Quoted in the Silverlight travel Website, Moscow

One of our post on Free virtual Journey from Moscow to Vladivostok on Google Maps in Accounting Education was picked by the Silverlight travel, Moscow – “Free virtual Journey from Moscow to Vladivostok”

“Take rest from your accounting work. Stop accounting books. Leave tension of stock market. Come and join with me for enjoying free trip of Russia from Moscow to Vladivostok in Accounting Education Blog.” Link

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Simple Explanation of cost accounting

This is query of visitor from London, United Kingdom. He wants to know simple explanation of cost accounting. We all know cost accounting is determination and control of cost. But, a person who did not study accounting, can not understand even this simple definition of cost accounting. For such students, I can give following example to explain cost accounting simple way.

Example

Suppose, you are scientist. Often, you purchases the chemical bottles and uses for your business. Can you calculate the exact cost of each bottle? Cost of chemical bottle will include

1. The cost of purchase of bottle

2. If you have paid expense like freight, wages to laborer to pick and keep it in laboratory. These expense will be the part of chemical bottle cost.

This will formulate the direct cost of bottle. If you want to make your own chemical product. Then, you have to include other expenses like rent of laboratory, salary of laboratory assistant or lab. attendant. You also control your cost of your chemical products by using inventory management and cost accounting techniques like standard costing, break even point analysis.

Every producer should know basics of cost accounting. After learning cost accounting, you can reduce your cost yourself and you can get optimum return on your investment in production.

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How should be Indian Education System

1. Indian education system should be totally free from cramming.
2. Indian education system should be free from parental stress and pressure on students.
3. Indian education system should be free from teacher’s beating to students.
4. Indian education system should be full of fun.
5. Indian education system should be full of enjoy.
6. Indian education system should be free from outdated theory burden in the form of 10 kgs books bags on the head of 1st class student.
7. Indian education system should be full of innovation which should be students themselves.
8. Co-curricular activities should be promoted by teachers.
9. Indian education system should be full of creativity of students, classroom and teachers.
10. Indian education system should be free from tension and frustration.
11. Indian education system should be free.
12. Indian education system should be Gurukul mode and on the basis of Vedas.
13. Indian education system should be high standard.
14. Indian education system should motivate students.
15. Indian education system should be in mother tongue.

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Inventory Management

Inventory’s other names are goods, stock or products of company. 80% of business transactions are relating to purchasing and selling of inventories. Inventory can divide in raw material, work in progress and finished goods. For continuing production, it is very necessary to manage inventory management because without inventory management, it may possible that there is no stock in store and without stock of raw material our production may delay. But the sense of inventory management in finance or financial management is advance and it is the part of working capital management. In finance, it is the money of investment. So, proper inventory management is very helpful to provide good return on the investment in inventory.

I want to take your attention on following facts which are needed for proper inventory management.

1. In inventory management, we maintain the stock register which used to track what quantity is sold at what price.
2. We have to calculate proper financial statement by using first in first out method of calculation the value of inventory or any other method of valuation of inventory.
3. Proper inventory management tells you different stock items closing stock at its cost. I can explain it very simple example. Suppose, you have started your own VCD business. You have produce 100 VCDs by using your own computer and appoint your salesman to sell this 100 VCDs but your salesman sells the only 2 VCDs. Then, you can calculate cost of goods sold by using your own calculator but in very large institute where 100000 or more VCDs raw materials are purchased and then these VCDs are produced and sold by salesmen. At that time, proper inventory management will tells you what quantity of raw material you should keep by using reorder level. It also tells you that what amount should be used for purchasing of raw material and what quantity, we should be produce and keep as finished product. After selling, what amount of profit, we have to receive from each salesman.
4. Some decisions are also taken relating to reducing the stock conversion period in inventory management. Stock conversion period is the period when stock is converted into sales. Less period is better from financial point of view.


Importance of Inventory Management


Inventory management is very important for making company’s sales, strategic, production and financial planning. An inventory manager should aware that inventory, its quantity, its cost, its rates and price because inventory is effected large number of factors. So, it should be based on flexible approach, so that company can change its design according to changes in inventory market.

With effective inventory management, production and sales department can work to know inflow and outflow of material. This information can be very useful for management to reduce working capital in the form of inventory, because raw material, work in progress or finished stocks are the block of money and fund. But management should not forget that at the time of inflation to purchase high quantity can give us earning due to increasing prices of same raw material within short period of time. With proper inventory management, we can create balance between supply of raw material and demand of raw material.

Main Techniques of Inventory Management

1. Material requirement planning
2. Inventory control
3. Godowns Management techniques
4. Purchase management
5. Sales management
6. Product Expiry dates and obsolescence management

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Treasury Management and its Functions

If we have to describe treasury management, then we can state that it is the management of cash, fund, currency, bank and financial risk. So, it is an imperative tool of finance. In this management, finance manager checks the cash inflow and outflow. He makes the list of all receivable amounts which will increase treasure house of company. He also tracks the dates in which he has to receive the fund from debtors. Under this management, he estimates all financial risk for investment of cash. All investment is on the basis of investment policy. Many organizations have separate treasury department. If company deals with foreign currency, then management of foreign currency risk is the duty of treasury department. Suppose, Google Inc. USA Company which is a MNC and it receives the fund from advertisers and shares with adsense publisher. A good treasury officer can give the advice to Google Inc. about when company should pay the bill of adsense publishers.

