger - By preparing the trail balance.

2. Debtors Ledger - By comparing with Total Debtors A/c in General Ledger

3. Creditors Ledger- By Comparing with Total Creditors A/c in General Ledger

When does Debtors Accounts Shows Credit Balance:?

It is due to granting of allowances or return of goods etc. after the settlement of the accounts of some debtors.

When does Creditors Accounts Shows Debit Balance:?

When we return some goods to the supplier after settling the account, the total creditors account shows a debit balance. and vice versa

UNIT-IV ACCOUNTS OF NON-TRADING ORGANISATIONS -I

Non-Trading organisations are the nonprofit organisations which run to render service. Such as Sports club, recreation clubs, libraries, educational institutions, charitable institutions, welfare institutions hospitals,literary associations cultural associations, co-operative societies trade unions, political associations professional associations.

In this organisations Income and Expenditure account is maintained rather than Profit and Loss account.

This organisations generally survive on subscriptions from members, fees from users, donations and aid from others.

Distinction Between Receipts & Payment Account vs Income & Expenditure

S.No	Receipts & Payment Account	Income & Expenditure
1	Real Account	Nominal account
2	Summary of cash & bank transactions	Summary of income earned & expenses incurred during the year
3	Only cash transactions	Cash as well as non cash transactions
4	Includes payments & receipts of past, present and future periods.	It includes incomes and expenses pertaining only to the current year
5	Includes both capital and revenue items	Includes only revenue items
6	Does not include accrued items. i.e occurred incomes and expenses	It does not include incomes and expenses
7	It doesnot includes depreciation, bad debts, provisions, etc.	It does includes depreciation, bad debts, provisions, etc
8	It has opening balance ( of cash &  bank	It has no opening balance
9	The closing balance is cash in hand and cash at bank or over draft	The closing balance may be surplus or deficit.

S.No	Receipts & Payment Account	Income & Expenditure
1	Real Account	Nominal account
2	Summary of cash & bank transactions	Summary of income earned & expenses incurred during the year
3	Only cash transactions	Cash as well as non cash transactions
4	Includes payments & receipts of past, present and future periods.	It includes incomes and expenses pertaining only to the current year
5	Includes both capital and revenue items	Includes only revenue items
6	Does not include accrued items. i.e occurred incomes and expenses	It does not include incomes and expenses
7	It doesnot includes depreciation, bad debts, provisions, etc.	It does includes depreciation, bad debts, provisions, etc
8	It has opening balance ( of cash &  bank	It has no opening balance
9	The closing balance is cash in hand and cash at bank or over draft	The closing balance may be surplus or deficit.

S.No	Receipts & Payment Account	Income & Expenditure
1	Real Account	Nominal account
2	Summary of cash & bank transactions	Summary of income earned & expenses incurred during the year
3	Only cash transactions	Cash as well as non cash transactions
4	Includes payments & receipts of past, present and future periods.	It includes incomes and expenses pertaining only to the current year
5	Includes both capital and revenue items	Includes only revenue items
6	Does not include accrued items. i.e occurred incomes and expenses	It does not include incomes and expenses
7	It doesnot includes depreciation, bad debts, provisions, etc.	It does includes depreciation, bad debts, provisions, etc
8	It has opening balance ( of cash &  bank	It has no opening balance
9	The closing balance is cash in hand and cash at bank or over draft	The closing balance may be surplus or deficit.

Receipt Vs Income

S.No	Receipt	Income
1	Actual cash or cheque received	What is earned
2	May be of capital or revenue	Whether actually received or not
3	Receipts may be of past, present and future periods.	It includes incomes and expenses pertaining only to the current year
4	Real Account	Nominal Account

Capital Receipt vs Revenue Receipt

S.No	Capital Receipt	Revenue Receipt
1	It is liability	It is income
2	If receipt is 1.repayable,2.is due to sale of an asset,3.is of permanent nature.	if the receipt is non-payable,or it is earned through the regular activities
		This receipt is shown as income in income and Expenditure account

Payment vs Expenditure

S.No	Payment	Expenditure
1	It is paid in cash only	It can be of cash or with out cash
2	It is cash only	it is expenses incurred on various activities

Payment can be expenditure but Expenditure may not be payment.

Capital Expeniture vs Revenue Expenditure

S.No	Capital Expenditure	Revenue Expenditure
1	The benefit which is available for number of accounting years. it is immaterial whether such expenditure is actually paid or not.	The benefit of which is exhausted on same accounting year in which it is incurred.
2	Results in aquisition of assets or improvement of assets or upgradation interms of life and efficieny.	it is expenditure incurred in normal course of operations to meet the day to day expenses of the organisation whether actually paid or not
3	Shown as an asset in balance sheet	Shown as an expense in income & Expenditure statement

Legacy:- When an amount is received as per will of some person it is called Legacy.