How to Donate Blood

 Today, I went for donating my blood because today, my three months has completed. Three months ago, I donated my blood for celebrating my 31st birthday and today is 30th June 2011. I could not donate blood on World Blood Donation Day 14th June 2011 because I did not complete 3 months of previous blood donation. I think that blood donation is great donation and it is God gift which you can share with those who are needy. They need blood during the time of operation. We can not make blood synthetically, so we should come forward for becoming regular blood donor.

Today, I am explaining the steps of donation of blood to those who are worry about it. There is not any side-effect of blood donation but it is very necessary for your heart fitness. You can follow following steps for donating blood.

1st Step : Create Happiness for Yourself

When you have decided to donate blood. You should create happiness for yourself. For this, you can enjoy any good music or sing a good song or dance with full passion. It will increase your blood within few minutes.

2nd Step : Eat and Drink before Blood Donation

For removing nervousness during the blood donation, you must drink one liter milk and eat good food. It will give power for donating blood.

3rd Step : Find a Blood Bank in Your Near Hospital

There are lots of organisations who collect the blood and also sell these bloods. This is very bad work. Govt. blood bank or good NGO blood bank are good. They get free blood from volunteers and give free to needy patients. Few months ago, my mother faced big accident and I collected 2 bottles of blood free of cost from my near blood bank and my mother's life saved. So find it and apply for donation of blood.

4th Step :Condition of Blood Donation

Every man or woman can donate blood if he or she is healthy. There should not be any disease to you. If your operation has been done, please avoid blood donation for six months.

5th Step : Feel Relax during blood donation. 

You should feel at the time of blood donation that you are donating for saving any body's life. Life of that person may be saved only your blood. That person may be the sister or brother or son or daughter of any other person. So, with this kind work, you can give happiness to society.  Feel relax and enjoy this part of life.

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Interest on Service Tax Late Payment 2011

There are many students who have many doubts about calculating interest on service tax and what is the current interest rate on service tax late payment in 2011. First of all, I want to tell that interest on service tax is the loss of your business which did due to your negligence. So, it will treat as indirect expense and it will show in the debit side of profit and loss account. We will pass the following entry when we will pay interest on service tax with service tax payment. Service tax will not show in the profit and loss account because we are making books on the accrual basis and previous year, we already showed it in profit and loss account.

Interest on service tax Dr. XXXX


Service Tax Account Cr. XXXX

Now, your second problem is of calculating interest on service tax. For this, you need interest rate. According to new updates in interest rate ( As per otification no. No. 6/2011) is 18% on service tax  if value of taxable service is more than Rs. 60 Lakhs and if less than Rs. 60 Lakh, you have to pay 15% interest on service tax  if you do not pay service tax within the 5th day of the month following the month or quarter. The new rate of interest of 18% will be applicable from 1st April, 2011.

Suppose, your taxable service value is Rs. 10000 and   service tax is 1030 Rupees which is payable. You have to pay it after 125 days. You can calculate interest on this service tax with following way:

= 1030 X 15% X 125/ 365 =  Rs.52.91

In following video tutorial you can easily understand the accounting treatment of interest on service tax.

Related : New Amendments in Service Tax 2011

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3 Secrets of Financial Success

Well, for getting success in everything, you have to identify and use two secrets of success. One is saving of time and other is good works which I have mentioned in "What do you want, you will get it". But today in this inspirational content, I will explain  secrets of financial success. We all know, we can not carry money with us at the time of death, then why we have to succeed for that money. I can give its answer with following way.

"By getting money, we can use it for helping others. We can buy the food and distribute to poor. We can buy clothes and distribute to those who have not. We can make home for orphans. With money, we can make society happy. That is the reason, we all do work for getting financial success."

For this, you should follow the secrets of Financial success:

1. Be Persistent

It means, you have to do work regularly without seeing your bad luck. Constant doing your work is magic. Let me explain :


Suppose, there are two person who have their own business

First's thinking : I am doing a small business with limited capital. My earning is very low. I think, I am unsuccessful in this business. I think, I should leave this business and start new or do cheat in the business for my financial success. He acted up his thinking and became the unsuccessful businessman.


Second's thinking : I am doing a small business with my limited capital. My earning is very low. Ok, but I will do more hard work. I think, hard work is the key of success. I will speak more sweetly to my customers. I will save from my low earning and reinvest as capital in my business. I will do business as enjoy of my life. He did struggled more than 10 years. But he was persistent to do his business work and to follow on his thinking. After 10 years, he became richest person of the world. I think, you did read the history of that person. 

2. Be Student

  Student is that person who learns from everywhere and everyday. I think, only student can get financial success, he is interested to become student in his whole life because only student can go to the deep of financial matters. He does his business as classroom study. His competitors will be his class friends. His loss in business will be his punishment in class for bad behavior. His respect for his customers is just  like respect for teachers. Money and more money in his bank account will be just reward but like a student his aim will always get knowledge and without any greed, he will do his duty. 

3. Be Teacher 

  This is the big secret of financial success. To be student is good. But to be teacher is best. Why? Teacher is that person who teaches to his students. It means, he shares his knowledge. More he shares his knowledge, more his get knowledge. With this, he has treasures of knowledge. Try to apply this on your business. Suppose, your business is your classroom. You have to do business as teaching. You have to share what you get from society. 


(a) Use your knowledge for solving customers problems. Why do students go to teacher? Because they have problems. Teachers have knowledge to solve their students' problems. You have business knowledge. Try to use it to solve the problems of your customers. More you solve your customer's problem, more you get customers and more you earn the money. Suppose, your customers are facing parking problem when they come to your shop due to shortage of public place. But you have many space backside of your shop. You can allow this space for keeping the vehicles of your customers. This is just one example, how can you solve your customer's problem. There are lots of customers problem. Your duty should be to solve all these problems. With this, your customers will be happy from you and they will bring also their friends in your shop. 