Suppose, there are 90, 00,000 adsense publishers and approximate $ 100 which company has to pay to each Indian adsense publisher after one month. Now within 15 days, Google Inc. will choose that day when the price of dollar in Rupees will be minimum. Suppose, if company paid on 21st Feb. 2010 $100 to one publisher when the price of dollar is Rs. 46.5 and pays Rs. 2139 and if the next day, price will decrease 0 .5 dollar. Then, it means Google Inc. is in foreign currency loss Rs. 50 each publisher because, company has power to pay in next day and save Rs. 50 for each adsense publisher. If company has to pay $100, then company can receive loss of Rs. 45 Crore due to foreign currency loss. So, to manage foreign currency and control is major project under treasury management. In government departments, fund management is under treasury management. Treasury department makes map to collect for govt. treasure and decide how to use it for welfare works. Finance manager creates good relationship for getting locker facility at cheap rates and company can keep its important documents in locker of banks. These documents and commercial papers can be sold by banks in money market and company can take part in money market by indirect way. Finance manager also do the duty to sell company’s fixed assets at high price and he also acquire the properties for company at cheap rate for effective utilization of treasure of company.

Function of Treasury Management


1. To maintain the liquidity of business

It is the main function of treasury management to maintain the liquidity of business. Without proper liquidity, it is risk for business to operate smoothly. By using cash flow analysis and working capital management. Treasury officer make good ratio of liquid assets and liquid liability.

2. To Minimize Currency Risk

In above example of Google Inc. business, I have already explained that it is the function of treasury management to minimize the currency risk. For this, treasury managers touch with currency market of world. They analyze the reason of crisis in currency market. Sometime this crisis will be benefited for them because they have to pay less to other country for getting their service at cheap rates.

3. To provide quick finance to Company

It is also function of treasury department to supply quick finance to company, when it needs the money. For this, a good network in financial market is required.

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Mr Avinash Gupta, President of Tally Solutions Pvt Ltd - Interview

India's top branded Tallysolution company has More over Rs. 1.5 Crores turnover in this accounting year. Recently, its president Mr Avinash Gupta has given interview to CNEB in which he stressed to change the business model of business and to increase the quality of product for satisfying customer. This is the first video in which president of Tallysolution Co. has come in the front of Youtube.

Introduction to Mr Avinash Gupta

Avinash has 18 years of experience and expertise, in building highest operational efficiencies by directing and coordinating activities consistent with established goals, objectives and policies. His unique ability of designing and operationalizing business plans, catering to different strategic business units lays foundation for organizational success. His invaluable experience in international business development, strategic alliances and relationship management, adds immense value to the business initiatives of Tally.

Prior to Tally Avinash Gupta was the National sales head at NIIT India, where he in was instrumental in developing strategic relationships with International partners. Subsequently, as Country Head for NCS-Pearson, he established the successful Certification business from ground zero, across the Indian subcontinent. He later joined the Dadabhai group in Bahrain, as Director Sales and Marketing, to manage the retail and vocational business across GCC.

He has participated in various national and international forums and conferences on franchising, and contributed to different publications.

Avinash is a post graduate in management from Lucknow University and a post graduate in computers from Institute of Engineering and Technology

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Online Earning Without Any Investment

When we write "online earning or online earning without investment" on google search engine, we find natural search result and sponsored links, in sponsored links, we find that some of these ads are offering $ 6000 to $ 7000 per week or Rs. 3500 per hour without any investment just home work on internet or on computer. Is it real. If not what is real method to earn online without any investment. If you are interested to know this, then you should know the three types of earning money or cash or fund through online.

1st - By providing products or Services

For selling products and services, you need high investment. But reality is that, you can sell online with very small saving and purchase google adword ads at very low rate by online bid.

2nd - By Writing Contents and Earning From sponsored Links or from Advertising

If you are the expert in any field and solve the problems online by writing solution article, image, or video or audio, then you can earn money by sponsored links or from advertising.

3rd - By Donation

If you do not like sponsored links and provides costly services free of cost, then you can earn money by donation. Large number of good people will reward you by sending you donation cheque.

Best System of Online Earning Without Any Investment

Now, understand the system of online earning without investment. Revolution has been happened after coming google search engine in 1996. 14 years ago from today, Larry page and sergey Brin created google search engine and made Google inc. Company. They started first large scale online business. Google inc. provides two types product, one is google adword and other is google adsense. Google earns money from advertisers for showing ads of businessman relating to their products at very cheap rates. Any one can open adword account free of cost. Google takes money only when any other clicks on businessman's product ads. Second product is Google adsense. This product is relating to providing some part of advertising income to adsense publisher. Advertiser's product ads will be shown on google search engine or adsense publisher. When some clicks on the ads on google search engine or any adsense publisher's ads. At that time, google earns money from advertiser. Suppose, if google earns Rs. 100 from adsense income, then google will pay to partner adsense publisher some part which google Inc. It approximately (20% to 40% of adsense earning). Now, you can earn without investment only with sponsored links. For this you have to give application on the online form on adsense website. For this you have to follow some conditions of google Inc. One main condition is that you can not click on your own ads. You can not promote anyone to click on the ads. It is against Google TOS. You can start writing article by making free blog on blogger.com which is also the product of google. After accepting your application, you will receive an email from google Inc.’s engineer that your adsense accounts' application has been accepted. Now, you become adsense publisher and after this you can open your adsense account which is operated from your Gmail account (Google Account). In adsense account, you can get ads which are java script code. After copy the ads from adsense account and pasting these ads to your blog or website, your ads will live with in 4 to 5 hours. When you will receive 10 $ from sponsored links, google inc. will send Personal identification number in your mailing address not via email which you have to fill in your adsense account. After this, when your earning reaches $ 100 or more, you can see it and after one month it will reach your home address via cheque. In India, blue dart courier Service Company will provide you your adsense earning cheque which you can receive with in one to three weeks. This cheque is payable in City bank in India. Almost all the banks accept your adsense cheques and deduct commission Rs. 50 for clearing cheque from City Bank. After depositing cheque in local bank, your account will show adsense earning amount after 10 to 12 days. In this partnership, you have to solve the problems by using your skill, knowledge, experience, by giving new ideas or taking and mixing ideas from big websites. You can write your article by showing image, writing database, reference, using infographics, video and audio podcastes.If you page views are more than 100000, then you can contact advertisers directly and fix the your price for showing ads. It is true that your can earn Rs. 100000 to Rs. 500000 per day. But it is based on the number of page views. It is estimation that if 1000 page views, then one click may be on sponsored links. Never try to become smart by clicking on your sites ads by increasing your own ads. Google inc. engineers  investigate this matter and stop your account immediately.

