Recent Developments in Indian Capital Market

"What are recent developments in the Indian Capital Market?" is not only important question for finance students but there are large number of investors, researchers and companies may also be interested in this topic. Even, I am not personally interested in this market but as a teacher and being an Indian, I want to know its recent developments and its effect on our economy. So, I will cover new things which shows the latest development of Indian capital market.

1. New Measures of Risk Management System in Indian Capital Market

Every shareholder or investor wants to protect his investment and promote it as his source of earning. So, my always concentration is on new measures the Risk management system of SEBI which is the controller of Indian Capital Market. SEBI did several steps in this regards.

{ A } Measures for Reducing Price Volatility

Price volatility  is the relative rate at which the price of a security moves up and down.

But this technique of profit maximization which is used by bad guys for wrong purposes. They buys shares at very cheap rates and sell when overpriced. Because, they get idea of trend of next price of shares with invalid source instead of using mathematical formula which is given below

Using a simplification of the formulas above it is possible to estimate annualized volatility based solely on approximate observations. Suppose you notice that a market price index, which has a current value near 10,000, has moved about 100 points a day, on average, for many days. This would constitute a 1% daily movement, up or down.

Volatility is often viewed as a negative term in the market that represents uncertainty and risk. Higher volatility brings worry to the investors as they watch the value of their portfolios move wildly and decrease in value. To reduce price volatility and stability in the prices of stock market, A major reform undertaken by SEBI was the introduction of derivatives products: Index futures, Index options, stock options and stock futures.

{B} Place Circuit Breakers

This is another recent development in Indian Capital Market. We all know an excessive speculation is always risky for every investor. For reducing it, SEBI has introduced place circuit breakers.

A circuit breaker is the system which stops to trade in stock market when prices move after a specific level. For example, if a stock is at Rs. 100 and circuit breaker is fixed at 5%, then stock trading will stop if it hit of Rs. 95 or Rs. 105. There are mainly two types of circuit breakers. One is index wise circuit breakers and other is stock wise circuit breakers.

The index-based market-wide circuit breaker system applies at 3 stages of the index movement, either way viz. at 10%, 15% and 20%. These circuit breakers when triggered bring about a coordinated trading halt in all equity and equity derivative markets nationwide. The market-wide circuit breakers are triggered by movement of either the BSE Sensex or the NSE S&P CNX Nifty, whichever is breached earlier. In case of a 10% movement of either of these indices, there would be a one-hour market halt if the movement takes place before 1:00 p.m. In case the movement takes place at or after 1:00 p.m. but before 2:30 p.m. there would be trading halt for ½ hour. In case movement takes place at or after 2:30 p.m. there will be no trading halt at the 10% level and market shall continue trading. In case if the market hits 10% before 1 p.m. then as explained there would be a one hour halt in trading and after resumption of trade in case if the market hits 15% in either index, then there shall be a two-hour halt. If the 15% trigger is reached on or after 1:00p.m. but before 2:00 p.m., there shall be a one-hour halt. If the 15% trigger is reached on or after 2:00 p.m. the trading shall halt for the remaining part of the day. link

{C}  Intraday Trading Limit

Intraday Trading, also known as Day Trading, is the system where you take a position on a stock and release that position before the end of that day's trading session. Thereby making a profit for yourself in that buy-sell or sell-buy exercise. All in one day.

{D} Mark to Market Margin

MTM margin is imposed to cover loss that a member may incur, in case the transaction is closed out at a closing price different from a price at which the transaction has been entered.

It is just collection in cash for all futures contracts and adjusted against the available Liquid Networth for option positions. In the case of futures Contracts MTM may be considered as Mark to Market Settlement.

2.  Investigations

If any company law or SEBI Act's rules regarding indian capital market are voilated, its investigation is done by SEBI. This is the list of cases resulted in compounding in the prosecution filed by SEBI (As on 30th June 2010). See PDF

3. Investor Awareness Campaign

For making Indian capital market more secure for indian and foreign investors, SEBI has started investors awareness campaign. For this, SEBI has made his official site's sub domain at http://investor.sebi.gov.in/
Under this campaign, Workshops/ Seminars Conducted by Investor Associations recognised by SEBI. There are following things are included :

 Caution to Investors

Do not enter into securities transactions with unregistered intermediaries.

·        Do not get carried away by advertisements promising unrealistic gains and windfall profits.

·        Do not invest based on market rumours or unconfirmed or unauthentic news.

·        Be aware that advice through television or print media does not mean that it is the opinion of the channel or publisher.

4. Ban on Inside Trading

Insider trading is the trading of a corporation's stock or other securities (e.g. bonds or stock options) by individuals with potential access to non-public information about the company. In most countries, trading by corporate insiders such as officers, key employees, directors. To ban on inside trading,  SEBI has made ( Prohibition of Insider Trading) Regulations, 1992. Its updated amendment in 2010 says in clear words

No insider shall—19[when in possession of] any unpublished price sensitive information; [(ii) communicate 21[or] counsel or procure directly or indirectly any unpublished price sensitive that nothing contained above shall be applicable to any communication required in22[or profession or employment] or under any law.] [***]

24

company while in possession of any unpublished price sensitive information.][3A. No company shall deal in the securities of another company or associate of that other

3.

(i) either on his own behalf or on behalf of any other person, deal in securities of a company listed

on any stock exchange

or

20

information to any person who while in possession of such unpublished price sensitive

information shall not deal in securities :

Provided

the ordinary course of business

23

5. Trading Cycle Under T + 2

T' represents the trade day. 'T + 2' implies the settlement on the 2th trading day. SEBI has reduced the settlement cycle upto T +2 and in future, it may be T + 1 settlement cycle. But SEBI accepted shorter settlement cycles will mean more pressure on trade processing systems so that funds/securities are ready for pay-in/pay-out on the next day.

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Thanks for Your Wishes on My Birthday

Today, I have read large number of emails which I have obtained from you with lots of your wishes on my 31st Birthday. Some of them, I have sent thanks with my own words for you. But, your love for me is more than my time to write thanks to each of your email. So, I have decided to write thanks with this special open letter. This open letter is also be those who will send their best wishes in future.

1st : With this open letter, I am personally thankful to your good wishes for me on my birthday.

2nd : In return, I have no gift for you.

3rd :  I can  just pray to God to make you healthy and motivate you to do the works of human welfare.

4th : I think, I have very less time in my life than you. No guarantee of my life. So, it should utilize for humanity in any form. I believe in rebirth because without matching of our all good and bad works, we have to rebirth and in God's super computer, everything is recorded. If I think only bad, it is also act and has to pay for this in next birth. If I think good, it is also act and has to receive gain for this in next birth. So, do the duty under the order of God without thinking good or bad is the best way to match your balance sheet and free from cycle of birth and rebirth.