(b) As teacher, you have to share everything. These days, I am watching Chanakya Serial on Internet. Chanakya  was the great teacher of India. He gives not only education to his students but he gives them his home, food and everything what they need and one day his student become the King of Bharat. It was financial success of him because he was ready to sacrifice everything for their students.

You think, your financial success is getting more and more money from your business. It never be achieved if you are not ready to sacrifice same money  for those who have not. Now, you can ask the question, "How can I become rich by distributing my earning to poor and needy?" I try to make you understand this. In accounting, one term name is "Goodwill" and if you donate more and more money to poor and needy. They spread your name in the world and in the balance sheet, we can count it as "intangible asset" at the closing of any financial year. It is also part of your net worth. Net worth can be increased by increasing profit or increasing goodwill. 

Related : Give Me Your Secrets for Becoming Successful CIMA Accountant

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Profit Estimation

 Profit estimation means to calculate future profit on expected sale. This is also called profit forecasting. This profit estimation is done on the trends of past accounting data. In profit estimation, we  take risk as one of important factor. So, we also adjust all risk of unexpected loss for calculating correct profit estimation. For estimated profit, we have to estimate cost of goods sold, sales and gross profit margin and fixed cost and variable cost. All these will become the factors of profit estimation.

Profit Estimation Factors Chart

Now, you can learn profit estimation by reading profit estimation problem which recently was written by an Accountant Mr. Mohamed who is living in Somalia and its solution which has been given by me.

Problem of Profit Estimation

A company supplied tool kits for Handyman search. Toolkit comprises an standard plastic box which contains available number of tools depending on the tape of tool, the market and wholesaler's requirement.
the firm has derived a profit function which shows that their profit depends both on the number of tool kits supplied and the number of tool in each kit.

the profit function is:

P=8k-0.0001k(2)+0.05kT-77.5T(2)-10,000.where P=profit,K=No. of kits,T= No. tool in each kit,(2)= square. how to calculate estimated profit?.

Solution of Profit Estimation  Problem


Dear, your company has estimated profit by using following simple formula of revenue

Profit Function = total revenue from kit - variable cost of kit + total revenue from tool in kit - variable cost of tool in kit.  10000 in formula may be fixed cost.

Dear, I think there is some figure missing in the question. If you have data of expected sale units of kit and tool, we can calculate estimated profit by multiplying it with given data.


Related : Profit Maximization

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Journal Entry Problems and Solutions

Following content is "journal entry problems and solutions". Journal entry problems have been written by accountants and students like you in Accounting Education's "Ask a Question Section". After choosing some of your journal entry problems, I am trying to provide solution. I hope, it will also be helpful to new readers of accounting education and will encourage to write more journal entry problem for seeking solution.

1st Journal Entry Problem 

Investment of Rs. 10,00,000 made in the year 2009 @10% . What will be Journal entry for accrued interest. Whether TDS to be deducted on accrued interest. Please show me journal entries from the year 2009. In between there is no sale of investment..?

Santosh from India (At 6/27/2011 18:09:10)

Solution

Santosh, accrued interest means interest earned but not received. It means if in the end of 2009, we did not get this interest earning in cash, its adjustment's journal entry will pass in your books.

Accrued Interest Account Dr.  1,00,000

Interest Account Cr. 1,00,000

As per Income Tax Law, No TDS will be deducted on outstanding income, when the company will pay you interest, at that time company will deduct TDS and deposit in govt. account.


2nd  Journal Entry Problem 

Cash purchase of fixed assets are entered in which Subsidiary books.

1.Cash book OR
2.Journal Proper.

Rohit from India ( At 6/25/2011 18:26:10)

Solution 

Rohit, cash purchase of fixed assets are entered in cash book because all cash receipt and payment will only entered in cash book. We can use journal proper, if we have to pass the journal entry of credit purchase of fixed assets.

3rd  Journal Entry Problem 

Dear Sir,

An employee's salary is 40,000 pm but he was getting only 36000 pm.Thus his 4000 pm salary become liability for the company.Then what will be the journal entry for the same.

Amit from India ( At 6/22/2011 22:42:20)

Solution

Amit, It means, we have to do some adjustment in the profit and loss account and in balance sheet by passing adjusting entry.

Salary is our expenses ( Still it has not been paid in cash). So, it will be debit.

By not paying salary cash to employee, we are increasing our liability. Any increase in liability will be credit. So, outstanding salary account will debit.

Salary Account Dr. 4000

O/S Salary Account Cr. 4000



4th  Journal Entry Problem

Sir,
Prepaid fire insurance is given in trial balance as 10,000 on 30th June 2010, and it is written in adjustment, '12-month fire insurance policy was purchased on 1st March 2010, the date on which insurance coverage began. Please inform me about its solution.

M. Sharjeel from Pakistan ( At 6/22/2011 8:52:05)

Solution

Dear, there is no need that prepaid fire insurance will show in adjustment. Try to understand it practically. Suppose, your company is making final accounts on 30th June every year with help of trail balance. But, your company's accountant is very intelligent when he estimated 8 months advance payment of fire insurance policy's premium, he passed the journal entry in the books in march 2010 with 10,000. Entry was following

Prepaid Insurance Premium Account Dr. 10,000

Insurance Premium Account Cr.  10,000

After this, you accountant transfer it to ledger account and prepaid insurance premium account shows debit balance which went to the debit balance side of trail balance. That is the reason, you are seeing prepaid fire insurance premium in trail balance. Ok. Adjustments means all the transactions which happens either in the end of year or we forget to record in journal. So, often, you will see almost all adjustment outside of trail balance.