One more way to get earning online, that is donation. But for getting donation online, you have to make your online reputation. Wikipedia website is one example which does not like to show adsense ads on its site. It accepts donation. 100% Wikipedia’s earning is from donation. In 2001, this website is made by Jimmy Wales. After 9 years, it has 82 lakhs article with 500 to 5000 words length. If you do not like ads, then you can provide free services online and you can get donation by cheque which is payable to you in your mentioned bank in your local area or via PayPal.

In last, I will say that you should be careful and protect yourself  from online cheating, if you have decided to work online for online earning.

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Cash Budgeting

Cash is needed not only for paying everyday expenditure but lacking cash, we can not purchase any fixed assets also. Excellent planning of cash will make us easy to hold our expenditures and proper spending. The plan which helps us to use cash systematic way is called cash budget. Technique of making cash budget is called cash budgeting. In cash budgeting, we add all estimated cash which we receive from others in future and deduct all estimated cash which we have to pay for removing our liabilities. Its difference will shows estimated cash which will be our pocket. After spending of year, we compare this cash budget with actual receipt and payments. If our real cash receipt is more than budgeted cash receipt then this will be our favorable position. On the other hand, if budget cash receipt is more than actual, then this will be unfavorable position. We can also evaluate budgeted payments with actual payment.



Cash Budgeting Vs Cash Flow Analysis

Cash budgeting is different from cash flow analysis because cash budgeting is comparison between actual and estimated cash inflow and cash outflow but in cash flow analysis, we make cash flow statement and compare current year cash inflow and outflow with previous year cash inflow and cash outflow.

Importance of Cash Budgeting

Like working capital management, cash budgeting is the tool of finance. In finance, cash budgeting will control inflow and outflow of cash fund. You can plan how to pay and when to pay your expenses. With this you can increase your future ability to pay your debts. This following cash budget clears that we will make plan according to cash which we will receive in future from our debtors and cash sale and after deducting future expenses, the balance amount will show as closing balance of cash. But this is just estimation which is useful for future planning.

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Free virtual Journey from Moscow to Vladivostok on Google Maps in Accounting Education

Take rest from your accounting work. Stop accounting books. Leave tension of stock market. Come and join with me for enjoying free trip of Russia from Moscow to Vladivostok in Accounting Education Blog. This afternoon, I am reading newspaper and in the cyber world section, I find many new gifts of Google. Google Inc. has started virtual train for your free journey from Moscow to Vladivostok. You can complete 5752 miles journey with this blog. I have copied some contents for Google Virtual Journey Site. This journey is for 6 days but you can see online within 150 hours. This project is completed by youtube video, Google maps of 12 regions, 87 cities, Russian radio, passing time with Leo tolstoy's audio book of 1400 pages and many more things added in this free virtual journey in the quote link. This project is just like other education projects which are made in wikiversity .

The great Trans Siberian Railway, the pride of Russia, goes across two continents, 12 regions and 87 cities. The joint project of Google and the Russian Railways lets you take a trip along the famous route and see Baikal, Khekhtsirsky range, Barguzin mountains, Yenisei river and many other picturesque places of Russia without leaving your house. During the trip, you can enjoy Russian classic literature, brilliant images and fascinating stories about the most attractive sites on the route. Let's go! Link

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Connect Accounting Education with Google Buzz

Some days ago, Google launched Google Buzz and it is connected with Gmail account of every Gmail user. I am happy to announce that you can connect Accounting Education just by writing Vinod Kumar in find people in Google Buzz which you can find above left side of your Gmail account. After following me you can get all updates like new contents of accounting education, new video which I will upload in youtube or any image which I will upload in flickr in your Gmail account. Now need not go to twitter or facebook for connecting accounting education.

You can also start conversations about the things you find interesting with me. Share updates, photos, videos, and more. link

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5 Tips for Investment in Company Fixed Deposits

Burden of inflation is not on your pocket but also on but also on the return. Lot of investors does not care inflation when they invest their money. Return on fixed deposit (FD) is decreasing due to increasing inflation. In this situation many investors are interested to invest in fixed deposit of company. But investors should learn following tips if they have decided to invest in company’s fixed deposits instead of bank’s deposits.

Tip No. 1
Know the Historical Background of Company

If you desire to deposit large amount in any company as FD, then it is very necessary to know the historical background. These days, many companies are creating fund and sometime after, they are run out from market and it may possible that you money is plunged by worst company. So get knowledge about company.

Tip No. 2
To Invest in Profitable Company

Try to analyze the company’s performance with financial or ratio analysis and then only invest in profitable company. Avoid investing in FD of those companies who are suffering losses.

Tip No. 3
To Invest in Short Term FD

Never capture your money in Long term FD. If you have to deposit your money in company’s FD, then only deposit for 3 to 5 years. If any company is providing Mutual fund or public deposit for 3 or less period, then deposits in these fund is better.

Tip No. 4
Know complete terms and conditions of Company Fixed Deposits

Almost all companies have different terms and conditions. It is very essential to know term and condition of company FD. Never deposit in any company who is giving interest which is less than Bank FD. Some company may accept FD by creating condition that you can not withdraw your money within six months or it may possible that some company will not give you interest if you will withdraw money less than six months.