5th : Except few, all of you find me online through accounting education. If I did any slip-up, spelling-mistake or write wrong or anything which is against your feeling. I am sorry for this. I came in this field just for learning and I do not know when people started me as teacher. I hope, you will pardon me on my all mistakes and improve me to walk right in future. If you get any good idea with my content, I feel lucky.

6th : If you want to talk me personally, you can add me with my email id vinod@svtuition.org at your Google Talk.

From

Vinod

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Message of Prof. Vinod Kumar to Students on His 31st Birthday

Dear Students,

Today ( 30-03-2011) is my birthday. Now my age is 31years. Last time, I gave message to students on my 30th birthday in which I told the importance of saving of time, positive approach and becoming update. In real sense all these things are part of real education.

Today, I am searching out some practical things which you can do. All these things, I am also doing and I feel satisfaction.

1st : Blood Donation

Blood in human body is the gift of God which is used to operate human body. We can share it with those who need it at the time of accident, surgical operation or any other cause. This is that gift which can not make even our advance science and technology. It is only produced by God in human body. It is so worthy gift and your donated blood can save any body's life. So, you should donate your blood regularly and promote other to donate blood.

My Own Experience : I am regular blood donor. When, I got up today early in the morning, my first thinking was to ready to donate blood. Last time, four month ago, I donated blood and it is my also determination to donate blood after 3 or 4 months. I feel happy after my today blood donation. It is my own thinking that God has given us very less time to live. We should use it for service of humanity.

There is no any side-effect of blood donation. I hope all my students should start to donate blood to your near blood bank. For this, you should contact your local govt. hospital.

2nd Financial Help to Poor Students

In any developing country, there are lots of students who have no parents. There are lots of students whose fathers are unemployed or no any source of income. At that time, students leave their school and education. As student, you can feel this. You can help all these orphan and poor students with donation of your saved pocket money. One side, your health will improve with not buying unhealthy consumable products and other side, you will get blessing from orphan and poor students. With this, we can fulfill our aim of full educated society of our country.

My Own Experience : 10 years ago, I joined my local NGO who supports poor and orphan students by paying their school fees and by other ways like giving school books, registers and dresses. I support it from my personal income because I want to see every student in school for getting education.

In this NGO, there are also lots of other good personalities who support poor and orphan students. I hope, you will also start this activity in your local area.

3rd Financial Support to Set up the Business of Poor Persons

This is also good way to uplift the society. This financial support can stop evils in society. I have good idea in this regard. Suppose, any person knows any skill, you can support him to set up his business. Even, you can get refund in the form of services of that poor person.

My Own Experience : Still, this is new project for me. I saw to set up the business of a poor who was unable to set up his business himself. I supported him financially. Now, his business is OK and he wants to refund me by giving me their service. We all part of a society, if any part of society suffer poverty, we can not live with enjoy. So, we have to ready to help them.

I hope, you will follow above my message.

From your teacher, guide and author of Accounting Education

Vinod Kumar

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How to Teach Management Accounting

To teach management accounting means not only to teach the analysis of financial statements and to instruct students for presenting useful accounting information but also to teach everything about accounting which is helpful for management decision making. Like, any other teaching planning, teaching of management accounting also requires to create step by step lesson plans for each topic of management accounting. Management accounting teacher should take some real life problems and try to solve them and show these solution as the part of his management accounting teaching.

1st Step : To Develop  Analytical Thinking in Students

It is the first step of teaching of management accounting that teacher has to develop analytical thinking in students. Students who are studying management accounting, already know how to make final accounts and what are the main accounting terms. But how can they analyze all these financial statements? They have to learn from you.

For developing analytical thinking, following things may be helpful :

a) To teach all the restrictive conditions.

b) To instruct all the alternatives.

c) Not to develop guess work.

d) Give some time to student to think the problem with fresh approach.

2nd Step : To Investigate the  Causes of Difference between Actual and Budget or Standard  Data

This is the second step to teach management accounting. In this step, management accounting teacher should take any accounting problem with its budget data or standard data. He should have all its variance. Now, teacher should investigate the cause of variance. Suppose, our record actual sale is 20% less than previous year. There may be 100 of reasons, if we deeply study it. This is just one accounting term, there are lots of accounting terms and we make lots of budget. All these items should be investigated. One side, this approach will make management accounting more practical and other side, student will get confidence if they investigate new reason of these causes.

3rd Step :  Motivating Students’ Participation

Teacher of management accounting should motivate students for participation in any discussion. One good tip is given in this PDF file which I am mentioning following quote:

In introducing budgeting topic, the teach should use to draw an organization chart of a manufacturing organization, and started with a question, “Which department should start a budget?” At the beginning, it may be puzzling for the students but after a couple of minutes different answers came up such as “finance and accounting department”, “production department”, “human resource department”, and “marketing department”. To
increase more students’ involvement, their answers were followed by another question asking who would support which answer. It made the other students think, and the result of thinking is learning. For the next step, the question would be about different targets between marketing department and production department, how to resolve them if the students were respective managers. The purpose was to set them enter in the role of managers and force them to think what they will decide if they were in managers’ place.

4th Step : Use of Multi-media in Teaching Managerial accounting

Without use of multi-media in teaching managerial accounting may not be successful. Teacher should use all latest multi-media technology for teaching managerial accounting. Making of PowerPoint slides, animated clips, video presentation and use of images and icon may make solution more easy to understand. One example is my past content Fund Flow Analysis's Image which was successful online for teaching students. I think, step by step teaching of management accounting topic through 10 minutes multi-media is better than one hour boring lecture.

5th Step : Use of Management Accounting Text Books

Teachers should learn lots of management accounting text books instead of one book first. It will be helpful to teacher to teach interpretation of financial information from different ways. Recently, I reviewed a new book of Management Accounting, 5/e which is written  by Atkinson in which, I learned new management accounting term incremental budgeting. Like this, there are lots of other new things whose knowledge can be obtained from different management accounting text books. 

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Tools of Management Accounting

In previous educational contents, we've explained functions and advantages of management accounting. Both contents were published to tell the importance of this branch of accounting. We want to take this conversation a step further today, and discuss tools and techniques of management accounting that can be helpful to management for providing best information. Take a look at some of best tools and techniques of management accounting outlined below:

1st Tool : Analysis of Financial Statements

Analysis of financial statements is the main tool of management accounting. In this tool, we collect four financial statement, one is profit and loss account, second is balance sheet, third is cash flow statement and fourth and last is fund flow statement. After this, we calculate more than 30 ratios and also analyze the financial statement by financial analysis, fund flow analysis and cash flow analysis. Main aims of analysis of financial statements are following :

1. Profitability - its ability to earn income and sustain growth in both short-term and long-term. A company's degree of profitability is usually based on the income statement, which reports on the company's results of operations;

2. Solvency - its ability to pay its obligation to creditors and other third parties in the long-term;

3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations;

Both 2 and 3 are based on the company's balance sheet, which indicates the financial condition of a business as of a given point in time.