5th  Journal Entry Problem

I am saif ullah from pakistan . I am doing  M.B.A. My brother  runs a small restaurant. From one month,  he is  facing many problem  to maintain account and passing journal entries. Plz guide me that what type of technique can be utilized.  I am very thankful to u plz reply with in 2 days .

saif ullah  from pakistan ( At 6/21/2011 7:54:00)

Solution

Sorry, dear Saif Ullah, I am late to answer your question. Your brother should learn debit and credit first. This video may be helpful to your brother. I think, your brother will have Internet connect. If yes, then he can learn directly from this accounting education. 

6th  Journal Entry Problem

 If I am an accountant and one person donated books of rupees 1,00,000 to my library then how entry will be done in my accounting books.

Vaishali from India ( 6/20/2011 2:14:17)

 Solution 

First you should see what comes in your organisation. That is books, so books account will debit. Then see who is giver. But if we write that person name, it will increase your organisation's liability. But it is not increase because that person gave the books as donation. So, we can credit to donation account as revenue because all revenue will be credited.

Books Account Dr. 1,00,000

Donation Account Cr. 1,00,000

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Idle Time Variance

Idle time means that time in which laborers do not engage in production activity. So, if there is any abnormal idle time, it will increase the cost of production. So, it is very necessary to calculate idle time variance and if there is unfavorable idle time variance, we take the steps to reduce abnormal idle time.

Definition of Idle Time Variance 

Idle time variance is the part of labor variance which happens due to abnormal idle time. We can calculate idle time variance by multiplying standard wage rate with abnormal idle time.

Suppose, abnormal idle time is 50 hours and standard rate of wages per hour is $ 1.50.

Idle Time Variance = 50 hrs X $ 1.50 per hr = $ 75 ( Unfavorable)

Related : Labor Efficiency Variance 

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How to Teach Debit and Credit

Debit and credit are two sides any entry and any account. Without correct account mentioned in debit or credit, we can not get correct result. Debit and credit one of important concept of accounting. So, it is the duty of financial accounting teacher to teach debit and credit. Good teaching of debit and credit will make perfect your students in accounting. If you want to teach debit and credit better way, you should learn three methods of teaching of debit and credit first which I am explaining in following content.

1st Method of Teaching of Debit and Credit - Explain the Rules of Double Entry System

If you will start to explain the rules of double entry system. You have to teach that every transaction will affect of two accounts in two different side. Each side may be debit or credit. Now, questions is which side will be debit or credit? It depends on the nature of transaction and applied double entry rule on it.

Debit 

i) If a person, firm or any company receives anything from you or your business, you have to debit that person, firm or company.

ii) If anything comes in your business, you have to debit that thing.

iii) If you have consumed any service and you have paid the expenses for this, you have to debit that expenses.


Credit 


i) If a person, firm or any company gives anything to you, you have to credit that person, firm or company.

ii) If anything goes from your business, you have to credit to that thing.

iii) If you have provided any service and you have gotten money of your service, you have to credit that revenue.


Following my video may be helpful explain more about double entry system. 

2nd Method of Teaching Debit and Credit - Explain the Debit and Credit by Funny Example


Recently, I have made a funny video in which I have tried to explain debit and credit. Teacher should be source of entertainment. Fun and enjoy make difficult things very easy. So, teacher should bring change in himself and after this, he can teach accounting or any other subject better way.





3rd Method of Teaching Debit and Credit - Explain Debit and Credit by Accounting Equation Rule


We know that accounting equation is Assets = liabilities + owner's equity + revenue - expenses.


If any transaction happens, before selecting debit or credit any accounting, you think the changes in the elements of accounting equation.


For Debit 


(a)  If there is any increase in asset.

For example we buy furniture, it increases our asset, so furniture account will debit.

(b) If there is  any  decrease in liability

For example we pay our long term loan, so long term loan account will debit.

(c) If there is decrease in owner's equity.

for example, owner of company gets the product of $ 2000 of business for personal use. With this transaction owner's equity will decrease, we will be debit to capital or drawing account.

(d) If there is any decrease in the revenue.

For example, we get loss of $ 1500 due to cheating by our accountant in counting of money. This is loss of our business. It decreases our revenue, so loss by cheating accounting will be debit.

( e) If there is any increase in the expenses

For example, we pay electricity bill of $ 600, this will increase our expenses, so we will be debit to electricity account with $ 600


For Credit 


(a)  If there is any decrease in asset.


For example we sell furniture, it decreases our asset, so furniture account will be credit.


(b) If there is  any  increase  in liability 


For example we have gotten long term loan, so long term loan account will be credit.


(c) If there is any increase in owner's equity.


for example, we issued $ 500000 new equity shares to shareholder. This $ 500000 will increase our owner's capital, so this equity capital account will be credit.


(d) If there is any increase in the revenue.


For example, our cheated accountant became honest and returned our  $ 1500 which he collected from our business with cheating. This is increase of our revenue of our business. So Loss recovered account will be credit.


( e) If there is any decrease in the expenses 


For example, we get 10% discount for  paying electricity bill 10 days before the maturity. So, discount on advance payment of bill account will be credit. Because it will decrease our expenses.

Related : Journal Entries Examples 

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Price Determination Under Monopolistic Competition

 In the time of inflation, to determine selling price is one of main challenge for a manager because today real market is of monopolistic competition. A little mistake can be loss of big number of customers. So, it is the duty of manager to get the advice of cost accountant, management accountant and economists of finance department. Economist thinks different factors instead of  just seeing historical accounting data. He analyzes the the total quantity of demand and supply and tries to see its effect in monopolistic. So, today content is based on economics and you will learn "how to determine price under monopolistic competition."