Tips No. 5
Compare Bank FD and Company FD investment

Never be excited by just seeing high return on the investment in any company’s FD. Compare every point deeply after brainstorm and thinking intensely. Imagine, if company will become insolvent, can it give you guarantee to repay your FD amount or not. If not never see the return but see the security point of your cash.

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Working Capital Management Analysis

 In the last Article ' Working Capital Management ' I have told that working capital management is nothing but just decisions of finance manager to make working capital more optimize for business. In following youtube video lecture, you will understand working capital management analysis.

In this video working capital management analysis is done on the simple working capital equation that working capital = current assets - current liability.

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Working Capital Management Note at The Top of Google Search in Netherlands and Philippines

About two hours ago, I have written the article ' Working Capital Management Note for MBA (Finance) students and Google has showed it at the top of its search result in Netherlands and Philippines. I have Just checked. You can see in following screecast.



Thanks Google

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Working Capital Management

Introduction of Working Capital Management

Working capital management is the device of finance. It is related to manage of current assets and current liabilities. After learning working capital management, commerce students can use this tool for fund flow analysis. Working capital is very significant for paying day to day expenses and long term liabilities.

Meaning and Concept of Working Capital and its management

Working capital is that part of company’s capital which is used for purchasing raw material and involve in sundry debtors. We all know that current assets are very important for proper working of fixed assets. Suppose, if you have invested your money to purchase machines of company and if you have not any more money to buy raw material, then your machinery will no use for any production without raw material. From this example, you can understand that working capital is very useful for operating any business organization. We can also take one more liquid item of current assets that is cash. If you have not cash in hand, then you can not pay for different expenses of company, and at that time, your many business works may delay for not paying certain expenses. If we define working capital in very simple form, then we can say that working capital is the excess of current assets over current liabilities.

Types of Working Capital

1. Gross working capital

Total or gross working capital is that working capital which is used for all the current assets. Total value of current assets will equal to gross working capital.


2. Net Working Capital

Net working capital is the excess of current assets over current liabilities.

Net Working Capital = Total Current Assets – Total Current Liabilities

This amount shows that if we deduct total current liabilities from total current assets, then balance amount can be used for repayment of long term debts at any time.


3. Permanent Working Capital

Permanent working capital is that amount of capital which must be in cash or current assets for continuing the activities of business.

4. Temporary Working Capital

Sometime, it may possible that we have to pay fixed liabilities, at that time we need working capital which is more than permanent working capital, then this excess amount will be temporary working capital. In normal working of business, we don’t need such capital.

In working capital management, we analyze following three points

Ist Point

What is the need for working capital?

After study the nature of production, we can estimate the need for working capital. If company produces products at large scale and continues producing goods, then company needs high amount of working capital.

2nd Point

What is optimum level of Working capital in business?

Have you achieved the optimum level of working capital which has invested in current assets? Because high amount of working capital will decrease the return on investment and low amount of working capital will increase the risk of business. So, it is very important decision to get optimum level of working capital where both profitability and risk will be balanced. For achieving optimum level of working capital, finance manager should also study the factors which affects the requirement of working capital and different elements of current assets. If he will manage cash, debtor and inventory, then working capital will automatically optimize.

3rd Point

What are main Working capital policies of businesses?

Policies are the guidelines which are helpful to direct business. Finance manager can also make working capital policies.

1st Working capital policy

Liquidity policy

Under this policy, finance manager will increase the amount of liquidity for reducing the risk of business. If business has high volume of cash and bank balance, then business can easily pays his dues at maturity. But finance manger should not forget that the excess cash will not produce and earning and return on investment will decrease. So liquidity policy should be optimized.

2nd Working Capital Policy

Profitability policy

Under this policy, finance manger will keep low amount of cash in business and try to invest maximum amount of cash and bank balance. It will sure that profit of business will increase due to increasing of investment in proper way but risk of business will also increase because liquidity of business will decrease and it can create bankruptcy position of business. So, profitability policy should make after seeing liquidity policy and after this both policies will helpful for proper management of working capital.

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Fund Flow Analysis

{Results 3,350,000 for fund flow analysis. (0.32 seconds) – Google Ref. }

Fund flow analysis is the analysis of flow of fund from current asset to fixed asset or current asset to long term liabilities or vise- versa. First of all, we make fund flow statement and then study its cause and effect  deeply and try to find many important facts and information which can be used in business. It can also solve following problems.

Q: - 1. Why are net current assets decreasing after getting high volume of net profit?

Ans. Fund flow statement is made by take two period balance sheets and if we study it then we can find that it may possible that we are using net profit for purchasing fixed assets. Statement of changing in working capital can also show net decrease in working capital.

Q:-2.Why did company not issued high dividend, even company had earned high profit in last year?

Ans. You know that dividend is given after seeing the level of fund from operation not net profit. If company has made fund flow statement, then fund from operations will be the source. Financial analyst should check this amount and suggest board of directors what amount will be suitable according to the revenue performance of company. So, it is not necessary that high profit level will give high dividend to shareholders.

Q: - 3. How did company use the net profit?

Ans. Fund flow statement provides clear picture of sources and utilization of fund and if we take some adjustments of non operating items, then we can know the amount of fund from operation and it is compared with fund used. So, it may possible that we had used it for purchasing fixed assets or repayment of loan.

Q: - 4. What are the main sources of redemption of loan?

Ans. Loan is the main fixed liability of business and if it has increased from previous period, then if we study sources of fund from fund flow statement, then we can estimate that whether sources are strong to repay all the amount of loan or not. Suppose, if we are taking another loan to repay the amount of payable loan then it is not good source but if we have received large money from operation as source for repayment then it can be said that it is good source of fund.

