Errors of Principle.

Posting to wrong account on correct side.

Book of original entry and a ledger account.
Types:
- Single Column: Only cash transactions.
- Double Column: Cash & Bank (or Cash & Discount, Bank & Discount).
- Triple Column: Cash, Bank, Discount.
- Petty Cash Book: For small expenses.
Cash column always shows a debit balance or nil; Bank column can show debit or credit balance (overdraft).

Statement prepared to reconcile the difference between the bank balance as per cash book and the bank balance as per pass book.
Common Causes of Difference:
- Cheques issued but not yet presented for payment.
- Cheques deposited but not yet cleared by bank.
- Direct deposits by customers into bank.
- Bank charges.
- Interest allowed by bank.
- Direct payments made by bank (e.g., insurance premium).
- Dishonor of cheques/bills.
- Errors in Cash Book or Pass Book.

Systematic allocation of the depreciable amount of an asset over its useful life.
Causes: Wear and tear, obsolescence, effluxion of time, depletion.
Methods:
- Straight Line Method (SLM):
  - $Depreciation = \frac{(Cost - Salvage Value)}{Useful Life}$
  - Depreciation amount is constant each year.
- Written Down Value Method (WDV/Diminishing Balance):
  - $Depreciation = WDV \times Rate\%$
  - Depreciation amount decreases each year.

Valued at Cost or Net Realizable Value (NRV), whichever is lower (Prudence Concept).
Cost includes: Purchase price, duties, freight, other directly attributable costs.
NRV: Estimated selling price less estimated costs of completion and selling expenses.
Methods for Cost Determination:
- FIFO (First-In, First-Out): Assumes oldest goods are sold first.
- LIFO (Last-In, First-Out): Assumes newest goods are sold first (not allowed under Ind AS/IFRS).
- Weighted Average Method: Average cost of goods available for sale.

Bill of Exchange: An unconditional order in writing, signed by the maker, directing a person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.
Parties: Drawer (maker), Drawee (acceptor), Payee.
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