Redeemable Preference Shares

When the preference shares are issued with the stipulation that these shares are to be redeemed after a certain period of time, then such preference shares are known as redeemable preference shares.

According to section 100 of Indian Company Law, " If a company collects the money through redeemable preference shares, this money must be returned on its maturity whether company is liquidated or not. Section 80 describes the following provisions relating to redeemable preference shares :

1 # Its repayment will be out of net profit of company or amount received through issuing of new shares. These shares will never be redeemed by the amount of new issue of debentures of company. It means, we can not use loan for repayment of preference share capital. Company also can not use the sale amount of any asset for redemption of redeemable preference shares.

2. # Capital reserves from forfeiture of shares and share premium account are not available for payment to redeemable preference shareholders.

3. # No such shares shall be redeemed unless they are fully paid. Only fully redeemable shares will be redeemed.

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What is Easy and What is Difficult for Students

This is not accounting question, but this is the general question which should remember to every student of this world because only this time, you can leave easy and simple work and do something difficult. After learning this, you can do straggle for doing difficult work.

1. Saying is easy but doing is difficult:

It is very easy to say to do something. But act upon is very difficult. I have written more than 1200 contents. Main aim of these contents is just to teach you accounting with interesting way. But, if I only say to you, I will write, I will write, I will write, contents will not be created because for writing, I have to concentrate my mind, I have to sit in peace position, I have to collect my thoughts, I have to write my thoughts on rough copy, I have to do some research online and offline and online, I have to type, I have to choose and editing some good image, I have to make the video tutorial or choose any other's video after watching and so many other works. But when I did this difficult work, I am able to say that I have created 1200 contents with my small brain and with the power of God. My theory also applies on every student of this world. You also pick you notebook and start to put it on the table and think, I will read, I will remember, but, you leave your work without completing it. To do this easy because next day, you can easily say that I will do my home work next day. But next day will never come. So, I am saying to you do because it is easy for me to say but when I will complete this content, I will do and this is the greatest example that I can do difficult work and you will also do difficult work in the way of learning. Never become weak. Weakness is like death for a student.

2. Destruction is easy but construction is difficult:

It is also very easy work to break or to destruct anything. Suppose, for writing, this content, I will spend my one hour and after this, I select all and then press delete for deleting the content. Dear students, you can tell me how much time will be spending for doing this work? OK, you are right, I can do this job just within one second or two second because destruction of my content is very easy but construction is very difficult. I also want to share that after my death, all my constructed content will be offline due to not paying the bill of domain by any other, but I will feel happy that I will not be here to see this destruction. I am happy to do difficult work and I will do because, I think, if any one of my constructed content will teach you the good lesson, I will feel that I have done my job best by taking the challenge of this difficult work. Same thing, I want to say to my students that never involve in destruction. Always construct something new and you will definitely feel happy by doing this difficult work.

3. Education is easy but knowledge is difficult:

Education is very easy because its area is very limited but there is no area of knowledge. Try to practice to bath in knowledge not education. Today, I received an email from Piji peter who is working as an assistant accountant after doing B.Sc. and interested to know accounting means he is perfect in science education but he wants to do difficult work by getting knowledge of accounting. I need students like Piji Peter who struggles with life by learning new and new knowledge and not close the door just getting the degree of B.Com. Or B.Sc. Piji Peter's original message:

I am Piji Peter working as an assistant accountant in a FMCG company in Muscat. I am completed BSc Statistics and Computer A Level Diploma. When I was come here I got an Inventory related job in a store basically preparation of invoices, daily collation from salesman and prepare reports both the sales as well as collection. From that area I promoted as an assistant accountant. But my problem is I am very much interested in accounting, through Internet I searched lot of sites for online study from the base itself in that search I got your site and mail id. So can you please give proper guidelines? If you send any study materials or any site address for study am very much thankful to you.

4. Finding the faults in other is easy but removing your own fault is difficult:

This is best quote for me also. From last 30 years, I was finding the faults in others by saying he is not good, she is not good, you are not good, they are not good, my friend is not good, he is taking drugs, he is taking drinks, he is so bad, she is so bad, they are so bad, he is abusing, he is doing cheating, they are corrupted. But, I never see my own faults. Now, I have changed my thinking. Now, I have started to say, my students are good, my friend is good, he is good, she is good, they are good because, I have started to find their qualities and try to remove my long list of faults.

1. Today, before going to bed, I will ask from myself, did I speak lie. But it is very difficult for me to do daily. But I will try.
2. Today, before going to bed, I will ask from myself, did I help any helpless and needy? But it is more difficult than first because, I often ignore when I saw a helpless on the road who need my help and I leave him alone in the faith of god.

5. Learning Bad is easy but learning Good is difficult

When I am searching, I forget my way what I am searching. Why? I know my question's answer. Learning bad is easy. But when I start to read any knowledgeable book, I am lazy and think to sleep. Why? I also know my question's answer. Learning good is difficult.

Q: - a) Why learning bad is easy?

Ans. We have five sense organ and five action organs and eleven is our mind. All these organs need the food of bad things. But, we are the part of God, so, our soul directs us in good way. But in the fight of 11 organs, it is defeated. After this, we learn bad things.

Q: - b) What are the bad things?

Ans: All things are bad which restrict our development. Our peace leaves our room and we become impatient.

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Role of Credit Rating Agencies

Credit Rating Agencies are the main authority to assign rate of credit for the companies who issue debt. Any investor can measure the risk of bad debt after analysis these credit rates. These credit rates are fixed on the basis of ability to pay back the loan.

Credit Rating Agencies are also helpful to rebuild the investor confidence which is vital to the global capital markets.

