விண்டோஸ் லோகோ கீ பயன்பாடு

விண்டோஸ் ஆப்பரேட்டிங் சிஸ்டத்தில், அதன் சின்னத்துடன் ஒரு கீ, கீ போர்டில் தரப்பட்டிருக்கும். இதனைத் தனியாகவும், மற்ற கீகளுடனும் இயக்கி சில செயல்பாடுகளை மேற்கொள்ளலாம். கீழே அந்த ஷார்ட்கட் கீகளும் அவற்றிற்கான செயல்பாடுகளும் தரப்பட்டுள்ளன. இவற்றில் சிலவற்றை நீங்கள் அடிக்கடி மேற்கொள்ளும் சூழ்நிலைகளும் உங்கள் செயல்பாட்டில் இருக்கலாம். எனவே கவனத்துடன் இவற்றை நினைவில் கொண்டு பயன்படுத்துங்கள். 
விண்டோஸ் லோகோ கீ தனியாக – ஸ்டார்ட் மெனு திறக்கவும் மூடவும். 
Pause கீயுடன் – சிஸ்டம் ப்ராப்பர்ட்டீஸ் டயலாக் பாக்ஸ் திறக்கப்படும். 
D கீயுடன் – டெஸ்க்டாப் காட்டப்படும். அப்போது இயங்கும் புரோகிராம்கள் அனைத்தும் சுருக்கப்பட்டு டாஸ்க்பாருக்குச் செல்லும். மீண்டும் அழுத்த, புரோகிராம்களின் விண்டோ கிடைக்கும். 
M கீயுடன் – அனைத்து விண்டோக்களும் சுருக்கப்பட்டு டாஸ்க்பாருக்குச் செல்லும். 
Shift + Mகீகளுடன் – சுருக்கப்பட்ட புரோகிராம் விண்டோக்கள் திரைக்கு மீண்டும் வரும். 
E கீயுடன் – கம்ப்யூட்டர் திறக்கப்படும். 
F கீயுடன் – பைல் அல்லது போல்டர் தேட 
Ctrl + F கீகளுடன்– நெட்வொர்க்கில் இருந்தால், கம்ப்யூட்டரைத் தேட 
L கீயுடன் – கம்ப்யூட்டரை பூட்டி வைக்கும். அல்லது பயனாளரை மாற்றும். 
R கீயுடன் – Run டயலாக் பாக்ஸ் திறக்கப்படும். 
Tகீயுடன் – டாஸ்க்பாரில் உள்ள புரோகிராம்களுக்கு ஒவ்வொன்றாகச் செல்லும். 
நம்பர் கீயுடன் – டாஸ்க் பாரில் பின் செய்யப்பட்ட புரோகிராம்களுக்கு, அதன் வரிசையில் அந்த எண் உள்ள புரோகிராம் செல்லும். 
Shift + நம்பர் கீயுடன் – புரோகிராமின் இன்னொரு இயக்கம் திறக்கப்படும். எந்த எண் கீ பயன்படுத்தப் படுகிறதோ, அந்த எண் வரிசையில் உள்ள புரோகிராம் திறக்கப்படும். 
Ctrl + நம்பர் கீயுடன் – எண் கீ அடிப்படையில், டாஸ்க்பாரில் உள்ள வரிசைப்படி, இறுதியாக இயங்கிக் கொண்டிருந்த புரோகிராமிற்குச் செல்லும். 
Alt + நம்பர் கீயுடன் – எண் கீ அடிப்படையில், வரிசையில் அந்த எண் உள்ள புரோகிராமினை இயக்க ஜம்ப் லிஸ்ட் திறக்கப்படும். 
Tab கீயுடன் – டாஸ்க் பாரில் உள்ள புரோகிராம்கள் ஒவ்வொன்றாகச் செல்லும். இதற்கு Aero Flip 3D பயன்படுத்தப்படும். 
Ctrl + Tab கீயுடன் – டாஸ்க் பாரில் உள்ள புரோகிராம்கள் ஒவ்வொன்றாக அம்புக் குறி கீ பயன்படுத்திச் செல்லும். இதற்கு Aero Flip 3D பயன்படுத்தப்படும். 
Ctrl+B கீயுடன் – நோட்டிபிகேஷன் ஏரியாவில் மெசேஜ் காட்டிய புரோகிராமிற்கு மாறும். 
Spacebar கீயுடன் – டெஸ்க்டாப் பிரிவியூ கிடைக்கும். 
Up Arrow கீயுடன் – விண்டோ பெரிதாக்கப்படும். 
Left Arrow கீயுடன் – திரையின் இடது பக்கம் விண்டோ பெரிதாக்கப்படும். 
Right Arrow கீயுடன் – திரையின் வலது பக்கம் விண்டோ பெரிதாக்கப்படும். 
Down Arrow கீயுடன் – இயங்கும் விண்டோ மினிமைஸ் செய்யப்படும். 
Home கீயுடன் – இயங்கும் விண்டோ தவிர மற்ற அனைத்தும் மினிமைஸ் செய்யப்படும். 
Shift + Up Arrow கீயுடன் – விண்டோ திரையின் மேல் கீழாக இழுத்து வைக்கப்படும்.

