Capital Assets, Family Pension, Depreciation, HRA and Gratuity Explained
Capital Assets
Capital assets include:
- Shares and securities
- Jewellery
- Mutual fund units
- Goodwill
- Patents and trademarks
- Stock-in-trade – goods held for sale in the ordinary course of business
Assets Not Considered Capital Assets
The following are generally excluded from the definition of capital assets under the Act:
- Stock-in-trade – goods held for sale in the ordinary course of business
- Personal effects – movable property used for personal purposes, such as clothes and furniture, except specified items
Digital Finance Revolution: FinTech, UPI, and JAM Trinity
FinTech and Financial Technologies Cheat Sheet
Introduction to Financial Market Technologies
Financial markets use advanced technologies to improve speed, efficiency, transparency, and security in trading and investment.
Key Technologies:
- Electronic Trading Systems: Automated stock exchange trading
- Algorithmic Trading: Computer programs execute trades automatically
- Artificial Intelligence (AI): Market prediction, fraud detection, and chatbots
- Blockchain Technology: Secure decentralized ledger for transactions
- Big
PPE, Inventory, and GAAP Accounting Principles
Chapter 10: Property, Plant, and Equipment (PPE)
Tangible Assets: Depreciated vs. Non-Depreciated
Tangible Assets (Depreciated): Buildings, equipment, machinery, furniture, autos, trucks, land improvements, and natural resources (subject to depletion).
Tangible Assets (NOT Depreciated): Land (never depreciated), Construction in Progress (CIP), and assets held for sale.
Capitalizing Tangible Asset Costs
Equipment Capitalization: Purchase price + sales tax + freight + shipping insurance + installation
Read MoreACC 202 Final Exam Study Notes: Accounting Principles
Core Accounting Principles
- Match the method to the data given:
- Units given → Units-of-production
- Time given → Straight-line
- Always update depreciation BEFORE disposal.
- Watch time carefully: (months vs. years vs. 360 days).
- Accrual vs. Cash: Expenses are recorded when incurred, not paid.
- Normal balances: Essential for every journal entry.
Chapter 10: Assets
Asset Classification
- Tangible: Depreciation
- Natural Resources: Depletion
- Intangible: Amortization
Cost of Asset (Highly Tested)
Include: Purchase price,
Read MoreCheat Sheet
CHAPTER 10 — Plant Assets, Natural Resources, Intangibles
Asset Classification
Depreciated (Tangible)
• Buildings • Equipment • Machinery • Vehicles
Depleted (Natural Resources)
• Timber • Oil • Minerals
Amortized (Intangible)
• Patents • Copyrights • Franchises • Trademarks (limited life)
Cost of Assets
Total Cost = all expenditures to get asset ready for use
Includes: purchase price, taxes, shipping, installation, testing, legal fees.
Depreciation Methods
Straight‑Line •
Read MoreFinancial Accounting and Statement Analysis Formulas
Liquidity
Current Ratio = Current Assets ÷ Current Liabilities
Quick Ratio = (Cash + A/R + Short-term Investments) ÷ Current Liabilities
Working Capital = Current Assets − Current Liabilities
- High Working Capital: Strong ability to pay short-term debts
- Low Working Capital: Higher liquidity risk
- Impacts operating cash flows on the Statement of Cash Flows
Contingent Liabilities (Warranties)
Record liability and expense if both criteria are met:
- Probable future loss
- Amount can be reasonably estimated