Magic of flickr

For commerce student it is very necessary to get also general awareness regarding what happen in technical environment . For improving commerce students general awarness , we will include some important technical news and videos in Accounting Education blog for improving the thinking level of commerce student . In this way , we are including the news of National geographical website .Title of news is " Flickr Pictures Help Build 3-D Rome in a Day" . This is the reality , With the help of 496 computers, the program completed its monumental task in 21 hours. A team at the University of Washington used 150,000 photos tagged with “Rome” or “Roma” from Flickr to create a 3D model of Rome in 21 hours . Watch it and see the magic

Continue reading »

Uses of Accounting

Accounting plays important role for correct and satisfied operating of any organization. As a matter of fact, the development of any business is only possible, if we record all business transactions with correct method and analyze them. There are following main uses of Accounting:-

1. Avoidance of the limitation of memorizing power:-

Businessman can not remember all business transactions due to the limitation of human memory. Accounting is helpful for recording all business transaction and when businessman checks the record, he can easily remember it and use it for his business purposes.


2. Compliance of Statutory provisions:-
From accounting point of view, recording of business transaction is compulsory. Hereby, accounting helps to fulfill all statutory provisions. In India, it is compulsory to record of all cash, bank and purchase and sale transaction for joint stock companies.


3. Ascertainment of profit and loss of the business:-

Any business concern is established for the motive of earning profit. Net profit or loss is pure result of business. For correct calculation of business profit, it is necessary to record correctly by adopting the principles of accounting.

4. Ascertainment of financial position of the business:-

At specific date, company finds the knowledge of his assets and liabilities from financial statement. Assets means all sources of business and liabilities means all payable amounts of business. Business can calculate correct financial position, if businessman records all assets and liabilities in accounting.

5. Assessment of Tax:-

Nowadays, a businessman has to pay many taxes. For example income tax, sale tax, property tax , excise duty , import duty and custom duty etc. Its correct estimation is only possible, if businessman record correctly all his income, production and sale with the help of accounting. If businessman does not keep his record properly, then Assessing officer calculates amount of tax with his own estimation.


6. Knowledge of Debtors and Creditors:-

With accounting, businessman can easily find what amount is due from his debtors and what amount is payable to his creditors. If he maintains the accounting records properly.

7. Determination of sale price of business:-
If businessman wants to sell his active business to other party , then the total sale value of business can easily determine, if businessman records all investments in business.

8. Evidence in the court of law:-

If any disputes are presented between two parties in court. Then books of accounts can show as proofs, court accepts these records as evidence of transaction.


9. Assistance in taking managerial decisions:-

Accounting is helpful for many managerial decisions like calculation the price of goods and services , calculating the product mix and sale mix , purchase decisions , different uses of plants , determination of the productivity of different sources of productions , continue or close of business decisions , replacement of machinery decisions , decision regarding accepting of any specific order , decision regarding tenders etc.

10. Development of nation :-

Nation can also develop with the help of accounting, if all the businessman records correctly. With this, the can not save black money and with huge amount of tax, Govt. can utilize these funds for development programmes of nation. After this development of nation is possible. Read also the Accounting facts of other countries

Continue reading »

A 12 Year Old Blogger David Wilkinson

David Wilkinson, a 12 Year old , who main his blog techzi

Wilkinson is from Manchester, UK . You can see his story at here

Continue reading »

Download Free Software for Filtering out Inappropriate Web Content

After Internet revolution , all age group persons are getting benefit from Internet . But , one problem is for parents who are allowing Internet facility to their children . This problem is relating to inappropriate web content . How to filter these inappropriate web content from search engine . This is the main problem of parents .

Now K 9 web protection software is providing free facility for filtering out all inappropriate web contents from Internet . Blue Coat the company whose aim is to make Family-safe Internet is issued above free software .





you can download this software from here .

related : How to Prevent Children and Students to Sex and Adult Sites

Continue reading »

How to Earn One Crore Rupees with in One Day ?

When God had sent us to this world , he had sent with full and all powers to live better life . God has given us one body , one brain , two hand and two legs . But all reposal , convenience and comfort can not obtain only by sleeping on bed .If you want to earn One Crore Rupees with in one day , then this is not tough work . If you have decided that you have to earn one crore rupees just in one day , you will ensure to earn this large amount in this very less time .
Now we want to tell you the way. First of all we tell you the wrong way with 99% persons are Misleading. They become poorest but not become millionaire.

For winning the lottery, Should we purchase the lottery ticket of winning price one crore?

This decision is wrong. Lottery is the worst in this world . With this you can never millionaire . All person who are playing gambling, lottery , cards are running from the struggle of life and captured in laziness .

Is robbing of bank good idea for earning one crore with in one day ( Bank may be swiss bank where is Rs. 70000 crore of Indian black money ) ?

No , This is wrong way to earn one crore with in one day . Every bank accepts the small savings of poor and middle farmers , labourers and general public . So , this is also worst scheme and I will not suggest to use it .

Should I print fake notes by establishing machinery ? With this I can print one crore rupees with in one day .

No , why are you telling these bad schemes ? Printing of fake currency is crime and also fraud to your country . It is not the way of progress . So never to think these schemes . Except above all methods which are double-crossing to general people who are not tech savvy by telling him fake scheme are also bad and you should ever try to them.

Now I am telling you which is the best and correct way to earn One crore rupees with in one day .

You must follow 10 following Conditions :-

1. Full determination to earn one crore with in one day
2. High thinking
3. Full faith in God and full devotion to God.
4. Self confidence
5. Full Attention
6. Morale to struggle with all problems
7. Exclude word impossible from your dictionary
8. Capable yourself to do all impossible work
9. Read Guinness World Record
10. Tenth and last condition ask from yourself, why do you want to earn One Crore Rupees. Because, if you have not any aim of utilization of One Crore Rupees with in Short span of Time. You are wasting your time on Internet. If you have aim to digest one crore rupees with in one day . Then making the way for earning such amount is not difficult . If you have big aim and you need one crore rupees with in one day , then start to work for getting one crore rupees with in one day . Way will open automatically and before one hour of one day , you will surely earn one crore rupees .

Read famous book of Mark Fisher (How to Think Like a Millionaire) available at google book pdf file

Continue reading »

Objectives of Bookkeeping and Accounting

• Show permanent record of business .
• To know profit or loss of business .
• To know know the financial position of business.
• Providing the information of total sale and purchase of business.
• Supplies the information of creditors and debtors of business.
• Get knowledge of quantity and Value of stock .
• To determine the amount of Tax liabilities ( both income tax and sale tax )
• To provide the information to interested parties like owner of business/ shareholders , managers , creditors , debtors , employees , Govt. etc.