4. Stability- the firm's ability to remain in business in the long run, without having to sustain significant losses in the conduct of its business. Assessing a company's stability requires the use of both the income statement and the balance sheet, as well as other financial and non-financial indicators.

2nd Tool : Budgetary Control

This is that tool of management accounting in which we make budgets for planning and control of fund. All budgets are made with past historical accounting data and future expectations. After this budgeted data is compared with actual recorded accounting data and performance is calculated on the basis of deviation between actual and expected performance.

3rd Tool : Decision Accounting

There are lots of decision which businessman has to take on the basis of tools of management accounting. One of management accounting tool is decision accounting. It is helpful to take main decision which we can explain following ways :

a) To Buy or to construct any fixed asset

b) Do's or Dont's to do any business activity

c) To choose best alternative

d) Calculation the price of product

4th Tool : Throughput accounting

Throughput Accounting (TA) is a dynamic, integrated, principle-based, and comprehensive management accounting's tool  that provides managers with decision support information for enterprise optimization. Actually this is the extension of decision accounting. Throughput accounting  is relatively new in management accounting. It is an approach that identifies factors that limit an organization from reaching its goal, and then focuses on simple measures that drive behavior in key areas towards reaching organizational goals.


5th Tool : MIS


We MIS tool, management accountant provides information needed to manage organizations effectively
. If we have to understand MIS, we need to understand ERP, SCM, CRM, DSS and other computer techniques for providing information with effective ways.

6th Tool : Financial Policy

Financial policy is that tool of management accounting which is needed to make good structure of capital mix We decide the proportion of share capital and loans in capital structure. Financial and operating leverages are also its sub-tools.
7th Tool : Working Capital Management

With this tool of management accounting, we manage short term assets and short term liabilities. All cash management, debtor management and inventory management will include in working capital management. We make also working capital cycle for knowing the firm's ability to convert its resources into cash. If there is low time for conversion of raw material into sales and then cash from debtor, it is good indication.

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Advantages of Management Accounting

Today, we will make clear the advantages of management accounting. After reading this, you will surely study all concepts of management accounting more deeply for becoming perfect in it.

Management accounting is needed in business because it has capacity to change the business performance and financial position. Please pay attention to the advantages of management accounting.

1st : Increase Efficiency :

Management accounting increases the efficiency of operation of company. Everything is done in management accounting with a scientific system for evaluating and comparing the performance. With this, we find deviations. We will take promotional decisions on this basis. Other employees will also be motivated with this because if their performance will be favourable, they get reward of this. Thus management accounting increases efficiency.

2nd : Maximizing the Profitability :

Using of management accounting's budgetary control and capital budgeting tool, company can easily succeed to reduce both operating and capital expenditures. After this, company can reduce its price and then company will receive super profits.

3rd : Simplify the Financial Statements

For taking different managerial decisions, management accountant provides deep technical reports with simple interpretations  in which he mentions the facts of financial statements, after this, company's management officers understand what is in financial statement and how will they use this for company's progress.


4th : Control of Business's Cash Flow :

It is one of important advantage of management accounting that it can be used for controlling of business's cash flow. We all know that cash in hand is better than in fixed properties if there is emergency to pay our loan or debt. So, management accountant deeply studies from where is money coming and where is it going. To check on misuse of money will surely control of business's cash flow.

5th : Business-critical Decisions

To take business - critical decisions, now management accounting will become more powerful. Global management accountants are coming for join on one plate-form for taking all business critical decisions.

 Its example, we can see in the form of new joint venture of USA and UK certified management accounting bodies. Link

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Functions of Management Accounting

Management accounting is one of important part of accounting. To use accounting for decision making encourages its development. Management accounting’s main function is to collect accounting information which is useful for different managerial functions like planning, organization, coordination and control. Now, we are explaining other important functions of management accounting.

1st Planning and Forecasting Function:

In 2005, Mr. A started his small business. He was well educated of management accounting tools. By effective use of management accounting, he developed his small business. Now, after 5 years, he is operating good company. Management accounting’s basic functions like to study ratio analysis and cash and fund flow statements can develop any small business like Mr. A. How is it possible?

One – Businessman can easily watch in which project he invested his cash and fund. He can see whether its ROI and ROE is better than any other investment.

Second – He also makes good plan to reduce his investment in that project whose return is not sufficient.

2nd Modification of Data Function:

Second good function of management accounting is to modify of raw accounting data. After this, businessman bids fair to effective use these modify data in business’s management. Management accounting can be used to classify every accounting item in different views. There are so many accounting software which can be helpful to show sale or purchase or any other accounting items according to production level, area, season, country, age or quality of debtors or creditors.

One Side, it will build up analytic approach of company and other side, it will be helpful to check up each and every accounting item from different angels.

3rd Interpretation Function:

It is also function of management accounting to do complete interpretation of financial analysis. It cuts down work burden of manager because management accountant supports him by providing fact and interpretation of financial data after its analysis.

4th Management Control Function:

Management control can be possible only with management accounting function. Management accounting uses responsibility accounting tool in which different cost, revenue and investment centers are made. Proper budget is maintained in each centre. Analysis of actual recorded performance is compared with standard performance and deviation is evaluated. This will be helpful to fix up wrong side of company’s decision promptly. Thus company can do smoothly management control.

5th Communication Function:

Management accounting puts together all useful accounting information with comparable past data for good communication with govt., bankers and investors.

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What is Arrears?

If any payment or debt is not paid on its due date, it becomes arrears. There are lots of expenses and other payments  which are not paid on due date and these become payment in arrears. Payment made at the end of a period is also arrears.

We are explaining Arrears with two examples

1. Insurance premium in Arrears

For example, you pay your insurance premium after one month. If you did not paid three month insurance premium, it will be three month insurance premium in arrears.

2. Calls in Arrears

Suppose, you issue shares of $ 5,00,000 and out of this you have to get $ 1,00,000 in the form of final call. $ 20,000 is not obtained on its due date. That $ 20,000 will be calls in arrears. It is the asset of company and it must be deducted from called up capital for calculating net paid up capital which is shown in liability side of balance sheet. This call in arrears may be of directors, managers or other shareholders.

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What is Aging of Accounts?

