Entry for Depreciation would be:

Dr. Depreciation A/c     Rs.  XXXXX
Cr. Asset A/c      Rs. XXXXX

As per AS-1 issued by ICAI there are 3 basic assumptions of accounting:

1. Going concern: The enterprise is normally viewed as a going concern, i.e. as continuing operations for the foreseeable future. It is assumed that the enterprise has neither the intention nor the necessity of liquidation. For example, a company purchases a plant and machinery of Rs.100000 and its life span is 10 years.According to this concept every year some amount will be shown as expenses and the balance amount as an asset.

If an enterprise is not a going concern -Valuation of its assets and liabilities on historical cost becomes irrelevant and as a consequence its profit/loss may not give reliable information.

2. Consistency:   It is assumed that accounting policies are consistent from one period to another. This adds the virtue of comparability to accounting data. It comparability is lost, the relevance of accounting data for users’ judgment and decision making is gone.

3. Accrual :  Revenues and costs are accrued, that is, recognized as they are earned or incurred (and not as money is received or paid) and recorded in the financial statements of the periods to which they relate. This assumption is the core of accrual accounting system.The accrual concept under accounting assumes that revenue is realized at the time of sale of goods or services irrespective of the fact when the cash is received. For example, a firm sells goods for Rs 55000 on 25th March 2014 and the payment is not received until 10th April 2014, the amount is due and payable to the firm on the date of sale i.e. 25th March 2014 .It must be included in the revenue for the year ending 31st March 2014.

Cash Flow Statement and Funds Flows statement

Cash Flow statement: Cash flow statement is a statement that shows the movements of cash. It takes the opening balance of cash adds all cash inflows and deducts all cash outflows to arrive at the closing cash balance.   Non-cash transactions are excluded from this statement.

Funds flow statement:. It shows the inflow and outflow of funds i.e. Sources and Applications of funds for a particular period. In other words, a Funds Flow Statement is prepared to explain the changes in the working capital Position of a Company. it is based on accrual system f accounting.

An account should be one of three (for accounting purpose)

Personal Accounts are those which represent Individuals, firms, Organisations etc.

Real Accounts are those which represent assets & Liabilities . e.g. Land , Building

Nominal Accounts are those which represent Income, Expense , gain & losses

Shares are of Two Type-a. Equity Share B. Preference Share

Equity shares are those shares who do not enjoy any preference as regards payment of dividend and repayment of capital. The rate of dividend on
equity shares is not fixed. It fluctuates, as it depends on the profits made by a company. They have normal voting rights.

Preference shares are those shares which enjoy preference as regards payment of dividend and repayment of capital. Preference shareholders do not have normal voting rights. Many investors view preferred stock as more closely related to fixed income because the divided yield is typically higher and more stable than on equity shares.

EPS stands for Earning Per Share.

In other words, the Portion of Company’s Profit allocated to each outstanding Share.

E.g. During the F.Y. Company earned a profit of RS. 264300 & its outstanding shares are 100000 then EPS will be 26430000/100000=2.64

Differential cost is simply the cost difference between two separate possible decisions. Business managers often face situations that require choosing a solution out of two or more different alternatives. E.g. If the first solution costs a company Rs. 2,00,000 and the second solution costs Rs. 1,00000, the differential cost between the two solutions is Rs. 1,00000. Similarly, managers may have more than two solutions from which to choose. In that case, managers must specify the two solutions to which the differential cost applies.

Opportunity cost is typically expressed in terms of benefits that are lost when one solution is selected over another. Managers may face solution alternatives that are all appealing in some way. Finding the opportunity costs of each alternative makes managerial decisions more analytical and less instinctual. Two solutions to a problem may appear profitable, but a closer inspection of the opportunity costs might show that one solution could create Rs.50,000 in profit while the other creates Rs.. 45,000. The opportunity cost for picking the latter solution is Rs 5,000.

Gross Profit =Sales – Cost of goods sold (Cost of goods sold= Opening stock+Purchases+Direct Expenses-Closing Stock)
Net Profit (Before Tax)= Gross Profit- Indirect Expenses
Net Profit (After Tax)= Net Profit Before Tax- Tax