Crawl errors have Been Removed from Accounting Education Site

For writers  who are operating educational site like my accounting education, have to use links for connecting one educational tutorial with other tutorial for convenience of users of sites. But sometime, errors may happen due to writing wrong link in link button. Technically, this is called crawl errors.

Thanks Google webmaster tool, which can find each type of crawl errors if you have added your website in this tool by signing in google webmaster tool. As webmaster, I recommend to you to use it. You can find crawl error by just click the left side below button  (+) Diagnostics , in this button, you can see can see crawl errors. It means which wrong link of your site affected how many and which link of site. I wrongly written wrong link of definition of finance which had affected nine educational contents because, I had added definition of finance in these nine contents.

Recently, we watched google webmaster tool and correct all these crawl errors. We apologize for not opening the pages ( 404 (Not found)) due to this crawl errors. Now, these errors have been removed and you can read every page of accounting education.

Captured Crawl Errors by Google Webmaster Tool in my Site

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School in Bangalore who Charges Donation of Rs.25000 to a Lakh for a Primary School

Recently, I watched video of CNN, IBN in which reporter opens bad ethics of schools of Bangalore where a poor parents can not admit their students because schools in Bangalore charges donation between Rs. 25000 to Rs. 1 Lakh just for admission in primary class. You can watch video at here. This shows the problems of education  in India which I had written already in this site.

Some of viewers of this video commented, from them, you can take the idea what is the position of schools in Bangalore.

Its not new that children are denied admission looking at their parents income profile. Some international schools charge whopping lakhs of rupees for primary school education.

Right to Education is a welcomed Act. But rich and big schools wanted to teach only the rich, only children of rich are more violent and bound to bad activities so they can't isolated this to only poor groups. Rich will drink take car and kill people in the roads.Theses schools only provide education to these type of people .

I think, schools of Bangalore should leave this greedy attitude and serving needy and poor community of Bangalore by admitting their children without any  fees.

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Cost Sheet Presentation (PPT)

This is cost sheet presentation which is taken from slideshare. In this presentation, you can learn the steps of preparing cost sheet and also analyze cost sheet items. It has 11 slides. In these slides has also taken example for understanding us.

How To Prepare Cost Sheets And Analyse Costs

View more presentations from TKJAIN AFTERSCHOOOL SOCIAL ENTREPRENEURSHIP .

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Statement of Cost

Statement of Cost is a memorandum statement which is not made according to the double entry system. It is a statement which is made for calculating total cost, per unit cost and budget cost of product.  All elements of cost in statement of cost are taken from financial accounting's historical records. If there is difference between the items of statement of cost and financial accounting data, we reconciliation of this after sometime. This statement also know as cost sheet which is very necessary for calculating the price of product.

Specimen of Cost Sheet or Statement of Cost

Direct material XXXX

Add Direct labour  XXXX

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

Prime cost  XXXX

Add Work overheads XXXX
---------------------------------------------

Works cost XXXX

Add administrative overheads  XXXX
-----------------------------------------------

Cost of production XXXX

Add Selling and distribution overheads XXXX

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

Total cost or cost of sale

_____________________________________
--------------------------------------------------

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Expenses Excluded from Cost

All capital expenditure will not include in cost accounting when we calculate total cost of product. Following are the main examples of expenses which will be excluded from cost.

1. Income tax and advance tax
2. Dividend paid
3. Discount on issue of shares and debentures
4. Underwriting commission payment
5. Capital losses
6. Expenses for purchasing of fixed assets
7. Loss on the sale of fixed asset
8. Interest on capital
9. Abnormal loss of material
10. Over depreciation
11. Investment of profit

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Elements of Cost

This time, I am in my city's local park with two of my cost accounting books to write some cost accounting contents. I wrote very less on cost accounting within last two years in this site. So, I am thinking to cover all important topics of cost accounting in next august. So, if you are learning cost accounting, you can also enjoy to read cost accounting from this site in the month of august 2010.

One of main aim to choose park for writing these contents, because in the cool air of park, I feel happy to create any new creation. Writing of contents is also creation. So, I also suggest to you to study in park.

Ok, now, I come on the above topic, element of cost. It is basics in cost accounting. If you know elements of cost, you can try to collect them for finding the cost of product. Element of cost provides the complete structure in which we can identify our total cost. For example, you go to market and buy one packet of tiger biscuit by paying Rs. 5. But this price's major part is the cost of packet. Manufacturer made this packet of biscuit by purchasing its raw material, producing by the help of machines and labours and delivered you by any transport means. All these things have some cost and these cost will be element of cost in simple words.

We can divide total cost in following main elements of costs:

1. Direct Cost

It is that element of cost in which we can include the cost of direct material and direct labour. If we take its total, it will be prime cost.

a) Direct Material Cost

Direct material is that material which we find in finished product and easily measures its cost. For example, for making furniture, woods are direct material and its cost will be the part of direct cost.

b) Direct Labour Cost

Direct labour is used for producing the product. We pay wages for making product to labourers and this cost will be the direct labour cost.

c) Direct expenses cost

Except direct material and direct labour, all direct expenses will be direct expenses cost.


2. Indirect Cost

c) Overheads

When we can not charge an expense directly on the product, we can say it is indirect expense or overhead. In overhead, we can include indirect material cost, indirect labour cost and other following indirect expenses.

i) manufacturing overheads
ii) administrative overheads
iii) selling overheads
iv) research and development cost

Factory rent and rates, insurance of plants or telephone bill are the main examples of overheads.

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Scope of Cost Accounting

The scope of cost accounting is very wide. There are lots of techniques, tools, procedures, processes, programs are used in cost accounting for calculating cost and its control. But basically, we divide its scope within three major parts.

1. Cost Ascertainment

In this region of cost accounting, cost accounting collects product's material, labor and overhead cost and try to calculate total and per unit cost of product. This total cost calculation will be based on historical or standard or estimated basis. After this, cost accountant will use any method of costing like specific order costing, operation costing, and direct costing technique. These techniques and methods may be used for calculating different nature products in same organization.

