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Module D Final Accounts covering Final Accounts

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1 Module D Final Accounts covering Final Accounts
CA R. C. Joshi B.Com(Hons.),FCA,LL.B.CAIIB

2 Equation Balance Sheet Rs. Lakhs Capital & Liabilities Assets Capital Fixed Assets Reserves Investments Capital Employed Current Assets Term Liab Cash Current Liab Bank Debtors _____ Stock

3 Assets = Equities (Total Claims)
Or Assets = Liabilities +Capital or Liabilities= Assets- Capital or Capital= Assets- Liabilities Capital =Rs.65 lakhs-Rs.25 lakhs(TL *CL) So we get capital deployed of Rs.40 lakhs

4 Final Accounts Current assets are those which are:
kept temporarily for resale for converting into cash they are cash or cash equivalent are to be realized within a period of one year are to be realized during the normal operating cycle

5 Some common adjustments are:
Closing Stock Expenses due but not paid (Outstanding expenses) Expenses paid in advance (Prepaid expenses) Incomes due but not received (Accrued incomes) Incomes not due but received (Unearned incomes) Depreciation on assets Interest on Capital

6 : Closing consolidated journal entries are normally passed for
Transfer of all manufacturing and purchase expense to the debit side of trading a/c Transfer of Purchases and Sales return to the debit side of Trading a/c Transfer of Sales and Purchases return to the credit side of Trading a/c Transfer of closing stock to the credit of trading account by an adjustment entry

7 Equation & closing entries
Transfer of Gross profit to the credit side of Profit & Loss a/c for the yearended Trading Account To Opening Stock By Sales To Purchases By Cl.Stock To Wages O/s forMar To Carriage Inward To Gross Profit Transfer of Gross loss to the debit side of Profit & Loss a/c

8 Profit & Loss Account for the Period ended 31/3/09.
To Salaries By Gross Profit To Rent By Commission 4000 To Admin. Exp By Misc. Income1000 To InsuranceRs.3000 LessPrepaid To Dep To Net Profit Trd To Capital Account

9 Balance Sheet Capital A/c Fixed Assets Op. Bal Dep Profit Current Assets Drawing Cash Sun Cr Bank Wages O/s Debtors Stock Adv: Prepaid Div Total

10 Owners fund includes: Capital less drawings of the owner Undistributed profits Reserves Assets minus liabilities

11 True or False a. Balance Sheet represents an expansion of the equation: Assets= Liabilities+ capital b. Assets- Original Capital= Liabilities c. Rehman has assets of Rs.5000 & Liabilities of Rs.5000 therefore his Capital would be Rs d. Assets will be equal to Capital if there are no liabilities of the business. E. If a firm borrows a money its capital would be reduced. F. Samir has assets of Rs & Liabilities of Rs Therefore his Capital is Rs

12 Answer a)True b) False © False d) True e False
(F) False

13 Banking Final Accounts

14 BANKING ACCOUNTS A company that carries on the business of Banking in India. It generally governed by the Provisions of the Companies Act, 1956. It is specifically governed by the Banking Regulation Act,1949.

15 BANKING ACCOUNTS The Major institutions that are carrying on business of banking in India are: Nationalised Banks State Bank of India and their associates Foreign Banks having branches in India Co-operative Banks Rural Banks Private Sector Banks

16 BANKING ACCOUNTS Bankers’ Books include: Ledgers Day Books Cash Books
Account Books All other records used in the ordinary business of a bank

17 BANKING ACCOUNTS Third Schedule: Form ‘A’ Form of Balance Sheet
Balance Sheet as on 31st March,…………. Capital and Liabilities Schedule Rs Capital ……. Reserves and Surplus ……. Deposits ……. Borrowings ……. Other Liabilities and Provisions ……. Total ……. …….

18 Non- Banking Assets ‘Non-Banking Assets?
This relates to assets, which are not acquired by the banks for the purpose of Banking business like lending .Land & building for its own se. Second category of non Baking assets are assets repossesed by Bank In case of non-payment of loan amount such securities are taken in possession for recovery.These assets were finance by the bank & have turned bad.