Continue reading »

Features of Accounting

1. Recording
Accounting is the art of recording of transactions. Only business relative transactions are recorded in which money is mentioned. All transactions are recorded in detail. Both journal and subsidiary books are used for this.

2. Classifying

Accounting’s main feature is also classifying all business transactions. Accounting makes group of all similar accounting entries in one place. For example all receipt and payment will be shown in cash book. So, all transactions are collected under one common head . This system is also called classification of transaction. This process is completed by opening accounts in books. These books are called ledger.

3. Summarizing

Summarizing is the art of showing business results in summarize form .After this, it can use for all the interested parties. This feature tells about to financial statement. One is Trading and profit and loss account and other is Balance Sheet.

4. Interpreting

By interpreting, we can know whether the position of profitability is good or bad. By knowing this, we can estimate business’s performance.

Continue reading »

How will You Teach in Class Room ?

Do you know teaching techniques ? And How will you teach in class room ?
If No , learn from interesting videos Whole Brain Teaching made by ChrisBiffle .
He has taught college philosophy classes for 38 years. Along with two other teachers, Chris Rekstad (4th grade) and Jay Vanderfin (5th grade), I founded Power Teachers in 1999. Our free conferences, offered several times a year at Crafton Hills College in Yucaipa, California are among the largest in the United States.


Whole Brain Teaching (Power Teaching) Lesson 4




Whole Brain Teaching: The Basics

Continue reading »

How to Enable Job Costing in Tally.ERP 9

Job Costing is very important method of costing and it is also part of specific order costing in Cost Accounting. When we manually study job costing, then it is very easy to record under this system. But before make it possible in Tally.ERP 9 , you must learn this tutorial because this is advance feature of Tally.ERP 9 .

Tally.ERP 9 gives you the power to check all your cost and revenue information at single job level.

Main aim of this tutorial

1. To Guide the Accountants who are working in Interior Decoratoration Industry
2. To Guide the Accountants who are working in Construction industry
3. To Guide the Accountants of Architecture
4. To Guide the Accountants of Printing Company.

Except above aims, Job costing helps all accountants to determine the true cost for each job broken down by locations. After this accountant can track net profits associated with each job and find the losses on project at the beginning of project. Many accountants face the problem to track the transfer of material from one godown to another. By Enabling, they can solve all these problems.

Easy Steps to Enable Job Costing in Tally.ERP 9

Step No. 1

1. Open Tally.ERP 9 and follow following path
2. Click to Company Features ( F1: Accounting features)
3. Set Maintain Cost Centers and Use Cost Centre for Job Costing to Yes.
4. Click Accept to save.

Step No. 2

1. Click to Company Features again now, click Inventory features and
2. Set Maintain Multiple Godown to Yes (F2: Inventory Features).
3. Click Accept to save.

After this, Tally.ERP 9 will activate to track all the incomes and expenses for a project. Each project or job is created as a Cost Centre. The Cost Centers and Inventory Options (Maintain Multiple Godown) are integrated in Tally.ERP 9 to enable Job Costing, if the company maintains Accounts with Inventory features.

Take care: If you are doing work Maintain Accounts only Company , the Job Costing feature will not be available. So, first go to company creation alteration and alter it as maintains account with inventor features.

Continue reading »

Features of Bookkeeping

Bookkeeping is a science

Logical point
: Record of transactions are based on rules and regulations

: Universal checking of its correctness

Bookkeeping is an art

Logical point
: Need practise to do work perfectly.
: Utilisation of knowledge in practical field .

Bookkeeping involves the recording of pecuniary transactions

Logical point
: No record of thoughts
: No record of checking or inspection before transaction.

Recording of transactions is done in proper set of Books

Logical point
: Need of Cash book , purchase book , sale book and other books .
: Need of Ledger

Continue reading »

Simple Meaning of Bookkeeping

Bookkeeping is an accounting term. It has made from two words, one is book and other is keeping.

→ Book means journal and ledger accounts.
→ Keeping means recording and maintaining accounting by correct and regular way.

So, bookkeeping means recording of transactions by pre-determined method or system. We all know that business is the other name of large number of transactions which happens day to day. In these transactions, we can include purchase of goods, sale, receipt of cash or payment of cash etc. We can not remember it for long time due to shortage of human memory. So, recording of transaction by scientific way is very necessary. Bookkeeping is the art of recording these transactions.
A person who records the transactions in journal and ledger is called bookkeeper. His duty is as account clerk and he is responsible to complete day book after occurring any transactions. He also keeps the records of bills , vouchers , receipts and challan

Continue reading »

What is Difference Between Cash Discount and Trade Discount?

First

Trade discount is issued by deduction in list price.

Cash discount is issued by deduction in payable amount of debtors.

Second

Trade discount is given with the aim to purchase at high quantity.

Cash discount is given with the aim to get payment fastly and before payment date .

Third

Trade discount is shown as deduction in Invoice.

Cash Discount is not shown as deduction in Invoice.

Fourth

There is no any accounting treatment for trade discount.

There is accounting treatment for cash discount both in vendor and buyer’s day book.

Fifth

Trade discount is related to quantity of the goods purchased.

Cash Discount is related to the amount of payment but not to quantity of goods.

Sixth

There is no need to give cash discount with trade discount.

If seller has given trade discount, cash discount can be given after trade discount.

Continue reading »

Cash Discount and its Accounting Treatment in Day book

Definition of Cash Discount

Cash discount is deduction from purchase price of customer, if he pay within time or before time. In other words, it is encourage to buyer for buying with cash rather than buying on credit.

For example

Suppose, According to terms, if any buyer will pay the purchase price within 30 days of XYZ company products. Then company will deduct 20% from his purchased price, and then this deduction or discount will be cash discount.

Benefits for providing Cash Discount

1. It improves cash flow or liquidity.

2. It also increases ability to pay because buyer sees discount as income so, he will surely to pay and its effect will on his ability to pay.

3. Sometime cash discount is helpful for good bargaining with seller.


Accounting Treatment of Cash Discount

Cash discount must be recorded both vendor and buyer’s day book. In Vendor book, it is treated as discount allowed and this cash discount will become loss of business and in the day book of buyer, it will become discount received account which income account.

Suppose Ram has sold goods to Sham on Credit of Rs. 50000 and it is the term of agreement that if Sham pays within 20 day of this purchase, he can receive 10% discount. If Sham pays within 20 days then Treat cash discount in day book of both parties.

Day book of Seller ( Ram )

Bank Account Dr. 45000
Discount Allowed Account Dr. 5000
Sham Account Cr. 50000

Day book of Buyer ( Sham )

Ram Account Dr. 50000
Bank Account Cr. 45000
Discount Received Account Cr. 5000

related: Difference between Journal and Ledger

Continue reading »

ICICI Bank's New Decision - Your One default Credit Card will Block All Your Cards

ICICI Bank has changed his credit card policies . Now , if any case of default credit card comes in the front of ICICI Bank , then ICICI Bank will suspend or block all its credit cards . This credit card policy will activate from 5th Oct. 2009 .