Aging of accounts is the technique to classify accounts according to billing or due date. In this classification, we get the idea to whom, we have to get first and to whom, we have to pay first. There are main three types of Aging of Accounts

1st Aging of Receivable Accounts

In aging of receivable accounts, we fix the time to collect money from our different customers. If our customers remain uncollected, it may be bad debt. That is the reason, company makes aging schedule for accounts of debtors. An aging schedule of accounts receivable may break down receivables from 1-30 days, 31-60 days, 61-90 days, and over 90 days.

An Account Receivables Aging Report or schedule is used by a business to show how long an invoice for payment has been outstanding. This aging of receivable accounts is also helpful to estimate net  bad debts.

2nd Aging of Payable Accounts

Aging of payable accounts is simple a sorting of a company's accounts payable by due date. Accounts Payable aging report is useful to  the management to evaluate that which of there payments are going to due at which date in this way this helps the management to manage the amount requires to pay when they are due to pay.

3rd Aging of Inventory

With regard to inventory, if it is held too long, obsolescence, spoilage, and technological problems may result.

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What is Adjunct Account?

Adjunct account is that liability account which increases other liability's book value. For example, if a corporation issues $100,000 of shares at a price of $105 per share, it will be issuing the shares at a premium of 5%. The journal entry will include a debit to Cash for $105,000; a credit to shares Payable for $100,000; and a credit to Premium on shares Payable for $5,000. Since a credit balance is the normal balance for a liability account, the account Premium on shares Payable can be referred to as an adjunct account. Immediately after the shares are issued, the shares will have a carrying value of $105,000 ($100,000 PLUS $5,000).

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How to Calculate Cash from Operations

For preparing cash flow statement, we need to calculate cash from operations or cash operating profits. It is main inflow of cash which can be used for working capital. Generally, net profit of business is inflow of cash and net loss is outflow of cash. But it does not mean that cash from operation will always be equal to net profit. Net cash operating profits or loss may be less or more than net profit or loss. It may be possible that company suffered net loss but at that time, company may get net cash operating profits. Main reason of this is some non cash items which we did debit or credit in profit and loss account.

Steps to Calculate Cash from Operations :


There are two main methods of calculating cash from operation :

1st Method : Calculating Cash from operation from cash sales

If we have the information of sales, we can calculate cash from trading operations. Its formula is given below :

Cash from operation = Cash sales - ( Cash purchase + Cash operating expenses )

Or

Cash from operation = Total sales - credit sales - ( total purchase - credit purchase) - ( total expenses - non operating expenses - non cash operating expenses)

2nd Method : Calculation of cash from operation from Net profit or net loss

Under this method, we can calculate cash operating profits or loss with the help of our profit and loss account's net profit or net loss. For this, we have to make a statement for calculating of cash from operations

 If you have to use second method, following points must be noted :

i) Outstanding / Accrued Expenses ( Current Year )

Outstanding expenses are those which is payable. So, there is not cash payment of such expenses. So, there is no cash outflow but it is shown in debit side of profit and loss account. That is the reason, we will add it in net profit for calculating cash operating profits. We will add only current year o/s expenses because previous year o/s expenses will be paid current year. So, there is no need to add previous year o/s expenses.

ii) Prepaid Expenses (Previous Year )

We also add prepaid expenses ( Previous year ) in net profit because it is paid in advance  in previous year and profit and loss account debited this current year.  But according to rule of cash operating profit, this prepaid expenses already was shown as outflow of cash in previous year. That is the reason, we will added it in net profit.

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Solution of TDS Problem of Sub- Contract

I am an advocate , my question is that my co. has allotted to construct road work as a sub contractor. In this regard my party is third and allotted constricted part. Now question arises,  first party has deducted tds and deposited to the department then my party  raised bills to second party.  Second party is also deducting tds from my party i.e. sub contractor now my party want the tax should not be deducted from  my payment .  Kindly guide me , what I should do now . thanks.

From India

As per the rule of TDS, it is deducted on the payment. If contractor receives payment, he is responsible to pay TDS and if sub contractor receives the payment, sub contractor will be responsible to deduct TDS and it is the duty of contractor to deposit this TDS to Govt. Account.

Read Rules :
Payments to contractors and sub-contractors (S.194C),

Section 194C- Payments to contractors and subcontractors exceeding Rs.20,000/-. For payments to contractors, the rate of TDS is one percent in case of advertising and two percent in other cases. Work includes advertising, broadcasting and telecasting including production of programmes for such purpose,
carriage of goods and passengers by any mode of transport other than by railways and catering.

For payments made by Contractors to sub contractors rate of TDS is one percent. The provision is not applicable in case of payment made by individuals and HUF if the gross receipts or turnover from the business or profession does not exceed the monetary limits specified u/s 44AB clause (a) or (b).
Section 194D - Insurance commission TDS on payments 4.6 Contractor - Section 194C applies to a person who is responsible for “paying any sum to a contractor or sub-contractor”.  Such contractor or sub-contractor should be a resident.

Exception :

If main contractor did say to perform his all work himself. But main contractor contracts with sub contractor as his branch. At that time, sub contractor will be the branch and not payable TDS. It is illegal, if  the contracting Company/ Firm/ Agency shall be allowed to transfer, assign, pledge or sub-contract its rights and liabilities under this contract to any other Agency without the prior written consent of the first party.

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Is Depreciation a source of Fund

There is big debate whether depreciation is source of fund or not.

1# Some say, ''Yes' it is true because there is no outflow of Fund.
But it is acceptable as deduction from profit for calculation of
taxable profit and dividend. That saved fund can be used for
development of company.''

2# Some say, '' It is not source of fund because there is no
profit, there will be no saving of tax via depreciation.

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Treatment of Abnormal Account Balances in Balance Sheet

I am preparing final account of a company. I found that there are debit balances in current liabilities accounts ( in fact they are suppliers of the company) and there are credit balances in the accounts of receivables (they are customers of the company). Should I take net effect of these on the balance sheet or what is the suitable procedure keeping in view the full disclosure principle or other legal implications. Kindly give prompt reply as I am engaged in preparing the final accounts of an unlisted public company for first the time.

Accountant From Pakistan

It may possible due to receiving of cash discount from payment to creditor or high provision of discount on creditor or giving advance to creditor relating to his account. At that time, supplier account may be debit and just opposite, if you take advance is taken by your company before providing any service. You just show the net balance of both supplier and debtors. I think, your balance sheet will be matched with this. In next period, you have to do some adjustments also.

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How to Set up a Hedge Fund (Trust) with Indian Money in India

I know, Hedge funds or Private Equity funds are not allowed to be based in India. Someone told me they can be run as trust, will you have any idea how is that possible.

Also, can you please tell me which are funds (private not mutual) that are set up with money raised in India.

I would appreciate your answers.