In monopolistic competition, we can divide market on the basis of product differentiation. It is situation in which there are lots of seller and lots of buyer. But they do not sell same product. Every seller's product will be different on the basis of quality, brand or trade mark. So, in this market, both monopoly and perfect market's feature will be exist. Every seller will take different price for his product. But seller will also try to get best price than other competitors of market. That is the reason, in this market, price will not be fixed at the equal point of quantity demanded and quantity supplied. Price will be determined at the point where marginal revenue is equal to marginal cost. Economist gets the help of cost accountant for getting all past and relevant data relating to marginal cost, average cost, fixed cost and average variable cost. I have already explained all these concepts in cost accounting when I had taught you marginal costing chapter. So, economist will determine the price after accepting following two condition.

1st Condition = Marginal Revenue will be equal to Marginal Cost

2nd Condition = Marginal cost curve cuts marginal revenue curve from below.

At that time, company will get following things :

1st : Company will get Super Profit 

Economist will advice that company will get super profit if he will see the average cost curve below the the average revenue curve. We know that super profit value will be calculated on the basis the excess of average revenue over average cost.

2nd Company will get Normal Profit 

Economist will advice that company will get normal profit if he will see that  the average cost curve is touching average revenue curve. At that time, we will have to survive because our both fixed cost and variable cost are getting from sale of products. So, there is no need to worry at that point.

3rd Company will get Minimum Loss

Economist will advice that company will face minimum loss of fixed cost due to less demand and over production. He can give this report after seeing average cost curve above the average revenue curve. If he will deeply study, he will find that at this point, company will receive average variable cost from his average revenue because average revenue will equal to average variable cost. 
 

Above three situation may be of his performance but equilibrium must be at the point where company's marginal cost will equal to marginal revenue.
Following presentation will be helpful to learn this concept deeply.

Related : Price Determination Under Monopolistic Competition Video Tutorial

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Difference Between Accrual Accounting and Cash Accounting

 Following are the main difference of accrual accounting and cash accounting :

1. On the basis of Meaning

  In accrual accounting or accrual base accounting, we record all the revenues and expenses whether we receive or pay these in cash or not.  In cash accounting or cash basis accounting, we record the transaction when we receive money or we pay money.


2. Effect on Profit and Loss Account 


  If we use accrual accounting method, our profit and loss account will be affected from income received in advance, outstanding income, advance expenses and outstanding expenses. Both Advance expenses (Due to not showing in debit side profit and loss account) and outstanding income ( Due to showing in the credit side of profit and loss account) will increase the profit of company. Outstanding expenses and advance income will reduce the profit of company.

If we use cash accounting, our profit and loss account will also record only cash expenses and cash revenue. It means advance income and outstanding expenses will income the profit of company  and advance expenses and outstanding income will reduce the profit of company which is just opposite of profit and loss accounting which is maintained under accrual accounting.


3. Effect on Balance Sheet


If we make balance sheet on the basis of accrual accounting, credit sale will increase the size of total assets because we have to get money from our debtors. And credit purchase or outstanding expenses  will increase the size of liabilities because we have to give money from our creditors. Outstanding revenue is also part of current assets in the accrual accounting method.


If we make balance sheet on the basis of cash accounting, advance revenue and advance expenses will affect the size of assets and liabilities of company. Advance revenue and advance expenses will treat normal income and expenses in cash accounting. Difference of this will be closing balance of cash which will current asset of company. If advance revenue is more than advance expenses, our current assets will be more in the balance sheet. 



Related : Cash Accounting 

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Cash Accounting

Cash accounting is that method in which we record each transaction on the basis of cash. When we receive cash, transaction of receipt will be recorded and when we pay cash, transaction of payment will be recorded. It means there will be not any record of credit sale or purchase transaction. So, this accounting method is totally different from accrual accounting.

For example, we sold goods of $ 500 to Mohan in Jan. 2011 but we received cash from our customer Mohan in Feb. 2011. In cash basis accounting, we will record our sale in the month of Feb. 2011 instead of recording transaction in Jan. 2011. If there are cash expenses of  $ 600 Feb. 2011, our cash book show negative balance. If we deal through Bank, $ 100 will be bank draft.

Suppose, Our customer Sohan gives us $ 1000 advance for his buying in March 2011. In the month of march, if there are $ 600 cash expenses. We will have net cash balance under cash accounting $ 300 because we will show advance as our sale and previous bank draft will deduct as our cash expense and we will also deduct current month's cash expenses.

{ Important Note : Cash accounting or cash basis accounting is only useful there are almost cash transactions in our business but if there are lots of credit transaction, accrual accounting is best option because with accrual accounting, we know correct profit on the basis of actual transaction happens. All credit sale and purchase and other credit revenue and expenditures will be included in accrual accounting.} 

Related : Historical Cost Vs Fair Value

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Prof. Vinod Kumar - Life in a Day Video

From few day, I am thinking to upload my life in a day video for sharing with my online students who are interested to know my life. As teacher, I am spending a very simple life. I think, every teacher's life style should be simple because he has to become role model for his students. A teacher should spend his time for finding  new ways of teaching. His life's aim should be to develop the personality and character of students.

You can get insight to my life in a day in following video:

Related : Prof. Vinod Kumar - Life in a Day (Content)

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Accounting, Taxation and Law Requirements for Company

I joined a partnership firm as an accountant some month ago. now that partnership is going to be converted as a private limited company, procedure is in process. I'll be single accountant in this company. I am worried about my job how I will handle my work. please tell me what are the accounting, taxation, law and other requirement of a private ltd. company. Also tell me what are the starting journal entries of pvt. company.