2. Cost Records

In this part of cost accounting, cost accountant maintains cost books, vouchers, ledgers, reports and other cost related documents for future comparison and reference. It will also be under the scope of cost accounting.

3. Cost Control

This is the end boundary of cost accounting scope. In this division, cost accountant used different techniques and methods for controlling the cost. Save One Rupees in the cost of product means we have earned one rupees in the production of goods. So, Cost accountant uses budgetary control, standard costing, break even point analysis and many other techniques for controlling the cost.

Related : Importance of Cost Accounting

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Inside Wikipedia

Did you know who are operating great website whose name is Wikipedia for providing free knowledge on the earth which has fourth rank in google search engine. It is my favorite educational website, which I often read for knowing what is latest facts in accounting and finance. Even this website is written by large number of volunteers and contributors but it is controlled by about 55 staff. These staff do hard work day and night for providing you fresh, correct and without spam information. For this, they are eligible for appreciation and thanks.

Recently, I watched the video of Inside Wikimedia in YouTube and I came to know some new things about this non-profit organisation.




1st New Thing #

23 members of staff are working the project for create co-ordination with volunteers and contributers.

2nd New Thing #

We can read wikipedia's educational contents in 64 languages.

3rd New Thing #

Wikipedia is not using any type of advertising. No yahoo or google ads, you can see on wikipedia pages.

Are you interested to know how does wikipedia works. Watch following video " Wikipedia in Plain English"

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Watch Svtuition Channel's Accounting Videos on Youtube Leanback

Youtube recently has discovered Youtube leanback in beta form. Just as its name implies, YouTube Leanback is all about letting you sit back, relax and be entertained. Videos tailored to your interests play as soon as you visit the site and they play in full screen and high definition, continuously. There’s no need to click, search, or browse, unless you want to, of course. Watching YouTube becomes as easy as watching TV.

If you have subscribed svtuition channel, you can watch our daily published video by going to www.youtube.com/leanback and selecting or searching svtuition. After this, you can enjoy svtuition channel's accounting video.

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How to Rectify Errors

Rectification of errors in accounting is not so easy because first of all we have to find mistakes. Sometime errors may be very small and hidden from our eyes. So, it is very necessary to use a very step by step procedure for rectification of errors.

1st Step : Divide the Rectification of errors into sub parts

For easily rectification of errors, we divide rectification of errors into sub parts.

a) Errors affecting one account

All mistakes like errors of commission, errors of posting and errors of balancing affect the one account and after watching ledger of account through internal auditing system, you can find the errors and correct it without any delay.

b) Errors affecting two or more accounts

After deep review of ledger accounts and journal and subsidiary books, we can find errors which affect two accounts. Even by making trial balance, we can not find these errors. Errors of principles and errors of omission are its main example. By rectify journal entry, we can correct these errors.

2nd Step : To Fix the Stages of Rectification of Errors

a) Before making trial balance

This is the first stage in which before making trial balance, we correct all our accounting mistakes.

b) After making trial balance and before making final accounts

Before making final accounts, if you want to correct your accounting error, you have to pass such rectify entry so, that effect of mistake will be zero on final accounts.

For example

You have written less Rs. 500 in the total of sale book. This error can affect trial balance. After finding this error, we can understand that this error is affecting only sale account, so in the credit side of sale account, we have to write Rs. 500 amount by writing “By rectification of undercasting”

You must remember,

i) What should be correct entry?

ii) What is wrong entry done?

iii) To find in which account, there is mistake?

iv) What should be rectify entry

Suppose, we purchase machinery of Rs. 5000 and entered into purchase account. Now we follow above steps

i) Machinery Account Dr. 5000
To cash Account 5000

ii) Purchase account Dr. 5000
To cash account 5000

iii) Mistake in only purchase account

iv) Machinery Account Dr. 5000
To Purchase Account 5000

c) After making final accounts

If before making final accounts, auditor did not find the errors of accounting, we have to open a new account and its name is suspense account. This account shows the amount of error which did not find and this account is opened for matching our trial balance and balance sheet. Now next year, if we find where is mistake and we close our suspense account by rectification entry. For example, in the next accounting year, we find that debit side of previous trial balance’s debit side was less of Rs. 200 and same amount was transferred to suspense account. But this year, we find its reason. Reason is that we did not we did not debit the amount of sale in the debit of Ram’s account. Now this is one sided error because we had written correct amount in sale account. So we rectify this error by passing following rectification entry.

Ram Account Dr. 200

To Suspense account 200

If there are many errors, we have to open suspense account and we can close suspense account after rectification all errors. If there are still some errors which did not find, we will show closing balance of suspense account in this years trial balance.

Step 3. : Follow  Rectification of Errors  Rules

Related : All Financial Accounting Tutorials

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Different Types of Errors in Accounting

We can divide accounting errors with following ways:

1. Errors of Principle

In accounting, if accountant records any transaction against the rules of double entry system, then this mistake is called error of principle. For example, accountant takes all capital expenditures as revenue expenditures and passes the entry of machinery purchased in purchase account.

2. Clerical Errors

We can separate clerical mistakes with following ways:

a) Errors of Omission

If accountant forgets to pass the journal entry of any transaction or if he records only one part of transaction, then these mistakes are called errors of omission. Accountant can also forget to post any journal entry in ledger accounts.

b) Errors of Commission

If accountant passes the wrong entry or posts wrong side of ledger accounts or writes wrong amount or calculates wrong total of any account, then these types of mistakes are called errors of commission. Some of errors of commission can easy find out by making trial balance but some errors of commission can not find out through trial balance.

c) Compensating Errors

Sometime we compensate one error with any other errors. For example we write Rs. 500 less in the credit side of sales account but same time we write less Rs. 500 in the debit side of purchase account. This is the error which can not be revealed through trial balance.