Thanks,

from India

Yes, it is right. Recently SEBI has issued strict rules for setting up hedge fund in India. According to this:

1. #  The rules also say that the fund manager or investment advisor must have a minimum three-year track record in managing funds with an investment strategy that is similar to that of the applicant fund.

2. # "This provision is expected to allow well managed funds to access our market and at the same time, keep our markets insulated from the possible adverse effects of 'trial and errors' by uninitiated rookies," says Sebi in its draft regulations.

3. # Incidentally since hedge funds are not regulated entities, they cannot register as an FII under Sebi's regulations.

4. # Sebi's draft paper has recognised the fact that some hedge funds may be operating in India through sub-accounts.

According to Sebi data, at the end of March, 2004, the total investment by hedge funds in offshore derivative instruments (participatory notes) against Indian equity is Rs 8,050 crore (Rs 80.50 billion) or about eight per cent of the total net equity investments of all FIIs.

Some tips to Set up a Hedge Fund in India

1. # Like any other trust, hedge fund is also a fund under an organisation. There are many parts of this organisation but two is most important one is investment manager and other is custodian. Custodian  is financial entity that holds hedge fund assets. This includes cash in the fund as well as securities.

2. # There are some good tips for setting up a hedge fund in Madrasi.info

• Prior to finalizing investment, take couple of months to know about the hedge fund industry in India. The age of hedge fund industry, the key players, their worth, the operational risks, the pros and cons of investing in hedge funds etc
  
• Identify potential hedge funds, refer commercial directories or databases. Account for your investment goals, risk tolerance level, amount allocated for investment.
  
• Get to understand the ground realities of regulatory factors, its implications; how business is run in India all helps.
  
• Read blogs, financial magazines, websites, news articles, white papers on hedge funds in India. Talk to personnel; preferably interact with hedge fund managers involved with hedge fund investments and those who have already invested in hedge funds.
  
• Notice annual events like Hedge funds world India to gain an assessment of the burgeoning Indian hedge fund industry.
  
• Approach wealth manager in wealth management companies, securities broker or licensed investment consultant for advice on hedge fund investments in India.
  
• Understand terms related to hedge funds, remittance, management fee and performance fee, withdrawal and redemption fees.
  
• Check the pros and cons of long-term hedge funds vs. short-term hedge funds.
  
• Ensure your activities are that of an accredited investor (with a net worth of more than $1 million).
  
• Involve financial advisor in the process of investing in hedge funds in India.
  
• Maintain direct communication with hedge fund manager.
  
• Check if diverse hedge fund strategies and techniques are put to use.
  
• Receive and file monthly or quarterly updates.
  
• Engage in data mining, keep track of trends.
  
• Check with accountant with regard to tax reporting and implications.
  
• Know your rights, where to seek help in terms of a dissatisfied hedge fund investment operation, or any other complaint in general that doesn't confirm with regulations.

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How to Research on Debtor Management

Sir, I am doing a research work on debtor management, a case study of Ghana Water Company, and I would like a sample of a research on a topic like this to guide me. Or any information on this to help me do the research more importantly on the literature review.

Query from Scholar of Ghana ( West Africa)

 Above scholar and many other scholars who are also researching on debtor management in different field. So, it will be better to connect all other scholars who can share their research with you. But here, I am giving some tips which will be helpful for all who are researching on debtor management.

Main aim of research on debtor management to promote credit sale at minimum risk of getting credit amount from debtors. In past research on debtor management, there are three methods which are used in debtor management which I already mentioned in my past content. Now, you research should be the progress of these methods or to invent some new method or do anything new in debtor management.

For your research, you can take some data for checking the effect on debtor :

i) If any company increases or decreases Credit period.

ii) If any company increases or decreases of cash discount.  

You should also compare debtor turnover ratios and average collection period of different companies. It is very easy, you can get updated financial statements of different companies online. Just download and deeply watch which company's debtor turnover ratio is less. Analyze,  why is it so less? Other steps, you can also check past online google news relating to that company. Company releases press notes and you can make the list of reasons which is affecting it.

According to my thinking, for proper research on debtor management, you should research on counseling and debtor education. There are lots of factor for not to pay the debt. To provide good education to debtor means to bring bad debts at zero level.  

In end, I can say that it is so practical and developing area of finance management, as researcher, you should do more work in this area for reducing the cost of investment in debtors. My best wishes with you !

Related : How to Do Research in Accounting

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How to Use Spreadsheet of Google Docs in Mobile

There are large number features of spreadsheet of google docs which is not in the spreadsheet of quick office of Microsoft. So, today, we guide to use spreadsheet of google docs in mobile ( Nokia E63) for making account.

1st Step : Connect Your Mobile with Internet Service Provider

You know that google docs's spreadsheet service is online. So, for using google docs spreadsheet, you have to connect your mobile with Internet service. In India there is very low rate plans which are providing by your local mobile call service companies. You can use any of these plans.

2nd Step : Sign in Google Docs Account

If you have registered your Google Docs account in your laptop or your own pc. You use this google docs account for your mobile also. Just search google docs from google search of your mobile and write your google account id and password and you can open it after sign it.

3rd Step : Create a New Spreadsheet

After reaching google docs, you can create spreadsheet by choosing its radio button and click create. Never forget to give title of your spreadsheet.

4th Step : Record Accounting Data by Clicking + Add

Suppose, you have to record the data of sales in Mobile's google Docs's spreadsheet. Just click + Add with and write date, name of item, quantity, rate and amount of sale. For add next data, you have to again click + Add for adding new data with same way.

5th Step : See All Data in Mobile's Google Docs Spreadsheet

For this, you have to click on the column and you can see all your past recorded data in google docs spreadsheet. You can edit any data any time.

Related : How to Use Mobile Spreadsheet for Accounting

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Prof. Vinod Kumar Interview with News Media

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How to Use Mobile Spreadsheet for Accounting

Microsoft's Office provides quick office  package in all most all latest mobiles. In this quick office, you can use spreadsheet for accounting. With this mobile spreadsheet or excel, you can record any transaction from anywhere. It is very simple to understand. You can also print of accounting data from your mobile also. I use my Nokia E63 mobile's spreadsheet to track my expenses on daily basis. You can also maintain your budget in your mobile's spreadsheet. Following steps may be useful for you for maintaining your accounts in Nokia E63 mobile's spreadsheet.

1st Step : Start the Mobile Office program of your choice, by selecting main menu (Home icon).

Just press home icon and go to mobile office program.

2nd Step : Start new spreadsheet in the new document of quick office option.

You can start new spreadsheet by going to quick office option in mobile office program.

3rd Step : Maintain Record of Expenses, Revenue or Receipt and payment

Just write cash book in Cell and go to option and accept changes. If cell is short than writing content, then again go to option and then go to format and select column autofit. Same way, you can write date, name of expenses, name of incomes and name of receipts, name of payments and amounts. in mobile spreadsheet.

