UNIT - 4

Q6. EXPLAIN PROFIT AND LOSS ACCOUNT ?Inaccounting,profitis the difference between the purchasepriceand the component costs of delivered goods and/or services and any operating or other expenses.

Inaccounting,Lossis the negative difference between the purchasepriceand the component costs of delivered goods and/or services and any operating or other expenses.

Q7. Explain Tangible and Intangible asset?Tangible assetsare considered thegoods of material naturethey can be perceived bysenses like :

Row material and stocksThe furnitureThe machinesThe landsThe money

Intangible assetsare considered the goods of immaterial nature :

The science of knowing what to doOur relations with the clientsOur operative processesThe technology of information and databases.Capacities, abilities and innovations of the employers.

Assets that have a physical form. Tangible assets include both fixed assets, such as machinery, buildings and land, and current assets, such as inventory. The opposite of a tangible asset is an intangible asset. Nonphysical assets, such as patents, trademarks, copyrights, goodwill and brand recognition, are all examples of intangible assets.

Q8.What is goodwill and explain?In anacquisition, goodwill appears onthebalance sheetof theacquirerintheamountby which thepurchasepriceexceedsthenet tangible assetsof the acquiredcompany.

Q9.Explain Non Profit Organization?such organisations are : schools, hospitals, charitable institutions, welfare societies, clubs, public libraries, resident welfare association, sports club etc. These are called Not-for-Profit Organisations (NPOs). These organisations provide services to their members and to the public in general. Their main source of income is membership fees, subscription, donation, grant-in-aid, etc. As the money is involved in the activities of these organisations, they also maintain accounts. These organisations prepare certain statements to ascertain the results in financial terms of their activities for a particular period say, one year.

Characteristics of Not-for-profit organisations (NPOs)Following are the main characteristics or the salient features of Not forProfit organisations (NPOs) :1. The objective of such organisations is not to make profit but to provideservice to its members and to the society in general.2. The main source of income of these organisations is not the profit earnedfrom purchase and sale of goods and services but is admissions fees,subscriptions, donations, grant-in-aid, etc.3. These organisations are managed by a group of persons elected by themembers from among themselves. This group is called managingcommittee.4. They also prepare their accounts following the same accounting principlesand systems that are followed by business for profit organisations thatare run with an objective to earn profits :The type of financial statements that are generally prepared by Not-for-Profit Organisations (NPOs) are :1. Receipts and Payments Account2. Income and Expenditure Account3. Balance SheetThe receipts and payments account is

Q10. Importance of Accounting?