19 Sec. 17 of BR Act requires 25% from 2007(earlier 20) by way of Reserves and also provision for Bonus Sec. 15 prohibits bank to declare dividend unless first written all capital expnses

20 BANKING ACCOUNTS Assets Schedule No. Rs.
Cash and Balance with RBI ……. Balance with Banks and Money at call and Short Notice ……. Investments ……. Advances ……. Fixed Assets ……. Other Assets ……. Total Contingent Liabilities

21 BANK BALANCE SHEET : Sch1 to 12 Balnance out of which 1to 5 for Capital & Liability Side & Sch.6 to 12 for Babk’s Assets Side. Bank’s P & L : Sch.13 to 16.

22 Sch.1 Capital The various items in schedule-1(Capital) in Balance Sheet(Form A) includes: For Nationalised Banks- Capital For Banks incorporated outside India- Start up capital as prescribed by RBI + Amount of deposit kept with RBI under section 11(2) of BR Act,1949. For other Banks- i) Authorised Capital (…shares of Rs….each) ii) Issued Capital do- iii) Subscribed Capital do— iv) Called-up Capital do— v)Less call unpaid + Add Forfeited Shares

23 Sch.2 The various items in schedule-2(Reserve and Surplus) in Balance Sheet(Form A) includes: Statutory Reserves(opening Balance + Additions and Deductions during the year). Capital Reserves ( do ). Share Premium ( do ). Revenue and other Reserves ( do ). Balance in Profit and Loss Account. Total(a+b+c+d+e)

24 Sch. 3 The various items in schedule-3(Deposits) in Balance Sheet(Form A) includes: a) (I) Demand Deposits-- ( i )From Banks, ii) From Others. (II) Savings Bank Deposits (III) Term Deposits – i)From Banks, ii) From Others (IV) Total (I + II + III) b) (I) Deposits of Branches in India (II) Deposits of Branches Outside India

25 Sch.4 The various items in schedule-4(Borrowings) in Balance Sheet(Form A) includes: Borrowings in India (reserve Bank of India +Other Banks +Other Institutions and agencies) Borrowings outside India Total(a + b) Secured Borrowings in a & b above

26 Sch.5 The various items in schedule-5(other Liabilities and Provisions) in Balance Sheet(Form A) includes: Bills Payable Inter-office Adjustments(net) Interest Accrued Others(including Provisions)

27 Sch. 6Cash & Bal. with RBI Form A includes:
Cash in Hand (including foreign currency notes) Balances with RBI in(Current Account, other Accounts) Total(a + b) . Cash and Balance with the Reserve Bank of India includes: Cash in hand including foreign currency notes. Balance with RBI in current account and in other accounts. It includes cash in hand including foreign currency notes and also of foreign branches in case of banks having such branches.

28 Sch. 7 The various items in schedule-7(Balance with Banks & Money at call and short notice) in Balance Sheet(Form A) includes: In India: i) Balance with banks (in Current Accounts + in Other Deposit Accounts) ii) Money at Call and Short Notice (With Banks + With other Institutions) Total( i + ii ) Outside India: i) In Current Accounts ii) In other Deposit Accounts iii) Money at Call and Short Notice Total (i + ii + iii) Grand Total (a + b)

29 Balances with other Banks and Money at Call and Short Notice includes:
Balances with Banks in India including co-operative Banks, in current accounts and in other Deposit accounts shown separately. Money at call and short notice with banks and other institutions. It represents loans given by one bank to other for a short period. Call loans are repayable at any time the banker recalls while short notice advances are repayable within short notice say, 24 hours to maximum period of two weeks. It also includes deposits repayable within 15 days notice lent in the inter-bank call money market. Balances in current accounts and deposit accounts outside India which includes balances held by foreign branches and branches of Indian Banks outside India. Money at call and short notice in foreign countries.

30 Sch. 8 The various items in schedule-8(Investments) in Balance Sheet(Form A) includes: Investments in India in: i) Govt. Securities ii) Other Approved Securities iii) Shares iv) Debentures and Bonds v) Subsidiaries and/or Joint Ventures vi) Others (to be specified

31 Sch. 8 Investments Outside India in:
i) Govt.Securities (including Local Authorities) ii) Subsidieries and/or Joint Ventures abroad iii) Other Investment (to be specified) Total: Grand Total (a and b)

32 Investment in India includes:
Central and State Govt. securities and govt. treasury bills shown at the book value. Difference between the book value and market value should be mentioned in notes. Other than govt. securities which are treated as approved securities as per BR Act,1949. Investments in shares, debentures and bonds of companies and corporations not included above. Investments in Subsidiaries/Joint Ventures (including RRBs) Residual investments if any, like Gold, commercial paper and instruments in the nature of share/debentures/bonds.