4th Step : Use Simple Excel formulae in Mobile Spreadsheet

Suppose, you have bought 25 books of accounting of $ 20 each. To calculate the total price of accounting books and record in mobile spread sheet. First of all select specific cell where you want to show this price and just write = 25*20 and then go to option and accept changes. You will see 500 $ in that cell. With this way you can record every transaction in this mobile spreadsheet.

5th Step : Insert New Worksheet

For maintaining the records of other items, you can go to option and select worksheet. In worksheet, you can select insert for creating new accounts. After this, you can rename this worksheet in same worksheet option and also rename of this worksheet.

Related : How to Teach Accounting with Mobile

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How to Study Accountancy

In every company, you see accountant. It means that requirement of accountant is started when any body opens of his new business because all want to effective use of fund. With accountancy, we can effective use our fund. When we make financial statement with accountancy knowledge, we can track our financial shortcomings and in future, we take good business decisions according to our financial limitations. So, to study accountancy is must for everybody. Moreover, to records transactions through accounting skills make us to reduce useless expenses. Budgeting is also one of tool of accounting which teaches us to proper forecast of our incomes and expenditures. So, that is reason, today, we will learn steps to study accountancy successfully.

1st Step : Take Care of Every Step of Study of Accountancy

Accountancy is step by step learning process. You can not avoid any of its step. If you start to learn advance topics or problems without understanding theory concepts, it may be tough for you. So take care of its each step.

2nd Step : Try to Differentiate Cash Book and Revenue Book

Sometime, when you get money or paid money, you understand it just like income and expenditure of business. Many accounting confusions may start from this point. Remember, Cash book is just record of cash and bank receipts and payments. It is not related to revenue book. Revenue book is profit and loss account which records the earning and expenditures of business whether it received in cash/ bank form or not. Many outstanding earning and expenditures are recorded in revenue books under accrual basis.

3rd Step : Analysis of Accounting Information is Important to Study

To pass the voucher entries and show financial statements is the work of accounts assistant. But, you have not to fix your target at this point. You have to go above. For this, you have to learn to analyze of accounting information. This is very important part of study of accountancy. Because, if you get this skill, you can obtain the chance to capture the nervous system of accounting. There are many analysis like ratio analysis, cash flow analysis, fund flow analysis and cost benefit analysis are main things to study.

4th Step : Try to Solve Sample problems

After fixing high vision, start practice, practice and practice to solve sample accounting problems is the best way to study accounting.

Related : Best Ways to Teach Accounting

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How to Use Accounting Education

In jan. 2008, I had founded accounting education. More than 3 years, it has seen many changes. Different students, accountants, researchers, teachers and readers from all over the world, joined for knowing different things of accounting. Thanks to Internet who has provided this classroom to all who want to learn accounting. Today, I am explaining, how can you take full advantage of this accounting education for learning accounting.

Ist Step : Concentrate on Your Topic of Accounting

We are researching more than 100 topics of accounting, finance and education. But, it is on you which topic are you interested? Please concentrate on that topic. If you have subscribed accounting education's feed, you can add your interested learning content in your bookmark list or you can search your related topics and bookmark on all these topics. With this, your can learn your interested topic more deeply.

2nd Step : Accounting Resource for Fresh and Other Area Students

If you are fresh and other area of specialization, you can also use our accounting education. You learn basic and financial accounting topics first. In above accounting resource, you will find accounting help and in accounting help, you will find all basic and financial accounting topics. We recommend to learn all these step by step.

3rd Step : Video Guide and Tutorials

On big demand of our students and readers, we are bringing new section of Video Guide and Tutorials in the home page of Accounting Education at http://www.svtuition.org/ . Still, there is no section for this. All those who want to learn accounting and tally step by step, they will learn from these videos.

4th Step : Practice through finding Practical Solutions

In our ask a question database, we find lots of questions of accountants who are doing practical work of accounting in different corporates and industries. We try to solve all these problems. Reading and learning all these practical solutions, you can certainly become expert in accounting.

5th Step : Special Guide for Accounting Teachers

From time to time, we wrote different tips in education and teaching section which you can find right side button. In these tips, you can teach accounting better way.

6th Step : Research Accounting Education through Sitemap

In the last of this site, we have submitted the sitemap. You can research any topic by going to sitemap of accounting education. This sitemap has been kept and updated monthly basis.

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How to Check Your Usage of Internet?

We know that accounting is the system to record and check financial information. But non-financial information is also important as accounting information. One example of this non-financial information is to check the record of your usage of Internet in different hours, dates and months.

Now, learn its simple two steps :

1st Step : Login your account in your Internet Provider's Official Site

Just Go to your Internet provider's official site and login your Internet account by providing your username and password. This username and password, you can find from your modem. After this, you will see welcome page where you will find your account detail like your account information, billing information, payment information and report.

2nd Step : Open Account Information and Click Usage information

You just click account information and then click usage information. Customize your usage information according to your need and click the button view and you can check your all usage information. I checked my three month Internet usage data with these steps.

Important Note : This non - financial information may be used for calculating accounted cost in the Internet usage of big corporation. Accounted Cost is calculated based on Accounted Time when Rating Type is set to Hour / Occupancy and on  Accounted Volume when set to Volume.

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Reasons of Not Receiving Accounting Education's Updated Contents

Recently, I got a query in which one reader of Accounting Education asked the question, " Why is he not receiving Accounting Education's Updated Contents?

There are lots of reason of not receiving Accounting Education Newsletter.

1. #  Confirm of subscription of Accounting Education

When, you write your email in email subscription box and sign up it. You will receive a confirmation email. If you did not receive this email even after 5 minute, it may be in your spam box. So, open, you spam box in your email account and click link of confirmation of subscription of accounting education. Without clicking confirmation link, email newsletter service will not be activated by feedburner.

I checked my database of accounting education subscribers in which I saw that lots of new readers have just added their email but not verify. Due to unverified status, they can not become activate subscribers.

 So, please verify today.

2. #  Check Your Spam Emails in Your Email Account

Sometime, it may be possible that your email account has wrongly filtered our Accounting Education newsletter and added in its spam emails. If you see our accounting education email newsletter in spam, please select this email and click on above button "not spam" after this, you will receive our new content in your inbox.

3. # Subscribe Our Accounting Education Feed with Other Ways

You can also get update of new contents of accounting education by subscribing with google readers, friendfeed, Mozilla Compatible Agent, Generic Java-based feed client, FeedDemon, Mac OS X RSS Reader. If you want to read on mobile, you can subscribe via Opera RSS Reader. You can also get updates after like accounting education at facebook.  