According to the new terms and conditions of ICICI Bank :

ICICI Bank is authorised to block the credit limit as made available to the card member under all other ICICI Bank’s card accounts as well as withdraw such privileges/ benefits as made available under all such card accounts, till such time the defaulting card account is regularised by the card member.”

Continue reading »

How to Unfollow Spam twitter ?

Twitter is very good and free social networking and micro-blogging service that enables its users to send and read messages known as tweets. Tweets are text-based posts of up to 140 characters displayed on the author's profile page . But some time spam following may occur problem . I have find many spam twitters to whom I was following by mistake or who is following me .So , first duty is to find spam twitter and then delete it by going to following or follower and then click on unfollow . After this your tweet can reach to whom who are really interested in it .


You can Scan every twitter account with Twitblock website and then take action for unfollow .

You need not block not spam twitter users .

Watch the Video for learning how to Unfollow spam twitter .

Continue reading »

How to make Accounting Easy ?

Problem

Dear Sir ,
sir i have a 1 big problem . I m scare to accounting . I can not understand this deeply . I can not ask questions please tell me what should i do . I m student of acma .

Solution

Dear Student ,

This is not only your problem but more than 70% students do not understand accounting deeply. They made Scare to Accounting subject when they are not able to solve any practical question . After this , they feel accounting as boring subject . Even , they feel nervous to ask it from his or her school or college teacher . Teachers and Modern Accounting books are also responsible for making Accounting as most difficult subject of world . It is true that accounting is the game of logic , math and some complexity . But it is so closely related with social life and as teacher it is my first duty to tell and guide you how to make Accounting Easy .

1. Read theoretical fundamental two or three times and try to understand it . After this accounting will become easy and simple . When you will clear your theoretical fundamentals , you will find that all practical problems are based on it and new solving them will become enjoyable.
2. Read more and more accounting examples . Examples are very important . They provide you the way , they provide you power to solve same or related accounting problem yourself . According to my experience most of students ignore accounting examples . They just join tuition and try to solve only practical problem without any pre-knowledge of solution of specific problem . Every accounting problem is different from other . So , Often accounting book offer some examples of same kind of accounting problem . So , study them .
3. Get help from Internet source yahoo answer , wiki answer , wikipedia , e-how , slideshare , google bloggers and many more famous websites and Video sites like teacher tube and YouTube are working to make accounting easy and more easy . You can research on Internet and get high confidence to do this .
4. Change your psychology to solve accounting questions . Some time , accounting question is very difficult in reality . At that time leave it for some time and do next question . Why am I suggesting to you to leave that difficult question . In this question , it may possible some logical fact , some provision of accounting GAAP or some mistake . When you will leave it you will get some time to discuss it with your friends , your classmates and your accounting teacher . After this you can solve it . Remember , Human being is not prefect . If you see my accounting book , you will find that many accounting problem , I can not get solution and I had written on these question "not " and exam had cleared . But , after 8 to 10 years , when I saw same book and find the words "not" . Then remember , yes " In reality , human being is not perfect and God is only perfect . " Faith in that God and Do practise and practise . After this you will feel accounting is so easy .

Continue reading »

How to Close Ledger Accounts ?

In the business, businessman keeps different ledger accounts. In the beginning of financial year, businessman opens new ledger books and in the end of year, he closes same books. Now, question is arise, how to close ledger accounts. It is very simple.

All personal and real accounts of assets will be closed by getting their debit or credit balance and then it is showed in the balance sheet as assets or liabilities. Then we carried it to next financial year. Last year closing balance of assets and liabilities accounts will be the opening balance of next financial year.

But system of closing personal and real account will not apply on nominal and accounts relating to goods. These accounts will go to trading and profit and loss account according to the nature of expenses. Purchase account , sale account , purchase return account , sale return account ,opening stock account and direct expenses account will be closed by transferring to trading account and other indirect expenses and indirect income account will be closed by transferring to profit and loss account .

Continue reading »

What are Main Objectives of Making Ledger ?

There are many Objectives of making ledger in manual accounting which we can explain
with following way:-

1. Basis of making final account

2. Effective classification of each and every transaction

3. Calculate debit and credit balance for checking mathematical correctness by making trial balance.

4. Ledger is also important for scientific record keeping which can easily verify with each and every journal entry of Day book.

5. Main objective of making ledger is to know what is the position of each and every account. Suppose Ram who is our debtor. After watching his account, we can know what amount due from Ram. Same situation is for our creditor. After reading respective creditor account, we can know what amount of payable to our creditors.

Continue reading »

How to Calculate the Result After Ascertaining the Balance of Ledger Account ?

After finding the balance of account , we will write it where is total less than other side.

At that place, we will write amount with to balance c/d or by balance c/d . After this both side will tally.

* If Debit side is more than Credit side = Debit balance
* If Credit Side is more than Debit Side = Credit balance
* If Debit side is equal to Credit Side = Nil Balance

Now, we write account’s balance on it next month’s first date.

If it was written to balance c/d , then it will go to credit side and it will be written By balance b/d . If it was written by balance c/d , then it will go to debit side and it will be written to balance b/d .

For Example

Ledger

Continue reading »

How to Find Balance of The Ledger Accounts ?

After posting all transactions in manual accounting , we add debit side and credit side amount . After this we compare both side . By comparing , we can calculate difference between debit and credit side of a particular account .So, this difference will be the balance of ledger account and this process is called balancing of a ledger account .


Balance of account may exist in three situation :-

Situation No. 1



Where debit side total is equal to credit side total of account , then balance will be equal to nil .



Situation No. 2



Where total of debit side is more than total of credit side of account , then it will be Debit balance .



Situation No. 3



Where total of debit side is less than total of credit side of account , then it will be Credit balance .

Continue reading »

How to Post Opening journal Entry ?

When a business organization shifts from one account period to another accounting period. His assets and liabilities are also shifted. In the beginning of new accounting year, accountant will pass opening journal entry by writing debit to all assets and credit to all liabilities. But it will not post to ledger by ordinary way. When we open assets and liabilities account , we write “ To balance b/ d ( brought down ) ”, if balance is debit . We also write “ By balance b/d ( brought down ) ” .We can explain it with following way !