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Public Deposits in Indian Companies

Following is the list of Indian Companies which can accepts public deposits. Moreover all these companies are Non-banking indian companies and RBI accepted their right under new updates which is issued on 15th Jan. 2010.

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Accounting

First time, I have read accounting word in  1996 and today is  2010. If I take its difference, then it is 14 years. It means I know accounting from 14 years. But, still, I am saying that I am learning a, b, c of accounting due to its deepness. So, before studying accounting, one thing, you should remember that just learning the history, meaning, definition, explanation, branches, objectives, scope, importance, uses,  features, limitation of accounting is not enough to say that you are master in accounting. It is true that after completing accounting degree, you can become accountant, chartered accountant or account manager but it can not say that you know every thing about accounting. If you are the accountant of India, you can expert in Indian accounting system. If you are the CPA, then you can be expert in USA accounting. But, for becoming well-known in accounting or you have to go home at accounting,  you should know everything about accounting. Open google search engine, you will see 121,000,000 search results with the word of accounting. If you click left plus button of option and click images, then you can see 35,500,000 image results with the word of accounting. More than 10,600 videos are uploaded with the word of accounting. Every time, you can receive more than 43,900 news relating to accounting. More than 14,400,000 blogs are updated with the word of accounting. You can also see twitter report in google search option and check that every second someone writing on accounting in twitter. So be serious to learn the first lesson of Accounting

Q:- 1. What is Accounting ?

Ans. It is the science to record the transactions.

Q:- 2. What is the meaning of Accounting ?

Ans. It is art to transfer the values from bill, vouchers, invoices, receipts and cash memo to day book.

Q:- 3. What do you mean by Accounting?

Ans. To calculate the net profit from all the transaction is Accounting.

Q:- 4.  Accounting ?

Ans.  Assets = Capital + Liability

Q:-5. What is the definition of Accounting?

Ans. To record financial transaction and leave rest is accounting.

Q:-6. What can you say about Accounting?

Ans. I can say only that accounting is the book of accounts, transaction, their record, profit and loss account and balance sheet and their analysis.

Q:- 7. What is the simple definition of Accounting?

Ans. Journal → Ledger → Trial Balance → Manufacturing Accounts → Trading Accounting → Profit and loss accounting → Balance sheet → Cost Sheets → Budgets → Trends → Ratios → Cash flow statements → fund flow statement

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Cash Flow Analysis

Cash flow analysis or cash flow statement analysis is the tool of finance. Like financial and ratio analysis cash flow analysis is also show the strength and weakness of business’s operation and investments and other financial activities. In cash flow analysis, we are interested to know the answer of following questions.

Q:-1 Is company capable to pay the creditors through the amount receivable from debtors?

Ans: For this, we can check the difference between a/cs receivables and account payables and if a/cs receivable is more than a/cs payable then it means, we are capable to pay our creditors.

Q: - 2. Accounting personnel, who need to know whether the organization will be able to cover payroll and other immediate expenses?

Ans. If there is existence of cash in business after paying current liabilities, then it is sure that we can pay our payroll and other immediate expenses out of balanced money.

Q: - 3 Is the company financially sound?

Ans. Every company’s financial strength can be estimated by checking its liquidity position. For this, it is very necessary to prepare cash flow statement which shows business’s cash inflows and cash outflows and difference will show closing balance of cash. If it is sufficient to pay all the liabilities of business, then I can exhort to you that company is fully financially sound.

Q:- 4. Give the  its example.

Ans. After watching this example you can understand,  we are anlyzing information that we can get from cash flow statement.

Study following Cash flow Statements with direct and indirect methods for deep study of cash flow analysis

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Ratio Analysis

Ratio analysis is the tool of Finance. With ratio analysis, we can check our financial position and revenue position. It is very helpful to analyze financial statement. It is also easy to understand and explain interpretations through these ratios.

Before discussing different ratios, you should understand the meaning of Ratio. Ratio is the relationship between two or more items of balance sheet or profit and loss account or both statements. For knowing short term position’s strength or liquidity, we can find current ratio, liquid ratio. These ratios tell us what is the amount of current assets, which is in the business if we take the burden of current liabilities. If amount of current assets will more the amount of current liabilities, then our liquidity position will strong. We can also calculate mixed ratios like inventory turnover ratio, debtor turnover ratio, creditor turnover ratio.

These ratios are very helpful to find following period

1. With inventory turnover ratio, we can calculate inventory conversion period. If this period is very short then it means we have power to sell our product fastly.

2. With debtor turnover ratio, we can calculate debtor conversion period, if this period is short then it means that we can convert over credit sale fastly into cash.

3. With creditor turnover ratio, we can calculate creditor conversion period, if this period is short, then it means we are ready fastly to reduce our current liabilities. This is plus point if our debtor conversion period will also short. if debtor conversion period is long, then shortness of creditor conversion period is our negative point.

We can  analyze of profitability by making gross profit ratio, operating ratio, net profit ratio and ROI ratio.We can also check our long term financial position’s strength or weakness by calculating debt-equity ratio, fixed asset and equity ratio, current asset and capital employed ratio.

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Financial Analysis

Financial analysis is the tool of finance. With financial analysis, company can know his financial position’s strength and performance of his operations. It can also compare with other companies financial statements. It is also to find the financial strengths and weakness of company. For analysis, Accounts manager establishes relationship between different items of balance sheet and profit and loss account. There are many ways of financial analysis. We can analyze the financial statements by making comparative statements, common size statements, trend analysis, statement of changes in working capital, fund flow statement and cash flow statement, cost volume profit analysis and ratio analysis.

Objectives of Financial Analysis

1. To understand company’s position and performance with better way.

2. To know the trend of business sale, purchase, profit, assets and investment.

3. It is helpful to estimate future earning, interest, strength to repay the loans by explaining the meaning of financial data.