Accountant  from India

There is no need to worried about your job after conversion of your partnership firm into pvt. ltd company. There is no difficulty to maintain the accounts of pvt. ltd. company. If you have followed me as student of my accounting education classroom, how can I see you as unsuccessful in your career? Accounting's rules apply equally to the firms and company. So, your duty is to record transactions according to accounting rules not on the basis of nature of organization. But you have to fulfill accounting, taxation and law requirement for company. I expain each step by step :

{ A } Accounting Requirements

For learning accounting requirements, I recommend you to study Corporate Accounting. Daily transaction will be passed in day book just like you are passing in partnership's accounts. But to making the final account of company will be important and different from partnership's final account.

1. # In company, you have to calculate managerial remuneration as per Indian company act 1956 and will be expenses in your company's profit and loss account. If you did not learn the steps of calculating remuneration of company, please learn its steps at here.

2. # In company, all the profit will not divide in the partners of company like in partnership accounting. Company's partners are known as shareholders of stockholders. Company's entity is different from its stockholders. You have also to transfer your net profit's part to dividend, general reserve. All these things treatment will be in profit and loss appropriation account. If you still did not learn to make this account, learn now at here.

3. # Company Law has given the form of financial statement, you have to prepare balance sheet and cash flow statement according to this.

4. # I do not know your business's nature, If your business is financial, after becoming financial company, you have to follow RBI's rules and regulations. 


{B} Taxation Requirements 


1. Corporate Income Tax 

 In India, company has to pay on his earned income at a flat rate of 30% for Indian company, with a 5% surcharge applied on the tax paid by companies with gross turnover over Rs. 1 crore (10 million). After conversion of you partnership firm into company, you have to file your return via electronic way. If you do not know its basic, watch this video, this is for individual but like this, you have to electronic file of company's return.

2. Service Tax 

Your duty is to collect service tax from customer and deposit to Govt. account, if your company will provide any service.

3. VAT

You have to maintain VAT input and VAT output for net payment of VAT like partnership business's sales tax.  record it in your company's book.


4. Excise Duty 

If your company is manufacturing organization or leader, you have to pay net excise duty after getting excise duty credit.  record it in your company's book.


5. TDS of Employee's Salary


You have also collect TDS from your employee and has to deposit in Govt. account and record it in your company's book.


{C} Law Requirements 


Except Indian Company law and Income tax law, there are also other laws which have special provisions regarding company. I recommend you following law deeply for becoming perfect corporate accountant.

1. # If your new company is relating to export and import, study of FEMA 2000 and  FTDR Act 1992 will be useful for you.

2. # If your company will do work in IT sector, then please study  Information Technology Act 2000.

3. # You should also check statutory provisions relating to employee's deductions.

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Price Determination Under Perfect Competition

We all know that cost accounting's different tools are very useful to calculate correct and optimum selling price of product of company. But, before selecting this selling price and printing on each product, company manager should also calculate the price on economics rules and regulation. Only after this, manager can calculate best selling price of any product. We can say economics is the old form of modern finance. So, today, we will learn how to determine price under perfect competition.

In perfect competition, we can divide market in to perfect and imperfect market. Perfect competition is that situation of market in which there are large number of sellers and buyers. All the sellers sell the product on same price. So, price will determine with demand and supply of product. We have to make price list, quantity demanded and quantity of supply. We have to fix our selling price at that point where quantity demand will be equal to quantity supply by our supplier. This price will be called market price. You can see practical example in vegetable market. When there is no supply of vegetable, price will very high than other normal days. We can calculate price in two types of period.

Price determination in Short Period 

First of all we divide product into perishable and durable according to the nature of product. After this, we create demand and supply curves on the graph paper. In short period, price will be affected from demand because we can not increase our supply according to demand.

Price determination in Long Period

In long period, only normal price will be fixed at the point where total quantity of demand will be equal to the total quantity of supply. Company or firm will receive only normal profit at this equilibrium.

Following presentation  will be helpful to learn this concept deeply.

Related : Price Determination Under Perfect Competition Video Tutorial

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How to Teach Small Children

Small Child is learning during online playing

To teach small children is more difficult than to teach young students because many of children are not interested to get education from teacher. But we all know that our childhood is our base of education. If any teacher get success to teach small children, he should feel satisfy because his given teacher will be useful for children in their future life. So, such teachers who are really interested to teach small children should search net for getting new and new tips from expert teachers.

Recently, I have taken the interview of my best friend Vikram who is the Govt. teacher of small children. He has been teaching to 1st class to 5th class children for 10 years. I have visited his school many times. His way of teaching small children is very good. By reading the text of his interview in following lines, you will learn many tips to teach to small children more easily and effectively.


Me : Vikram , please tell me, how can we teach small children more effectively?

Me with my friend

Vikram : First of all, you as teacher should understand that small children fidget from nature. Their attention always hold in different games. So, these days, many new methods of teaching small children have been developed. One of them is play way method of teaching to small children. With this, we can  teach small children effectively. We can create interest of small children in education during the time of play. 


Me : You have taught small children more than 10 years. Please tell me how to control the mind of small children? Because I think, without controlling the mind of small children, teacher can nothing teach to small children.


Vikram : I already told that small children are of flighty nature. Their interest always is not in study but their interest always is in playing games. Sometimes they are interested in playing and sometime they are interested in chatting with other small children. So, we have to divide our time. Teacher should provide some education during playing. Teacher should provide some education during chatting with children. It is good for teacher if he makes a good time table to teach small children. 


Me : What message will you give to young teacher who are teaching small children? How can they become successful teacher by changing their method of teaching to small children?


Vikram : Teacher should teaching by going to the level of small child. Some teacher are very qualified. Some of them are also PhD. holder. They do not see their level but they have to see the level of small children while they are teaching to small children. Only after mixing with small children at their level, we can teach small children well. 

You can watch this interview at here. 