DRAFT TERMS OF REFERENCE 7 TH CPC AS FINALISED BY STAFF SIDE, JCM

Buyer should withhold tax from sum paid to a non-resident co-owner to acquire a house property

Where assessee purchased a property jointly owned by co-owners, in view of fact that one of co-owners of property was a non-resident, assessee was required to deduct tax at source under section 195 to extent sale-consideration paid to said co-owner.

Facts:

a) The assessee purchased a property owned by two co-owners for a total consideration of 1.20 crores. One of the co-owner was a non-resident who had executed a General Power of Attorney in favour of other resident co-owner to execute sale agreement;

b) The AO opined that since one of co-owner was a non-resident, assessee was required to deduct tax at source under section 195 on entire sale consideration of Rs 1.20 crores. On assessee's failure to deduct tax at source, the AO treated the assessee as 'assessee-in-default';

c) On appeal, the CIT (A) held that assessee ought to have deducted tax at source on the share of the non-resident in the sales consideration. Aggrieved assessee filed the instant appeal.

The Tribunal held partly in favour of assessee as under:

1) To the extent the sum was paid to non-resident co-owner, the provisions of section 195 were attracted and the assessee ought to have deducted tax at source while making payments to her;

2) Thus, the assessee could be considered as an 'assessee-in-default' only to the extent of sum paid to the non-resident - R. PRAKASH V. ITO(2013) 38 TAXMANN.COM 123 (Bangalore –Trib.)

Assessee needn’t be unemployed while going abroad for a job; only stay in India would determine his residential status

Where status of assessee was a non-resident, fact that assessee was already employed before leaving India should not affect his residential status

Facts:

a) The assessee working in Whirlpool China filed his return of income and declared taxable income under the head 'salary'. During scrutiny assessment, he pleaded that he was out of India for 236 days and he was not liable to be taxed in India as he was non-resident during the relevant financial year;

b) The Assessing Officer did not accept the assessee's contention and made the assessment on ground that assessee was already employed in Whirlpool India prior to leaving India;

c) On appeal, the CIT(A) held that the assessee’s salary was not taxable in India. The aggrieved revenue filed the instant appeal.

The Tribunal held as in favour of assessee as under:

1) Section 6(1) read with the Explanation provides that for an individual, who has left India for employment outside India, should be treated as resident of India only if he was in India during the relevant year for 182 days or more (Anurag Chaudhary, In re (2010) 190 Taxman 296 (AAR-New Delhi));

2) A careful reading of such Explanation would show that the requirement of the Explanation is not leaving India for employment but it is leaving India for the purposes of employment outside India. For the purpose of the Explanation, an individual need not be an unemployed person who leaves India for employment outside India (British Gas India (P) Ltd. In re (2006) 155 Taxman 326 (AAR-New Delhi))

3) During the relevant financial year, the assessee's stay in India was of less than 182 days and, thus, his residential status was non-resident;

4) The assessee’s contention, that he was already employed in the Whirlpool India prior to the leaving India for working with Whirlpool China, would not affect his residential status. Therefore, the order of the CIT(A) stating that salary income of the assessee accrued and arose during his employment in China and was not taxable in India was to be upheld - ACIT V. RAJ JAIN (2013) 38 taxmann.com 133 (Delhi- Trib.)