In capital market, its importance is not less than SEBI because credit rating agencies protect different investors from risk of financial loss by providing them upto date information of credit rate. Many other key roles can be explain with following way:

1. # To compare the loan on the basis of quality of credit and loan. Suppose X, Y and Z are three companies offering debentures to investors. Credit rating agencies will assign their credit rate because these are financial expert and assign rate on the basis of analysis of past financial records and statements. Credit rating agency will assign rate AAA to best of X, Y and Z and to invest AAA -credit rating company means low risk of loss.

2. #  Not only show AAA but it show other range of credit rate like A for medium risky company, BBB medium risky and BB high risky and speculative company.

3. # Credit rating agencies also assist to portfolio monitoring. In portfolio monitoring, they provide information about which investment is most secure and provide high return of interest.

4. # Credit quality of transparency.

5. # Credit rating of money market securities.

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Zoo Learning Activities

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Education Loan for MBA

Problem

One of Reader wants to know,  how to get education loan for MBA in his E-mail letter? and he writes

Respected Sir,

I am a B.Com pass student. I want to do MBA ( finance). I belong to middle family, I have no money for admission in any business school and I have no knowledge from where I can get educational loan. Please guide me how to get educational loan for my MBA.

Solution

Dear student, like you, there are large number of B.Com. holders who have dream to do MBA finance but due to money problem, they do not take admission in this professional course. But, now, you need not worry and take tension about this. Large number of Indian commercial banks have started to give loan at very cheap interest rates for MBA education. These banks are interacting with various business schools in India and soon, all banks will be tie up with B-Schools. So, when you go to any business school and will disclose your money problem, they will definitely  help you for getting loan from tie up banks and without formality. You will take loan for paying admission fees of MBA class. Many educational institutes have already connected with commercial banks. So, first of all you go to your nearest B- school and get more information of educational loan for your MBA finance. Second, you can direct contact with Indian educational loan providers and banks.

One of new thing is in media that you can also take insurance facility like insurance on your home loan. After getting this insurance facility, there will no liability of your family for repayment of your educational loan.

You can get up to 10 lakh Rupees  for MBA education in India and 20 Lakh Rupees loan for MBA education from  abroad. Now, many current assets like shares, debentures and NCC can be used as security of educational loan. No need of any fixed asset as security.

After showing your academic certificates , offer letter in which b-school agree to admit you, list of fees of that institute and  residence proof,  you can get loan from bank.

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FII and its Role in Capital Market

FII means Foreign Institutional Investors. When some investors who have same interest to invest in foreign company, they create the company and start to invest in foreign companies. In India, SEBI defines all these investors as foreign institutional investors.

Wikipedia states about FII

In countries like India, statutory agencies like SEBI have prescribed norms to register FIIs and also to regulate such investments flowing in through FIIs. In 2008, FIIs represented the largest institution investment category, with an estimated US$ 751.14 billion.

Role of FII in Indian Capital Market

• As on that date the net cumulative investments made by Flls are around USD 35.9 billion representing around 6.55% of India's market capitalization.
• Net Investments by Flls (Rs Cr.) 41416.45 in 2004-05 in Indian Companies.
• Yet, we intuitively know that the FIIs are important for the market. They typically start a market rally. Subsequently flows come from all classes of investors. At this stage, the market behaves like a self-organised system. No single class of investors drives the market — asset prices go up, driven by the collective momentum of all investors. Finally, the market enters the state of self-organised critically. This is when any negative information could have non-linear effect on the market. The FIIs play a major role during this phase too. link

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Procedure of Issue GDRs

GDRs are the best way of raising finance from USA and other European countries' investors. No Indian company has right to sell their shares in foreign capital market without GDRs. So, it is very necessary to know the procedure of issue GDRs. Only GDRs connects foreign investors with Indian Companies.

Following are the simple steps of issuing GDRs :

1st Step


To find the Depository bank

Depository bank has only right to issue the GDRs. So, it is necessary to find depository bank in USA and other European countries.

2nd Step


Issue the Shares to Depository bank

Shares can not issued to foreign investors. But shares are issued to depository bank and depository bank will accept the shares of Indian companies as the custodian of foreign investors.

3rd Step


Deposit the fees

For issuing GDRs, either investors or Company has to deposit the fees for issuing the certificate named global depository receipt.

4th Step


Issue of GDRs and Record

Depository bank has right to issue one GDR certificate for 2 to 10 shares. The issue of GDRs to those investors who will pay the amount of shares of Indian companies. After this, it will be assumed that USA or other foreign countries' investors have acquired the shares of Indian companies. Indian company gets money of shares through depository banks. On the other side, foreign investors' name registered and they will get dividend through this bank in USA Dollar. Not only Indian companies but many other developing countries' companies are using same procedure for getting fund through GDRs. This year, a Kuwaiti investment company successfully issued shares in the form of Global Depository Receipts (GDRs) to foreign investors. After issuing GDRs, these shares can deal in any foreign stock exchange and GDRs will be one of the security type in stock exchange list of stocks.

Tips and Warnings

• Regulation 4 of Schedule I of FEMA Notification no. 20 allows an Indian company to issue its Rupee denominated shares to a person resident outside India being a depository for the purpose of issuing Global Depository Receipts (GDRs) and/ or American Depository Receipts (ADRs).
• Purchasing the shares through GDRs will have the risk of currency and all currency risk will be of Investors and non of depository bank or company will suffer currency risk. For example, if the dollar increases in value against the Indian currency, the dollar value of Indian's stock will decline even if the share price in Indian Rupees does not. So, this currency loss will be USA Investor.

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Solvency Ratio Vs Immediate Solvency Ratio

Related : Immediate Solvency Ratio

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Immediate Solvency Ratio

Do, you know immediate solvency ratio? No, but if I tell you some clues about this, I think, you can tell me what does this solvency ratio show?