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Provision for Discount on Debtors

Meaning of Provision for Discount on Debtors Account

Lecture Session

In accounting, provision for discount on debtors shows the reserve amount for adjusting loss due to discount allowed to our debtors. Every businessman wants to get money faster from their customer. So, businessman accepts less money than actual from those customers who will pay before maturity of debt. So, at the end of year, we make provision for next year losses due to discount allowed. So, these provision will be called provision for discount on debtors. These provision is made on the basis of past experience with customers. We will not use this money which has been kept out of profit and will use for purchasing new material in case our loss of discount allowed will happen. This provision may be 1 % to 10%  of net debtors.

We will show provision for discount on debtors in profit and loss account and balance sheet. Many students are still confused which amount of provision for discount on debtor will be shown in profit and loss account and balance sheet. According to question, there may be different situation but best procedure is to make provision for discount on debtors account and new provision of this year will be deducted out of gross debtors in balance sheet and balancing figure of provision for discount on debtors account will be shown in the debit side of profit and loss account.

I can explain you with a very simple example

suppose your trial balance showing Rs. 5 as provision for discount on debtors account in the credit side. Your trial balance also showing bad debts of Rs. 15 and discount allowed of Rs. 10 and debtors Rs. 100. Outside of trial balance there are following adjustments.

a) provision for bad debts 10%
b) bad debts Rs. 10
c) provision for discount on debtors.

Make provision for discount on debtor account and show these adjustments in final accounts.

provision for discount on debtors account

Credit side

1. provision for discount on debtor account Rs. 5
2. Difference of Debit side and credit side will go to profit and loss account  Rs. 9

Debit side

1. discount allowed Rs. 10

2. New provision for discount on debtors  Rs. 4

working note
debtors 100
less new bad debts 10
----------------------------
balance 90
less new provision for bad debts 10% on 90 = 9

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

balance 81
------------------------------------------------------

new provision of 5% on 81 = 4

Adjustment in Profit and loss account

In profit and loss account's debit side, we will show only provision for discount account with Rs. 9
( Note, we will not show discount allowed )

Adjustment in balance sheet

In balance sheet's asset side, we show only net debtors amount

Balance debtors Rs. 81

minus new provision for discount on debtors Rs. 4

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

Net debtors  = Rs. 77

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

Related : Provision for Doubtful Debts Account

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Time Table of a Student

To become a good student and develop real personality is not easy. For becoming good student, you have to become strict on your time table. You also have to live your life under full discipline.  You have to become Strong physically and mentally for not only for examination but for achieving your vision of life also . So, please follow the time table.

1. Get up in the morning 4:00 A.M.

2. Fresh 4:00 A.M. to 4:30 A.M.

3. Exercise and Yoga 4:30 A.M. to 5:30 A.M.

4. Bathing 5:30 A.M. to 6:00 A.M.

5. Pray of God and Study of Spiritual and other Good books  6:00 A.M. to 6:30 A.M.

6. Study Your Educational  books  6:30 A.M. to 7:30 A.M.

7. Breakfast 7:30 A.M. to 8:00 A.M.

8. Reading and watching  of  news, blog and websites 8:00 A.M. to 8:30 A.M.

9. Attend School or College for study from teachers  8:30 A.M. to 2:00 A.M.

10. Lunch  2:30 A.M. to 3:00 A.M.

12. School or College's Home Work 3:00 A.M. to 6:00 P.M.

13. Evening Walking, cycling, exercises and bathing 6:00 P.M. to 7:00 P.M.

16. Self Study  7:00 P.M. to 8:00 P.M.

17. Feed Back of Today work 8:00 P.M. to 9:00 P.M.

18. Determination for Future 9:00 P.M. to 9:30 P.M.

19. Pray of God 9:30 P.M. to 10:00 P.M.

20. Sleeping 10:00 P.M. to 4:00 A.M.

Do Some other Practical Works on holiday or Sunday

1. Be Good

2. Practical social work by teaching free to poor and needy students.

3. Water to plants and free plantation services

4. Free services for cows, birds and other animals

5. Free services to parents

6. Free services to patients by blood donation, eye donation.

7. Read the stories of  great personalities.

8. Seminars and conference with other students.

9. Writing of blog on your favorite subject.

10. Discussion with your friends.

11. Learning India's all states language.

12. Washing your own clothes.

13. Cleaning your home and your near environment

Above is just guidance to you how to live your life as a student, but you can change time according to season, situation and emergency.

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RBI Increased the Repo Rate and Reverse Repo Rate

Finally, RBI has increased the repo rate and reverse repo rate by announcing in the First Quarter Review of Monetary Policy 2010-11, it has been decided to increase the repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points from 5.50 per cent to 5.75 per cent and the reverse repo rate by 50 basis points from 4.00 per cent to 4.50 percent with effect from Second LAF of July 27, 2010.

It is noted that the bank Governor D. Subbarao has hiked  only the repurchase rate by a quarter percent raising it to 5.75 percent and the reverse repurchase rate by half a percent, taking it to 4.50 percent. Other policy rates have been kept untouched by the Bank.

The increase in this rate increases the cost of borrowing for banks, discouraging them to hunt for more funds. Reverse repo rate, referred to as the short term borrowing rate, is the rate at which the central bank borrows money from commercial banks. This rate makes it more lucrative for banks to park funds with the central bank.

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RBI will Hike Policy Rates Soon

India's central bank RBI is interested to reduce inflation and to increase GDP from 8.2% to 8.4% in 2010-2011. For this, it will increase all policy rates. Repo and reverse repo will be increased by 0.25%. In June 2010, it was 10.55%.

RBI said in media said ,"The major policy concern would be to contain inflationary pressures and anchor inflationary expectations.It would continue exiting from its easy money regime to check double-digit inflation, while ensuring stable economic growth."

Update : RBI has hiked Repo and Reverse repo rate  only two second ago.