33 Investment outside India includes:
All foreign government securities including securities issued by local authorities. Investments made in the share capital of subsidiaries floated outside India and/or joint ventures abroad. All other investments made outside India.

34 Sch. 9 . The various items in schedule-9(Advances) in Balance Sheet(Form A) includes: i) Bill Discounted and Purchased ii) Cash Credits, Overdrafts and Loans Payable on Demand iii) Term Loans Total: i) Secured by Tangible Assets ii) Covered by Bank/Govt. Guarantees iii) Unsecured

35 Sch. 9 continued I. Advances in India: i) Priority Sectors
ii) Public Sector iii) Banks iv) Others Total: II. Advances Outside India: i) Due from Banks ii) Due from Others( Bills Purchased and Discounted, Syndicated Loans, Others) Grand Total( I and II )

36 ‘Advances’? includes Loans, Cash Credit and Overdraft Loan is an advance which has fixed amount and fixed period. Cash Credit is an arrangement where banks agree to lend money to borrowers up to a fixed limit against Hypothecation or Pledge of securities. However the borrower need not avail the whole amount in one go. Overdraft is an arrangement where customer is permitted to overdraw money in his current account up to a certain limit against securities like, L.I.C. Policy, FDRs, National Saving Certificates, Quoted shares etc.

37 Sch. 10 Fixed Assets The various items in schedule-10(Fixed Assets) in Balance Sheet(Form A) includes: Premises : At cost as on 31st March of the preceding year Additions during the year Deductions during the year Depreciation to date Other Fixed Assets(Including Furniture and Fixture) At cost on 31st March of the preceding year Total (a + b)

38 Sch. 11 Other Items . The various items in schedule-11(Other Assets) in Balance Sheet(Form A) includes: Inter-Office Adjustments Interest Accrued Tax Paid in Advance/Tax Deducted at source Stationery and Stamps Non-banking Assets acquired in satisfaction of claims Others (any unadjusted balance of loss, when the loss exceeds the aggregate of capital, Reserves and Surplus)

39 Sc. 12 Contingent liabilities
. The various items in schedule-12(Contingent Liabilities) in Balance Sheet(Form A) includes: Claims against the Bank not acknowledged as debts Liability for partly paid investments Liability on account of Outstanding Forward Exchange Contracts Guarantees given on behalf of constituents; i) In India ii) Outside India Acceptances, Endorsements and other Obligations Other items for which the Bank is contingently liable Total

40 Sch. 13 P& L The various items in Schedule 13 (Interest Earned) of Profit and Loss Account (Form B) includes: Interest/Discount on Advances/Bills Income on Investments Interest on balances with RBI and other inter-bank funds Others

41 Interest Earned (schedule 13) includes:
Interest/discount on Advances/bills: includes interest and discount on all types of loans and advances like Cash Credit, demand loans, overdrafts, export loans, term loans, domestic and foreign bills purchased and discounted (including those rediscounted), overdue interest and also interest subsidy, if any, relating to such advances/bills. Income on investments: Includes all income derived from the investment portfolio by way of interest and dividend. Interest on Balances with RBI and other inter-bank funds: includes interest on balances with Reserve Bank and other banks, call loans, money market placements, etc. Others: Includes any other interest/discount income not included in the above heads.

42 Sch. 14 other income The various items in Schedule 14 (Other Incomes) of Profit and Loss Account (Form B) includes: Commission, Exchange and Brokerage Profit on Sale of Investments Less: Loss on sale of investments Profit on Revaluation of Investments Less: Loss on Revaluation of Investments Profit on Sale of Land/Building and other Assets Less: Loss on sale of Land, Building & Other assets Profit on Exchange Transactions Less: Loss on Exchange Transactions Income earned by way of dividends, etc., from subsidiaries, companies and/or joint ventures abroad/in India Misc. Income

43 Other Incomes (schedule 14) includes:8
Commission, Exchange and Brokerage: includes all remuneration on services such as commission on collection, commission/exchange on remittances and transfers, commission on letters of credit, letting out of lockers, guarantees, commission on Govt. business, commission on the other permitted agency business including consultancy and other services, brokerage etc., on securities excluding foreign exchange income. Profit on sale of investments less loss on sale of investments. Profit on revaluation of investments less loss on revaluation of investments.

