URGENT HELP IN ACCOUNTS!!!

[Sarah Paul]

Dear sisters and brothers
Im doing AS now i rele want some help from u guys as soon as possible
OK SO COMING INTO MY DOUBT
Can ull please give me some explanation or notes for the following concepts please
they are as follows:
Substance over form
realization
sales return basis
and the other concepts which are important


Your help would be greatly appreciated. Jazakallah Khair

 

[Sarah Paul]

Is this forum dead?
Dear sisters and brothers can ull please help me!!!

 

[afshinsalim]

Substance over form:
Transactions and other events must be accounted for and presented in accordance with their substance and economic reality and not merely their legal form. This is referred to as substance over form.
The legal form of a transaction can differ from its real substance. Where this happens, accounting should show that transaction in accordance with its real substance which is, basically, how the transaction affects the economic situation of the business. This means that accounting in this instance will not reflect the exact legal position concerning that transaction.
- From a legal point of view, the car does not belong to the business until all the hire purchase instalments have been paid, and an option has been taken up whereby the business takes over legal possession of the car.
- From an economic point of view, you have used the car for business purposes, just as any other car owned by the business which was paid for immediately has been used. In this case, the business will show the car being bought on hire purchase in its ledger accounts and statement of financial position as though it were legally owned by the business, but also showing separately the amount still owed for it.
In this way, therefore, the substance of the transaction has taken precedence over the legal form of the transaction.

Realisation
When accountants speak of realisation, they mean that something becomes an actual fact, or that something has been converted into money. For example, if a man goes into a shop and says that he will return tomorrow and buy a pair of shoes, there is no sale yet; but if the man returns the next day and buys the shoes, the sale has become a fact. By selling the shoes, the shop keeper has converted goods into money. The sale has been realised. Transactions are realised when cash or a debtor replace goods or services. This principle is important as it prevents revenue from being credited in the accounts before it has been earned.
Goods on sale or return: When a trader sends goods on sale or return to a customer, no sale takes place until the customer informs the seller that he has decided to buy them. The customer has the right to return the goods to the trader. The goods remain the property of the seller until the sale actually takes place. Goods on sale or return when final accounts are being prepared must be treated as stock. If they have been wrongly treated as sold, the accounting treatment must be reversed. Sales and debtors must be reduced by the selling price, and closing stock must be increased by the cost price of the goods.