Motivation is Good Tool to Teach Small Children

Recently, my relative's child had come to my house. She was interested in painting when I was painting to my table. I gave him paint and brush and allow to paint my table. I think, if we allow small children to do any creative work in which they are interested, they will surely learn what we want to teach them. I  made her small video, when she was painting my table. You can watch it here. 

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Cookie Jar Accounting Example

Cookie Jar Accounting Example

Cookie jar accounting is one of bad accounting practice which is used by company to show the earning growth in the year when company's earning is not sufficient. In cookie jar accounting, clever accountant accountant make false reserve for company when company's earning is at highest level and this reserve is used when company is not earning sufficient with his own effort. In other word, it is the way of managing profit not the way to manage business. Sometime, it may be mislead to investor who checks the return on investment before investing in the company. So, this type of accounting practice is not recommended by auditors who audits the company.

Now, we explain cookie jar accounting with simple example

Cookie Jar Accounting Example

Suppose, company earns $ 10,000 dollar on $ 1,00,000 sales. So, profit rate is 10%.  Company's analyst expect profit rate in next year as 20% but third year it will decrease to 5%. Now, company's officer met to his company's clever accountant. Clever accountant gives suggestion that for improving third year profit rate, we have to create false reserve by creating false provision for bad debt which will be equal to 8% of sale. One side this false provision will show in the debit side and it will decrease  next year profit with 8% and we will show this false provision as liability of business in second year's balance sheet. In third year, we close the account of provision for bad debt by transferring it to the credit side of profit and loss account. With this, third year our profit rate will become 13% and in second year our profit rate will be 12% and by doing this, we can show 1% increase in third year. 

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Risk Adjusted Net Present Value

Risk adjusted net present value is little different from normal net present value. In normal net present value, we just use normal cut off rate for calculating present value of cash inflows and present value of cash outflow. But for calculating risk adjusted net present value ( eNPV), we use risk adjusted return on investment as cut off rate. This risk adjusted return on investment is more than normal cut off rate because we include some margin for unexpected risk. This excess will be of  risk premium rate. To calculate eNPV is very useful to evaluate risky assets alternatives.  This is also called expected net present value.

Formula of eNPV 

= Present value of Cash Inflows ( With risk adjusted ROI) - Present value of Cash outflow ( With risk adjusted ROI)

Under the probability model, a credit default swap is priced using a model that takes four inputs; this is similar to the rNPV (risk-adjusted NPV) model used in drug development:

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Mark to Market Accounting | Definition | Problems | Tips to Use

If we have to define mark to market accounting, we can say, " Mark to market accounting means to show all the assets and liabilities in balance sheet on the basis of current market value. According to this concept, we can also calculate market value of any asset or assets or liability or liabilities instead of showing all assets and liabilities. It is also called fair value accounting. It is suitable to financial companies who trades in shares and other stocks."

For example, If an investor owns 10 shares of a stock purchased for $4 per share, and that stock now trades at $6, the "mark-to-market" value of the shares is equal to (10 shares * $6), or $60, whereas the book value might (depending on the accounting principles used) only equal $40.

Similarly, if the stock falls to $3, the mark-to-market value is $30 and the investor has lost $10 of the original investment. If the stock was purchased on margin, this might trigger a margin call and the investor would have to come up with an amount sufficient to meet the margin requirements for his account.( Example has been taken from wikipedia)

Problems of Using Mark to Market Accounting 

There is big problem to traders, if they show assets and liabilities on their current market value instead of book value:

1. The balance sheet of company may be inaccurate, if our expected market value is not current.

2. There may be change values on the balance sheet frequently, if market prices changes frequently. If market value of assets increases fastly for temporary period than liability values, our net worth may show high value which will make our balance sheet against "the fair and current view".

3. I studied Enron Company scandal which did fraud in Maharashtra power supply and ran from India. It was using mark to market accounting as loophole. For showing better net worth, it had inflated its value of assets and decreased its liabilities with false way.  

Important Tips for Using Mark to Market Accounting 

1. It should be used by financial company and other company should use historical accounting method.

2. If any company gets long term project, its income should estimate as the present value of net future cash flows. If there is not current information of  expenses in such project, never use mark to market accounting.

3. For showing true economic value, never recognize future profits of long term project who is facing loss.


Related : Historical Cost Vs Fair Value 

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Corrupt Government

More than one year ago, I explained government expenditure and government budget which is the part of public finance. If government budget is made by honest government, general public can never live below the poverty line. A 2005 study conducted by Transparency International in India found that more than 45% of Indians had first-hand experience of paying bribes to govt. officers and Indian political leaders (As per Wikipedia's content Corruption in India) . I think, corrupt government is the main reason for the poverty of India instead of increasing population and scarcity of resources. As student of finance, I could understand the following meaning of corrupt government.


Which is Corrupt Government?

" Corrupt government is that government which get bribes for doing any public interest work and use the public money for their personal benefits without any accounting record."

I have good relationship with many  Non-resident- Indian (NRI) friends who are living USA, Canada and UK. Recently, I talked with my UK NRI friend who told many things about government corruption which I am sharing with you.

1. # My friend is from UK, he is living UK more than 30 years. He told me that every work is done in India on the basis of bribe money and political pressure. He is patient of paralysis. Recently, state govt. of UK sent him notice in which govt. wrote  that he has to pay 2000 pounds ( I do not know for what purpose). He filled case against the state govt. of UK in UK court. UK court provides him free advocate help. His advocate fought his case and won. UK court told to UK state govt. that he will give you nothing because he is patient. How can he earn? So, don't disturb him. Otherwise state govt. will give penalty to him.

We need such honest court in India who give order in the favor of consumer. We need not corrupt government in India. We need honest government who follow the order of court.

