It is important to understand the difference between Profit and Cash concept. Below a simple question to test you on this profit and cash concept: ABC sells computer on a retail basis. The firm began operations during December 2010 and sold computer for cash of $330,000. The computer that was sold by ABC was delivered … Read more
In a balance sheet, we often see reserves been categorized into statutory and non-statutory reserves. Statutory reserves are reserves a company is required to set up by law and which are NOT available for the distribution of dividends And Non-statutory reserves are reserves consisting of profits distributable as dividends, if the company so desires. This … Read more
Non trading organizations normally maintains the following books for their operations: Register of members Minutes Book for recording the proceeding of meetings A cash receipt journal with separate columns for donations, entrance fees, subscriptions, Receipts for special programs or Funds, special receipts for Billiards, Tennis, Swimming and Bank transactions A cash payment journal with separate … Read more
Nominal income or money income is income expressed as a number of monetary units like money wagesWhereasReal income is what the money income can actually buy on the market. Real income is the actual purchasing power reflecting the goods and services that it can command. Illustration: Say the monthly household’s monthly income is $4,000 which … Read more
Earlier article on practical challenges on constructing the consumer price index (CPI).Below are the brief steps to construct a consumer price index (CPI): Select the base year Select a basket of goods and services Assign weights Gather information on goods and services
In theory, constructing a CPI is simple but there are the following practical problems: The choice of a base year The selection of a representative basket of goods The weighting to the selected items No consideration given to the quality of the item Problem with the accuracy and reliability of data supplied Problem with the … Read more