Mr. Ajay is doing business as a general merchant . On first April 1992 , his position was as follows :

Cash in hand Rs. 15000 , Cash at bank Rs. 75000 , stock Rs. 300000 , furniture Rs. 16000
Machinery Rs. 144000, Due from Rahul Rs. 100000 and from Tarik Rs. 110000

His liabilities were : Due to Dev Dutt. Rs. 260000 and loan from Surinder Kumar Rs. 40000 . Give the opening entry and post it to ledger

Journal

Cash account Dr. 15000
Bank account Dr. 75000
Stock Account Dr. 300000
Furniture account Dr. 16000
Machinery account Dr.144000
Rahul account Dr. 100000
Tarik account Dr. 110000


Dev Dutt account Cr. 260000
Surinder kumar’s loan account Cr. 40000
Capital Account Cr. 460000

Ledger

Cash Account

Dr. Side

___________________

To balance b/d 15000

---------------------------

Bank Account

Dr. Side

__________________________

To balance b/d 75000

----------------------------

Stock Account

Dr. Side

__________________________

To balance b/d 300000

--------------------------
Rahul Account

Dr. Side

__________________________

To balance b/d 100000

--------------------------

Tarik Account

Dr. Side

__________________________

To balance b/d 110000

---------------------------
Furniture Account

Dr. Side

__________________________

To balance b/d 16000

---------------------------
Machinery Account

Dr. Side

__________________________

To balance b/d 144000

---------------------------

Dev Dutt Account Account

Cr. Side

__________________________

By balance b/d 260000

--------------------------

Surinder kumar’s loan Account

Cr. Side

__________________________

By balance b/d 40000

---------------------------

Capital Account

Cr. Side

__________________________

By balance b/d 460000

--------------------------

Continue reading »

How to Post The Compound Journal Entries ?

The posting of compound journal entries is that in which more than one transaction are posted in one side of account . Before posting compound journal entry , it should be given special care because when we post it in one’s account’s side then we have to write total of all transaction . Suppose we have done payment of rent , lighting and Internet bill in one day via cheque .
If you want to post journal entry , you have to make and write compound journal entry in journal book


Rent account Dr. xxxx

Lighting account Dr. xxxx
Internet bill account Dr.xxxxx
Bank account Cr. ( Total payment )

Now , we will write all expenses account in the credit side of Bank account and after this , we will write bank account in the debit side of each expenses whose payment is given in same day.

Continue reading »

Ledger

Definition of Ledger

Ledger is just a register or bound book in which there are large numbers of pages according to serial no. In ledger, one page is distributed for one account. If account is big and size is more than one page, then new page is added and page no. of new page is written on old page of same account.

Every ledger has index in the beginning of it. It is typically alphabet order. One page is distributed for every word of alphabet. Ledger’s account is prepared in the form of T.

In big organisation, ledger is divided in different parts. These parts are also called the types of ledger.

sides of Accounts in Ledger :-

1. Left side shows debit
2. Right side shows credit.

The following columns are made both, the side of account in ledger :-

i) Date
ii) Particulars
iii) Folio
iv) Amount

Ledger in Computer Accounting

In computer accounting, ledger creation is so important because first of all different accounts are created in ledger creation under specific head.

Continue reading »

Procedure of Posting

Posting is process of transferring journal and subsidiary books to ledger accounts. All journal entries are the base of posting in accounts of ledger. We know that every transaction has two parts, it has also two accounts, so posting of transaction is also in to two accounts. First record in one account’s debit side and then record in the credit side of other account.

Continue reading »

Accounting Ratios Presentation

Hamilton Grammar, user of Slideshare has made beautiful presentation of Accounting Ratios in which he also has explained it .In these ratios , he has included Profitability Ratios , Gross Profit as a Percentage of Net Sales, Rate of Stock Turnover, Net Profit as a Percentage of Net Sales , Balance Sheet Ratios , Working (Current) Capital Ratio .

Accounting Ratios

View more presentations from Hamilton Grammar .

Continue reading »

Difference between GDR and ADR

1. Global depository receipt (GDR) is compulsory for foreign company to access in any other country’s share market for dealing in stock. But American depository receipt (ADR) is compulsory for non –us companies to trade in stock market of usa .
2. ADRs can get from level -1 to level –III. GDRs are already equal to high preference receipt of level –II and level –III.
3. Indian companies prefer to get GDR due to its global use for getting foreign investment for own business projects.
4. ADRs up to level –I need to accept only general condition of SEC of USA but GDRs can only be issued under rule 144 A after accepting strict rules of SEC of USA .
5. GDR is negotiable instrument all over the world but ADR is only negotiable in USA .
6. Many Indian Companies listed foreign stock market through foreign bank’s GDR. Names of these Indian Companies are following :- (A) Bajaj Auto (B) Hindalco (C) ITC ( D) L&T (E) Ranbaxy Laboratories (F) SBI Some of Indian Companies are listed in USA stock exchange only through ADRs :- (A) Patni Computers (B) Tata Motors
7. Even both GDR and ADR is the proxy way to sell shares in foreign market by India companies ADRs is not substitute of GDRs but GDRs can use on the place of ADRs .
8. Investors of UK can buy GDRs from London stock exchange and luxemberg stock exchange and invest in Indian companies without any extra responsibilities . Investors of USA can buy ADRs from New york stock exchange (NYSE) or NASDAQ (National Association of Securities Dealers Automated Quotation).
9. American investors typically use regular equity trading accounts for buying ADRs but not for GDRs .
10. The US dollar rate paid to holders of ADRs is calculated by applying the exchange rate used to convert the foreign dividend payment (net of local withholding tax) to US dollars, and adjusting the result according to the ordinary share but GDRs is calculated on numbers of Shares . One GDR's Value may be on two or six shares

Continue reading »

Why is American Depository Receipt (ADR) Needed?

American depository receipt is very important receipt. With its help, non – USA companies can purchase and sell shares in US stock and share markets. Thus, Investors of USA can buy the shares of foreign companies without any problem of cross border or cross currency. It is more famous with ADRs. All payment of price for getting ADR is in US dollars. Only after this receipt foreign company can deal in USA share market.

Now, I will give you more important information regarding this:-

• ADR can be issued by US depository banks like Citibank and Bank of New York Mellon.
  American depository shares are called ADS.
• It is just like licence to trade in USA stock exchange and this ADR can be gotten only by three levels. Ist level ADR is very simple. Any foreign company who has English website in which it shows his annual financial statements and also apply general conditions of Security exchange commission of USA. But other two level ADR is more difficult because for getting these ADRs, Foreign companies have to fill the form 20, accept all US GAAP and also accept all related conditions of SEC.

Continue reading »

Free Download Tally.ERP 9 Video Tutorials

If you want to download all my Tally.ERP 9 Video Tutorials free of cost .

Then following are the simple steps :-

First

Go to my channel on YouTube

Second

Watch Tally.ERP Video tutorial which you are interested

Third

Change the url of youtube by voobys all other part of url must be same .

Fourth

Download .flv video player first from here and then download my Tally.ERP 9 Video tutorial , you will see new save pop up , save it by writing .flv in the end of naming . Wait for downloading in your hard desk and after this you can watch it offline.

or you can watch all my Tally.ERP 9 Video Tutorial here .

