Debtors are the persons to whom goods are sold. They are simply buyers.

Creditors are the  persons from whom goods are purchased. They are simply sellers.

By definition, a bankrupt or an insolvent person is the one who is unable to pay his debts.

In India, there are Two Acts that govern insolvency:

1.The Presidency Towns Insolvency Act, 1909 (PTIA),

2. Provincial Insolvency Act, 1920 (PIA).

Applicability: The PTIA is applicable in Mumbai, Chennai and Kolkata, while the rest of the country comes under PIA. Except for some minor procedural differences, the law concerning insolvency is the same under both the Acts.

Procedure :A petition for insolvency can be filed in a particular court only if you have resided in that place or have conducted business for a year. Bankruptcy is filed in an individual capacity without including the spouse, but first, you will have to hire a lawyer to help prepare the petition.

This document should have a statement that you are unable to pay your debts, the place where you reside or conduct the business, details of the court order if you have been arrested, details of pecuniary claims against you, as well as the list and addresses of creditors.

After the suit has been filed, the court shall fix a date for hearing. Here, you will be required to produce books of accounts, an inventory of your properties and the list of creditors. The court will examine your conduct, dealings and properties in the presence of the creditors. This gives the latter an opportunity to examine if you have made a full disclosure of your real estate holdings.

If you have filed for insolvency in Mumbai, Chennai or Kolkata, the examination will take place only after you have been declared insolvent, while in all other areas, the examination takes place at the time of hearing. Once you are declared insolvent and the public examination concludes, you can file an application of discharge, which requests the removal of the status of ‘insolvency’.

Working capital is the capital required for day to day working.Working capital measures how much  liquid assets a company has available to build its business.In general companies that have a lot of working capital will be more successful since they can expand and improve their operations.

In accounting Term, Working Capital=Current Assets-Current Liabilities.

In general, internal audit is not mandatory or legally required  for organizations. Instead, their installment is left up to individual organizations’ discretion. Recent legislation, however, has made internal auditing mandatory in some cases. Internal audit is done by internal staff.

An external audit is legally required for many companies, External audit is conducted by persons independent of organisation.

By Statutory Audit we mean audit required under statute or the incorporating act e.g. the audit of company incorporated under Companies Act 1956 /2013 will be Statutory Audit.

Transactions entered in the journal are classified according to their nature and posted in their respective accounts in ledger.

Journal Entry:- It is a process of recording the business transactions in journal which is known as a journalising .To divide business transactions into two aspects and recording it in the journal is called ‘journal entry’.The first aspect is Debit second aspect is Credit.

Ledger:– Ledger is prepared with the help of journal entries. Ledger is a set of accounts.It contains all accounts of the business enterprise whether real,nominal,personal.

There are mainly two type of Accounting System:

Cash System– Under this system all transaction are recorded only on cash basis i.e. when cash is being received or paid. e.g. You purchased goods for your business on 24th March 2014 but payment is made on 01 st April 2014  . then txn will be recorded in the books of next year i.e. in F.Y. 2014-15.

Accrual/Mercantile System-Under this system all transaction are recorded  on accrual basis i.e. as and when they occur e.g. You purchased goods for your business on 24th March 2014 but payment is made on 01 st April 2014  . then txn will be recorded in the books of current year.i.e. on 24th March 2014 for F.Y. 2013-14

In simple words Deferred Tax liability is a provision for future taxation. It is different from provision for tax which is basically a provision   for current taxation. Deferred Tax liability/Asset  arises due to difference between Profit as per Profit & Loss Account (Books) & Income Tax(Taxable Income)

You can refer As -22 for further details.

As the name indicates the profit and loss statement (also known as a statement of financial performance or an income statement) measures the profit or loss of a business over a specified period. Profit & Loss account is prepared to know the results of transactions over  a specified period.