STUDY NOTES

Remembering based Question 1. Define accounting. Ans. A ccounting  may be defined as the process of recording, classifying, summarizing  and communicating the financial information to the users of accounting service for making rationale decisions about the entity. 2. What do you mean by accounting? Ans . Accounting is the art of recording, classifying, summarizing and interpreting the results of money transactions of the entity. 3. Name any two functions of accounting. Ans. (i) Business transactions are recorded either in the journal or in the subsidiary books depending upon the size of the business and the volume of transactions. (ii) After recording of transactions in the journal or in the subsidiary books, these are posted to ledger date wise. 4. Name three branches of accounting. Ans . Financial accounting , Cost accounting , and Management accounting. 5. Define Book-keeping. Ans. Book-keeping is the art of recording and classifying t...

INCOME FROM HOUSE PROPERTY (Sections 22 to 27) Basis of charge :- The annual value of any property is assessable under the head 'Income from House Property' if : (1) Assessee is the owner of property. (2) Property means building and attached land. (3) Property should not be used by the owner for his business or profession. Fully Exempted Incomes :- (1) Income from farm house. [Sec.2(1A)(c)] (2) Annual Value of one palace of ex-Indian Rular. [Sec.10(19A)] (3) Income from property owned by :   (i) Local Authority;  (ii) Scientific Research Association;  (iii) Trade Union;  (iv) Charitable Trust;  (v) Political Party;  (vi) University or other educational institution existing for educational purposes and not for purposes of profit;  (vii) Hospital or medical institution existing for philanthropic and not for purposes of profits. (4) Income from property used for assessee's own business or profession. (5) Income f...

INCOME FROM SALARIES (RETIREMENT) When an employee retires from service or leaves a job and joins the other or he is retrenched, he receives some special payments from the employer, e.g. : Gratuity [Sec.10(10)] Pension and Commuted Value of pension [Sec. 10(10A)] Earned leave salary [Sec. 10(10AA)] Compensation on retrenchment [Sec. 10(10B)] Compensation on voluntary retirement [Sec. 10(10C)] Amount from provident fund [Sec. 10(11)(12)]    GRATUITY :-      For exemption of death-cum-retirement gratuity, employees have been classified into three categories : (A) Government employee [Sec. 10(10)(i)] . Any death-cum retirement gratuity received by all categories of Government employees of a local authority is exempt from income tax in full. Even if after retirement he takes up an appointment in a private organisation the gratuity received by him from the government will be exempt from tax.  (B) Non-Government employees cove...