Setting of Credit limit in Tally.ERP 9




Treatment of TDS in Tally.ERP 9




Tally.ERP 9 Tutorial - Multicurrency recording between USA and Singapore




Voucher Entries fastly in Tally.ERP 9




Open Tally.ERP 9 in Education mode

Continue reading »

Sources of Writing Ledger

There are two main sources of writing ledger

1st is journal

And 2nd is subsidiary books like purchase book, sale book, purchase return book, sale return book, bill receivable book and bill payable book.

Journal and ledger are books of recording all business transactions. Accountant writes all accounts in journal first and then posts related records in same account of ledger .


related : Sources of Writing journal

Continue reading »

How to Set Credit Limit in Tally.ERP9

Credit limit means in how much you will spend for payments to your creditor or in how much time, your debtors will pay to you for your credit sale . Setting of credit limit in Tally.ERP 9 is only possible after activating advance accounting feature. This feature is relating to set maintain budgets and controls.

Click to F11 Features >> Accounting Features >> Set Maintain Budgets and Controls to Yes


After this you can create credit limit in single mode and in multiple mode

In single mode ledger creation

Gateway of Tally>> Accounts Info>> Ledgers>> Create / Alter (under Single Ledger)



In multiple ledger creation mode

Gateway of Tally>> Accounts Info>> Ledgers>> Credit Limits (under Multiple Ledgers)
You can set credit limit in days and amount both . Suppose if you want to sell credit to debtor upto Rs. 400000 within 20 days . Then you can write default credit period 20days . It means your debtor has to pay you within 20 days and set credit limit as Rs. 400000


Benefits of Setting Credit limit


After this if you pass any voucher entry of credit sale more than Rs. 400000 , voucher entry will show error , with this error , you can find that we can sale credit only Rs. 400000 to Debtor X



One more benefit of setting credit limits is that the current balance and the credit limit of the Ledger accounts are displayed in the Order and Invoice entry vouchers to ascertain the amount permitted or acceptable.

Continue reading »

GDRs And its Importance

Definition of GDRs

GDRs mean global depository receipts. It is negotiable and transferable from one body to another. It is also evidence of ownership of a company's shares . When a bank purchases shares of foreign company, at that time it issues a certificate, that certificate is called global depository receipt.

Suppose A USA based company wants to buy the shares of Indian company, then it only possible by getting GDRs. USA Company can buy Indian company shares by the help of his bank. Bank takes some charges and issues GDR.

Importance of GDRs

If any company gets GDRs for his purchased shares, then these can be sold in any stock market of world through global network of banks and financial institutions.

Global Depositary Receipts (GDRs) give power to investors and companies access to two or more markets, most frequently the US market and the Euromarkets, with one security. GDRs are most commonly used when the company is raising capital in the local market as well as in the international and US markets, either through private placement or public offerings.
Securities and Exchange Commission of USA has allowed USA companies and also foreign companies to buy and sell shares through GDRs

Among the Indian Companies, Reliance Industries Ltd. was the first company to get funds through a GDR issue , after this many other Indian Companies like Infosys,WIPRO AND ICICI have started to raise funds via GDRs.

It is the good way for getting foreign investment for developing economy .

Continue reading »

Types of Ledger in Basic Accounting

Ledger is just classification of accounts. A small business enterprise makes only one ledger book in which he prepares all his accounts due to the numbers of transactions are very measly.
If the numbers of transactions are very large, then ledger can be divided into following types or parts.

1. Debtor ledger :-


These ledger accounts of customers are opened to whom trader has sold the goods, so its other name is also sale account ledger. Because all credit sale’s amount can be checked from the amount due from debtors in this ledger.
It is also one place where we can find each debtor’s closing balance.

2. Creditor’s ledger:-

In this ledger accounts of suppliers are opened from whom trader has purchased the goods, so it is also called purchase ledger.

3. General ledger:-

In this ledger all journal entries are posted except relating to credit sale and purchase.

related : Types of Accounts

Continue reading »

Rating Agencies in Financial Market

Rating agencies which are popular with Credit Rating Agencies (CRA) are those organizations which determine the rate of different type of loans and debts and also fix and assigns the level of quality of companies who issue these debts in the form of loan, debt, bonds and debentures. Rate is given after analysis of many things like ability to pay back the loan, credit-worthiness, measurements of relative credit risk

Benefits and Merits of rating agencies

1. Most benefits of rating agencies is to all the bodies who invest their money in companies or major projects. In these bodies, we can include

• Bank
• small investors
• brokers
  

2. Rating agencies act as Google search engine. Google search engine gives page rank 10 to great website. Same work is done by credit rating agencies. They fix the credit rating score. Good companies are included zero risk at A or AAA credit score, then B with medium and low risk companies, C is low risk companies. Many rating agencies use BBB for medium risk. These are small code for providing score and it is very important for investor to check these rating score before invest his hard earned money in bad schemes.

Credit Rating System in Japan

Demerits of Rating Agencies

1. When rating agencies do not act honestly, then it is very dangerous for small investors. You can read wikipedia’s criticism of credit rating agencies . Wikipedia’s is crying and saying that downgrade company’s rate is not mention correctly. But now India rating agencies has started to downgrade companies ( read economics times report )
2. They also have relationship with company management, so partiality or undue influence is possible.
3. Because, these rates are created by human being so it may possible errors of judgment
   
   

Which are the best rating agencies in world financial market?

After analysis merits and demerits of rating agencies, all investor’s first duty is to find best rating agencies in world financial market.

1. Moody's (U.S.)
2. Fitch Ratings (U.S.)
3. CRISIL (India)
4. Credit Analysis and Research Ltd (CARE) (India)
5. ICRA (India)
6. Brickwork Ratings India Private Ltd.,(BWR) (India)
   

How can a company get high score from rating agency?

1. providing high return on investment
2. low risk of bad debts
3. stability of income
4. liquidity of fund

If any company provides above to his investors, then it may possible that it will get highest credit score in rating.

So, it is very essential for every investor to check the report of credit rating agencies of your own country before taking any investment decision.

Continue reading »

Accounting Education Has Moved to a New Address: www.svtuition.org

Accounting Education is India’s premier website for providing free education of accounting , finance and tally and , has over the years , been at forefront of various pioneering initiatives in the accounting e-education space .


As you know that I have started this blog from 19 Jan. 2009 on my niche Accounting And Finance . For this I was using free platform of blogger.com and my blog’s URL was http://svtuition.blogspot.com/ which is the sub domain name of Google blog. So, for bringing revolution in this education domain, I was thinking to purchase own domain name and today (20/09/2009) I am happy to announce that I have purchased my own domain name from Google Apps. Accounting Education has moved to a new address: http://www.svtuition.org/ . Now, you can read accounting education at http://www.svtuition.org/


If you have any question, query or problem or question, you can now send me direct at my new email vinod@svtuition.org

Continue reading »

Solution of Journal Entry problem of TDS in Tally with Tally.ERP 9 Video Tutorial

Problem

Dear Prof. Kumar,

I have frequently refereed to your blog “Accounting Education” and have found it to be extremely useful for a novice like me.