Basis of Accounting – Cash Basis and Accrual Basis

It is the duty of accountant to calculate the correct net profit or net loss of the business. For this, accounting will use any one of following basis of accounting. Accountant cannot use both basis together.

1. Cash Basis of Accounting

As per this of accounting, accountant will record any income when it will receive in cash or through bank. Accountant will also record any expense when it will pay in cash or through cheque. We will not record any income receivable or expense payable. When income receivable will receive in cash, we will record. When expense payable will pay in cash, we will record it. Net profit or Net Loss through this, will be the cash net profit or cash net profit because there will not any entry of credit sale, credit purchase and income receivable and expense payable in it. We can calculate this cash net profit or net loss through making of receipt and payment account. In this account, we include both revenue and capital expenses which we have paid in cash. We also include both revenue and capital incomes when we will receive in cash. It means, expense on buying of any fixed asset and buying of stock will include in the payment side. We also include income from sale of fixed asset and income from sales  in receipt side which we receive in cash. As per company law 1956, to calculate the net profit or net loss on the basis of cash is not recognized.

2. Accrual Basis of Accounting

As per accrual basis of accounting, we record both incomes which are received in cash or not but these  must be earned by businessman. All the expenses which are paid in cash or not but these must be due. Profit and lossaccount is made on this basis of accounting. We record both cash and credit revenue nature expenses and revenue nature incomes.

In the expense side, we include cash purchase, credit purchase, cash expenses and expenses payables. In the income side, we include cash sale, credit sale, cash incomes and income receivables. Net profit or net loss is calculated by comparing both income side and expense side. Some incomes which are in cash but these incomes are in advance. We will not include such incomes because these incomes are cash but not earned. If there are advance cash incomes in total incomes, we will deduct for calculating the net profit or net loss under this basis of accounting. Like this, if there are any advance payment which is paid but not due, we will deduct it from total expense. As per company law 1956, all company must follow the accrual basis of accounting. 

Disbursement of cash to farmers through discounting of cheque doesn't violate sec. 269SS or sec. 269T

When it was not proved that by cheque discounting business assessee had taken any loan or deposit from agriculturists and/or he had repaid any loan to agriculturists, neither section 269SS nor section 269T were attracted

Facts of the case:

• Assessee, engaged in business of cheque discounting, received certain amount through post-dated crossed cheques from farmers who were selling their produce to traders.
• Assessee's case was that such traders made payment to farmers traditionally by way of post-dated crossed cheques and since farmers normally did not maintain any bank account, they used to take such cheques to assessee for discounting same for cash.
• Assessing Officer held that there was contravention of sections 269SS and 269T and, accordingly, levied penalty on assessee under sections 271D and 271E.
• Aggrieved by order of AO, assessee filed an appeal before CIT(A).
• CIT(A) quashed and set aside the orders of penalty imposed under Section 271D and Section 271E of the Act.
• On appeal by revenue to ITAT, ITAT rightly confirmed the order passed by the CIT(A).
• Revenue was in appeal before High Court against order of ITAT.

