The Double Account System is a method of presenting annual financial statements of public utility concerns (formed by Special Acts of Parliament) like tramways, railways, gas, water and electricity companies. It is a special method of presenting the Final Accounts rather than a special system of keeping accounts, Here, all accounts are also kept under the normal double entry system. The main objective of this system is to disclose how much capital has been raised and how such capital has been utilised in the acquisition of fixed assets. To achieve this, the Balance Sheet is prepared in two parts, the first being a statement of Receipts and Expenditure on Capital Account and the second, the General Balance Sheet.
Features of the Double Account System
(i)The conventional Balance Sheet is divided into two parts :(a) Receipts and Expenditure on Capital Account; and (b) General Balance Sheet.
(ii) Financial statements are prepared in greater detail, accompanied by a number of statistical data and statements.
(iii) Along with share capital and debentures, premium (or discount) on issue of shares and debentures are permanently retained in the books as capital items.
(iv) Long-term loans and debentures are treated as part of the capital acquired and are shown in the Receipts and Expenditure on Capital Account.
(v) Revenue Account is prepared in place of Profit and Loss Account. Likewise, Profit and Loss.
Features of the Double Account System
(i)The conventional Balance Sheet is divided into two parts :(a) Receipts and Expenditure on Capital Account; and (b) General Balance Sheet.
(ii) Financial statements are prepared in greater detail, accompanied by a number of statistical data and statements.
(iii) Along with share capital and debentures, premium (or discount) on issue of shares and debentures are permanently retained in the books as capital items.
(iv) Long-term loans and debentures are treated as part of the capital acquired and are shown in the Receipts and Expenditure on Capital Account.
(v) Revenue Account is prepared in place of Profit and Loss Account. Likewise, Profit and Loss.
Appropriation Account is named as Net Revenue Account
(vi) Interest on loans and debentures are shown as appropriations in the Net Revenue Account.
(vii) Cost of replacement of an asset not involving any increase in capacity is charged to Revenue Account.
(viii) The fixed assets are shown at original cost in the Receipts and Expenditure on Capital Account. Depreciation is not shown as a deduction from the original cost of the assets but as an accumulated fund in the General Balance Sheet (Liabilities side).
(ix) Preliminary expenses on formation are treated as capital expenditure and shown in the Receipts Expenditure on Capital Account.
(x)Capital account appearing on the assets side of the General Balance Sheet, represents the total expenditure to date on assets which may or may not be in existence on the date of the Final Accounts.
(xi) General reserve, Sinking Fund, Investment Fluctuation Fund etc., are shown on the liabilities side of the General Balance Sheet.
(vi) Interest on loans and debentures are shown as appropriations in the Net Revenue Account.
(vii) Cost of replacement of an asset not involving any increase in capacity is charged to Revenue Account.
(viii) The fixed assets are shown at original cost in the Receipts and Expenditure on Capital Account. Depreciation is not shown as a deduction from the original cost of the assets but as an accumulated fund in the General Balance Sheet (Liabilities side).
(ix) Preliminary expenses on formation are treated as capital expenditure and shown in the Receipts Expenditure on Capital Account.
(x)Capital account appearing on the assets side of the General Balance Sheet, represents the total expenditure to date on assets which may or may not be in existence on the date of the Final Accounts.
(xi) General reserve, Sinking Fund, Investment Fluctuation Fund etc., are shown on the liabilities side of the General Balance Sheet.
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