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Education Loan Problems India

According to my view, there is no need to get education loan for education because education should be free for all and no fees should be taken from any student specially who are poor. But it is very sad reality that day by day fees of colleges and universities are being increased for paying petrol and other luxuries of teachers and lecturers because teachers and lecturers feel sham to come to college in cycle and use cars which consumes petrol of Rs. 60 after operating 20 kms. So, all teachers and lecturers wants to collect this money from poor and needy student who loves education and want to do higher study.

I remembered in 1998 to 2001, I completed B.Com. in just Rs. 6000 and same B.Com. has become of Rs. Rs. 50,000 (including tuition charges) and in my time any body can do MBA within Rs. 8000 and same MBA will be done more than Rs. 1,50,000. So, teachers and universities lecturers  become cheater in 2010 year who are getting money from opening new and new diploma, degree and students are captured in their schemes and took loan for paying its fees and after not getting job, they face the problem to pay the loan and its interest. Financial institutions abuse students and their family who do not return their money on the time.

Ok, it is my own thinking in which I want to tell that fees are not under the status of needy but intelligent students of India. But, if a student decides to take loan for paying fees of his higher degree, then, banks normally asks security. But, student has no property because he or she is poor and his or her family are living in the single room whose rent has not been paid by his or her father for 2 months.

There are millions of children who are setting on near bus stand but no bank asks them for loan. Because according to my definition banks are commission agent, they only want to give loan if they will hope of interest on that loan.

Moreover, students of villages leave their hopes when they see large number of formalities in banks when they try to find excuses.

Indian banks should change their thinking and they should provide loan to students without security and guarantee. They should realize that they are doing service and they can rise their business when they encourage needy studies by providing loan without any formality. They can check students past educational record if student is in merit, banks should provide loan to him or her without any security.

Related : List of Student Loan Providers

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Indian Rupee Symbol Presentation

Recently, Indian Govt. has chosen Indian Rupee Symbol of D. Uday Kumar. Do you know, why was his symbol chosen? I have checked his presentation in slides shares and found this presentation which will tell you how is it best for showing Indian Rupee Symbol.

The Indian Government has proposed to the Unicode Consortium that the Unicode character code U+0971 be assigned for the new Rupee symbol.

Indian rupee symbol

View more presentations from roopsahoo.

Related : Indian Currency Symbol Result

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Accounting Resource Center - Fast than Search

in Accounting Education

We have recently added new button whose name is Accounting Resources.

With this button, you can find all accounting help, online conference, accounting tips and our demo and guides which we have made for you. In simple words, we have started to classify our all written content and made most suitable for you.

We know your time is very worthy. We are fully dedicated that how can save your one second for just wasting in search, search and search. Above accounting resources button will reach at what you want or learn from this website. Our target is to satisfy to you with our mission to provide perfect accounting education.

Moreover, we are trying also adding all contents of different fields of accounting. In first stage, we have added all contents of Financial Accounting which you can check out after going to Accounting resources link >> then Accounting Help Center >> Financial Accounting.

In future, you can check also cost accounting, corporate accounting, management accounting, financial management and important contents of B.Com., M.Com., C.A. and MBA. So, I only say to you, Keep in touch with Accounting Education !!

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Adjustments Financial Statements

Following is the bird's eye view adjustments in financial statements. In this table, you can learn adjustment entry, effect on trading and profit and loss account and effect on balance sheet of each adjustment.

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How to Teach Teachers to Teach

Teaching to New Teachers with Indian Gurukul  System 

To teach teacher about how to teach is most difficult work because teacher thinks that why will any body teach us? and because he is already a teacher.

I am writing following some thinking which are  my own thoughts, If you like please comment.

1. # Learning is process not end

Before teaching to teachers, it is very necessary for you to make them understand that learning is process not end. I know you are expert but you also feel happy, if you know something new in the area which I have found new after my research in the field of teaching. I want just sharing about result of my research, if you will follow me during your teaching, you can gain good result by this learning

2. # What is new

Before teaching to teacher, it is most needed that you should be well prepared with all latest and up to date facts of the field of education. It may be related to idea which will be supported by facts. It may be useful in the environment where teachers teach to students. First of all, you write after collecting data from your research information and then keep it in the order, so that your lecture will be perfect for teachers.

3. # Touch the minds of Teachers with Local language

Teachers will feel comfort, if you teach to teachers in their local language. If you do not know the language, try to speak in Hindi the national language of India, if some of teachers do not know English.

4. # Make teaching the best Enjoy of Life

It is my personal experience that 90% teachers fail to teach as teaching is best enjoy of life. I always teach because it is my best enjoy of life. Teachers are already in the research how to teach with enjoy and fun. If you have a great idea and research in it, please summarize it in limited time and open the doors of your knowledge.

5. # Demo or Presentation Way is best to Teach Teachers

Teachers love power point presentation. They can understand it step by step. Suppose, you are economics teacher and you are giving lecture in Indian Conference of Economics Teachers. You have to teach teachers how they can teach to students “how to develop India?”

a) First Step: Tell real history of India as it was sparrow of Gold as the introduction of lecture.

b) Second Step: Why could India not developed in 63 years?

c) Third Step: How can we change the system?

d) Fourth Step: What is teachers’ contribution for development of India?

e) Fifth Step: What is students’ contribution for development of India?

6. # How to Teach Online

After Internet revolution, you can teach teachers about how to teach online. Suppose, if you have one Internet, one computer and one web cam. Can you teach students of 200 all around the world. Do you know that it is possible. Not just 200 students, a single teacher can teach 20,000 students within same time with the help of Internet. Actually, whole system is that first of all  teacher has to connect the technology  in which higher conference can be presented. After this, teacher will make 100-100 students classroom in every city and appoint one classroom assistant.  Now, when a teacher will teach, it will be live presented like cricket match.