Gujarat High Court held and observed that:

• Revenue was not in a position to satisfy the Court how by the aforesaid transaction of cheque discounting it could be said that there was any loan or deposit taken by the Assessee.
• In any case, when it not proved and/or established that by cheque discounting business the assessee had taken any loan or deposit from the agriculturist and/or they have repaid any loan to the agriculturist, neither Section 269SS nor Section 269T of the Act was attracted
• Under the circumstances, no error and/or illegality has been committed by the ITAT in confirming the orders passed by the CIT quashing and setting aside orders of penalty passed under Section 271D and Section 271E of the Act.
• Appeal was accordingly dismissed.- CIT V. DINESHCHANDRA SHANTILAL SHAH (HUF) (2013) 37 TAXMAN 307 (GUJARAT)

Accounting Journal Entries for Taxation - Excise, Service Tax, Vat, Tds

We all knows the importance of  provision and compute of tax liabilities. Liabilities which may be  monthly/quarterly/half-yearly or yearly basis, accounting journal entries is as equal important for the same. Here we will see how to make accounting journal entries of  for taxation

I  Value Added Tax (VAT)
The organizations engaged in Sale and purchase transactions have to pay Vat liability. When they purchase material Vat is paid on purchases and when they sell material Vat is collected on material.


Vat paid on purchase of material-Input
Vat paid on Sale of Material-Output
Output amount is adjusted with the input and the balance is paid to the department. Entries to be made are:-

At the time of Purchase of Material
           Purchase Dr………….
           Vat Input Dr……………
           To Creditors……………………
At the time of Sale of Material

                Debtors Dr……………….
               To Sales………………………….
               To Vat Output…………………..
At the time of Adjustment
           Vat Output Dr………………..
           To Vat Input……………………………..
           To Vat Payable (If Output>Input)………………………………

At the time of Payment
Vat Payable Dr…………………………..
To Cash/bank

II  Service Tax

When services are received:-
       Expenses Dr………………………
       Service tax Input Dr………………
       To Party

When services are provided
    Debtors Dr……………………
    To Revenue………………………
    To Service tax Output……………

At the time of Adjustment
    Service tax Output Dr…………….
    To Service Tax Input…………………….
    To Service tax Payable……………………….

At the time of Payment
    Service tax Payable Dr………………….
    To Cash/bank…………………………………….

III  Excise Duty

At the time of Purchase
    Purchase Dr……………..
    Central Excise Input Dr………..
    Education Cess Input Dr……………….
    Secondary and Higher Education Cess Input Dr.
    To Creditors

At the time of Sale
    Debtors Dr…………….
    Manufacturing Duty (Basic+Education Cess+Secondary & higher education cess) Dr.
    To Central Excise Output …………………..
    To Education Cess Output…………………..
    To Secondary & higher education cess Output……………
    To Sales (Including excise duty amount)…………………………………………………..

IV   Tax Deducted At Source

At the time of deducting TDS
    Expenses Dr……………
   To TDS Payable………………….
   To Party………………………………
At the time of deposit of amount of TDS
   TDS Payable Dr………………………
   To Cash/Bank………………………………………

At the time of booking of income
    Party Dr…………………….
    TDS deducted………………………
    To Revenue receipts……………………………….

At the time of receipt of Income
   Bank/Cash Dr………………………..
   To Party……………………………………..

Set a company to load itself when Tally start

Tally supports the number of company to work with, you can create as many Companies as you wish to work on. This is the wonderful features that Tally supports. As usual user will divide their company data from period to period, basically Financial Period. Therefore, the data loads very fast and software will not stuck down while working with the Company. By default, Tally Software will open a Company file, having the Company ID 000001. You can customize that by choosing the any one of the companies from your local hard drive. Let's see the process of customizing the process for loading a specific company from the list in your Tally Software.

1. Select Data Configuration from Configuration screen.
2. Set option for Loan Companies on startup as Yes.
3. Take any one or more companies from the list in Preload Companies on Startup option
4. Press Ctrl + A to save the setting.

After making the changes to your Tally Configuration settings just restart the Tally software in order see the changes.

Factory Canteen Exempted from Service Tax w.e.f. 22.10.2013

Service Tax Exemption to Factory Canteen‏

The CBEC has exempted Services provided in relation to serving of food in canteen maintained by a Factory vide Notification No. 14/2013-ST dated October 22, 2013 which inserted 19A to the Notification No. 25/2012-ST dated June 20, 2012 (Mega Exemption).

