1. Statement of Changes In Equity
Lecture 1
Statement of Changes In Equity
Statement of changes in equity shows the movement in:
Share Capital (issued share capital)
Share Premium
Nature of Reserves created
Un-appropriated Profit / Loss
Dividend Distributed
Note: Show all points simultaneously.

2. Statement of Changes In Equity
Lecture 1
Statement of Changes In Equity
Capital Reserve and Fixed Asset Replacement Reserve are used for specific purpose. These are not distributed among share holders.
General Reserve and undistributed profit` can be distributed among share holders.

3. Lecture 1
Share Premium
Share Premium – Amount received in excess of the face value of the share. Example: if a Rs. 10 share is sold for Rs, 12 then Rs. 2 is share premium.
Share Premium can not be distributed among the share holders.
It can be utilized for:
To issue Bonus Shares
To write off Preliminary Expenses
To meet the difference of face value and cash received in case of shares issued at discount
To meet the expenses of issue of shares
For payment of premium on redemption of debentures

4. Lecture 1
Revaluation Reserve
Revaluation Reserve – is created when an asset is re-valued from cost to market value.
Revaluation Reserve can not be distributed among the share holders.
It can be utilized for:
Setting off any loss on revaluation
At the time of disposal of asset, the reserve relating to that asset is transferred to profit & loss account.

5. Lecture 1
Cash Flow Statement
Cash Flow Statement – shows the movement of cash resources during the year.
It is an integral part of Financial statements.
Note: Show all points simultaneously.

6. Lecture 1
Notes to the Accounts
Notes to the Accounts – are the explanatory notes of all the items shown in the profit and loss account and the balance sheet.
It is the requirement of the Companies Ordinance and the International Accounting Standards.

7. Contents of Notes to the Accounts
Lecture 1
Contents of Notes to the Accounts
Following are explained in Notes to the accounts:
Nature of business of the company
Accounting Policies of the company
Details and explanation of items given in the Profit and Loss Account and Balance Sheet.

8. Lecture 1
Debentures
Debenture is an instrument for obtaining loan from general public.
Mark up is paid on Debentures which is generally equal to the market rate.

9. Lecture 1
Debentures
Debentures are acknowledgement of debt, owed by the company to the public at large for a defined period of time, and has a mark up (profit) rate attached to it.

10. Term Finance Certificate
Lecture 1
Term Finance Certificate
Term Finance Certificate are issued for a defined period.
These are also issued to obtain loan from public at large.

11. Lecture 1
Both Debentures and Term Finance Certificates are usually issued by Public Companies.

12. Question Beta (Private) Limited is a manufacturing company.
Lecture 1
Question
Beta (Private) Limited is a manufacturing company.
Following list of balances has been extracted from its books as on June 30, 2002.

13. Authorized Capital (face value Rs. 10 each) 500,000
Lecture 1
Particulars
Amount Rs.
Authorized Capital (face value Rs. 10 each)
500,000
Paid up / issued Capital
300,000
Debentures
240,000
Land
120,000
Building
315,000
Motor Vehicles
187,500
Furniture
34,500
Accumulated Profit and Loss Account
49,489
Stock in Trade
48,630

14. Accumulated Depreciation
Lecture 1
Particulars
Amount Rs.
Debtors
42,525
General Reserve
8,000
Creditors
27,360
Proposed Dividend
15,000
Bank Balance ?
Accumulated Depreciation
Motor Vehicles
46,050
Building
66,000
Fixtures
11,250

15. Lecture 1
Note:
All items of profit and loss have been accounted for in calculating the balance of accumulated profit and loss account, except for Depreciation which is to be charged at 10% on WDV on all depreciable assets.
Required
Prepare the balance sheet of Beta (Private) Limited As on June 30, 2002

16. Solution Beta (Private) Limited Trial Balance As At June 30, 2002
Lecture 1
Solution
Beta (Private) Limited
Trial Balance As At June 30, 2002
Debit Rs.
Credit Rs.
Paid up Capital
300,000
Debentures
240,000
Accumulated Profit and Loss Account
49,489
General Reserve
8,000
Creditors
27,360
Accumulated Depreciation
Motor Vehicles
46,050
Building
66,000
Furniture and Fixtures
11,250

17. Debit Rs. Credit Rs. Proposed Dividend 15,000 Land 120,000 Building
Lecture 1
Note: See Animation
Debit Rs.
Credit Rs.
Proposed Dividend
15,000
Land
120,000
Building
315,000
Motor Vehicles
187,500
Furniture and Fixture
34,500
Stock in Trade
48,630
Debtors
42,525
Bank Balance
TOTAL
748,155
763,149
14,994
763,149
Double Under line

18. Double Under line Lecture 1 Beta (Private) Limited
Balance Sheet As At June 30, 2002
Particulars Note
Amount Rs.
Fixed Assets at WDV 1
Current Assets
Debtors
Stock in Trade
Bank Balance
Total Current Assets
Current Liabilities
Creditors
Proposed Dividend
Total Current Liabilities
Working Capital
Net Assets Employed
Financed By:
Authorized Capital
50,000 Shares of Rs. 10 each
Paid Up Capital
30,000 shares of Rs. 10 each
General Reserve
Accumulated Profit and Loss Account 2
Debentures
Total
Double Under line

19. Beta (Private) Limited
Lecture 1
Beta (Private) Limited
Balance Sheet As At June 30, 2002
Particulars Note
Amount Rs.
Fixed Assets at WDV 1
Current Assets
Debtors
Stock in Trade
Bank Balance
Total Current Assets
Current Liabilities
Creditors
Proposed Dividend
Total Current Liabilities
Working Capital
Net Assets Employed
Double Under line

20. Note 1 – Fixed Assets at WDV
Lecture 1
Note 1 – Fixed Assets at WDV
Particulars
Cost
Rate
Acc. Dep.
WDV
As At
1-7-01
Addition/
Deletion
For The
Year
Land
Building
Furniture & Fixtures
Vehicles
TOTAL