1st Clue

This ratio is calculated for knowing the Short Term Financial Position.

2nd Clue

This ratio is calculated from Balance Sheet's Information.

Above two clues are enough to know about immediate solvency ratio. If you are not wrong, you are thinking about liquid ratio or quick ratio.

Yes, immediate solvency ratio is liquid ratio or quick ratio which is calculated for knowing the short term financial position and it is also calculate from liquid assets and current liabilities. Both information can only be found through making of balance sheet.

Immediate Solvency Ratio = Liquid assets / Current liabilities

{*} Note

Liquid assets

1.  Cash
2. Bank
3. Sundry debtors
4. Short term investments

In liquid assets, we will not include inventory and prepaid expenses or if current assets are given, then for calculating liquid asset, deduct inventory and prepaid expenses from current assets.

Current Liabilities

1. Sundry creditors
2. Bills payable
3. Outstanding expenses
4. Short term advances
5.  Income tax payable
6. Dividends payable
7. Bank overdraft

As a convention, generally, immediate solvency ratio or quick ratio of "one to one" (1:1) is considered to be satisfactory.

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Financial Risk

In financial market, both buyers and sellers of financial instruments have to face several risks. These risks are relating to return on investment, shortage of liquidity, fluctuations in foreign exchange and many others. So, we can say, financial risk is uncertainty of return and liquidity. Happening of this risk may be very harmful for business. Financial crisis and financial disasters are main result of financial risk and it can liquidate any company. In case small business, one may have the chance to lost the capital or entire money.


Types of Financial Risk

Liquidity Risk


Liquidity risk means risk of not receiving cash at the time when we need it. Its other name is cash risk.

Solvency Risk


Solvency risk is the part of financial risk like liquidity risk. In this risk, company is not capable to pay his debt.

Interest Rate Risk


It is the risk for debtor, if he has to pay high amount to creditor due to increasing interest in future. It is also risk for creditor, if he will receive less interest due to decreasing the interest rate in future. This risk will be on all interest bearing financial instruments like bonds, short term credit or other debt.

Equity Risk


We can delineate equity risk as the risk of loss of investment amount in equity shares due to change in the prices of stock market.

Legal Risk


Legal risk can happen in the form of legal penalty or legal charges due to changes the laws, rules and regulation of government. This potential loss may happen due to not act upon on the any notification which was given by law of respective country or any other reasons.

Currency Risk


Currency risk is not only for traders who trades in currency or foreign exchange market but every person who is providing goods and services in foreign country.

Commodity Risk


Govt. may increase taxes on commodities which will increase the cost of commodities. Many other risks may also include in commodity risk. If a trader gets his goods from foreign country, risk of damage of commodity can also include in commodity risk.

Operational Risk


Except these minor risks, all other major terrorism attack risk may be included in operational risk. Main reason of these risks is not use perfect and strategic business decision. Some of operational risks are out of control of businessman.

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Types of Mutual Funds Schemes

Mutual funds are those institutions which take the money under mutual funds schemes. These schemes are also managed by Asset Management Companies (AMC), which are sponsored by different financial institutions or companies. These mutual funds schemes can be divided under different basis and need of customers. Detail of these schemes are given below :

( A ) Types of Mutual Funds Schemes on the Basis of Structure

i)  Open - Ended Schemes

Open - ended schemes is that structure of mutual fund which allow investors to buy the shares of MF at its unlimited level and time and sell it when they want in market.

ii)  Close - Ended Schemes

Close - ended schemes issue the Mutual Funds under many restrictions like to offer to limited investors or limit of time of issue etc.

iii) Interval Schemes

This is a mutual fund scheme whose redemption features is between those of closed-end and open-end funds.

( B ) Types of Mutual Funds Schemes on the Basis of Investment Objective

i)  Growth Schemes

In the growth scheme, all profits made by the fund are ploughed back into the scheme. This causes the Net Asset Value to rise over time. The NAV is the price of a unit of a mutual fund.

ii ) Income or Dividend Schemes

The dividend option does not re-invest the profits made by the fund through its investments. Instead, it is given to the investor from time to time.

iii) Balanced Schemes

The aim of Balanced schemes is to provide both growth and regular income. Such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. They generally invest 40-60% in equity and the rest in debt instruments.

( C ) Other Mutual Funds Schemes


i) Money Market Schemes

It is open ended mutual funds whose amount will be only invested in money market. These funds invest in short term (one day to one year) debt obligations such as Treasury bills, certificates of deposit, and commercial paper. The main goal is the preservation of principal, accompanied by modest dividends.


ii)  Tax Saving Schemes

Tax saving schemes of mutual funds which saves the tax of investors. Tax benefits to be mentioned under the "objects of the offering" column. Any exclusive tax advantages for the mutual fund company and its shareholders by mentioning the section number of the Income Tax Act 1961 without revealing the content of the section.

iii)  Special Schemes

This is the mutual funds which have something special and mutual funds provider will mention this in invitation form.  You can read the discussion of reliance mutual funds updates to know what is special in it.

iv) Index Schemes

Index schemes attempt to replicate the performance of a particular index such as the BSE.

v) Sector Specific Schemes

Sector Specific Schemes  are those Mutual funds Schemes which make investments in those sectors that have been specified in the prospectus of the funds. The various sectors in which the Sector Specific Schemes make investments are software, petroleum stocks, power, and pharmaceuticals.

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Close Ended Mutual Fund

Close ended mutual funds are just opposite of open ended mutual funds. These mutual funds are issued to few and limited investors for specific period. After closing of that time, close ended mutual funds are not closed to issue. These mutual funds can not be redeemed through selling the MF in market like open ended mutual fund. Only benefits or return can be shared with closed ended mutual funds holders. Main aim of closed ended mutual funds is to make the pool of money through best investors.  