“19A. Services provided in relation to serving of food or beverages by a canteen maintained in a factory covered under the Factories Act, 1948 (63 of 1948), having the facility of air-conditioning or central air-heating at any time during the year”.

Hence, services provided in relation to serving of food or beverages by a canteen having the facility of air-conditioning or central air-heating at any time during the year maintained in a factory covered under the Factories Act, 1948 will be exempt w.e.f. 22.10.2013.

How Accounting Works

As per my thinking, accounting works for you as your best friend if you are doing any business. Whether you are doing the business transport or selling the gym items or any other. All need to accounts for each transactions, if they want to know the information which they need actually. I mean, the information of net profit, quantity of stock of different items which are unsold and financial position of business.

Like a best friend, accounting will solve your all problems if you share with him through correct recording of each transaction. In this content, we will explain the steps of "how accounting works for you?"

1. Accounting Works for the Success of Your Business

When you do any transaction in your business in any day and start to record in your books, you can make the database of world's greatest information which works for success of your business. You can compare given information with your target. For example, you have make the target of net profit of Rs. 1 Crore in one month. If you have no record of everyday incomes and expenses, it is impossible to know the amount of net profit or net loss. Like this, you can set your target and accounting will help you to achieve your all target. For example, you have made the target to sell 500,000 customer. This is your target. Only debtor account and cash book will tell you, how much cash and credit sale, you have done in the month. For going to more deeply, you can easily find the number of actual customers who bought from you. For example, they are 4,00,000. Now, this figure will help you to do more for increasing the number of customers. 

2. Accounting Makes You Greatest Accountant of World

If you have started to learn accounting, you will become greatest accountant of the world. After this, your dependence on other professional accountant will stop. You can record your all business transactions yourself. You can manage your inventory, debtors, creditors, inventories and taxes yourself. For this, you have to keep your positive attitude for learning the accounting. Whether you are providing the service of painting or you are musician, you can become accountant yourself. For this, you just start to learn accounting from beginning by leaving all your unsuccessful stories of learning of accounting. 

It is true, you may unsuccessful to record any your transaction through journal entries but it was past, today is new morning. Today is new sun. Today is new air which are singing, if you will try again, accounting will become easy for you. Everyday, you have to say to yourself, when accounting makes me great accountant of the world, I have to give its price by giving my time with full concentration. Please stop all my negative thinking which are saying me that I can not make the accountant. I can not learn accounting because this is not my field. If you are doing any business or commercial activity, it means, it is the one of the best proof, you are the eligible for learning accounting. Start dream when you learn accounting, you can not only check your accounting mistake but mistake of big MNC's financial statement. What a great reward! Interesting!

3. Accounting Works for You as Intelligent Adviser 

Today, accounting works for you as intelligent adviser because today accounting system is totally dependent on the computer software which have hundreds options to analyze the accounting data within the second. For example, out of your 6,50,000 product items, you have to promote 55,000 products items in this Diwali season, your accounting software will take just few second for showing last 10 years trend of sale of your products in Diwali season. Now, some accounting software systems  have started to use statistics tool with accounting information. So, it will very easy for you to get all technical advice from accounting instead from any third party advice. 

Dual Aspect Concept

As per dual aspect concept, every transaction affects two accounts. One account must be debit and other account must be credit. Dual aspect concept has been made on the basis of accounting equation. In accounting equation, there are two sides. One sides are total assets and other side is total liabilities. Assets always equal to liabilities.



When we record transaction by debiting one account and crediting other account, our all assets will equal t our total liabilities. We give proof that dual aspect concept is so scientific.

We know accounting equation

Total Assets = Total Liabilities

Or

Total Assets = Liabilities + Capital

We have invested Rs. 1,00,000 in our Business. This is transaction. One account will be cash account which is Rs. 1,00,000 and second account is capital. Now we have to debit one account and credit other account. We debit one account and credit other account on the basis of double entry system's rules and regulation. Because cash is coming the business, we will debit cash account and businessman is giver of his money in the form of capital, so capital account will be credit.