I have just a cursory accounting background and have slowly learnt the detailed concepts by reading various books and online sites. I run a proprietorship company (single person) for management consulting and am maintaining my accounts on my own in Tally 9. I had some specific questions and thought I would ask you for some help with the same –

I am currently maintaining the accounts for year 2207-08, 2008-09 and 2009-10 in tally under one company name. Have not split the company till now and would prefer to keep as is since it is easy to go back and forth to check various entries.

Last year (FY 08-09) I had paid certain TDS was deducted from payments made to me. This is recorded under current assets under a ledger “Taxes Paid”. I will be filing my income tax return on 30th Sept and need to get my accounts audited. How do I account for the Taxes Paid amount in the balance sheet? Would appreciate if you can give exact journal entries for the same in Tally for the year end accounting? Quite confused on this.

Solution With Tally.ERP 9 Video Tutorial




related : Accounting Treatment of TDS in Tally.ERP 9

Continue reading »

Quote from Accountant of Singapore

Some days ago , I have solved one problem of Accountant of Singapore relating to Multicurrency in Tally.ERP 9 . After getting solution Accountant of Singapore has written quote in my email . In the original words of Accountant .

Dear Sir,

Thank you very much for your Answer.

I was clearly understood how to enter the entry in Tally.ERP 9.0.

I am very glad to see your Answer & explanation, Very easy to
understand. I am very happy to get touch with you.

Thank you very much for you, Your time & your help.

I will come back to you again, If any queries.

Thanks and Regards,

Sabitha

Like Indian Accountants , all other countries like USA , UK and Singapore's accountants are using Tally.ERP 9 due to its simplicity from previous version but still some problems of advance concepts of Tally.ERP 9 , they are facing from time to time and I welcome in my Accounting blog to all accountants who are facing such problem and I am ready to solve their problems .

Continue reading »

Accounting Treatment of TDS in Tally.ERP 9

First of all, I want to tell that in Income tax Law 1961, TDS is the way of collecting tax from assessee. TDS is deducted by the person who pays to other certain amount which is mention in TDS sections. So, learn its accounting procedure or accounting treatment and journal entries in Tally.ERP 9

There are two way of accounting treatment of TDS in Tally 9 or Tally.ERP 9 . I am writing both the way of accounting treatment and effect of it is same .


Automatic Way

Following are the simple steps for Accounting treatment , Voucher entries and return making of TDS in Tally.ERP 9 .

First Step

First of all go to Tally 9 Gateway Press F11 and go to Statuary & Taxation and Set Enable TDS as YES.



Second Step


i) Then create a Ledger account in the name of TDS Account under the group Duties & Taxes (Under C. liabilities).

ii) Type of Duty or Tax select as TDS

iii) Nature of Payment- for example you can select Payment of rent on buildings

iv) Ignore TDS Exemption limit- YES/ No




Third Step



(i) Then create another ledger account. For example create YZ. Company under the group of S.Creditors (job work).


(ii) Maintain Bill by Bill- YES.


(iii) Is TDS Applicable- write → YES Enter TDS details like Deductee type- whether Individual or Company. Then fill the required items.



Fourth Step


Then create another ledger account of rent account under indirect expenses.


Fifth Step



(i)Enter the transaction in Journal voucher.



Rent A/c. Dr.→ Rs 140000

YZ co. A/c. Cr. → Rs. 118370


TDS A/C Cr. → Rs. 21630




( Tally will select only one transaction TDS amount automatically , if not activate then calculate yourself and write )



Sixth Step


Then Payment entry ( Write same amount of TDS which is calculated by Tally )


TDS A/c Dr. → Rs 21630


To. Bank A/c. Cr. →Rs. 21630


After this you can see the status report in computation of TDS


Gate way of tally >> Display >> Statutory reports >> TDS Report >> Computation





You can also print TDS return directly from TDS reports .




Manual Way



First Step




In Gateway F11 set TDS as No and in XYZ co. TDS applicable- NO.


You enter every transaction in Purchase a/c in Voucher mode not Invoice mode.


Second Step



Calculate the TDS manually suppose it is Rs. 21630 on rent payment of Rs. 140000 (See update amendments of Income Tax Law relating to TDS provisions)


Then after creating normal ledger of party , rent and TDS accounts the following entry will pass


Rent account Dr. → 140000


YZ company Account Cr. → 118370


TDS Account Cr. →21630


( Exempt TDS if payment is not more than 120000 , if more then 10% of payment )


Third Step



At the end of month , Pass the Voucher entry of payment of TDS which is calculated by you in payment voucher .


TDS Account Dr. →21630


Bank Account Cr. →21630

Continue reading »

How will You Classify the Accounts?

Accounting is fully dependent on the large number of accounts. Small business owner has to make different accounts relating to their business transactions. When Small business owner utilizes the double entry accounting, he finds three Accounts personal, real and nominal accounts. But in real sense, these are also assets or liabilities. So, it is very easy for him to classify the Accounts in Assets, Liabilities for removing all confusions.

Assets Accounts

All accounts which are relating to projects in which small business owner has spent his money. Either, he can invest money in current assets or in fixed assets. According to these Assets accounts are also two type one is fixed assets account in which we can include land and building, furniture and fixture, machinery and equipment. These assets’ value is reduced after spending of time. So, depreciation is charged on these assets.
Current Assets accounts are also the main type of Assets Account and in these assets account , we can include short term assets like inventory , prepaid expenses , bill receivables , debtors and cash and bank accounts .

Liabilities Accounts

If a small business owner takes the money or work or services from other, then, it is his duty to pay or repay for this. These are called his liabilities and it his duty to make liabilities account. Liabilities accounts are also divided into current and fixed liabilities accounts. Current liabilities account is made when he takes services and different expenses are payable. He can also take goods on credit or bank overdraft. All these liabilities are showed in liabilities accounts. If he pays these current liabilities, then these current liabilities will remove after payment.
Long term liabilities accounts are relating to long term loans and it is generally taken on the security of fixed assets and when these loans are repaid, then these accounts will also remove.

Capital Accounts

Capital Accounts are relating to the owner’s equity or all money which is invested by small business owner by himself. Its other name is also Equity account. Even expenses account and income account is classified in nominal account under double entry accounting. But these are also capital account because all expenses and incomes effect on capital of him .