44 Sch. 15 Interest Expended The various items in Schedule 15 (Interest Expended) of Profit and Loss Account (Form B) includes: Interest on deposits Interest on RBI/Inter-Bank Borrowings Others

45 Sch. 16 The various items in Schedule 16 (Operating Expenses) of Profit and Loss Account (Form B) includes: Payments to and Provisions for Employees Rent, Taxes and Lighting Printing and Stationery Advertisement and Publicity Depreciation on Bank’s property Director’s fees, Allowances and Expenses Auditor’s fees and expenses (Including Branch Auditors) Law Charges Postages, Telegrams, Telephones etc. Repairs and Maintenance Insurance Other Expenditure

46 Sch.16 Operating Expenses (schedule 16) includes:
Payments to and provisions for employees: Includes staff salaries/wages, allowances, bonus, other staff benefits like provident fund, pension, gratuity, leave fare concessions, staff welfare medical allowance to staff. Rent, Taxes and lighting: Includes rent paid by the banks on buildings and other municipal and other taxes paid excluding income tax and interest tax, electricity and other similar charges and levies. House rent allowance and other similar payments to staff should appear under the head “Payment to and provisions for employees”.

47 Sch.16 Printing and stationery: Includes books and forms of stationery used by the bank and other printing charges which are not incurred by way of publicity expenditure. Advertisement and publicity: Includes expenditure incurred by the bank for advertisement and publicity purposes including printing charges of publicity matter. Depreciation on bank’s property: Includes depreciation on bank’s own property, motor cars and other vehicles, furniture, electric fittings, vaults, lifts, leasehold properties, non-banking assets etc.

48 Sch. 16 Directors’ fees, allowances and expenses: Includes sitting fees and all other items of expenditure incurred on behalf of directors. The daily allowance, hotel charges, conveyance charges etc., which though in the nature of reimbursement of expenses incurred may be included under this head. Similar expenses of local committee members may be included under this head. Auditors’ fees and expenses (Including branch auditors’ fees and expenses): Includes the fees paid to the statutory auditors and branch auditors for professional services rendered and all expenses for performing their duties, even though they may be in the nature of reimbursement of expenses. If external auditors have been appointed by bank themselves for internal inspection and audits and other services, the expenses incurred in that context including fees may not be included under this head but shown under ‘Other expenditure’. Law charges: includes all legal expenses and reimbursement of expenses incurred in connection with legal services.

49 Sch.16 Postage, telegrams, telephones etc.: Includes all postage charges like stamps, telegram, telephones, teleprinters etc. Repairs and Maintenance: Includes repairs to bank’s property, their maintenance charges. Insurance: Includes insurance charges on bank’s property, insurance premium paid to DICGC etc., to the extent they are not recovered from the concerned parties. Other expenditures; Includes all expenses other than those not included in any of the other heads like, license fees, donations, subscriptions to papers, periodicals, entertainment expenses, travel expenses, etc. In case any particular item under this head exceeds one percentage of the total income, particulars may be given in the notes.

50 The Provisions and Contingencies include:
Provisions made for bad and doubtful debts Provisions for taxation Provision for diminution in the value of investments Transfers to contingencies

51 Money at Call & ShortNotice
‘Money At Call and Short Notice’? It relates to inter-bank transactions. One Bank may approach another Bank to avoid adverse clearing which may be for a day or Friday then for two to three days. Banks having short supply of money borrow from banks having surplus money. Money is borrowed usually for 1 to 14 days. The rate of interest fluctuates everyday and even within a day.

52 It is a contra item in the Balance Sheet.
‘Bills receivable being Bills for collection as per contra’? It is a contra item in the Balance Sheet. ‘Bills received being bills for collection ‘ account denotes the amounts receivable and is shown on assets side of the balance sheet. ‘Bills for collection being Bills receivable’ account denotes the amount payable to the customer and is shown in the liabilities side of the balance sheet.