One of benefits of these mutual funds is that you can purchase these mutual funds on market value instead on net asset value. If market rate are going to down, you can get these mutual funds on discount, otherwise, you have to buy it on premium or at par.

Livemint.com compared both close and open ended mutual funds in India

Most fund managers of closed-end funds typically get money for a three-year period. They, however, take it for granted that this money is going to stick around for three years and markets would also keep rising. Hence, these funds are seldom actively managed against open-ended funds that are actively managed funds.link

It also has made chart of both mutual funds performance in last three years. Following screecast is one part of chart. You can see full chart here.

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Open Ended Mutual Fund

Open ended mutual fund is that type of mutual fund which is most popular in US and other developed countries. It means, a mutual fund in which a investor can invest up to maximum limit. He can buy or sell the share of this mutual fund without any restriction. Almost all the collective investment schemes are open ended mutual funds. Both investors and fund manager gets benefit from open ended mutual fund because acquired shares can be redeemed by selling it in market.

Some days ago, I had defined mutual fund and I explained that money collected through mutual fund  is further invested in shares and bonds under collective investment scheme. So, open ended mutual fund's share is not equity share but part of this fund and which can be purchased and sale on its only net asset value at any time and at any level. We can not buy or sell it on premium or discount like closed ended mutual fund.

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Robot Teacher

Can you believe, a robot which is just automatically guided machine, can become the teacher? But now, you have to believe after watching this video in which a Robot teach you how to play the violin.



Toyota an automobiles company of japan developed this robot. In video search, you can also download the video from reuters.com. In this video, you can see robot is teaching yoga and gym to the students in classroom. It is good innovation and soon, you can see robot as your accounting teacher for teaching accounting with best ways. .

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Investing Ideas

1. To start from small amount.
2. To invest in many schemes.
3. To get consultation before invest the money.
4. To invest in business is better than to invest in saving account.
5. Make the equation of risk, control, cost, return and try to get equilibrium point.
6. Try Investment analysis before investing the money.
7. Try capital budgeting techniques before investing the money
8. You have not all the money for investment, do partnership for investing large amount.
9. Investment in gold, property and metal should be in your list.
10. Hedge fund, mutual fund and derivative schemes are also useful to reduce the risk.
12. Break your limit of national investment, take the risk to invest in international capital market.
13. Never invest your money for purchasing lottery ticket. Your hard earned money will be Zero in end, so be careful. Learn from Mahabharata.
14. World's best investment is education. Do course, degree, diploma and its reward will be life time.
15. Donate some money means investment with the reward of blessing. Just faith and try.
16. Investing in commodity market may be better than nothing investing or have no any other knowledge.
17. To remember the histories of those who got loss in investment. To analyze why did they got loss?
18. Take the advice from other but take the decision from your brain but not mind. Sometime, you will be wrong, learn from this mistake. Sometime, others had done the mistake. Learn from others. Make the path of your success in your investment.
19. Take one idea from me. To invest money for Making  lab in your room for doing the test. Sometime, it may possible, that you will be the next Indian scientist of the world. After this, its reward will not only for your but whole humanity.

20. Never understand your investment less than any other. Atom is smallest part of matter but it has power to make atom bomb. Like this, your hard earned 1 rupees or 1 $ is more important than 1 crore rupees or 1 billion dollars of a corrupted businessman. 

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Corporate Governance

Corporate Governance means all actions which are taken for creating the good relationship between management and shareholders. Day to day news and media are calling it with different name like business ethics, business good conduct, values and transparency in company works. But theme is that it is the process of creating good relationship between management and shareholders of company.

SEBI writes clear in its report that board of directors are just trustee of company and real owners are shareholders. So, not only financial statements must show true and fair financial information but every action of company must be truthful and useful for the shareholders of company. SEBI had also banned inside trading for good corporate governance.

Now next question is " How can corporate governance establish in company?"

There is no fix rules and regulation for establishing and not any Indian or foreign law who pressurizes to apply the corporate governance rules but following the all the laws of companies and other will be automatic use of corporate governance.

 I liked wikipedia's lines in which following principles should be added in Corporate Governance :

1. Rights and equitable treatment of shareholders
2. Interests of other stakeholders
3. Role and responsibilities of the board
4. Integrity and ethical behaviour
5. Disclosure and transparency

In the interview with CNBC, Dr. Saurabh Srivastava said, " Board of director must not violate the separate business entity concept. If board of directors uses company's property for personal use, its record must be kept proper way in company and board of director should pay all these charges and never throw this burden on shareholders.

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True Education

Education is just search and act upon the truth. But sometime, human being forgets the way after getting education. He feels that he knows everything. He is expert and prides on his knowledge and education. But true education teaches us the lesson of humility. When a tree is full of fruits, its branches fells down for showing humility. Higher weights always goes down. But some person who get the degree of MBBS, PhD, MBA and many others, never give the importance of humility as true education. But, when they realize this true education, there is no time rest to correct this mistake. So, all students and teachers include me should not pride of education, knowledge. But we all should bring humbleness in our daily life and when we behave other general personal.

True education clears our doubt by showing us day to day accidents in our daily life. One of example is death of lineman due to high electric shock who came today morning about 6.00 a.m. in our main street to repair the fault of open wires ( electrical). He did not switch off the main supply electric current  and was electrocuted by 11,000 volts. I think, either he thought that he is expert and he can do without any safety and had climbed onto the roof of a reactor and touched the live electrical system and killed or it may be the mistake of other person who did not obey his order for switching off  and this accident was done. After seeing his dead body, I got only one lesson that we should leave pride in our education, knowledge, it is just gift of god which we have been given for sharing with needy and helpless. By helping the needy, we can bring humility in our minds.

