Question
Asked Dec 5, 2019
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Describe the nature of the assets that compose the following sections of a balance sheet: (a) current assets and (b) property, plant, and equipment.

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Expert Answer

Step 1

Accounting follows the double-entry bookkeeping system. The basic rules of double-entry bookkeeping system are:-

  1. Personal Accounts- Debit the giver and credit the receiver. Personal Account means an account relating to a person like Harry, Peter, etc.
  2. Real Accounts- Debit what comes in and credit what goes out. Real Accounts relate to any account which exists in real like Cash, building, land, etc.
  3. Nominal Accounts-Debit all expenses and losses and credit all income and gains. The nominal account relates to all items of expenses like stationery purchased, cost of goods sold and revenues like sales, interest received.
Step 2

Assets which can be converted into cash or cash equivalent within 12 months from the balance sheet are known as Current Assets. Example: Inventory, Accounts ...

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