53 Acceptance Endorsements and other Obligations’?
It represents liabilities, which the bank assumes on behalf of its customers. The various ways in which a bank may accommodate its customers are, opening of L/C, accepting bills on behalf of customers, making endorsements on Promissory Note prepared by customers, issuing Letter of Guarantee. The bank obtains counter Guarantee from its customers to meet the third party liabilities. It creates contra item in balance sheet. The account ‘Constituents’ liability for acceptances, endorsements or other obligations’ appears in the asset side of the balance sheet. The account ‘ Acceptances, Endorsements and other Obligations’

54 Interest on Fixed Deposits 298000
Prepare the Profit and Loss account of Andhra Bank for the year ended 31st March, 2003, from the following: Interest on Fixed Deposits Rebate on Bills discounted Interest on Loans Commission Charged to Customers Establishment Discount on Bills Discounted ,000 Interest on Cash Credit ,0000 Unexpired Disc. Agst bills disc Directors’ Fees 10,000 Audit Fees Postage and Telegram 2,000 Printing and Stationery 3,000 Rent and Taxes Interest on Overdrafts Sundry Charges Interest on Savings Bank Deposits 72000

55 Andhra Bank Ltd. P & L Account for the YE 31/3/03
Schedule No. Rs I. Income Interest Earned Other Income Total II. Expenditure Interest Expended Operating Expenses Provision for Contingencies Total III. Profit Net Profit for the year

56 Sce. 13Interest Earned Schedules to be annexed with Profit and Loss Account Schedule13: Interest Earned Interest on: Loan Cash Credit 24,0000 Overdrafts Discount on Bills discounted165000 Less: Rebate on Bill Discounted 690000

57 Sc.14 &15 Schedule 14: Other Income
Commission charged to customer Schedule 15: Interest Expended Interest paid on       Fixed Deposits       Savings Bank Deposits 415000

58 Schedule 16: Operating Expenses
Establishment Expenses Director’s Fees Audit Fees Rent and Taxes ,000 Postage and Telegrams 2,000 Printing and Stationery ,000 Sundry Expenses ,000

59 Partnership

60 Partnership Sec. 4 of Indian Partnership Act,1932 defines partnership as relationship between the persons who have agreed to share the profits of a business carried on by all or any one of them acting for all. Partnership Agreement inter alia contains partnership business, commencement of business , the Firm name & ,Commencement & duration, Capital contribution, RoI on loans etc Salary Other terms. CAPITAL ACCOUNTS: METHODS : Fixed Capital: Here as stipulated amount of capital will be shown as Capital while Salary, Drawing, Interest entries are routed throgh Current Accouts.

61 The important features of partnership are
It is a relationship between persons There should be minimum two persons to form a partnership It is the result of an agreement The partnership agreement may be written or oral The agreement is to share the profits of the business. There must be a lawful business The business must be carried on by any one of them acting for all or by more than one, or by all of the partners

62 Any variations in the mutual rights and duties of partners
Method by which goodwill is to be calculated on the admission, retirement or death of a partner Procedure by which a partner may be admitted or retired, and the method of payment of dues Basis of the determination of the executors if any one of them is deceased and the method of payment Treatment of losses arising out of the insolvency of a partner. Whether Garner vs. Murray rule will be applicable to them or not. Procedure to be followed for settlement of disputes among partners Preparation of accounts and their audit.

63 Fluctuating Capital methods :
Here entries for Salary, Interest are routed through one account hence the amount in capital account may fluctuate. For eg. Prakash & Surya have position as under Capitals: Prakash Surya Fixed Capital Salary Drawings Share in Profit Current Acs Show Fixed Capital & Fluctuating Capital Accounts incorporating the above transactions .

64 Prakash 31/3 To Bal C/d /4 By Bal B/d Surya 31/3 To Bal C/d /4 By Bal B/d Current A/c: Prakash 31/3 To Drawings /4 By Bal B/d /3 To Bal C/d /3 By Salary / By Sh. Of Profit

65 Current A/c: Surya /3 To Drawings /4 By Bal B/d /3 To Bal C/d /3 By Salary ______31/3 By Sh. Of Profit Now Under Fluctuating Capital There being no separate Current A/c One single Account for each partner will appear as: SURYA’s CAPITAL A/C 31/3 To Drawings /4 By Bal B/d /3 To Bal C/d /3 By Salary ______31/3 By Sh. Of Profit

66 Valuation of goodwill 1. Average profit method :
Goodwill at 5 Years’ of last 3 years average profits: = average profit 3 40000*5 years = Rs goodwill. 2. Superprofit Method : From Capital employed Rs we assume return at 10% i.e. normal profit Actual profit Rs Rs Rs Super Profit at 5 years’ purchase Rs.26000*5= Rs Capitalisation : Normal Profit* normal rate

67 Say normal Profit is Rs.30000, normal rate is 10%
Value of business= 30000*100 i.e. Rs.3,00, Actual Capital say Rs. 1,00,000. Goodwill = Rs.1,00000= Rs