Related : Real Education for Life

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Importance of Budgetary Control

Simple Introduction of Budgetary Control

Budgetary control is the one of best technique of controlling, management and finance  in which every department's budget is made with estimated data. After this, manager compares the estimated data with original data and fix the responsibility of employee if variance will not be favourable.

In other words, to make budget and control the business is key tool in budgetary control.

Importance of Budgetary Control

1. To Use the Forecasting Techniques

It is the importance of budgetary control that with this, we can use the forecasting techniques. Three departments work hard for calculating best estimation of future. Accounting department provides old data. Statistical department provides the tools and techniques of forecasting like probability, time series other sampling methods. Management department uses both department services to estimate the expenditures and revenue of business under the normal conditions of business. So, no department say anything wrong in making of budget. So, it is necessary for business to use budgetary control techniques.

2. Fix the Responsibility of Departments

Department's scientific name is cost center. Manager makes budget and show the target of company and employees are given the powers to perform these targets. After checking the variance in budget through budgetary control process, manager can fix the responsibility of each department and its employees in a particular cost center.

3. Effective Utilization of Company's resources

Company can only effective use its resources, if someone stops misuse of money and fund of company. If budgetary control is used in company, at that time, no action will be taken before making budget. Responsible personal of company will be accountable for his action. Suppose, company has fixed the target of company's annual Sale is $ 40,00,000 after participating sales manager in the setting of  this sale budget. Now, after one year, if sale is just $ 1,00,000. This sale manager must say what is the reason for not selling the product up to standard level of sale.

4. Excel yourself

After using budgetary control techniques in your business, you will definitely learn the skills of excel yourself because we all know that a budget is based on estimates, it may or may not be true. But continually practise of making good budget and apply in organisation, manager can learn skills and experience for increasing the efficiency in every work of company. Meaning of this, manager will get positive approach through budgetary control.

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Appreciation for Making the List of Mutual Funds

There are large number of Investors who are interested to learn about different companies of different countries who have mutual funds. But, if you search online you will not find complete list of mutual funds. Previous month, I had made many lists of mutual funds in India, Canada, USA, Pakistan and Philippines after searching each websites of financial companies who have mutual funds.

One of my reader needed this information and after getting he writes his comments below the list of mutual funds in Philippines. I have added this comment in this blog's quotes.  In his original words

I appreciate you putting together all of these companies. I have been looking for reliable fund managers for mutual funds and I appreciate you posting this!

Thanks dear.

from Writer.

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Gmail Attachment - Solution of All Your Email Attachment Problems

I read few minutes ago the three days old content of official GMail blog in which Arielle Reinstein wrote 5 tips for effective use of GMail attachment. I had learned them. These are also the solution of all your email attachment problems.

1. Gmail attachment drag and drop

When you sign in the yahoo email and attach your any file to present to your officer, it will transfer to scanner. But it in GMail no need to browser. Just drag your file and and drop it in the attachment of Gmail.

2. Gmail attachment search

If you want to know specific attachment in Gmail, you can use Gmail attachment search. You have to write has:attachment in Gmail search box to know all messages that contain attachments

3. Gmail Attachment Viewer

Gmail is the product of Google and google has google docs viewer for viewing all your received Gmail attachments. You ca view .pdf, .ppt, and .tiff files in your browse.

4. Gmail Attachment Alert

If you have written any letter in Gmail and if there is any line like ("I've attached" or "see attachment") and warns you if it looks like you forgot to do so.

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Absorption and Reconstruction

Meaning of Absorption

Absorption means an existing company taking over one or more companies. At that time, one or more companies must close their business and existing company will operate one or more company who are being  absorbed by it.

For example : There are three companies in the market A,B and C. C company wants to become powerful in the market. So, C company offers A and B companies to sell their business to it. A and B companies accepts and close their business after getting purchase price from C company. This is the simple case of absorption.

Meaning of Reconstruction

If any company is suffering loss and it close its business and join with or without other company, it create new company. That is called reconstruction. There are two types of reconstruction.

Amalgamation Vs Absorption Vs External Reconstruction - Comparison through Chart

Ist - External Reconstruction

When a company has no power to operate his own business due to heavy loss and it sells his all business to a new company. It will be external reconstruction.

2nd - Internal Reconstruction

Internal Reconstruction means to do every action for bringing the company out of losses. If a company is suffering heavy losses, company can use the provision 94 of Indian Company law 1956 and reduce its capital.

{*} Simplified the meaning of Capital Reduction

You know Capital will increase with profits and decrease with losses.

Suppose, company has $ 100,000 share capital and Debt is $ 50,000. Company has losses in business
$ 60000. Now, if company will use debt for losses, it means the end of company but if company reduce $ 60000 from share capital. It can relive after this.

Capital reduction can be done with simple journal entry

1. Sacrifice which has been given by shareholders

Suppose, company has the share capital with $ 10 each share. Company wants to reduce by $ 2. It can do with following way

Old Share capital Account Debit $ 10

New Share Capital Account Credit $ 8
Capital Reduction or Reconstruction Account Credit $ 2

2. Sacrifice which has been given by Creditors and debentureholders

Creditors Account Dr. XXX
Debentureholders Account Dr. XXX

Capital reduction or reconstruction account Cr. XXX

3. Now this reconstruction account or capital reduction account can be used for written off any losses of business

Capital Reduction or Reconstruction Account Dr. XXX

Profit and loss account ( Losses ) Cr XXX

Any other losses Cr. XXX

One Important Question : Why are we passing above journal entries in the Process of internal reconstruction?

Answer is very simple. If you make the balance sheet of loss making company. You will see losses in the debit side. These shows zero assets, it is clear indication to all creditors that company has no resources and all past resources are utilized in bad project. So, either shareholders and creditor can do above or take the action to liquidate the company.

