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Paper 1 Principles and Practices of Accounting Theoretical Framework 1.37
Fund: An account usually of the nature of a reserve or a provision which is repre-
sented by specially earmarked assets.
Sinking fund: A fund created for the repayment of a liability or for the replacement
of an asset.
Lien: Right of one person to satisfy a claim against another by holding or retaining
possession of that other’s assets/property.
Provision: An amount written off or retained by way of providing for depreciation or
diminution in value of assets or retained by way of providing for any known liability
the amount of which cannot be determined with substantial accuracy.
Reserve: The portion of earnings, receipts or other surplus of an organisation (whether
capital or revenue) appropriated by the management for a general or a specific pur-
pose other than a diminution in the value of assets or provision for depreciation or or
for a known liability. The reserves are primarily of two types: revenue reserves and
capital reserves.
ABBREVIATIONS
CA Chartered Accountant
MIS Management Information System
GAAP Generally Accepted Accounting Principles
FS Financial Statements
BOA Books of Accounts
AS Accounting Standards
CAPEX Capital Expenditure
FS Financial Statement
AS Accounting Standard
FS Financial Statements
IND AS Indian Accounting Standard
IFRS International Financial Reporting Standards
ASB Accounting Standards Board
IASB International Accounting Standards Board
KEY CONCEPTS
Objectives of Accounting
Users of Accounting Information
Book Keeping vs Accounting
Going Concern Concept
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