68 Current A/c: Prakash 31/3 To Drawings /4 By Bal B/d /3 To Bal C/d /3 By Salary / By Sh. Of Profit

69 Admission of new Partner & treatment for goodwill
1. When privately paid : No entry 2. When brought it is shared by existing partners in their profit sharing ratio. By Cash/ Bank A/c Dr. To Goodwill A/c Goodwill A/c To A’s Capital A/c To B’s Capital A/c 3. No goodwill is brought in but is raised & Shown inB/S as an assets. Goodwill A/c To A;s Capital To B’s Capital

70 No goodwill is brought in but is raised & written off : Goodwill A/c To A;s Capital To B’s Capital By A’s Capital By B’s Capital To Goodwill A/c.

71 Goodwill on retirement
A,B & C are equal partners. C retires when goodwill is valed at Rs C’s Share Rs Goodwill A/c Dr To C’s Capital A/c A’s Capital A/c B’s Capital A/c To Goodwill A/c

72 Goodwill is normally due to:
Favourable Location Nature of business Licences and quotas with the business Possibility of competition Better customer service Efficient advertisement Possession of patent rights and trade marks Efficiency and Personal skill/ reputation of the management Better products

73 Fundamentals of Partnership Accounts
Let us suppose A, B, and C are partners sharing profits and losses in the ratio of 5 : 3 : 2. A retires and B and C agree to continue at the ratio of 3: 2. In this case, the position will be as follows: Old Ratio New Ratio Net Gain/Loss A 5/10 Nil — B 3/10 3/5 + 3/10 (3/5 – 3/10) C 2/10 2/5 + 2/10 (2/5 – 2/10) Gain ratio will be 3 : 2. (b) Let us now suppose B and C change their ratio to 5 : 3; then the position will be as follows: A /10 — (–) 5/10 i.e 1/2 B /10 5/8 + 13/40 (5/8 – 3/10) C /10 3/8 +  7/40 (3/8 – 2/10) Gain ratio will be 13/40 : 7/40 i.e. 13 : 7.

74 On death of a partner On the death of a partner the executors or representatives of the deceased partner are entitled to the following benefits: The amount standing to the credit of deceased partners’ capital a/c His share in the goodwill of the firm His share of profits earned from the beginning of the year to the date of death His share of profits on revaluation of assets and liabilities. His share of the loss, if any, shall be deducted His share of undistributed profit or reserves Interest on capital, salary or commission, etc. if provided in partnership deed. His share of the proceeds of the joint life policy.

75 Event of DEATH If the death takes place in the DURING THE accounting period, the deceased partner is entitled to his share in profit or loss upto the date of his death. The amount can be determined by (i)preparing final accounts up to the date of death, or (ii) an estimated share in profit or loss is determined on the basis of (a) Preceding year (b) on the basis of sales up to the date of death and calculating profit on the basis of the percentage of profit earned in the previous year (c) on the basis of the time (d) on the basis of the average of the two

76 COMPANY

77 Company A Private Company is one which Restricts the transfer of shares. Limits no. of members to 50 & Prohibits invitation to public. Public Company (Sec. 3(i) (iv) of Indian Companies Act, 1956) is one which is not a Private Company. Govt. Co. where Govt (Central or State) holds not less than 51% of its paid up capital. Holding Co, holds 51% capital in Subsdiary co.

78 1. Authorised 2. Issued 3. Subscribed 4. Called up & 5. Paid up.
Co. may have both Preference Share Capital Or Equity Share Capital or both Pref. Shares may be cumulative (Dividend is accumulated) Redeemable (after a period) or Participating( in profits in excess of those available to equity shareholders. Another Classification 1. Authorised 2. Issued 3. Subscribed 4. Called up & 5. Paid up.

79 True or false 1. Paidup capital may exceed authorised capital
2. Particpating pref shares have right to participate in profits after paying dividen to eu. Shareholders. 3. Equity Shareholders have to first paid dividend before paying/declaaring dividend to Eq. Shareholders

80 COMPANY Accounts The Assets side of the balance sheet shows the following sequence: Fixed Assets Investments Current assets, Loans and Advances Current Assets Loans & Advances Miscellaneous Expenditure Profit & Loss account (Debit balance, if any)

81 COMPANY Accounts With regard to Share Capital, the company should specifically state: Details of Authorised, Issued, Subscribed, Called up and Paid up capitals Details of number of shares and face value of each share Amount called up on each share Classes of shares-Preference or Equity with or without voting rights Shares allotted as fully paid for consideration other than cash Shares issued as bonus shares and source

