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  • Profit & Loss Account Items Preoperative Expenses: Liabilities Court Case

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    Surabhi Rastogi
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    The document defines various profit and loss account items and balance sheet items. Profit and loss account items include preoperative expenses incurred prior to starting operations such as costs for manpower, technology selection, and location selection. Deferred credits refer to income received before completing related services. Contingent liabilities are potential liabilities that may or may not occur depending on future events. Balance sheet items include revaluation reserves from increases in asset values, gross block representing total asset acquisition costs, and total value added as the difference between sales price and production costs summed over all units sold.

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    The document defines various profit and loss account items and balance sheet items. Profit and loss account items include preoperative expenses incurred prior to starting operations such as costs for manpower, technology selection, and location selection. Deferred credits refer to income received before completing related services. Contingent liabilities are potential liabilities that may or may not occur depending on future events. Balance sheet items include revaluation reserves from increases in asset values, gross block representing total asset acquisition costs, and total value added as the difference between sales price and production costs summed over all units sold.

    Copyright:

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    4 views2 pages

    Profit & Loss Account Items Preoperative Expenses: Liabilities Court Case

    Uploaded by

    Surabhi Rastogi
    The document defines various profit and loss account items and balance sheet items. Profit and loss account items include preoperative expenses incurred prior to starting operations such as costs for manpower, technology selection, and location selection. Deferred credits refer to income received before completing related services. Contingent liabilities are potential liabilities that may or may not occur depending on future events. Balance sheet items include revaluation reserves from increases in asset values, gross block representing total asset acquisition costs, and total value added as the difference between sales price and production costs summed over all units sold.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
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    Profit & Loss Account Items

    1)

    Preoperative Expenses - are connected with actions that are required for start-up of operations. Pre-operative expenditure can therefore be capitalized by apportionment/allocation to assets which are the subject matter of operation. The pre-operative expenses incurred by a company include the following: A) Cost of Man Power involved in project selection/project sizing. B) Cost of Technology Selection. C) Cost of getting budgetary cost estimation or data. D) Cost of estimation of preliminary data for land, power & other utilities. E) Cost of Location finalization-surveying various areas. F)Cost of Travelling.

    2) Deferred Credit- refers to income or income items a business receives but has not yet reported as income. An example- A consulting firm receiving an advance payment before completing services for the payment. 3) Contigent Liability - are liabilities that may or may not be incurred by an entity depending on the outcome of a future event such as a court case. These liabilities are recorded in a companys accounts and shown in the balance sheet when both probable and reasonably estimable. A footnote to the balance sheet describes the nature and extent of the contingent liabilities. The likelihood of loss is described as probable, reasonably possible, or remote.

    Balance Sheet Items 1) Revaluation Reserves revaluation reserves (or, more precisely, revaluation surplus reserves) arise when the value of an asset becomes greater than the value at which it was previously carried on the balance sheet, increasing shareholders funds. 2) Gross Block- The total value of all of the assets that a company owns. Value is determined by the amount it cost to acquire these assets, and it is not decreased to take into account the effects of depreciation. 3) Total Value Added - the difference between the sale price and the production cost of a product is the value added per unit. Summing value added per unit over all units sold is total value added. 4)

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