Basic Accounting Terms
Part – 6 · Rebate, Bad Debts,
Depreciation & Final Accounts
Trading/P&L A/c terms + Fixed Assets, Book Value & the three Final Accounts
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CA Devesh Thakur’s handwritten note for Day 6 — save it for quick revision!
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Basic Accounting Terms – Part 6
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Rebate Allowed vs Received, Bad Debts vs Bad Debts Recovered, Depreciation, Book Value & Final Accounts. Day 6 of 50 Days Accounting Challenge 🔥
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Day 6: Rebate, Bad Debts, Depreciation & Final Accounts
In Day 5 we covered Trading Account and Balance Sheet extracts. Today in Day 6, we go deeper — learning four more key terms that appear in the Trading/P&L Account (Rebate Allowed, Rebate Received, Bad Debts, Bad Debts Recovered), plus the Balance Sheet concept of Fixed Assets, Depreciation & Book Value, and finally what Final Accounts are! 🔥
📒 Trading / P&L A/c (Extract)
Trading / Profit & Loss Account
For the Year Ended — (Extract)
🏷️ Rebate Allowed vs Rebate Received
Rebate Allowed
Yeh ek special type of discount hai jo customer ko purchase ke baad diya jaata hai. Agar customer ko maal mein defect mila ya quality poor thi — to business ek rebate deta hai as compensation.
Yeh business ke liye nuksaan hai kyunki paise wapas dene padte hain.
Rebate Received
Jab business supplier se maal leta hai aur supplier baad mein koi discount ya reduction deta hai — use Rebate Received kehte hain.
Yeh business ke liye fayda hai kyunki cost kam ho jaati hai.
Easy Memory Trick — Rebate
Allowed = Diya (hum ne customer ko diya → Loss → Dr. side).
Received = Mila (supplier se mila → Gain → Cr. side). Same as: Discount Allowed (Dr.) vs Discount Received (Cr.)!
💸 Bad Debts vs Bad Debts Recovered
Bad Debts
Jab kisi customer ne paise dene the — aur ab confirm ho gaya hai ki wo paise kabhi nahi aaenge. Jaise customer diwalia ho gaya (bankrupt), ya bhaag gaya.
Business ko yeh amount poora loss mein write off karna padta hai.
Bad Debts Recovered
Kabhi kabhi jo paise humne bad debt maan liye the — woh customer baad mein chuka deta hai. Yeh ek unexpected income hai kyunki humne expect nahi ki thi.
Isko Credit side mein income ki tarah record karte hain.
Important: Bad Debts vs Bad Debts Recovered
Bad Debt aur Bad Debts Recovered same customer ke ho sakte hain, alag saalon mein. Year 1 mein write off kiya as loss → Year 3 mein customer ne diya → Record as income. Dono separate entries hain — ek ko dusre se offset mat karo!
📊 Balance Sheet — Fixed Assets & Depreciation
Fixed Assets — Cost, Depreciation & Book Value
💰 Cost
Asset kharidne ki original / asli keemat. Jis price par asset purchase ki gayi. Balance Sheet mein starting point hoti hai.
📉 Depreciation
Asset ki value jo time ke saath ghatti hai — wear & tear aur usage ke kaaran. Har saal P&L Account mein charge hoti hai (expense).
📋 Book Value
Cost minus total depreciation = Book Value (Net Book Value). Yahi amount Balance Sheet mein Fixed Assets ke roop mein dikhata hai.
🤔 Why Depreciate?
Assets time ke saath use hote hain — machinery, vehicles, furniture sab ghiste hain. Depreciation is “wear & tear” ko accounts mein reflect karta hai honestly.
Connection with Day 4 — Loss on Sale of Machinery
In Day 4, we saw “Loss — Sale of Machinery ₹(3,000)”. That loss happens because the machinery was sold below its Book Value (Cost − Accumulated Depreciation). Now you know exactly what Book Value means!
🏛️ Final Accounts — The Big Picture
Final Accounts
Yeh teen statements milke ek business ki complete financial picture present karte hain
Accounts
Trading Account
Shows Gross Profit / Gross Loss from buying & selling goods
✓ Gross ProfitProfit & Loss A/c
Shows Net Profit / Net Loss after all indirect expenses & incomes
✓ Net ProfitBalance Sheet
Shows financial position — Assets, Liabilities & Capital at a date
✓ Financial Position📌 Flow: Trading A/c → Gross Profit → P&L A/c → Net Profit → Balance Sheet (Capital increases by Net Profit)
📊 Quick Summary — All 7 Terms
| Term | Statement | Side | Simple Definition |
|---|---|---|---|
| Rebate Allowed | Trading/P&L A/c | Dr. (Loss) | Customer ko purchase baad discount diya — business ka nuksaan |
| Rebate Received | Trading/P&L A/c | Cr. (Gain) | Supplier se discount mila — business ka fayda |
| Bad Debts | P&L A/c | Dr. (Loss) | Customer ke paise kabhi nahi aaenge — loss write off |
| Bad Debts Recovered | P&L A/c | Cr. (Income) | Bad debt maana hua paisa customer ne chuka diya — unexpected income |
| Cost of Fixed Asset | Balance Sheet | Assets | Kharidne ki asli original price |
| Depreciation | P&L A/c + Balance Sheet | Dr. (Expense) / Reduces Asset | Time ke saath value ghatti — wear & tear, usage |
| Book Value | Balance Sheet | Assets (Net) | Cost minus accumulated depreciation — actual balance sheet value |