4. Because in financial statement both analysis and interpretation are included so financial analysis can understand general public also.

5. Financial analysis is just treatment of Doctor. I can give a simple example. Suppose, you feel weakness and you go to Doctor. Doctor investigate your body by checking your body temperature, blood pressure and other your diagnosis reports and the he starts your treatment. Financial analysis is also investigation of financial statements and discloses its weakness, after this, management can solve the problems of weakness by taking good actions.

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What is Dead Stock? - Query From Student of Maharashtra

Question: What is dead stock? Because I have appeared in GDC & A an Examination of Maharashtra. I have found in trail Balance debit side dead stock Rs. 25000. Dead Stock means Bad Debts, if it not Bad debts, what is this explain, how is entry pass in Accounts which site?

Answer: No, dear, it is not bad debts, but dead stock means loss of stock due to changing of fashion or changing of technology and it will not sell in market. Dear if you want to show its effect in final account. Then first thing, you should know that This is abnormal loss and it will go to the debit side of profit and loss Account  and never deduct it from closing stock because, if closing stock is given then it means that is already deducted from closing stock. Study consignment accounting, many other examples, you can find of abnormal losses.

No, need to pass any adjustment entry because if it is shown in trial balance it means its journal entry is already passed.

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How Many Candidates are Awarded UGC NET Certificates?

Do you know, how many candidates are awarded UGC NET certificates? It is difficult to tell exact numbers. But only 2% of total appeared candidates clear UGC NET examinations. It means if 100 students appear UGC NET examination. Then, it is only 2 students who will clear this examination and als will make them eligible for teaching in various degree institutions all over India.

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New Amendments in UGC Net Paper June 2010

University Grant Commission has done new amendments in UGC – NET Paper June 2010 by publishing latest notification in PDF file. According to UGC Notification, the candidates will see changed form of paper III in UGC NET Exam. June 2010. Last year UGC had amended UGC – NET papers by introducing the provision of deduction for wrong answer in objective type questions. This is third amendment in UGC NET Examination.




Understand these changes:-

1. Now, you have to write two essay type questions’ answer instead of one big essay type question.

2. Now, Numbers of analytical question has been decreased from 5 to 3. Marks of per question have been increased from 12 to 15.

3. Now, number of definitional questions has been decreased from 15 to 9. Marks of per question have been increased from 5 to 10.

My Views on these Amendments

I think, UGC NET should be the test of knowledge. But it has just become test of memory which is so bad according to my view. If University Grant Commission wants to promote great teachers in India, then there will not enough just by doing new amendments for making tough UGC NET. It is need of time that UGC should give UGC NET certificate to those

1. Who can teach in classroom with best way.

2. Who can understand the problems of students.

3. Who can teach interesting way.

         4. Who can motivate the students.

It is my experience of more than two years after working with Google that students of India need best teachers who can understand them and solve their problems. India needs not the lecturers, teachers and professors who have cleared UGC NET examination by just cramming because they will failure to solve latest and practical problems of students.

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How did I find My One Mistake in Accounting Education?

Today (13 Jan. 2010), I am searching Sex in my site by Google to find the idea, how many articles of Accounting Education in which I have used this keyword and I found sex word in the Article “What is Company? What are its Features?  ” which I have written 26 Dec. 2009. I surprised when I saw sex word in this article. I wrote sex feature instead of six feature of company and google captured sex. Now, I have corrected this mistake.

Thanks Google, for helping me to correct my spelling mistake. This is also example for you how can find mistake in your online written contents because your written contents is your business and it must be free from spelling mistake.

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VAT in Tally.ERP 9

In the last tutorial of " Taxation in Tally.ERP 9", I have taught basic system on white board for tracking VAT, service Tax and Excise Duty by making four Videos in Youtube. Today, you will see the demo of how can accountant pass the voucher entries of purchase and sale with VAT input and VAT output and also pass the voucher entry of VAT adjustment by checking the difference of VAT input and VAT output in statutory reports.

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Taxation in Tally

I have covered taxation in tally.erp 9 with following four tutorial videos which I have made in youtube. In these videos, you will learn how to activate excise duty; VAT and service tax in tally.erp 9 and also learn what ledger will be created and then what voucher entries will be passed.

# First Part - Activate Taxation in Feature 11

Allow Excise duty → yes
Allow VAT → yes
Allow service Tax → yes



# Second Part - Create Ledger Accounts

VAT Input  under duties and taxes

VAT Output under duties and taxes

VAT Adjustment under duties and taxes

Purchase Account under purchase account

Sale Account under sale account

Indirect Income from Services Providing under indirect income




# Third Part- Create Inventory ledger Accounts

Voucher Types

Excise - Purchase  under purchase

Excise - Sale  under Sale


Tariff Classification  - finished product

Stock items with basic excise and education cess.



# Fourth Part - Pass the Voucher Entries


Pass the Voucher Entry

Excise - Purchase
with basic excise, education cess and VAT input

Excise -Sale
with VAT output

Receipt of Indirect Income with service tax.

Payment of Payable service tax and VAT Payable.

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Types of Excise Duties

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Public Deposits

Definition of Public Deposits

Public deposit is the source of fund for private and non-banking companies. It means to accept fund from public in the form of deposit. The interest on these deposits is more than interest which is given by banks and post offices.

This is the risky investment but investor can earn high return on public deposits. From June 1980, public companies of India also started to accept public deposits. More than Rs. 5000 crore has been invested by Indian Investors in public deposits.

Government Regulation on Public Deposits

 Company law 1956’s section 58- A provides the power to central govt. to make rules and regulation for controlling public deposits. Government of India has made Companies (acceptance of deposits) Rules 1975. From time to time, these rules are amended.