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Financial Leverage Simplified

Financial leverage is hugely utilized in corporate finance. But today, we are simplifying it by providing example of a sole trade. We know that in sole trade all capital is of one person and his aim is to maximize it. With financial leverage he can do it.

Financial leverage is tool to use own capital with debt for doing business. Following is the example which will simplify this finance term.


Mr. A has own capital of Rs. 5,00,000 and he bought a machine with his Rs. 5,00,000. Mr. A is not using financial leverage because he is using his own money for trading.

Mr. B has own capital of Rs. 5,00,000 and he took the loan of Rs. 10,00,000 @ 5% fixed interest. Now, he has Rs. 1500000 and he bought top quality machine with this Rs. 15,00,000.

If the machines owned by Mr A and Mr. B increase in value by 10% and are then sold, Mr. A will have a Rs. 50,000 profit on his own capital Rs. 500,000, a 10% return. Mr. A’s land will sell for Rs. 16,50,000 and will result in a gain of Rs. 150,000.

Now if we calculate the Mr. B's return on his own capital, it will be very high.

Mr. B's Return on his own capital = Rs. 150000/ Rs. 500000 X 100 = 30%

Suppose, if B has to pay interest of 5% on debt, then he will gain net = Rs. 150000 - 50,000 = 1,00,000

which will be the 20% of his own capital. Mr. A who is not using financial leverage, is gaining just 10% return.

Suppose if machine's value will increase by 20% and sell, then Mr. B's Return on his own capital  after deducting 5% fixed interest, will be = Rs. 300,000 profit from sale of machine - Rs. 50000 interest
 = Rs. 250000

Or = 250000/500000 X 100 = 50% which is 30% more than Mr. A's profit.

It means when assets inflate in value financial leverage works well.  But when assets decline in value the use of leverage works against you.

Related : Leverage Effect on ROE

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Leverage Effect on ROE

Introduction

Before writing leverage effect on return on equity (ROE), I have read my old content leverage and its type which I wrote more than one year ago. But, this content gave me idea to explain the leverage effect on ROE more clearly. If you are new for learning leverage, we are introducing it first.  Leverage means lifting machine. In lifting machine, what do you see? A person uplifts the weight with the help of machine. Even uplifted weight may be 1000 times heavy than that person's own weight.  But in this finance term, it is not lifting machine. but like lifting machine, we can use leverage tool to uplift return on equity level.

What is ROE?

Before analysing, leverage effect, we should know what is return on equity?  Return on equity is that rate of return on equity share capital. It is also called shareholder return. ROE can be seen with two way. From company point of view, it is return on his investment which company has to raise at any cost for surviving the business but from shareholder point of view, it is dividend. ROE shows the efficiency of company. If company generated high ROE, it is good for company and its shareholders. ROE can be changed by changing the leverage. Now we study the effect of leverage on ROE.

What are Sources of Leverage?

a) Taking Loan

b) Taking fixed asset

c) Taking Hedge fund

Leverage Effect on ROE

If we talk the leverage effect on ROE, it means, we talking operating leverage effect, financial leverage effect and combined leverage effect on ROE.


1. Operating Leverage Effect : % Change of EBIT is more than % Change in Sale

If % change of  earning before interest and tax is more than % change in sale, this operating leverage will effect ROE positively because at this level, per unit fixed cost will decrease and small increase in sale will boost EBIT. If EBIT will increase, ROE will also increase. After dividing % Change of EBIT with % changes in sales. We can take ratio of it and it indicates, how will change EBIT if changes will be done in sales. 2:1 of operating leverage means if 100% sales will increase 200% EBIT will increase. As interest is fixed cost, so with this ROE will increase.

A Situation : High  Operating Leverage :

 Too high operating leverage is not good, it may be high risky.

B Situation : Low Operating Leverage  :

Low operating leverage may be useful when sale market is fluctuating.

2. Operating Leverage Effect : % Change of EBIT is less than % Change in Sale

Now see also second face when % changes of EBIT is less than % changes in sales, it means 200% sale will increase, 100% EBIT will increase if operating leverage is 1:2. This situation is less effective for enhancing ROE.


3. Effect of Financial Leverage on ROE 

If we have to check real effect of leverage on ROE, we have to study financial leverage. Financial leverage refers to the use of debt to acquire additional assets. Financial leverage may decrease or increase return on equity in different conditions.

A Situation : High Financial Leverage :

Financial over-leveraging means incurring a huge debt by borrowing funds at a lower rate of interest and utilizing the excess funds in high risk investments in order to maximize returns.
B Situation : Low Financial Leverage :

Financial low-leveraging means incurring a low debt by borrowing funds. It may effect positively, if decrease the value of  bought asset with this low debt.

4. Effect of High Operating leverage and High Financial Leverage

It will increase ROE but it is high risky also.


5. Effect of Low Operating leverage and High Financial Leverage

It is optimum combination for bringing optimum return on equity.

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Simulation for Risk Evaluation

Simulation for risk evaluation is the process to evaluate corporate risk in synthetic environment. Here, I have used the term synthetic environment. It is not real but it is almost same business environment for checking corporate profitability with associate risk. Virtual simulation  is more famous finance term for risk evaluation. Before taking any financial decision, risk evaluation is must under artificial conditions.

Suppose, we have to construct a dam, this project will be simulated by computer engineering and estimated the risk if we construct it in real conditions. After this, solution is provided for minimizing this risk.

Some of questions relating to simulation for risk evaluation may be the issue of discussion :

Question : 1. Who can take benefits from simulation for risk evaluation?

Answer : Even whole company can take benefits from this technique of risk evaluation but risk manager and financial analysts must know this because they are responsible for managing the risk of corporate big projects. So, both risk manager and financial analysts can take benefits from it.

Question : 2. How to simulate for risk evaluation?

Answer : Like any other technique of risk evaluation, simulation for risk evaluation need good planning and other different steps which should be taken by risk manager. We are explaining it in following way:

1st Step : Risk Assessment  and Identify the Risk

You would listen the term of tax assessment. Tax assessment means to collect different incomes and calculate tax on it. Like tax assessment, we have to collect data relating to different risk of corporate different projects. Risk may be market, political, business, legal, liquidity or solvency. A assessment report should be made in which we we can assess their level of risk if we do specific act. For assessing the risk of big investment projects, we can take the help of project's risk computation techniques.

2nd Step : Develop Solution :

A)  NPV Solution

B) Credit Rating Model

C) Analysis of Borrower's Financial Statements

After calculating solvency ratios, we can know whether our borrower will in a position to pay us on the time or not.

D) Trend Analysis

E) Value at Risk

In this part of step we calculate maximum potential losses for an expected investment. This is used for evaluation of share marketing investment's risk.

