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Accounting entries

harini (student) (59 Points)

24 November 2009

What are the accounting entries to be made in the books of

a. Film production company

b. News broadcasting company

c. T.V. channel

d. Software company

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7 Replies

Jag Bhushan Sharma (Faculty in a B-School) (633 Points)
Replied 25 November 2009

All the above stated companies should be treated just like any other business entity. Basic fundas remain same for all entities. Simply you should be able to differentiate between revenue and capital expenditure. You should also be clear about revenue recognition principle.

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harini (student) (59 Points)
Replied 25 November 2009

sir,

can you just elaborate a bit on that- how to differentiate between revenue & capital , how to recognise revenue?

Jag Bhushan Sharma (Faculty in a B-School) (633 Points)
Replied 27 November 2009

Any money spent for day to day running of the business can be classified as revenue expenditure. For example rent, salary and telephone bills paid are revenue expenditure. Similarly any amount spent on acquiring such assets which are going to help you create income is called capital expenditure. For example amount paid for purchase of machinery, building and furniture is capital expenditure.

Basic principle for recognising revenue is that, when the seller becomes legally entitled to receive payment for goods supplied or services rendered, he can treat that amount as his income in his books.