 Following are the main features of these rules

1. Ceiling on Deposits

A company can accepts public deposits up to following level

a) Company can accept public deposits up to the 25% of the total of payable capital and free reserves.

b) Company can accepts public deposits from existing shareholders or debenture holders up to 10% of total of payable capital and free reserves.

2. Maturity of Deposits

Company has to accept deposits from public minimum for 6 months and maximum for 3years.

3. Form and Particulars of Advertisement

Company must publish its advertisement in English news paper and in local language newspaper.

4. Form of Application for Deposits

Public deposits must be accepted on given application by depositor.

5. Register of Deposits

Like register of shareholder and debenture holder, company should record all persons’ name, address, deposit cash, date, maturity date, and rate of interest in register of deposits.

6. Interest on Deposits

Company can fix rate of interest on deposits money  according to regulations of RBI.

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Financial Education for Kids

Recently, RBI has issued English comics (pdf form) for providing basic financial education for kids. I have read it. I can tell you its theme. It is the story of a lazy boy Raju who dreams of money dreams in day and night. One day, he goes outside for searching money tree and tells about this to a wise old man. That person gives Raju (lazy boy) a small seed and tells him that he keeps it in your field and to do service for becoming it tree. It will give you money. That lazy boy do hard work day and night and one day, this seed becomes tree and gives fruits and flowers and he sells it market and earns large number of money. He enjoys with earned money and he also saves some earning in the form of fund in  his box where some rats eat his all money. Now, old man suggests him to invest rest money in bank. It gives you interest on bank saving. If he makes goodwill with banks by depositing continue bank can give him loan also at very low rate and he does as what guidance is given by old wise man and soon he becomes again rich. I have given three pages picture of this comic and you can read this comic fully at this link.

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Bank Finance

Bank finance means amount of debt which is given by banks. It is different from banking financing. Bank finance is just part of bank financing. Bank financing includes all activities of bank which a bank activates to sell financial products at high rate of interest. If we see bank finance from the eye of customer, then that customer is the expert in bank finance who gets money from bank at minimum rate of interest. Bank finance is the source of finance of company and it is the duty of accounts manager to get skill for helping company in these financial works.

Bank Finance in India

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Advances

Advances or advance is generally identified for advance payments. If a company wants to acquire goods or assets or any services from other party, then sometime it can give some money to that party before purchasing and delivery of goods and services. This payment is called advance. This is the asset of company. If advance is given partly, then company will pay balance cash after actual delivery of goods. If advance is given for expenses, then accountant shows prepaid expenses or advance expenses as current asset in balance sheet of company.

In the field of property dealing, an advance against purchased property is a payment made by the purchaser to the seller at the time of contract (usually immediately upon contract) and promise to pay balance fund after certain period of time. For example, Ram the owner of Shanti house may vend his house to Sham for Rs. 90, 00,000 and get Rs. 9, 00,000  against that house at the time of contract. Rs. 9,00,000 is advance. This also a special form of loan but there is no interest on such advance payments.

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Credits in Finance

In finance, credit means to get money as debt. It also means to gets current asset or fixed asset without pay its price immediately. A person or company who gets money will be responsible to repay its principle amount with interest after certain time. In case, if he purchases goods on credit, then there is no need to pay interest on the credit amount. Bonds are issued if company gets credit from public, then company is also responsible to pay interest.
In credit, a party who gets loan will be debtor of other part and other party will become creditor for the first party who gets cash. If debtor does not pay the amount of credit then it becomes bad debts which is the loss of loan providing party. It is very necessary to maintain provision for doubtful debts for creating reserve for purchasing stock or paying other expenses if we will receive fund from debtors for given credit in reality.

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Bond

Definition of Bond

Bond is that financial product of company which is issued for getting loan. Government and semi-government bodies issue bonds. Its other name is debenture when it is issued by private company.

When company issues bonds, at that time company writes a certificate and accepts that it will repay the mention amount of loan after fixed time with fixed rate of interest.

The following things must be clear, if you or your company is issuing bonds.

1. Amount of Principle

You should tell bonds holder or investor, what amount you are taking. Investor should sure that amount will not demanded more than given principle amount.

2. Issue Price

Sometime, it may possible that company can issue bonds at discount. Then, at maturity, investor will have the right to receive only issue price not principle amount.

3. Maturity Date

It is the date when companies repay or redeem the loan to investor. It may possible that loan is taken for short period or long period. In short term loan, bonds amount will repay with in one year and in long term loan, bonds amount will repay more than 5 years.

4. Coupon

Almost all the bonds are bearer and interest coupons are attached with it. After one year or six months, interest is payable to that person who holds these bonds on coupon date.

Kinds of Bonds

We can classify bonds or debenture with following way.

Ist Kind of bonds

Fixed rate bonds

If bonds are issued with fixed rate of interest, then these bonds are called fixed rate bonds. For example Mr. James takes bonds of $ 5000 and he gets the interest coupon with fixed rate of interest at the time of purchasing of bonds, then these types of bonds will be fixed rate bonds.

2nd Kind of bonds

Floating rate bonds

If interest is not fixed and it is changeable according to the condition of financial market, then these bonds are called floating rate bonds.

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Easiest Way to Increase Return on Adwords Investment

Google company is providing two types of commercial products. One is Google adsense and other is Google Adwords. Google shows Ads in his search engine. On every click, google pays some percentage to its partners adsense publishers. On the other side, Google gets money from advertisers under Google adwords programs. So, this money will be the investment of advertisers. If you are the advertiser who is showing the ads online, then you can increase your return on Adwords Investment ( ROI )by using following simple idea.

#1. Creating report by selecting campaign performance button and clicking invalid click and invalid clicks Rate.