7. # Control Yourself

For good teaching, teacher must control himself. In following video, I saw, I teacher is teaching in classroom and suddenly, he saw a student is talking on the mobile. He went to her and picked mobile from her hands and broke it by falling it on the earth. This is the bad behavior of teacher. Dear teacher, your every action is like teaching. You have to control yourself before teaching. All students learned that you have no control on yourself. Even from YouTube this cool teacher, I learned bad things. One more thing teacher should learn that one thousand eyes are seeing always to you. So, teacher should try to control on tongue, on his temper and on his language and  on his action.



Related : How to Teach Mentally Retarded Children

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Adjustments in Final Accounts - Part 3

Objective of Content

In adjustments in Final Accounts, will treat provision for discount on creditors. After reading this content, you will understand, what is provision for discount on creditors, what its importance is, how to make provision for discount on creditors account and how to adjust it in final accounts?

Meaning of Provision for discount on creditors

If you are buyers of goods and you have bought goods on credit, it means you have to pay the amount of goods to your creditors. If you pay fastly, you may be right to get discount on your fast payment. It is called discount receivable. If the years are different, one year is belong to goods when we purchased and other year belongs to when we receive the discount. Now question is that in which year we show our discount income. Large number of accounting expert has given thought that we have to show discount income in that year when we buy the goods on credit. So, if some discount is receivable in the closing of year, we have to create its provision and this provision is called provision for discount on creditors.

Importance of Provision for discount on creditors

a) With this, we can show net receivable amount of discount in profit and loss account and our profit and loss account will show correct net profit or loss.

b) We can also analyze our net reserve by adjusting each receivable and payable provision.

Steps to make provision for discount on creditors account

Effect of provision for discount on creditors account in final accounts

A) In profit and loss account

Balancing figure of provision for discount on creditor account will be shown in profit and loss account.


B) In balance sheet

In balance sheet we will deduct new provision for discount on creditors from sundry creditors in current liabilities.

Related : Adjustments in Final Accounts - Part 2

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Balance Sheet

Definition of Balance Sheet

Balance sheet is that part of final accounts in which we show the assets and liabilities of company on specific date for knowing the financial position of company. So, this financial statement is also called financial position statement. This report provides knowledge about what are our main current assets, current liabilities, fixed assets and capital. From which source we have taken loan and how have we utilized this loan. Either money may be cash form or purchased current asset or purchased any fixed asset.

Any investor who wants to invest his money in company, he will see the financial position from the balance sheet. Company law has regulation that a company must make balance sheet at the end of accounting period and it must be audited by CA. Balance sheet is also base of making fund flow and cash flow statement which are fundamental tool of management analysis.

Accountant has to make balance sheet after adjusting every transaction which has not been recorded at the end of year. Profit and loss account and profit and loss appropriation account is also necessary for making balance sheet.

We can formulate balance sheet under marshalling rule. In this rule we show balance sheet either in the order of liquidity or in the order of permanency.

Explanation of Balance Sheet

Asset Side of Balance Sheet

1. Fixed Assets

In fixed assets, we show land, building, live stock, furniture, machinery, furniture and equipments etc.

2. Investments

In investment, we write investment in shares, debentures, bonds and currencies etc.

3. Current Assets

In current asset, we show closing stock, debtors, cash, bank, short term investments and outstanding incomes and advance expenses

4. Factitious Assets

In factitious asset we show deferred expenditures and all large amount of expenses which is not written off this year.

Related : How to Prepare Balance Sheet of Company

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Marshalling of Balance Sheet

Marshalling of balance sheet is to show assets and liabilities in specific order or arrangement. We can either show assets and liabilities in liquidity order or permanence order.

1. Liquidity Order

Under this system, we show all those assets first in balance sheet that will be liquidated within very short time. After this, we show fixed assets which are used for business not for sale. In the liability side we show current liabilities first which will be due within very short time and then we show fixed liabilities like long term loan, reserves and capital.

2. Permanence Order

This is the second system in which we show the assets and liabilities on basis of permanence. We show fixed assets and fixed liability before showing current assets and current liabilities in this system.

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Trial Balance Vs Balance Sheet

1. Object

a) Trial balance is prepared for knowing mathematical accuracy of accounts and the total amount of account balances with debit balances is equal to the total of amount of account balances with credit balances.

b) Objective of preparing balance sheet is to know the financial position of business.

2. Accounts

a) In trial balance, all accounts balances are included.

b) In balance sheet, only real and personal accounts balances are included.

3. Heading

a) Trial balance has two sides, one is debit side and other is credit side.

b) Balance sheet has also two sides but we show assets in one side and liabilities in other side.

4. Stock

a) In many cases, we only include opening stock in trial balance.

b) We only include closing stock in balance sheet.

5. Stages of Preparation

a) Trial balance is prepared before making trading and profit and loss account

b) Balance sheet is prepared after making trading and profit and loss account

6. Adjustment Entry

a) Trial balance is prepared before adjustment entries.

b) Balance sheet is prepared after adjustment entries.

7. Time of Preparation

a) Trial balance is made in the end of every month.

b) Balance sheet is prepared at the end of a year and checked by CA.

8. Proof

a) It can not be used as evidence in court.

b) It can be used as the proof in court.

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Steps to Write New Indian Currency Symbol for Indian Rupee

Like the US Dollar ($) and the Japanese Yen (¥), the Indian Rupee  has become a unique sign that has been  recognized worldwide after declaring the result of Indian Currency Symbols. It can be shown as

Now we learn, how to write this new Indian currency symbol for Indian Rupee in ms word :

1st Step :  Download Rupee Font Version 2

For downloading new rupee font version 2, click here. If Internet explorer blocks this download, please, right click on light Yalow color menu and click download. Save Rupee Foradian.ttf in your desktop.

2nd Step : Install Rupee Font in Your Font Folder

For installing, just copy the downloaded Rupee font version 2 and then open control panel and then open font folder. In font folder, paste Rupee font version 2.

Paste  Rupee Font in Fonts Folder

3rd Step : Write New Currency Symbol of Indian Rupee  in Ms Word

First of all open ms word and then select rupee font. For writing new new currency symbol of Indian Rupee, you have to press the key just above the tab key from your keyboard. After this you will see new currency symbol of Indian rupee in your ms word page.