2. # Recently, my friend went to vote in UK. This vote was  not for selection of a new leader but UK govt. wants to change the law in UK. For this, UK govt. wants to get public opinion. If majority of public of UK want to change the law of UK, UK govt. is ready to end old UK law totally and to make new one. But what is in India. There is nothing changing of law in India. All laws which are providing benefits to corrupt govt., are never be changed. They never get public opinion for changing or making new law. One of the example of this is the law of Income tax. English Income tax law's all provision in Income tax law 1961. There are lots of weak points of different laws of India. Corrupt leaders of corrupt govt like A. Raja  can easily get  corrupt money. Many other corrupt leaders have account in Swiss Bank.

3. # When corrupt government does agreement with Illuminati government, at that time, it sells our public property to foreign govt. without the knowledge of public. In other words, whole corrupt political system is controlled by Illuminati govt. of other country. Whole corrupt govt. budget and currency is controlled by Illuminati government. Convertibility of Rupee is also part of it. So, we have to join to do for getting freedom from corrupt government, if we want to effective use of public money.   

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Labor Efficiency Variance

 Definition of Labor Efficiency Variance

Labor efficiency variance is the part of labor variance. If we deduct actual working time of worker from standard working time and multiply with standard wage rate, we can calculate labor efficiency variance.This variance is also called labor usage variance.

Formula of Labor Efficiency variance 

= Standard Rate ( Standard Time - Actual Time )

or 

= Standard rate X standard hours allowed - standard rate X actual hours worked

Labor Efficiency Variance Example

If standard hours produced is 1600 and actual hours paid 1500 hours, out of which hours not worked (abnormal idle time) are 50 and standard rate per hour is $ 1.50, calculate labor efficiency variance.

First of all we calculate net actual time utilized for production purpose = 1500 hrs - 50 hrs = 1450 hrs
Labor efficiency variance = $ 1.50 ( 1600 hrs - 1450 hrs ) =  $ 225 ( Favorable )

$ 225 is favorable laborers efficiency variance because we use our labor more efficiently. Our laborers completed our target production before our standard time. They deserve for appreciation.

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Credit Default Swap Simple Explanation

 In following points, I am trying to explain  a finance term "Credit Default Swap". With this simple explanation of credit default swap, I hope that credit default swap will become easy and understandable to all non-experts in finance field.

1. # Suppose, I gave $ 10 million loan to A.  This is my asset. If A will become defaulter, what will happen with my $ 10 million investment in the form of loan. It will become Zero. I am also noble personality and I can not quarrel with A. So, I contract with an insurance company and buy credit swap policy. Now, I am tension free. If my borrower will not repay my loan, my $ 10 million loan will be repaid by insurance company. So, like interest rate swap, credit default swap is exchange agreement between insurance company and lender. Insurance company takes the risk of loss due to loan defaulting. Lender will be responsible to pay the amount of CDS policy.

2. # Suppose, I sell this credit default swap (CDS) policy to B and B sells CDS policy to C. (By this way CDS will become a market product and speculators can deal in this for getting trading earning). Now C is buyer of policy and B is the seller of CDS policy. Borrower of $ 10 million loan will become reference entity. C ( Buyer) will pay of quarterly premium. Suppose A ( Borrower or referring entity) defaults on the loan. Now, it is duty of B ( Seller) to pay the par value of $ 10 million to C ( Buyer). By this C can get protection.

3. # Suppose, XL bank sells CDS to C for getting annual premium and covering loss of A company's bonds. In 4th year, A company declares that it has not capacity to pay the amount of bond. In same year, XL bank also defaults. At that time C will face loss of CDS contract.

4. # If you read the above three points deeply, you have understood about the credit default swap in real sense. Now, come and go to more deep of credit default swap with the help of following presentation. Credit Swap contract is done with good credit rating organisation like American International Group, Inc (AIG). AIG is largest seller of CDS financial product.It can easily cover risk of defaulting on loan by getting premium from lots of lenders whose borrowers are non-defaulter.

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Labor Rate Variance Example

When there is difference between standard rate of paying laborers and actual rate of paying laborers, at that time, labor rate variance happens. Labor rate variance may be either favorable or unfavorable. If our actual rate of paying to laborers is more than standard rate of paying to laborers, it will be unfavorable rate variance. We have to find the reasons of unfavorable labor rate variance. If our actual rate of paying to laborers is less than standard rate of paying to laborers, it will be favorable labor rate variance. It shows, we have to deal with laborers efficiently. We follow this system for more saving of company's money.

Labor Rate Variance Formula = Actual Time ( Standard Rate - Actual Rate )

Now, we explain labor variance with example

Calculate labor rate variance from given information :


Gross Direct Wages = $ 3000
Standard hours produced = 1600
standard rate per hour = $ 1.50


Actual hours paid 1500 hours.


First of all we have to calculate actual rate per hour of wages = Actual labor cost/ Actual hours worked


= $ 3000 / 1500 hrs = $ 2 per hour


Now, we will calculate labor rate variance = 1500 hrs ( $ 1.50 - $ 2.00 ) = $ 750 ( Unfavorable)


This labor rate variance is unfavorable because we have paid to each laborer more than what is our standard rate per hour for paying laborers. There may be lots of reasons of this. Labor organization has increased by  $ 0.50 per hour or we have hired laborers at high rate. So, this variance will be very helpful for company for reducing the cost of laborers. 

Sometime, We have to calculate missing figures before calculating labor rate variance. See this example 


Calculate labor rate variance from following information:

	Standard	Actual
Nos. of men employed	100	90
Output in units	5000	4800
Number of working days in a month	20	18
Average wages per man per month	$ 200	$ 198

First, we calculate standard rate, actual rate standard t ime and actual time which are not directly given in the question. 