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Liquidation of Company

Liquidation of company means end of the life of company. When court orders to liquidate all the assets of it for paying the amount to outside creditors. Court can order only in that case if company is unable to pay its debt or not fulfilling other rules and regulation of govt. or laws. At the time of liquidation, a liquidator is appointed for selling the assets of company and distribute realized money among all the creditors of company.

We all know that company is not human being. I or you will die one day naturally, it is sure due to we are made from five elements of nature and it will absorb in them after our death but life of company can only be dead by winding up process. After winding up or liquidation of company, its name is cut out of register of companies by registrar of companies.

Liquidation Vs Insolvency

Liquidation is different from insolvency. Insolvency applies on sole trade and firms and hufs. But liquidation will apply only company who is unable to repay its debt.

Modes or Methods of Liquidation of Company

1st Mode

Liquidation by Court

Court can liquidate the company if it does not fulfill the terms and conditions of company laws and other laws. In that case, court will order to liquidate the company. Process of liquidation will be completed under the strict supervision of court and anyone who dissatisfy from distribution of fund of company can give the appeal against this action.

2nd Method

Liquidation by Voluntary acceptance

If all the shareholders or creditors who have more money that share capital can bring the resolution of voluntary liquidation of company. They can distribute all funds of company after selling of assets with their acceptance.

Statement of Affairs Account in Liquidation of Company

This statement shows the realization value of companies all assets and liabilities. This difference will be the surplus or deficiency of shareholders.

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How to Share Google Docs Easily

Now sharing Google docs is very easy. When you open any document or spreadsheet in google docs, you will see right side share button. Click on it and then add the the email address of people to whom, you want to share. You have power to share google docs on the web, with email link or share privately. Just see the official video of Google Docs Engineer to learn more.

New Features of Google Docs Sharing :

1. # Access viewable at a glance: Visibility options for your docs now appear next to every doc title and in the docs list. You can easily see the full list of editors and viewers by clicking on the visibility option next to the doc’s title or on the Share button


2. # A cleaner, simpler interface: We’ve removed the three tab interface and replaced it with one dialog that lets you see who has access, manage access and invite others.


3. # Resettable doc URL: For a doc set to anyone with a link, you can reset the doc’s URL at anytime, which helps you better control who has access to your doc.


4. # Bulk changes in the docs list: You can now modify the sharing settings of multiple docs at a time by selecting multiple docs and selecting Share & Sharing settings.

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PDC Cheque

Problem

Accounting Education reader Accountant from XYZ Co. put a query about handling PDC cheques  in Journal. To put his problem he says,

"I want to ask what will be the journal entry for PDC cheques issued to supplier.... let suppose we purchase office furniture from FURNITURE HOUSE on dated 25-5-2010. for amount Rs 50000/- and we issued 5 cheques on same day each cheque amount is Rs 10000/- starting date of payment is 1-10-2010 ... now what will be the entry for this in our books and the same time what entry will pass the FURNITURE HOUSE in his books of account?

Solution

First of all you and other reader should learn about the meaning of PDC Cheque.

Meaning of PDC Cheque

PDC Cheque means post dated cheque. In USA it is called Post-Dated Check. In banking, post-dated or PDC refers to checks or cheque which have been written for a date in the future. In above example, XYZ company purchased Furniture and issued.

Journal Entry of PDC Cheque

On 25-5-2010

No need to enter any post date cheque in journal as payment because your supplier will get money on 1-10-2010. You just have to enter the journal entry of furniture purchased on credit.  No need to do any journal entry in the books of Furniture house. Furniture house will just enter the journal entry of furniture sold on credit.


On 1-10-2010

you will pass


Furniture A/C Dr.
Bank Cr.

Furniture house will pass

Bank Account Dr.

Furniture A/C Cr.

Or use any good accounting software and when software, when you have to deal the PDC cheque, you have  just  click the post dated option and pass the voucher entry in 25-5-2010,  you will see that balance sheet of 1-5-2010 to 30-9-2010 will not show above and on 1-10-2010, it will  automatically show the effect of post dated voucher entry in balance sheet on 1-10-2010 which we already passed in 25-5-2010. That's simple. I see you in next problem's solution. Ok.

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Investment Vs Loan

I have already defined both Investment and Loan and showed in my Finance Chart.  Here, I am providing the detail of difference between Investment and Loan:

1. Investment is one of Basics of Finance. It means, if anybody will ask about the basics of finance, you have to tell investment is one of basics of finance. But loan is source of finance. If we have not money or fixed asset, we can finance it through getting loan from banking and financial institutions.

2. Accounting treatment of investment is different from accounting treatment of loan. Suppose, you have your personal contractual business. You bring your capital in business and after this you have started to earn money through dividend . For this, you have bought 5000 shares of XYZ company.This is your investment in shares and it will go to balance sheet asset side.  But if you have not sufficient money to buy the 5000 shares and you take some money from other party on interest. That payable amount will be your loan and it will be shown as liability in balance sheet. Sometime, you can give loan to other. Basically, it is your investment. But, you can show it in Loan and Advance as Asset.

3. On the basis of difference between investment and loan, board of directors are playing the game in business on equity. You have read in financial management, that it is the  duty of management to get loan at cheap rate, lower risk and control and risk and invest it at higher profit at lower risk. What did you get idea after reading financial statement. I have only one idea. Loan is power of business for taking the challenge to get high yield on same amount invested in any other project.

4. Loan is affected from market interest rates and cost of debt but investment decision is affected large number of factors like capital budgeting, investment analysis, project planning, real option analysis and capital asset pricing model.