Press Key just Above Tab Key

Choose Rupee Font from the List of Fonts in Ms Word

 Five thousand Rupees

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Unsecured Loan Vs Secured Loan

As a personal loan consultant, you will be associated with loan and interested to know latest difference between unsecured loan and secured loan. Both unsecured loan and secured loan is part of credit which is given by a financial company. To learn more about its difference, please concentrate on following basis of differences.

1. Definition

Unsecured loan is that loan which is given without any security. Suppose, you need $10,000, you show you income and employment verification and other reference of your financial position and bank allows to you $ 10,000. This will be unsecured loan.

Secured loan is that loan which is given on the basis of security of your any asset. Either you can give the registry of your building or you can give any other fixed asset. If you will not pay, bank or financial company has right to sell and recover their bad debt.

2. Amount of Loan

Often low amount of loan can be obtained through unsecured loan, but if you want to start a company and you need very high amount of secured loan for its construction work, you have to give the security of it.

3. Productive and Unproductive

Unsecured loan is very low amount which is needed in short time and bank accepts your proposal after seeing your past credit history and ranking.

Secured loan is totally productive and there is high risk of loss of money, so bank will not accept your proposal without getting any security.

4. Interest Rate

You have to pay high interest on your unsecured loan because high risk of bad debt.

You have to pay less interest on secured loan than interest on unsecured loan because low risk of bad debt.

5. Legal Claim

A person who provides unsecured loan will become unsecured creditor, he can sue to court for getting his money but his can not take the possession of any property for getting his loan.

A person who provides secured loan will become secured creditor, he can also sue to court for getting his loan and also sells the property which is under his possession for receiving his debt.

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Introduction to Final A/cs

By making trial balance, accountant is in the position that he can check the correctness of books of accounts. After this, he can make final accounts more easily.

In simple words, final accounts are those accounts which are made at the end of accounting period and prepared for knowing the profit or loss of business and financial position. These accounts are helpful to achieve the objectives of business by telling correct profit or loss. After this, businessman can take many decisions to improve the present position.

Final accounts are also known as financial statements. Last year final accounts are also helpful to make comparative financial statements.

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Preparation of Trial Balance from the List of Accounts Balances

Sometime, we do not prepare trial balance with facilitate of ledger accounts but with the help of balances of accounts. At that time, we have to classify the balances of accounts in debit or credit side. After this, we write it in the trial balance. After this, we compute its total.

For preparing trial balance with the help of balances of accounts, we should remember following things.

1. Assets, expenses and losses always debit balance.

2. Liabilities, incomes and profits always have credit balance.

3. Reserves and provisions also have credit balance.

4. There is credit balance of capital and debit balance of drawing.

5. We do not include closing stock in trial balance.

6. If the total of credit side of trial balance is less, then it will be capital.

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Errors Which a Trial Balance Fails to Disclose

There are many benefits of trial balance but there are also numerous errors which can not be disclosed or revealed from making trial balance. We are explaining all these errors one by one.
1. Errors of omission

If we forget to pass the journal entry of any transaction, both side of trial balance will not be affect with this. So, trial balance will be unsuccessful to disclose these errors. For example, we purchase the goods of Rs. 10,000 but forgot to enter it in journal.

2. Errors of commission

These types of errors are happened due to negligence of accountant and can not be found by making trial balance. Suppose, we sold of Rs. 10,000 goods but recorded in books as Rs. 100. Both account balances in trail balance will not be affected from this.

3. Errors of compensating

Suppose, accountant wrote Rs. 500 less in the debit side of purchase account and same time he also wrote Rs. 500 less in credit side of sale account. Because one mistake is compensated with other error. So, trial balance will not tell such mistakes.

4. Errors of principles

Errors of principles do not affect the trial balance because one side balance will agree with other side balance. Suppose if you have purchased machinery but you debited purchase account in journal entry. It is the mistake of principle but it can not be disclosed by making trial balance.

5. Errors of duplicating

If you pass the journal entry twice, it will not have an effect on the trial balance. So, it will also not be revealed by making trial balance.

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Objectives of Trial Balance

1. To Check the mathematical accuracy

With the help of trial balance, we can simply track if any mathematical fault is done by accountant or its assistant because at that time, trial balance will not match. We will understand that either one account is shown with fewer amounts or write incorrect amount in any side of any account. After finding that account, we can correct it. So, trial balance has become most important financial report which secures our accounts from all mathematical errors.

2. To Make Final Account of Company

It is also objective of trial balance because after making trial balance, we can know which items we have already recorded and which we have to record. If we do not make trial balance and just start profit and loss account, it may possible that we forget to record some adjustment. List of balance in trial balance is also helpful to do proper change specially adjustment of provisions.

3. Comparative study of each account

Trial balance is good source of telling the position of each account and compares it with past balance of same account. By making trial balance, we can decide whether closing balance of accounts will increase or decrease within two accounting period. It can also be used as the tool to decide whether there is need to decrease rate of depreciation for showing improved profit position or not.

4. To make financial budget

Previous year trial balance figures are also helpful to estimate the future amount. In other words, we can make financial budget with the help of trial balance and compare with its worth.

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Review of Top Business News

1. Wynn Telecom to set up mobile handset unit in HP

SAR Group will be infusing Rs 500 crore in its recently launched mobile handset manufacturing business over the next two years. Of this, Rs 270 crore will be spent on setting up a mobile handset manufacturing unit at Baddi, which will be commissioned by next year.

2. Parkway shareholders favour Khazanah’s bid

Malaysia's Integrated Healthcare Holdings Ltd today said 70 per cent eligible shareholders of Singapore-based hospital group Parkway have voted in favour of its takeover offer, dealing a blow to the acquisition bid of India's Fortis Healthcare.