Cash Account Debit 1,00,000

Capital Account Credit 1,00,000

Now, if we show it in the accounting equation, cash account represent the asset account and it is increase in the asset, so we will show it in total asset and capital will increase in the total liabilities. So, we will add it in total liabilities.

Total Assets ( Cash : Rs. 1,00,000) = Total Liabilities ( Capital : Rs. 1,00,000)

Rs. 1,00,000 = Rs. 1,00,000

Cost Concepts

In cost accounting, there are some cost concepts which you should know for understanding the science of cost accounting perfectly. Today, we are explaining all these cost concepts.

1. Cost 

Cost is monetary consideration for getting stock, asset or service. It is expense for buying goods or asset or service. In simple word, cost is the value of sacrifice for getting something. For production and sale, all paid and payable expenses will include in cost. Concept of cost will be different when our aim will different. If we have to calculate the cost of sale, we have to calculate total cost. When we have to calculate the cost of stock, we need to calculate the cost of production.

2. Cost Center 

Cost center is a small department or branch or division which is helpful for calculating the cost and control over costs. For example for production of any product need to process in 6 machines. All these 6 machines will become cost center because we can calculate the cost of processing in each machine. We can make the responsible to the manager of each cost center.

3. Profit Center 

Profit center is that part of business organisation in which we calculate the net profit. Every person who is the  incharge of profit center will be responsible both incomes and expenses of his profit center.

4. Conversion Cost 

Conversion cost is the part of cost concept. Conversion cost is the cost to convert raw material into finished stock. We can calculate conversion cost by deducting direct material cost  from factory cost or we can calculate it by adding direct labor cost with factory overheads.

5. Contribution Margin

Contribution margin is the difference between sale value and variable cost. We can calculate the % of contribution margin by dividing with sales and multiply with 100.

6. Carrying Cost 

Carrying cost is paid for caring the stock. In this cost, we include the rent of stock, cost of capital which is invested in stock, obsolescence of stock cost and other store expenses.

7. Out of Stock Cost 

We have to pay or suffer  this cost when there is no goods in our stock. At that time, we have to lose our sale and customer. Our employee will enjoy the idle time. We will suffer the cost of loss of goodwill.

8. Ordering Cost 

Ordering cost is the cost which we have to pay for placing new purchasing order.

9. Development Cost 

Development cost is the cost which is paid for developing a new product from constructional process.

10. Policy Cost 

Policy cost is the cost which is incurred for implementation of the policies of company.

11. Discretionary Cost 

Discretionary cost is the cost which can be reduced by manager's good decisions. So, it is called managed cost. For example, advertising cost is discretionary cost. Manager will check whether the advertising has increased the return or sale. If not, manager can low this budget or postpone this cost.


12. Idle Facilities Cost 

If employees has not stock or some equipment or machines are not repaired, at that time, employees will be idle. But we have to pay the wage and salary to them. So, this cost will become idle facilities cost.


13. Expired Cost 

This is one of the important cost concept. It means the expenses which were paid for getting benefits. If we got all benefits, same expenses will become expired cost. For example, we have used the car for our business in past 10 years. After deducting depreciation, it is scrape. So, cost of car which we have used in 10 years will be expired cost.


14. Incremental Cost 

Incremental cost is the cost for increasing one more unit of production. It is also called marginal cost.

15. Added Value 

Added Value is increase in the cost of product due to changing the product by production process or bring quality by improving the product. In simple word, Value added is difference between sale price and cost price of any product. We are earning profit because we have added some value in it. For example, a retailer buys the goods from city and sell it in village. By doing hard work and carrying goods to village is sufficient for getting earning from its sale.


16. Urgent Cost 

Urgent cost is the cost which are incurred for stopping the disturbance or delay in the production.

17. Postponable Cost 

Postponable cost are those expenses which can easily be transferred to future time. For example, advertising cost may be postponable cost because we can shift it in future date.

Matching Concept

As per matching concept, we have to match our all costs and all revenues for calculating the correct net profit. When we compare our total revenue with total expenses, we can find our net profit.