5. Area of investment is also more than area of loan. Dealing of loan is just limited to financial institution who do this duty professionally but area of investment include investment in each and every market, like investment in commodity market, investment in real estate, investment in capital market, investment in foreign exchange market, investment in insurance market, investment in private equity.

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How to Teach MBA Students

MBA students are those students who have admitted in any business school for doing MBA and your duty may be to teach them. At that time, you are surely interested to know "how to teach MBA students?" Every teacher has his own way to teach any class and any subject. But it is the quality of good teachers and professors that they always want to know new and new methods to teach not only MBA students but every class's students.

I am also teacher  and I have taught MBA students and many students have completed their MBA and are doing professional work. After teaching MBA students I got many ideas which I want to share in the content " how to teach MBA students."

1st Step 

Create good friendship with MBA students

After completing graduation, every student wants friendly environment of learning. On the other side, it is also need of time, teacher has to change his behavior and should become the friend due to the requirement of students. If teacher creates a good friendship with MBA students, it has following benefits :

  Good friendship with MBA students means good relationship. Students of MBA can take the help from teacher who is expert in his subject as help taken from best friend. I think this is the first rule to teach MBA students best way.

 After good friendship with MBA students, teacher can share his teaching experience informal way. He can teach not in classroom but in open ground or even in park or just in the front of laptop through Skype.

2nd Step

Do Research of Each and Every topic of MBA subject

This is the age of modernisation. MBA students have many other options also, if his business school teacher does not clear their doubts. He can take the help online, through coaching and through social network sites like facebook, linkedin and many more. So, today teacher has to change his attitude toward students. He should go to classroom after deep research of specific topic of MBA subject. He should read books, online search and also get idea how to develop the small concept and its related practical problems. Suppose, you have to teach finance, you have to check each and every website online what is total area of finance and collect the data relating to finance education as much as possible and also research good book shops  and purchase famous writer's finance books and read it, understand it, discuss it, write some important point from it and finally teach it to students.

3rd Step

Example, Example and Tell Example

All most all theory are read from books but teacher should has something extraordinary. Go to classroom and give example how to solve specific managerial problem practically. It is the way, you can not only teach to commerce students but also non -commerce students. You must explain the examples with logical and best interpretation. If you have some good presentation, graph and tutorials in PowerPoint, it can be helpful for student to understand the concept very clearly.

4th Step

Give Opportunity to Students  to Speak and Express their Views

It is my experience that in this world no one is perfect. Teacher is only person in the world who create the personality of student. Just Good wearing is not good personality of student, if he can not express and speak his views just front of any other. In this world, we have to present ourselves. Teacher should give opportunity to students to speak and express their views. Viva- Voce , communication the current matter on the stage are good way to give opportunity to students to speak and express their views.

5th Step

Practical Examination

To check the quality of MBA student is also part of teaching to MBA student. To write the paper and take the 3 hour examination is not good way to check the quality of MBA student. Suppose, student has learned 6 months from a teacher. Teacher should take examination every day after teaching and calculate the overall performance after six month. In many countries, this rule has started and one more technique is also famous for practical examination. To act the role of teacher is way to know the performance of student. Suppose, you have taught how to prepare the balance sheet of company to students. Now ask one of student, teach it to students or solve practical question of making the balance sheet with raw figures on whiteboard and to make understand the other students.

6th Step

Teaching of MBA is Easy than Teaching of Nursery Class

I always say to my MBA students that God has given me very easy work. My duty is just to teach MBA students  which is very easy than teaching of Nursery Class. I remembered, I had taught mathematics to 3rd class students in the beginning of my teaching career and faced many problems which I never faced in MBA class. If you are teaching MBA students, you should feel lucky that

a) You are just guide and your students act as teacher.

b) You have only to teach students to learn self.

c) No need to teach 9 hours. Teaching  just 9 minutes are sufficient.

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Issues in Financial Mathematics

The inauguration of the Center for Research in Financial Mathematics and Statistics at UC Santa Barbara featured three distiguished speakers addressing issues in financial mathematics and statistics.



Following are main issues in Financial Mathematics on the basis of above video's comments in YouTube :

1. Modeling financial markets

The problem with these subjects are that they all look 'from within the box'. The real world is incredibly complex. Modeling financial markets it is more complex than modeling even the movement of gas (in which even with extreme knowledge of conditions leads to butterfly effects that cannot be predicted). None of the references include guys like Mandelbrot who would claim that these models are not suitable for economics.

2. Mathematical illiteracy

The idiom, "a poor plumber always blames his/her tools", shows how silly to put blame on mathematical analysis not individuals for miscalculations.
To simply relying on models without knowing their constraints is a clear sign of mathematical illiteracy. I doubt the majority of these model users can even prove mathematically to why the models work.

3. Wrong assumptions

Not only. empirically these are simply learning how to be wrong. Their cognitive dissonance support them to grab the models and use them with wrong assumptions and therefore wrong outputs to sustain a wrong perception of the world and reality.
Human being will never change and his tendency to escape in "gnoseocrazia" and its jargon is just an example not of sane humble culture but arrogant fear.

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How to Find Fake Educational Institutions

This is real story of Sham (Not real name) who came Delhi for doing MBA in Finance  after B.Com. from city college in UP. His dream was to become Finance professional after MBA. He took admission in a Business school in Delhi. After one year study, he found that this education institute is fake and is not valid under any authorised institute like UGC or IIM or any other. He had given more than Rs. 5,00,000 to this educational institute but he got only fraud in this education sector.

These days, there are lots of Sham who are capturing in fake educational institutes and universities and get bad result of it. So, it is our first duty to know about recognised educational institute before taking admission.

Ist Step

Go to UGC Site and Check the Detail of Fake Universities :

It is your first duty to go to university grand commission's site and check the list of fake universities and educational institutes. UGC has added more than 20 universities in this list who have not recognition. But you have to check update list of fake universities.

