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An annuity is explained as stream of uniform duration cash flows. The payment of life insurance premium through the policyholder to the insurance company is an illustration of an annuity. As the same, a deposit in a recurring bank account is also an annuity.
Based on the timing of the cash flows annuities are categorized as:
a) Regular Annuity or Deferred Annuity
b) Annuity Due.
The regular annuity or the deferred annuity is such annuities wherein the cash flow arises at the end of all period. In case of an annuity due the cash flow arises at the starting of the period.
Content of accounts Periodical accounts should normally consist of: 1. Balance sheet of the whole trust; 2. Capital account; 3. Income account
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