Net profit is the accounting information which needs different interested parties for taking the decision. For following on the matching concept, we calculate following items.

•  Make the List of Expenses : First of all, we collect all the expenses information which are paid and which are payable. By making profit and loss account, we show it in the debit side.

• Calculate Cost of Goods Sold : For showing the cost of goods sold in the debit side of profit and loss account. We will add opening stock in current purchase and deduct closing stock from this.

• Make the List of Revenues : Second, we collect all the information of our total revenues which we have generated from our sales and providing our services. We will include both received and receivable revenues.  We will show it in the credit side of profit and loss account.

• Match between Revenues and Expenses : Now, start to match both debit and credit side of profit and loss account. When you will compare both side, you will find that one side’s total will be less than other side. Difference may be net loss or net profit. If revenues are more than our expenses, excess of revenue over expenses will be net profit. If expenses are more than our revenues, excess of expenses over revenues will be net loss. 

Cost Concept

According to cost concept, all assets will record on the basis of their purchasing value. This purchasing value will be called book value. Every year's balance sheet will show the asset on its book value. Because we have bought the asset in past time, so, we will also called this cost as historical cost.


There will not any effect of changes in the market value of any asset. For example, we have made  building in 2011 with the cost of Rs. 4,00,000 but due to increasing the price of cement and other raw material, cost has increased upto Rs. 8,00,000. But our balance sheet will show the value of building Rs. 4,00,000. This concept also allows to make the provision for depreciation and showing it in the liability side. It also allows to deduct current year depreciation from respected fixed asset if we do not make the provision for depreciation accounting. It is necessary to show the correct value of fixed asset in the balance sheet.

There are also exceptions of cost concept. 

1. Because we show inventory at the cost value or realizable value which ever is less. So, on inventory, this concept will not apply.
2. On investment, this concept will not apply. Because value of shares and Gold and other investments in mutual funds change fastly, so, it is the duty of accountant to show these investments on their market value.

Logic Behind Cost Concept

1. Every year, market price of assets change, if we changes our assets on this market price basis, there will decrease the trust on the balance sheet. Sometime, there are small period fluctuations, due to this, there may be big decrease in the price. All investors feel risk of their investments and sell their shares fastly. Company type business will stop within two days. If we show it on the basis of historical cost, balance sheet's fixed assets shows almost same price, this factor will increase the goodwill of company at long run. 
2. I compare this concept with water. In some area, we drink water free of cost and in some area, we have to pay Rs. 15 to Rs. 20 per bottle. But water is water. Its value for human body will be same. Thirsty person can tell its real value. In the market, different fixed asset's value is different. Different person may tell different value. No one is expert. If you carry your car in the car market. Ask 100 car dealers for its value. All's answer will be different. So, it is most difficult to calculate the current or market value of any asset. So, better is to follow the cost concept in accounting. 

Prudence Principle | Examples

Prudence principle is the rule of becoming carefulness. In accounting, we can become careful from future losses. For facing the losses without tension, it is very easy to separate of profit’s some part for this. Every type of loss will increase our liability.

As per prudence principle, we should make and record all estimated future loss and forget all estimated future gains. By doing this, we have to make the provisions for future losses. For example, there is the risk of defaulting the some debtors. For tolerating this loss, it is good, if we make the provision for doubtful debt. This reserve will deduct our total profit. If this loss will happen, we can easy buy new stock through this provision. 

This provision is also called principle of conservatism because this rule is not new. Every time, businessman wants to play his investment in safe side. He also wants to control every type of risk through making reserve. At that time of making of reserve, he should estimate the future loss correctly, otherwise, it will become secrete reserve and it is against the principle of full disclosure.

Examples of Prudence Principle

–       Stock‘s value is calculated on the basis of cost or realizable value whichever is less.

–       The provision for doubtful debts, provision for discount allowed and provision for other future losses should be made

–       Fixed assets must be depreciated on the basis of correct rate of depreciation.