2nd Step

Check the fundamental History of Educational Institute

Before getting admission, it is also your duty to obtain full information about the history of this educational institute. Try to get review online by clicking on Google discussion search. By registering to any educational forum online, you can talk to those who suffered the fraud in which you want to get admission. So, with this, you can save your money and future.

3rd Step

Send Report to Government Authorities

Send Report of Fake Educational Institute to UGC or CISR  or other Government Institute at their email address if you have found any clue before taking admission in it.

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Financial Statements and its Importance

What is Financial Statements?

Financial statements provide the useful information for company and other interested parties. In these statements, we can include profit and loss account, profit and loss appropriation account and balance sheet. In USA, company has to make retained earning account instead of making profit and loss appropriation account by following USA GAAP. One more statement whose name is cash flow statement which is made both in India and USA.

a) Profit and Loss Account

Profit and loss account shows the net profit by comparing revenue with expenses of company.

Net profit = Revenue - Expenses

Or
Net Loss = Expenses - Revenues

b) Profit and Loss Appropriation Account

Profit and loss appropriation account shows net balance of net profit which will be transferred to balance sheet.

Profit retained by company = Previous profit + Current Net profits - Reserve - Dividends -

c) Balance Sheet

This statement shows the liabilities and assets of company.

Liabilities = Assets

d) Cash flow statement

This statement is made for financial and cash flow analysis.

cash flow from operating activity + Cash flow from investing activity + cash flow from financing activity + opening balance of cash book = Closing balance of cash book

Why are these statements made by Companies?

These statements are prepared for following interested groups :

1. Managers and Directors

They can make plannings, policies and take other decisions after seeing above financial statements.

2. Investors

Investors can take the decision to invest in company after seeing the financial position and performance of company by checking these statements.

3. Government

Company can make good tax policy and take tax and fiscal decisions on the basis of these statements.

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Indian Industrial Output Extended 17.6%

It is good news of Indian Economy that 17.6% growth has been recorded in Indian Industrial output. NDTV said, "capital goods outputs are also increased up to 72.8%. It happened due to increase the demand of durable and non durable goods. Consumption of durable goods picked up to 37% and non- durable goods up to 6.6%. Now, RBI is trying to reduce the inflation of raw material and other food price.

The Indian industry is firing on all cylinders with investments picking up and consumption holding strong. Industrial output data released on Friday surpassed even the most optimistic expectations with a 17.6 per cent growth.

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Advantages of Double Entry System

In financial accounting, double entry system is the best system for recording the transactions. To know this system is necessary to entry in accounting profession. In other words, it has become the base of accounting. In this system, we record the transaction in two accounts. Every transaction affects two sides of two accounts. So, if we have to pass the entry of any transaction, we will write one account debit side and other any other account credit side. Always, both side total will agree. It has huge advantages in practical business life. But, there are some disadvantages which we can easily ignore after comparing it with its benefits.

Following are its main advantages:

1. Based on Scientific Accounting Equation :

If we study the history of accounting, we finds many clues which tell us that double entry system is fully based on scientific accounting equation. This equation shows two side one is asset and other is liabilities. If we compare both side, it will be always equal. It means assets = liabilities. So, if we pass the any entry on the basis of double entry system, we are apply this formula. We have to pass the entry in such a way so that one account's amount will include in assets and other account's amount will include in liabilities. In end, when we will compare our balance sheet, both side of balance sheet will be equal.

2. No Mathematical Mistake

After using this system of bookkeeping, accountant becomes confident that after making journal entries and ledger accounts, there will be no mathematical mistake because he has send amount in two sides of two different account. Every debit will be equal. He will either compare total of debit and credit or balance of debit or credit. In this system, he can clear his doubt by making trial balance. If there is mathematical mistake, trial balance will show difference.

3. Get Fast Accounting Reports

All most all accounting software respects double entry system. Either it is  quickbooks online which is used in USA or Tally software which is used in India and many other Asian countries. Just passing the voucher entries according to this system, you can get all accounting reports fastly without doing any further work of making ledger accounts, trial balance, profit and loss account and balance sheet. Software knows that it has to follow the rules. It means he has to send one amount in debit and other in credit. If we open the profit and loss account, what we see expenses in debit side and incomes in credit side. Balance sheet also shows two side one is asset and other is liability. Thanks double entry system, you are rock.

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ATM Cloning

ATM cloning or Card cloning is main card fraud in which card hackers or criminals  hack your ATM password from the magnetic tap on the back of ATM card by Skimmer device and wireless surveillance camera. In simple word, for hacking or cloning  your ATM card password, hacker installs a magnetic card reader over the real Automated teller machine. ATM Hacker also uses of a wireless surveillance camera or a modified digital camera to observe the user's PIN.

More explanation of  ATM or Card Cloning

ATM machines are fitted with above illegal devices which clone card information and are used to steal peoples identity. Any hacker can easily buy these card cloning machines from Internet. Today, it has become easiest way to get your money illegally. You can watch large number of cases of ATM cloning and by this skimmers withdraw Lakhs of Rs. in India and thousands of dollars in USA from ATM.

How to Secure Yourself from ATM Card Cloning

Following are some tips which can be used for get security from ATM card cloning:

1. When you are writing your ATM pin, always cover hand over it. It will be helpful to avoid your PIN number to capture by wireless surveillance camera

2. Get Security training from this YouTube video




3. In an attempt to stop these practices, countermeasures against card cloning have been developed by the banking industry, in particular by the use of smart cards which cannot easily be copied or spoofed by unauthenticated devices, and by attempting to make the outside of their ATMs tamper evident.

4. Use e-how site's step to avoid ATM Card Cloning.

Related : Photocopier Have a Hard Drive

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