Need for measuring Periodic Income
Need for measuring Periodic Income:
In olden days when business comprised one or more ventures, other one the business of modern times ones started, runs for indefinite time. If accounts of such business have to be prepared only after liquidation one has to wait for an indefinite time which is in practicable.
According to “Ray Side Botham, two factors are responsible for the introduction of the periodic reporting system. One is the advent of corporate body with the principle of limited liability. You cannot persuade an investor to invest corporate bodies unless he is assured of periodic dividends for this purpose it is necessary to measure income periodically before decision regarding dividends can be taken.
The second one is importance of taxation. Unless income is measured periodically it would not be possible for tax authority to determine the tax liability. Now in every country the requirements of company & tax legislation have made the periodic measurement of income mandatory.
Source: A/c Books & Notes
Tags: Account, accountant, accounting, Accounting Management, Capital, Capital Expenditure, Expenditure, for measuring, income, Management, Need, Periodic Income, revenue
By: Management Duniya
No comments:
Post a Comment