I can take one example

For example, if he has $ 5000 as capital and he paid first money rent $ 50. Then its effect will be on capital and on cash

Assets = Liabilities + Capital
Cash $ 5000 = Nil + $ 5000
After paid $ 50 rent

Cash $ 5000 - $ 50 = Nil + Capital ( $ 5000 - $ 50 )
Cash $ 4950 = Nil + Capital $ 4950

So , Understand this basic accounting equation , if you are confuse to classify the accounts . Because balance system of this accounting equation will guide you, how to classify the accounts. This is one of important part of basic account and all classification of accounts is fully related with this.

Continue reading »

Provision for Depreciation in Scribd IPaper

Scribd is great site for getting knowledge of original written work . This is the single website where more than 60 million people each month discover and share original writings and documents.



anyone can easily upload and immediately share their original works on Scribd.com or any other website .
I have discovered provision for depreciation which I am sharing with you watch its embed form .
Accounts - Provision for Depreciation

Continue reading »

How to Solve Date Problem in Tally?

Many accountants are generally facing date problem in Tally. On the queries which I often get in my email account, I found following main date problems.


Tally is not feeding data on that date which is written by accountant.

Tally is not showing accountant reports on specific date.

What is difference between period and date in Tally?

Can data feed in Tally by ignoring date?



Now, I am solving date problem one by one. It is the general rule that transaction must be recorded when transaction are done and bill or voucher are taken by accountant. When the company is created, see financial year and base year. Is it correct? If it is previous or unrelated to the current period. First of all change it. Suppose, if you want to pass voucher entry of the period 1st April 2009 to 31st march 2010. Then financial period must start from first April 2009. It may also start before first April 2009. But, it never any other date because, it will effect on accounting vouchers.


After this when you pass the voucher entries. You must change date by click right side button of date. Here you will also see the button of period. Main difference of period and date button is that period is time limit in which date wise accounting entries are passed in Tally. If next financial period has started. Never change financial and base year in company creation but change period. Let me explain with an example.


Suppose, if the financial and base year is 1/4/2006 and current financial period is 1/4/2009. If you have written wrong period, date will not be written due to this mistake. If period is written 5th April 2009 to 31st march 2009. Then pass the voucher entry by writing 2/4/2009 in date pop up box. If you want to ignore date, just yes to skip date field in voucher entry configuration. If you want to feed entry regularly on date base then write no to skip date field in voucher entry configuration and accept.

Continue reading »

Particular Column and Date Column and its Use in Accounting Books

Particular Column

Particular column is very necessary column in journal, ledger accounts and final accounts. In this column, accountant writes journal entry in journal, posting of accounts in ledger accounts. In other words, it provides close attention of each transaction’s record to detail after analysis the rules of accounting. In any account, accountant makes this column both debit and credit side according to the need of posting of journal entry in accounts.

Particular Column

Date column provides the information about time of recording transaction in books. It is very important because, without mentioning date, auditor can not find what transaction is recorded in books on what time. In this column , we can not write previous date , when we pass post dated transaction , we have forgotten to pass any old transaction , because doing this it can easily match with old dated transaction by checking that date vouchers . Like particular column, it is also both side of any account.

Continue reading »

How to Write Voucher Entries of Profit or Loss from Forex Fluctuation in Tally.ERP 9

Problem

I am Accountant in Singapore . I have some doubts in Tally. Can you please clarify my doubts?


1) Purchase stock from USA CO. USD$ 4089.00 while purchase time the exchange rate is 1.466.


Entry I post in Tally ERP 9.0:(F9)


Purchases A/C Dr → USD$ 4089 x 1.466 → S$ 5994.47

USA CO. Cr → S$5994.47

Payment made by TT to USA CO. same USD$ 4089.00 , But the exchange rate is 1.434.

Payment (F5)

USA CO. A/C Dr → USD$ 4089 x 1.466 → S$5994.47

Forex Rate Cr → S$ 130.84

Bank Cr → S$ 5863.63


Is it correct or Wrong, If it wrong means ,please tell me the correct posting in Tally.

More clear the problem , I have obtained from Yahoo Chat

In previous company they adjusted exchange rate automatically. once I did payments it will come automatically. but in new company they didn't set up Tally properly.

Solution

When we purchase or sale from other country. At that time, we face multicurrency problem. Different countries exchange rate is different. In India, Value of Dollar $ is Rs. 49. Value of Singapore dollar Rs. 34. In Singapore, Value of Dollar $ is 1.421 Singapore dollars. These currencies are fluctuating day to day. Suppose today value of dollar $ is Rs. 49, yesterday, it may be Rs. 48. So, It is very necessary to know, what is the amount of profit or loss due to change in foreign exchange rate when we will buy or sell the goods. This is the basic knowledge for every reader.

Now, I try to solve above problem.

If you can operate Tally.ERP 9 , then you can understand it that Tally.ERP 9 provides easiest way to track forex profit or loss . In your above example

Your first entry is correct

Purchases A/C Dr →USD$ 4089 x 1.466→ S$ 5994.47
USA CO. Cr→ S$5994.47

Your second journal entry is also correct. But way of feeding is not correct.


You will pass the second entry with exchange rate 1.434 with mentioning forex profit or loss in payment Voucher of Tally.ERP 9


USA Co. Dr. US $ 4089

Bank Account Cr. US $ 4089

Now tally calculate automatically profit or loss due to changing the value of foreign exchange and it can be seen in also in balance sheet . For transferring this profit to profit and loss’s income side . You have to pass the following journal entry in Journal voucher .


USA Company Dr. ( I have taken it jack ) S $ 130.84


Forex Profit and loss account Cr. S $ 130.84

Click image for full view

First of all create forex profit and loss account under indirect income and then pass the above voucher entry in journal voucher .

After this you can see forex earning in profit and loss account .






related Video : Recording of multicurrency transactions in tally 9

Continue reading »

Advantages of Journal

Journal is original book of entries in which we record first time all business transaction thoroughly. It advantages are given below :-

1. Journal provides records of all business transactions in one place on the time and date basis.
2. All transactions are recorded on the basis of receipts or bill, so we can check authenticity of each journal entries with their bills.
3. There is minimum chance to avoid any particular transaction because in journal transactions are recorded date basis.
4. Accountant writes every journal entry’s narration bellow of that journal entry, so other auditor can know what the reason of that journal entry is.
5. In journal, every transaction is recorded after deep analysis of two accounts on the basis of double entry system, so there is minimum chance of mistake in journal.
6. Journal is the basis of posting in ledger accounts. With making of journal, accountant can not make ledger accounts.
7. If there is mistake in ledger, we can rectify it with the help of journal or rectify journal entry in journal.
8. All opening journal entries , closing journal entries and all other transactions which is not recorded in any other subsidiary books , will be recorded in journal .
9. Journal is also needed in every type of accounting software . These accounting software can make auto system of posting journal entries by their automatic processing , but accountant must feed journal entries in journal and other specific vouchers of journal .
10. In journal , there is one column of ledger folio . It is very important for checking reference of each account's posting with its original journal entry .