{ Note: Google does not charge your account for invalid clicks that we determine were generated by prohibited methods. Data about Invalid Clicks and Invalid Clicks Rate (the percentage of clicks filtered out of your total number of clicks) can be included in Account Performance and Campaign Performance reports. }


#2. To Reduce the Number of Invalid Clicks by Contact the Ad Traffic Quality team at Adwords Help Center



If you are seeing high percentage of invalid clicks in report, then for protecting your adwords investment, you can contact the ad traffic quality team at adwords help center. Google employees are ready for providing 24 hrs service to advertisers. They will check and response you.



# 3. Use Website Optimizer Tools with Google Adwords Tool

With using website optimizer, you can test your site's quality landing page by changing image or contents for making a good impression and will bring many visitors to your site. A poor quality landing site will hurt you and only bring traffic that really doesn’t care about your site or what you are selling.

# 4. Use Geotargeting

AdWords allows you to reach people in 250 countries. But you can not deliver in 250 countries. Due to this, you should not waste money on all those clicks?

Define your target geographicaly. You have the possibility to choose the places you want your ads to be shown, in your AdWords account. Try not to play the generous, because your budget is at risk.

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Svtuition Channel's Most Discussed Video of Today in Youtube

Today, in the morning time at 5.00a.m. I have uploaded a very small video of  (7 minutes and 43 second ). It has become  most discussed Video of Today in Youtube. It is honor which is given by youtube to me.

You know that there are many different honors that are granted to the top producing videos and channels on YouTube. When a video or a channel receives an honor, they appear on YouTube's browse pages. To view these videos and channels, visit the Videos and Channels tabs from the YouTube homepage.

Youtube has made following condition for providing honor.

In general, to qualify for video honors, a video must have been uploaded within a particular time frame. To qualify for some channel honors, a channel must have been created within a particular time frame.

•For "Today" honors, this time frame is within approximately the past 48 hours.

See this Video, if you have not seen already.




 This video is lecture of my previous article" Which is better Job or Business for Indian Students. " I am thankful for youtube for giving me honor.

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Which is Better Job or Business for Indian Students?

I think business is better than job because if you have learned the skill to sell the product, it is sure that you will succeed in business. At that time, you need not to do job for earning money.
These days, everything is product; even you are providing education or other services. If you are expert in it, then business is better. In Business, you are the boss.
Now, Indian students should leave their mentality of earning Rs. 25000, Rs.50000, Rs. 100000 or more per month package just by doing only job. If you want to do job just for learning experience and skill, then it is good but never depend on jobs. Start to make customers because your income potential is unlimited in your own business.

Watch following Video Lecture which has been given by Prof. Vinod Kumar for Indian Students.
Note:{ If you are not seeing video, then please download flash latest version }

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Equity

In finance, equity means owner’s claim in business. It can say also the capital of owner. Its other name is owner’s equity. Owner in small business may be individual and can do business with his family members. At that time, his invested money in business will be his equity but if he has gotten secured loan from outside, then total equity will divide into two parts one is owner’s equity and other is creditor’s equity. Due to his business has unlimited liability, so his own equity can be used for payment of secured loan in case of insolvency.
The definition of equity will change in case of purchasing of other company’s shares. After purchasing other company’s share, company’s equity will be the total amount of equity share capital. It is also called shareholder’s equity. Large numbers of businessmen are using equity for succeeding in company type business.
They make company just getting fund in the form of share capital, after getting fund, they operate business, and then if they need money they take only loan not share capital. That technique is called trading on equity. One more thing, I have reminded that owner’s claim will be junior claim but liability of shareholder will be limited.

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Lecture: 1 Advice to Indian Students

Lecture Series on Education by Prof. Vinod Kumar. For more details on Educational Topics.

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Hedge Funds

Definition of Hedge Funds

Hedge Funds are that funds which are created by investment managers or professional investors to reduce the risk of small and medium investors. These investors invest some amount of his investment in hedge funds instead of direct investment in share or bonds. With this, return on investment will also increase. Investor chooses and decides hedge fund investment. Subscription amount is paid to the custodian. Custodian confirms receipt of payment to fund administrator. Fund administrator instructs issue of share to investor. Fund administrator issues reports on hedge fund performance. Investment manager instructs custodian to move funds to prime broker for investment in market. During the process the prime broker and custodian are in direct contact with fund administrator.

Hedge funds used to occupy a dark, undisturbed corner of the financial world, but over the last year theyve been thrown under the spotlight. Still, many people dont know exactly what hedge funds are, or what hedging actually means. Senior Editor Paddy Hirsch explains.

hedge funds in india


List of hedge funds operating in India :-

1. Indea Capital Pte Ltd.
2. India Capital Fund.
3. India Deep Value Fund
4. Absolute India Fund (AIF)
5. Naissance Jaipur (India) Fund
6. Avatar Investment Management
7. Passport India Fund
8. HFG India Continuum Fund
9. Monsoon Capital Equity Value Fund
10. Karma Capital Management, LLC
11. Vasishta South Asia Fund Limited
12. Atyant Capital
13. Atlantis India Opportunities Fund

{* see also the list of mutual funds companies in India }

Hedge funds vs mutual funds

Hedge funds and mutual funds are both useful to increase ROI with minimum risk of losing principle amount in investment. But, there are many differences between hedge funds and mutual funds.

* Mutual Funds are highly regulated, restricting the use of short selling and derivatives
* Hedge Funds, on the other hand, are unregulated and therefore unrestricted.
* Mutual Funds generally remunerate management based on a percent of assets under management.

* Hedge Funds always remunerate managers with performance-related incentive fees as well as a fixed fee.

* The future performance of Mutual Funds is dependent on the direction of the equity markets.

* The future performance of many Hedge Fund strategies tends to be highly predictable and not dependent on the direction of the equity markets. Link

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