82 COMPANY Accounts RESERVES AND SURPLUS Capital Reserve
Capital redemption Reserve Share Premium Account Other reserves Less: Debit balance in P & L A/c, if any Surplus (Balance in the P & L appropriation A/c) Proposed additions to reserves Sinking funds

83 COMPANY Accounts SECURED LOANS Debentures
Loans and advances from banks Loans and advances from Subsidiaries Other Loans and advances

84 COMPANY Accounts UNSECURED LOANS Fixed deposits
Loans and advances from subsidiaries Short term loans & Advances from Banks From Others 4. Other loans and advances (a.)from Banks (b) From Others

85 COMPANY Accounts INVESTMENTS
Investments in Government or trust securities Investment in shares, Debentures or bonds Investment in immovable properties Investment in the capital of partnership firms Balance of un-utilised monies raised by issues

86 COMPANY Accounts CURRENT LIABILITIES & PROVISIONS
(A) Current Liabilities Acceptances Sundry Creditors Subsidiary companies Advance payment and unexpired discounts Unclaimed dividends Other liabilities (if any) Interest accrued but not due on loans

87 COMPANY Accounts FIXED ASSETS Goodwill Land Buildings Leaseholds
Railway sidings Plant & Machinery Furniture & fittings Development of property Patents, trade marks & designs Live stock Vehicles, etc.

88 COMPANY Accounts The fixed assets must be Classified and distinguished
The following details are required to be shown separately: original cost, additions during the year, deductions there from during the year, Total depreciation written off or provided up to the end of the year

89 COMPANY Accounts : The followings must be clearly stated with regard to Investments: Nature of Investments Mode of valuation (Cost or market value) Classification of Investments

90 COMPANY Accounts CURRENT ASSETS LOANS & ADVANCES Current Assets
Interest accrued on investments Stores and spare parts Loose tools Stock in trade Sundry Debtors Cash in hand Bank balances With scheduled banks With others

91 COMPANY Accounts In respect of Sundry Debtors following details are to be shown: Debts considered good and in respect of which the company is fully secured Debts considered good for which the company holds no security other than personal security of debtors Debts considered doubtful or bad

92 COMPANY Accounts Loans & Advances Advances and loans Bills of Exchange
Advances receivable in cash or kind or for value to be received Balances on current accounts Balances with Customs, Port trust, etc. (where payable on demand)

93 COMPANY Accounts Miscellaneous expenditure is shown in the following sequence on the assets side of the balance sheet: Preliminary expenses Expenses including commission or brokerage on underwriting or subscription of shares or debentures Discount allowed on issue of shares or debentures Interest paid out of capital during construction Development expenditure not adjusted Other items

94 1. Final Accounts of a Company consist of ______ & ________.
2. _______need not be prepared separately & can be included in _______. 3. __________ Prescribes the form of Balance Sheet

95 1. P& L, B/s, 2. Trading. ,P &L 3Sch.IV

96 Answers: Match Match the following : 1. Fixed Assets a. Partly paid up shares held as investment 2. Current Liability b. Debentures 3. Secured Loans c. Deposits from Public Unsecured Loans d. Goodwill 5. Contingent Liability e. Sundry Creditors.

97 1.Fixed Asset; Goodwiil 2. CL: Sundry Creditors Secured Loans : Debetures 4. Unsec : Deposits from public 5. Partly paid shares : Cont. Liab

98 Classify under correct head the following items : (a) Proposed Dividend (b) Unclaimed Dividend © Prov. For Taxation d) Share Premium ( e) Forfeited Shares A/c (f) Credit Bal. in P & L A/c. Select Proper Heading : 1. WIP, 2. Government Bonds, 3. Goodwill 4. Prepaid insu 5. Disc. On Issue of Shares

99 Answers (a) True (b) False © False (d) True (e) False

100 TRUE OR FALSE 1. Paidup capital may exceed authorised capital
2. Particpating pref shares have right to participate in profits after paying dividen to eu. Shareholders. 3. Equity Shareholders have to first paid dividend before paying/declaaring dividend to Eq. Shareholders

101 COMPANY Accounts The Assets side of the balance sheet shows the following sequence: Fixed Assets Investments Current assets, Loans and Advances Current Assets Loans & Advances Miscellaneous Expenditure Profit & Loss account (Debit balance, if any)