3rd Step : Safety Measures

It is better that with simulation, we should develop new way to safeguard from risk. It is general saying, " Good defense is just as useful as good offense." So, safety measures can only develop after continue monitoring the progress of project completion.

Related : Financial Evaluation

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Accounting Teaching with Mobile

Recently, I bought nokia E63 mobile. Today, I am trying to teach
accounting with this Mobile handset. For this, I am thankful my
hosting co. Who has allow me to publish my accounting contents via
mobile. Everything is so easy. I need no to sit with my pc. Now, I can
also teach accounting when I will be outstation.

Today topic : what is slush fund in secret account?

Slush means dirt. So, slush fund is dirty fund which is obtained
through bad and corrupt way and if it is deposited in secret account,
it becomes personal property but this fund is exposed by honest
person. In India, there is rs. 280 lakhs crores slush fund has been
deposited in secret account by Indian corrupt leaders.
Businessmen also create this fund for hiding profit. Simple example is
to show the expenses of salaries without existence of employees. Same
expenses may be converted in slash fund and transfer to secret
account. Even this slush fund is used for promoting terrorism. So, it
must be banned by strict international laws

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Accounting Answers - Part 2

Before reading accounting answers - part 2, please read accounting answers- part 1. I am happy to see your lots of questions in my accounting education database. As human being, I am not perfect but I am trying to answer best of knowledge. I hope, it will be helpful to you. Sorry for not sending answers to your email account personally.  Please come to the site and do, simple search in solution. I hope, you will get your accounting question's answer.

Question : 1.

Sir, at a stage goods lost by fire at a time what type of entry require to pass and  then  after 6 months if insurance co. passes  claim then what type of entry require to pass.(if claim for not pass full and received partly amount then what entry require to pass )

from

B.R.Shah

Answer : When goods is lost by fire or accident, we see whether goods are insured or not. It may be possible that insurance co. may accept your claim after investigation. In your case insurance company accepted after six month.

When insurance claim will be accepted, we see again two things

 Whether full claim is accepted or partly?

If total claim has been accepted, then following entry will pass

1) Loss by fire Account Dr. ( Collect all the goods which are lost by fire at the time of making final accounts)

Trading Account Cr.

2) Insurance Claim Account Dr.

Loss by fire account Cr.

If a part of total claim is accepted

1) Loss by fire Account Dr. ( Collect all the goods which are lost by fire at the time of making final accounts)

Trading Account Cr.

2) Insurance Claim account Dr. ( With the amount of claim accepted)

Profit and loss account Dr. ( With the amount of claim not accepted)

Loss by Fire Account Cr. ( Total loss)

Question : 2.

Dear sir,

 I am doing M.com. through distance education..i have a one problem in ratio analysis which i am not able to find solution,,,can you please help in this regard , if yes i will send that problem. Another thing is where i can see your video of various accounting classes

Waiting for your reply

from

Yashoda

Answer : Dear Yashoda, you can email your ratio analysis problem, If I have free time, I will try to solve. You can see all accounting video by searching accounting education site.

Question : 3.

Dear Prof. Vinod,

I hope this email finds you well. I only recently started reading your blog, Accounting Education! I am a Junior English Major at the University of Texas, and I also freelance part-time as a writer for Online Universities.com. I mostly write about higher education, but I am looking to expand my writing portfolio and blog audience, so I was wondering if you would be interested in publishing a guest post on your blog.

I could write on any topic you wish, or I can simply come up with a post that I believe would supplement your blog. I just need a link to my homepage (http://www.onlineuniversities.com/) on my anchor text in the author by-line. Thanks so much for taking the time to read this; please let me know if this is something you might be interested in.

Sincerely,

Katheryn Rivas

Answer : Ok, you can write original content in accounting education as guest post. But it must be original and full of logic. Please it in my email profvk2010@gmail.com . Before, publishing, I will review it, only after, I can decide whether it should be published or not.
Question : 4

Hi.

I saw some of your video in youtube.. but its not contain full step by step coz ima fresher to tally so i need step by step video tutorial link.

so that i can know how it works

hope you send me all the links

thanks

from

asp

Answer : Ok, I noted this in my notebook. Soon, I try to make the playlist in the YouTube, which will guide you to show step by step tutorials.


Question : 5

Sir, I am very poor so, tell me how to earn online by a simple method.

from

Anonymous 

Answer : Dear, it is totally wrong that you are poor. In my thinking, poor are those who have no physical organs means no eye to see, no ear to listen, no foot to walk, no tongue to talk or any physical disability. I hope, God has given you the worthy assets to you in form of physical organs. So, never take any negative feeling in you. Don't compare yourself with your friend who is earning Rs. 1,00,000 per month. If your friend is earning Rs. 1,00,000 per month without doing any hard work, it means, he did very good works in previous birth and now he is getting it with interest. So, my request is to you to do something good whether you earn or not. Because this good works' labour is counted by God. To earn online is very simple. There are lots of work, you can do online. If you want to earn without investment, please read  my old content at here.


Question : 6.

please tell me if sale proceeds of fixed asset wrongly charge to sale how  it is adjusted in asset account.

from

Fahad

Answer :  It means you have passed entry of sale of fixed asset in sale voucher. You should again debit the sale account and credit the fixed assets. With this, you can adjust same amount in fixed asset account.


Question : 7

Sir, I want to know how to develop Accounting & Bookkeeping business.  I am B.Com & Pursuing MBA(Finance) from Distance education program i have also run small accounting firm with 10-12 customer with office premises in market place. Please  advice me how to improve my profession
thanking you

from

Sagar Tanna

Answer : This is good, you are interested to do your own accounting profession. Please take reference our content at here.

Question : 8.

 I want to know about payroll in tally erp 9. If you all matter explain in Hindi that will better for me so please,  kindly request to you do help on this topic for me in Hindi. THANK YOU .

Answer : Yes, Hindi is our mother tongue, to teach accounting in Hindi is just like pride for me. If you check in svtuition channel in YouTube. I made lots of tally tutorial  in Hindi language. Your request has been noted by me. In future, you will see payroll in tally.erp 9 video tutorial in Hindi.

Question : 9.

If i loss or thief my any asset or salary in any assessment year then can i get deduction from income tax return equal the amount which i loss. Give your answer with reason.

from

Ashish

Answer :  Yes, you will be responsible to deduct income tax on same loss of salary. Because, you are not doing business and in business, there is provision of loss to deduct from income. This is very rare case.

Question : 10.

Factors that can affect the value of goodwill

from

marten smith

Answer : There are lots of factors which affect the value of goodwill. We can take one factor of your health. Suppose, you are not healthy, you will not take care of your business. Your employee may cheat with your customers. With this, your business's goodwill will decline. So, take care of your health.

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