3. Reckitt to buy SSL Intl for £2.5 bn

Global household and personal care products major Reckitt Benckiser will buy the England-based SSL International, the makers of Durex condoms, in an all-cash deal worth £2.54 billion.

4. Toyota rolls out diesel variant of Altis

Looking to tap the vast diesel engine market in the country, the world's largest carmaker, Toyota, today launched the diesel version of its premium sedan Corolla Altis priced between Rs 10.95 lakh and Rs 13.75 lakh.

5. India keen to buy BP’s assets in Vietnam

With BP Plc looking at selling interest in some fields to fund its the Gulf of Mexico oil spill liability, India is pitching for buying the British energy giant's stake in the $1.3 billion Nam Con Son gas project in Vietnam.

6. Pension scheme for poor soon, says PFRDA

The interim pension regulator PFRDA today said it would soon launch a new scheme, NPS Light, for the economically deprived sections of the society which will entail an annual contribution of just Rs 1,000. Link

It also aims at harnessing the outreach and capacity of the Government operated schemes, NGOs, MFIs, NBFCs among others in targeting and servicing the old age savings needs of low income workers link

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Commodity Trading Tips

Alright, for knowing commodity trading tips, you must be ready to know many things. In commodity market, you may be interested to deal in bullion, energy products, fibers, metals, oil, pulse and many other products. Following are the tips which will be helpful to bring high return on your commodity investment.

1st Tip # Look the trend of Prices of Commodities

As the investor of commodity, it is your prime duty to look the trend of prices of commodities. To write it in your notebook and analyze whether prices of particular commodity is increasing or decreasing. After this, you must take the decision to buy or not to buy.

2nd Tip # Tips for perishable commodities

Vegetables like potato and others can be included in perishable commodities. To trade in these commodities, you should not only see the price trend but all see the active life of perishable commodities. When you do not keep these commodities in cold store, it may be dead after 5 to 10 days, so before happening this, you should sell it at what price consumer wants to pay to you. If you are interested to trade in these products, you must get training by going to vegetable market.

3rd Tip #  Take Decision Sell or Keep commodity with more patience

In commodity market, you can see more fluctuation, so you must take decision to sell or keep commodity with more patience. To harry and take decision fastly in this, you may suffer loss. Suppose, today prices of turmeric has been decreased and you have 50 tonnes turmeric and for saving further loss, you are also selling at very low price. Think again, is it short term fluctuation. Look the season time also and take decision more patience.

4th Tip # Become Real Trader

I always says people, why are you wasting your money by investing it in share market. It is just gambling market, you have to take 100% risk of loss of your hard earned money. Invest it in commodity market and become real trader. By doing this, you will feel satisfy that you are maintaining its accounts, you are also buyer of your commodity, you are seller of your commodity. If it will not sell, you can use it for your family at very less prices. In share market, you have to take risk because your money is used by board of directors. If they cheat with company, your share value will decrease and it may be zero like satyam co.

5th Tip # Bright Future in Investment in Indian Cows, Sheeps and Goats

I think if you want to get highest return on your investment, you can buy Indian cows, sheeps and goats. In future, I will also buy some cows, sheeps and goats.

Benefits

a) Why am I saying this. Today, we are all crying prices of cooking gas has been increased by Indian Govt. Prices of petrol has been also risen in the month of july 2010. But you know that dung of Indian cows, sheeps and goats are main product for making bio gass through  bio-gas plant. With this, you can get your cooking gas cylinder just of Rs. 50 instead of paying Rs. 450. You will operate you car with biogas with just Rs. 5 per litre. You can also produce electricity from this bio gas.

b) Cows, sheeps and goat can be used for milk producing.

c) Sheeps are also producing wool which can be sold in market.

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GST will Apply in India in April 2011

India's FM

5 minutes ago, AIR correspondent reported that Finance Minister Pranab Mukherjee has made three-tier structure for the implementation of GST. All central and state taxes like excise, value added tax (VAT) and service tax will be rolled into GST once the new regime comes into effect.

 Now it is sure that goods and service tax (GST) will apply in India in next year with following way :

1st Rate  : 6%

During the first year of introduction of the new indirect tax regime, the central government will keep the tax on essential items at 6 %.

2nd Rate : 10%

The tax on other items will be at the standard rate of 10 percent.

3rd Rate : 8%

For services, the levy would be 8 percent.

The Economics Times also published the report of FM's offer and a brief quote is being published here.

After the finance minister agreed to compensate the states fully for any possible loss of revenue from shift to the new tax, brightening the prospects for its roll out from April 1, 2011.

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Coin Investment

Coin investment means to spend your money in rare and old coins. Approximating any other market, coin market provides the place to all to transaction in rare coins. Some of Indian financiers buy rare coin only for fun and enjoy as their hobby, but it is also good investment because it can give good return on the investment of coins. In India, you can buy mughal age coins and British age coins. Some of goldsmiths are also vendors of rare coins. It will be astonishing to you if you will sell any rare coins at highest value because some museums are interested to pay for oldest coins what you want.

You can take help of eBay. In eBay, you can uncover many vendors of coins. From them, you can buy at minimum bid. There are three qualities which increase the price of coin. One is its value of metal. Gold coins value will be more than silver coins. Second its rarity factor. Mughal age coin value will be more than British age coin. Third is its solidness. Before purchasing rare coins, you must do some research the prices of any rare coin in international market.

The three best known companies are ANACS, PCGS, and NGC. These are all solid and reliable companies. I have dealt with all three of these companies, and I will include specifics of each company from my personal experience below. Two other companies that I have not dealt with, but that are good companies are ICG and PCI. Avoid any other companies unless you have personal knowledge of their quality. There are a lot of grading companies that over-grade coins just for the price of putting it in a holder, and even highly damaged circulated coins may get a high uncirculated grade from these companies. link

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Effect of Family Behavior on Children's Study

Science daily Newspaper has published the content, " Children's School Performance Tied to Family 'Type'" on the basis of the study of University of Notre Dame Professor of Psychology Mark Cummings in which it told the effect of family behavior on children's study.