102 COMPANY Accounts With regard to Share Capital, the company should specifically state: Details of Authorised, Issued, Subscribed, Called up and Paid up capitals Details of number of shares and face value of each share Amount called up on each share Classes of shares-Preference or Equity with or without voting rights Shares allotted as fully paid for consideration other than cash Shares issued as bonus shares and source

103 COMPANY Accounts RESERVES AND SURPLUS Capital Reserve
Capital redemption Reserve Share Premium Account Other reserves Less: Debit balance in P & L A/c, if any Surplus (Balance in the P & L appropriation A/c) Proposed additions to reserves Sinking funds

104 COMPANY Accounts SECURED LOANS Debentures
Loans and advances from banks Loans and advances from Subsidiaries Other Loans and advances

105 COMPANY Accounts UNSECURED LOANS Fixed deposits
Loans and advances from subsidiaries Short term loans & Advances from Banks From Others 4. Other loans and advances (a.)from Banks (b) From Others

106 COMPANY Accounts INVESTMENTS
Investments in Government or trust securities Investment in shares, Debentures or bonds Investment in immovable properties Investment in the capital of partnership firms Balance of un-utilised monies raised by issues

107 COMPANY Accounts CURRENT LIABILITIES & PROVISIONS
(A) Current Liabilities Acceptances Sundry Creditors Subsidiary companies Advance payment and unexpired discounts Unclaimed dividends Other liabilities (if any) Interest accrued but not due on loans

108 COMPANY Accounts FIXED ASSETS Goodwill Land Buildings Leaseholds
Railway sidings Plant & Machinery Furniture & fittings Development of property Patents, trade marks & designs Live stock Vehicles, etc.

109 COMPANY Accounts The fixed assets must be Classified and distinguished
The following details are required to be shown separately: original cost, additions during the year, deductions there from during the year, Total depreciation written off or provided up to the end of the year

110 COMPANY Accounts : The followings must be clearly stated with regard to Investments: Nature of Investments Mode of valuation (Cost or market value) Classification of Investments

111 COMPANY Accounts CURRENT ASSETS LOANS & ADVANCES Current Assets
Interest accrued on investments Stores and spare parts Loose tools Stock in trade Sundry Debtors Cash in hand Bank balances With scheduled banks With others

112 COMPANY Accounts In respect of Sundry Debtors following details are to be shown: Debts considered good and in respect of which the company is fully secured Debts considered good for which the company holds no security other than personal security of debtors Debts considered doubtful or bad

113 COMPANY Accounts Loans & Advances Advances and loans Bills of Exchange
Advances receivable in cash or kind or for value to be received Balances on current accounts Balances with Customs, Port trust, etc. (where payable on demand)

114 COMPANY Accounts Miscellaneous expenditure is shown in the following sequence on the assets side of the balance sheet: Preliminary expenses Expenses including commission or brokerage on underwriting or subscription of shares or debentures Discount allowed on issue of shares or debentures Interest paid out of capital during construction Development expenditure not adjusted Other items

115 Co. A/cs. Fill in the blanks
1. Final Accounts of a Company consist of ______ & ________. 2. _______need not be prepared separately & can be included in _______. 3. __________ Prescribes the form of Balance Sheet

116 1. P& L, B/s, 2. Trading. ,P &L 3Sch.IV

117 Study Illustation on page no:483 on Forfeiture of Shares on Page 486 Rahul Limited for entries to be paased on issue of Bonus Shares.

118 Answers: Match Match the following : 1. Fixed Assets a. Partly paid up shares held as investment 2. Current Liability b. Debentures 3. Secured Loans c. Deposits from Public Unsecured Loans d. Goodwill 5. Contingent Liability e. Sundry Creditors.

119 1.Fixed Asset; Goodwiil 2. CL: Sundry Creditors Secured Loans : Debetures 4. Unsec : Deposits from public 5. Partly paid shares : Cont. Liab

120 Classify under correct head the following items : (a) Proposed Dividend (b) Unclaimed Dividend © Prov. For Taxation d) Share Premium ( e) Forfeited Shares A/c (f) Credit Bal. in P & L A/c. Select Proper Heading : 1. WIP, 2. Government Bonds, 3. Goodwill 4. Prepaid insu 5. Disc. On Issue of Shares

121 Please refer EXCEL File separately attached giving example of Prakash Limited appearing
Appearing on page 520 of your book.

122 THANK YOU


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