Continue reading »

Finance Categories

Finance is very important field and if you want to study finance deeply . You should know its main categories . Finance Subject can be divide into two major categories .

First Category #

First Category is relating to getting fund from different sources at lower rate . When a company commences any business , it needs money and Finance Manager manages fund from different sources for company. So, in this category , you can study , shares , shares market , share capital , stock capital , debenture and cost of capital , different regulatory institutions .

Second Category #

Second Category is relating to effective utilisation of fund of company at high rate of return . For this analysis of different projects are done with the help of capital budgeting , market interest analysis , Bank schemes , cash and capital market trends . For this , Financial consultant should study major topics of second category .

This category is within the scope of Finance, a effort to improve the coverage of articles related to Finance on Accounting Education Blog . If you would like to read , please visit the project page and you can also see old contents of Finance by click on Older Entries .

Continue reading »

How to Progress in Education Field in India ? Tell Me .

1. Today, Education has become more costly and no poor student of India can progress in Education field . I remembered that I have done my B.Com. just in Rs. 6000 in 2001 , but If you want to do B.Com. , its total cost has reached from Rs. 30000 to Rs. 50000 .
2. Now , Education Centers have become the shops of business . They demand donation for B.Ed. , M.Ed. , MBA and MMBS seats . It means that education field has fulfilled corruption in the donation bribe .
3. These days , teachers have become butcher . They are earning and becoming rich by taking tuition classes without teaching in schools and colleges . They are staining on education field of this country .
4. Govt. is doing more dirty work . They are operating new schemes regarding higher education in India . Under this scheme , students can get loan at subsidy of interest ( see report of economics times here ) but not loan for getting education ( only for poor students ) . Government of India is big borrower of world and now it want to make borrower to Indian students .

Now , I asked from you , how to progress in Education Field in India ? Tell Me

Continue reading »

Short Cut Keys of Tally.ERP 9

In following chart , you can see all short cut keys of Tally.ERP 9 . With this , you can operate tally.erp 9 more fastly and save your worthy time for feeding transactions in this . Some of them are working by pressing Alt + specific word , or Ctrl + specific word . Other can be operated by pressing Alt + functional key ( F button on the top of keyboard ) . You can use tally short cut command for navigation purpose also .

Continue reading »

Add My Email in Yahoo Chat & Mobile Text and Get Prompt Solution

From today 09/09/2009 , I am announcing new facility to my Online Users . This facility is regarding prompt solution of accounting and tally problems on yahoo chat and mobile Text in yahoo mail box .


For this , add my email vinod_13242002@yahoo.com on the left side add box of your yahoo mail account . After this you can see whether I am online or not in yahoo mail . If , I am checking email , and you ask any query through direct yahoo chat , I will surely response if you send me message .

Continue reading »

What is Financial Planning ?

Financial Planning is combination of two words . First word is financial which has made from finance. It means fund and cash that generates earning . Financial is adjective of noun word finance, every business transaction or event which is relating to fund or money or cash or currency is called financial transaction or financial event . Planning means to do any work with predetermined process and program and factful estimations . Now , Financial planning means all planning which is relating to fund or money . In financial planning , Finance manager makes the plans for getting fund from loan and other sources at very low cost . He also makes plans for effective utilisation of these money in high return projects and purchasing of fixed assets . For this he estimates companies cost of capital , return on investment , companies fixed and variable cost , Companies other fixed and Variable revenue resources , companies work capability . All these plans and estimations are included in Financial planning .

Continue reading »

How to Pass Opening Journal Entry

We all know that life of business is very long but on the end of every financial year, accountant makes final accounts. When next financial year is started, accountant writes one journal entry in the beginning of every financial year in which he shows all the opening balance of assets and all the liabilities include capital. Then that journal entry is called opening journal entry. Because all assets have debit balance, so these are debited in opening journal entry and all liabilities have credit balance, so these are credited in opening journal entry.
It is based on accounting equation which have we can show following way.

Assets ( debit ) = liabilities ( Credit ) + capital ( Credit )

Opening journal Entry

Assets Account (opening balance) Dr.

Liabilities account (opening balance Cr.

Capital account Cr.


If all assets are more than all liabilities, its excess will be the value of capital which is showed credit side in the opening journal entry. If liabilities are more than the value of all assets, then this excess will be goodwill and it will be debited in opening journal entry. Typically, different of assets and liability will be positive and excess value of assets are showed as capital in the credit of journal entry.


How to get data for opening journal entry?

Its answer is very simple. Just see the balance sheet of previous year and make list of all assets one side and all liabilities in other side and then this will be based for creating opening journal entry. See example


On 31st march 2009 , S.K. shukla’s assets and liabilities stood as under :-


Assets

Building Rs. 30000, machinery Rs. 10000 , furniture Rs. 2000 , bill receivable Rs. 5000 , sundry debtors Rs. 12000 , stock Rs. 9000 , cash at bank Rs. 15000 , cash in hand Rs. 2000

Liabilities


Bill payable Rs. 4000, dev anand’s loan Rs. 15000, sundry creditors Rs. 20000

Make an opening journal entry on Ist April 2009

Before passing the opening journal entry, it is necessary to find out the amount of capital.

Capital = assets – liabilities

Total assets = 85000

Less total liabilities = 39000

Capital = 46000

Benefits for passing opening journal entry

• To activate next session of accounting


• After passing this journal entry, accountant can connect all previous record with current record. Suppose, if we want to pay Rs. 10000, but we have not passed opening journal entry, bank account show negative balance. So, by passing opening journal entry before any other journal entry, we can connect previous year Rs. 100000 balance of bank with current year account of bank .
  
  

Continue reading »

How to Filter Debtors List in Ms. Excel

If you have recorded all debtors' transaction in ms. excel , then you need filter tool to analyze different debtors' list . You may be interested what is the balance of particular debtor from 500000 or 600000 debtors list in ms excel or you may be interested to know the debtors in different range . You may know who are the debtors whose balance is between Rs. 50000 to Rs. 70000 . So , all facility available in Filter .

First of all you have to select the title of data in ms excel , it may be name of debtors and amount receivable or balance . Then go to data option in menu bar and here you will see filter option , click it and then click on auto filter . After this you will see small filter button on the title of data . Click it and you can see the list of debtors . When you will select any debtor , excel show only that debtor's balance and all other debtors will hide . You can click also balance filter and select custom and here you can enter amount of balance between . After this click pop up box , you will see only all debtors who will come in this range .

Same filtering process can be done in google docs . In google docs , it is called " Validate data"
This option in tool of google spreadsheet . In pop up window of data validate you can fix the range of numbers as well as text also .

Continue reading »