Simultaneous equation method:- is the method where the amount of each production department can be obtained by solving simultaneous method.

Repeated distribution method:- is where the overheads of service department are distributed to other departments on agreed percentage, and this process is repeated till the amount of overheads are exhausted to consider further apportionment.

A budget is a financial document or an action plan which is prepared and used to project future income and expenses. It outlines an organisation’s financial and operational goals. It can also include non- monetary information with the monetary information. They need to be made and approved in advance of the year in which they are to be used or implemented.

Following are the characteristics of a good budget:

Budgetary Control is a methodical control technique whereby budgets are prepared relating the responsibilities of budget holders. It is a continuous comparison of actual results with budgeted results, to ensure that the objectives of the company’s policy are achieved; or to provide a basis for the change of those objectives. In simple terms, it is the analysis of the plans which the organisation has made; what was the result when those plans were implemented practically. After practical implementation of the budget if any variation is seen in the actual result to the budget result then the reasons for the variations are fount out and corrective actions are taken to correct variations.

Following are the characteristics of Budgetary control:

Yes, depreciation generate funds for replacement of assets. When depreciation is charged against the asset, a significant portion is taken out of the profits every year during the lifetime of the existing assets, and is retained and accumulated without being distributed to the owners as dividend. Thus at the end of the life of the existing asset, the business will have some funds to replace old asset with the new one.

Under the Companies Act: Depreciation is computed either using the straight line method or written down value method. In straight line method the amount of depreciation is uniform for all the years where in written down method the amount of depreciation is highest in the first year and gradually decreases in the subsequent years.

Under Income Tax Act: Depreciation is computed using written down value method. Also it is charged on the block of assets and not on individual assets. The block of assets means a group of assets for which the same rate of depreciation is applicable.

Journalizing is the process of recoding business transactions in the Journal in chronological order, as and when the transactions take place. Journal is also known as Book of Original Entry or the Book of Prime Entry.

Journal has following five columns:

In day to day business, various similar transactions take place on the same day and every account is either debited or credited. Thus instead of passing different entries, a compound entry can be passed, which involves more than one debit or more than one credit or both. This makes the journal less bulky and avoids duplication.

Subsidiary book is the sub division of Journal. These are known as books of prime entry or books of original entry as all the transactions are recorded in their original form. In these books the details of the transactions are recorded as they take place from day to day in a classified manner.

The important subsidiary books used are as following:-

Cash Book : Used to record all the cash receipts and payments.

Purchase Book : Used to record all the credit purchases.

Sales Book : Used to record all the credit sales

Purchase Return Book : Used to record all goods returned by business to the supplier

Sales Return Book : Used to record all good returned by the customer to the business.

Bills Receivable Book : Used to record all accepted bills received by business.

Bills Payable Book : Used to record all bill accepted by us to our creditors.

Journal Proper : Used to record those transactions for which there is no separate book.

These subsidiary books are maintained because it may be impossible to record each transaction into the ledger as it occurs. And these books record the details of the transactions and therefore help the ledger to become brief. Future reference and any desired analysis becomes easy as transactions of similar nature are recorded together.

Ledger is the book where the transactions of similar nature pertaining to a person, asset, liability, income or expenditure are drawn from the journal or subsidiary books where the transactions are recorded in a chronological order and posted account wise in the Ledger account. Ledger maintains all types of accounts i.e. Personal, Real and Nominal Account.

All the business transactions are first recorded in Journal or Subsidiary books in a chronological order when they actually take place and from there the transactions of similar nature are transferred to Ledger and this process of transferring is called as Ledger Posting.

In a business, sometimes it is not feasible to carry accounts of all the suppliers and customers in the main ledger. In such cases apart from General or main ledger, the control ledgers are maintained. Control ledgers records the individual accounts. In the end of the period, balance shown in the main ledger has to tally with the balance in the individual ledger accounts maintained in the control ledger.

Purposes of maintaining control ledgers are:

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