"Coming from a cohesive family, in which members tend to be warm and responsive to one another, where problems are resolved, and members cope well, increases the likelihood of children doing well in school," according to Cummings.

Children from enmeshed families, characterized by over involvement, hostility and only moderate warmth, enter school with no more problems than their cohesive family peers, but suffer more anxiety and feelings of alienation later, Cummings explains.

The third family type, "detached," in which all problems are avoided, in which hostility is present, and without displays of affection, tend to have children with the most problems. link

Related : How should Students Behave in Classroom

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What is Lease Deed?

Two minutes ago, one of my old student came to me to show some documents in which company accepted the proposal of lease and order to make lease deed under the conditions of company.

So, it is very interesting to know "what is lease dead"  for a commerce student. Lease deed is a simple agreement between owner of land and company who is interested to take land on rent. In this deed, many conditions like amount of rent, its increment rate and duration of lease etc. are mentioned and both parties accept these conditions by signing on this agreement.

Suppose, you have 30 square foot land which you want to give on lease to BSNL for tower purposes. Now BSNL approve your application and you will make lease deed under the condition of BSNL. BSNL can accept your proposal with the condition that company will be pay rent of Rs. 2800 for 20 years. Company will make tower on that land. Company will increase rent 10% after every 5 years. As owner, you will pay all taxes of land. You will cover that land by building four walls etc.

Before Writing Lease deed, you must think following points :

1st Point : Can you earn more profit from that land?

Future is uncertain, so think, can you earn more profit from that land? If yes, need not write and sign this lease deed.

2nd Point : Have you proof of ownership. You must be the registry of that land. Only possession is not sufficient for lease agreement.

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Future of Gold in India

In Indian culture gold is deemed as precious and holy metal which is worn by women. Future of Gold is very bright because its price increases always. Today, Gold’s 10 grams value is Rs. 18,000. 10 years ago its price was just Rs. 2000. As investor, you can estimate how much was the value of gold increased? As investor of Gold, you should rejoice after seeing this rising trend in Indian gold market.

In India, all goldsmiths have also been earning large profit from gold business for decade. They normally sell jewellery, coins and bars of gold. Many of them became billionaires because they can easily hide in the earth because it is the quality of God that it does not be depreciated by touching water and air like iron. One more quality of gold that Indian goldsmiths can easily cheat customer by adulteration of brass in God jewellery because value of brass is very low than god and they earn high profit by this cheating. Even the smallest labors like designer and polisher are also involved in this cheating. So, it is my humble request to invest in Gold bar is better and profitable than invest in gold jewellery. Gold jewellery has faded due to adulteration in it. Suppose, if you buy set of Gold by paying Rs. 80,000, you will get 60% value because of adulteration of brass in these jewelry. So, beware from these cheaters who are finishing the future of gold in India.

In addition, it is 100% possibility that prices of Gold in India will rise because Gold is not produced in Indian mines. It is imported from African mines. I want to tell for your knowledge that in Africa, there is very less gold in their gold mines and they are still using it. So, in future, there will be nothing gold in gold mines and you will get 10 grams gold after paying Rs. 1,80,000 instead of paying Rs. 18,000 in India. So, you can estimate its future.

In end, I want to say gold was always pure in past and will be pure in future and many govt. like china are interested to keep gold as their reserves instead of keeping dollars. So, every Indian should purchase some gold as long term investment instead of losing money in share market. It looks not only beautiful but it will be helpful to protect you in emergency because when you sell it you will get money more than its purchasing value. You can also get loan with in 5 minutes on the security of loan from your local financial market if you want to invest money in any other market. I remembered that my mother sold gold ring in the childhood for treating my dangerous disease due shortage of cash. So, Gold is real friend for every Indian.

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Derivatives (Finance) Simplified

As a finance manager, you want to know simple meaning of derivatives. I think, example is best tool to simplified this murky finance term.

Suppose you go to metals market ( suppose it is derivative market)  for buying iron for your building which will be built in beginning of next 3rd month. But in the way, you opened your tremendous mind and thought , " Why am I buying today? For keeping this, I have to use a store. But if I do not buy price of iron may be increased." So, you go to metals shop and contracted with trader that iron's delivery will be end of next 2nd month. You also gave some advance money to him for assuring that you will buy all the irons. So, this contract will be derivative in simple words.

In financial sector, you can buy shares, bonds, debentures and mutual funds through derivative technique. Suppose, if you take any financial instrument for buying shares in future dates. Your given advance money will lock the price and you will have right to get shares with this price in future. Vendor can not demand more money than what he fixed and taken in past. Derivative tool is most benefited if there is risk of flactuation in market.

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Features of Money

1. Money has very long two wings. We can not see these wings with our eyes but we can only realize that these wings helps to take away money from us. This money does not stop anywhere and like a bird it goes from our home. 
2.  If you have more money than enough, it is very risky for you. It will drown your ship of life. You see when water fills in ship it dunks. You also know that  someone can take it without your permission. Yesterday, I went to my local crematorium home where dead body is carried for holy fire. This home is maintained by an old man. He said to me, " Dear, last night,  someone stole my Rs. 5000 which I had kept in my room." You can understand that thief can reach everywhere and he can steal your money. 
3.  Money can be easily consumed by you. You may be thousands desires but you can consume money up to some limit. You can buy shoes one piece, two piece and 10 piece of different design. You can purchase 100 different designs cloths.But still consumption of money have some limit.
4. Money can be increased through donation. Some person can not understand my idea. How can donation increases your money? I think, if you take 5%  to 10 %  of your earned money and it is used for donation for poor and needy. God will see this and allow you to more money for doing such kind works. So, you will see, your sources of money will become more and more automatically.
5. Money hates his misuse. It is the part of Lakshmi Goddess and if you will misuse it, it will go from your home by saying, you are fool, I will give chance to you for becoming rich and you have failed for getting benefits  from this opportunity.

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