Actual wages per man per month 


= Standard wages per man per month / standard working days in month 

= $ 200 /20 = $ 10


Actual working days in a month 


= Actual rate per day = actual wages per man per month / actual working days in a month 

= $ 198 / 18 = $ 11




Actual man days = number of men X working days = 90 X 18 = 1620 man days


Labor Rate Variance = 1620 man days ( $ 10 - $ 11 ) = $ 1620 (Unfavorable)

Related : Material Yield Variance Example

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Non Performing Assets in Banks

Now, to study non performing assets in banks has become important because RBI's Financial Stability Report which has been published today, has told that main reason of decreasing the profitability will be non performing assets in banks. RBI explained in the report that the gross NPA ratio in the agriculture sector rose to 3.3 per cent in March from 2.4 per cent a year earlier.

What is  non performing assets in banks?

Non performing assets is the investment of banks in doubtful loan. In simple words, it means to give loan to those parties who will not repay on the time. RBI has made a simple rules of asset classification  for showing non performing assets in the balance sheet.

If bank does not get his given loan with in 90 days after date of its collection, it will become non performing asset in bank. In bank term, it is called NPA. It is also called non performing debt or loan.

Related : RBI's Balance Sheet Analysis

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Material Yield Variance Examples

Material yield variance is the part of material variances. It shows the variance due to difference in actual abnormal loss and standard abnormal loss.  It is excess of material quantity variance over material mix variance. If we deduct material mix variance from material quantity variance, we can calculate material yield variance. With following examples we are explaining material yield variance.

1st Example : When standard mix and actual mix of material are same :

From the following data, calculate materials yield variance :

Standard Mix 

Material A 200 units @ $ 12

Material B 100 units @ $ 10

Actual Mix 

160 units @ $ 13

140 units @ $ 10

Standard loss allowed is 10% of input. Actual output is 275 units.

In this case standard and actual mix do not differ, So there is no need of calculating revised standard mix.

Standard Mix			Actual Mix
Material A	200 units @ $ 12	2400	160 units @ $ 13	2080
Material B	100 units @ $ 10	1000	140 units @ $ 10	1400
	300 units	3400	300 units	3480
Less Loss	30 unit ( 10%)		25 units ( Actual loss 300-275)
	270 units	$ 3400	275 units	$ 3480

Standard Cost per unit = $ 3400 / 270= $ 12.593

Material Yield Variance = Standard Rate ( Actual Yield - Standard Yield )

= $ 12.593 ( 275 - 270) = $ 62.965 Favourable

 Material Yield Variance's 1st  Example Simplified :

I know many of readers of Accounting Education could not understand this example. Friends ! $ 62.965 is favourable material yield variance. You know that yield means output. We (Company) did best. Our actual output is more than standard output. You also know, when does it happen? It happens only when we have succeeded to reduce our abnormal losses. In above example, we fixed standard or estimated abnormal loss 10% of total standard quantity of A and B material. But we did our work more efficiently. After this, our actual abnormal loss occurs only  8.33% of actual quantity. Due to this reason, our material yield variance is favourable for our business's growth.

Verification 

Material Yield Variance = Material Quantity Variance - Material Mix Variance

It means for verification of material yield variance, we have to calculate material quantity variance and material mix variance. With this verification, you will also learn the difference between material mix variance and material yield variance.

Material Quantity Variance 

= Standard Price ( Standard Quantity of one type of material/ (total standard material - Abnormal Loss ) X actual output - Actual Quantity)

MQV for material A = $ 12 ( 200/270 X 275-160) = $ 524.44 Favourable

MQV for material B = $ 10 ( 100/270X275 -140) = $ 381.48 Unfavourable

--------------------------------------------------------------------------------
Total MQV = $ 142.96 favourable
===========================================

Material Mix Variance 

MMV  =standard cost of standard mix - standard cost actual mix

MMV = $ 3400 - ($ 12 X 160 + $ 10 X 140)

MMV = ($ 80) favourable


MYV = MQV - MMV = 62.96 Favourable

2nd Example : When standard mix and actual mix of material are not same :

 To understand material yield variance is little difficult when standard mix and actual mix of material are not same. But if you will seriously study and remember the formula, you can use it easily.


Calculate Material Yield Variance from following information

Standard Mix 

Material A 200 units @ $ 12

Material B 100 units @ $ 10

Actual Mix 

160 units @ $ 13

120 units @ $ 10

Standard loss allowed is 10% of input. Actual output is 275 units.

In this case standard and actual mix are 300 units and 280 units which are different, So there is the need of calculating revised standard mix.

Revised Standard Mix of A material

= Standard Quantity of A / Total Standard Quantity of A and B X Total Actual Quantity of A and B material

= 200/ 300 X 280 = 186.66 units

Same way, we will calculate revised standard mix of B material

= 100 / 3000 X 280 = 93.33 units

Standard Rate per unit = $ 3173.25/ 252 =$ 12.59

Material Yield Variance = Std. Rate ( Actual Yield - Standard Yield)

= $ 12.59 ( 275 -252) = $ 289.57 Favourable because actual production is more than standard production.

Related : Material Mix Variance Examples

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How to Calculate Material Mix Variance

For explaining the steps of calculating material mix variance, we are taking following examples:

1. When there is no difference between actual and standard weight of material:

Calculate Material Mix Variance. Following information are given:

Materials	Standard	Actual
A	200 units @ $ 12	160 units @ $ 13
B	100 units @ $ 10	140 Units @  $ 10

Both Material A and Material B's Standard weight and actual weight is 300 units.

Due to shortage of material A, it was decided to reduce the consumption of A by 15% and increase that of material B by 30%.

Material Mix Variance (Formula) = Standard Unit Cost ( Revised Standard Quantity - Actual Quantity)

Important Steps : For calculating of material mix variance, we need to calculate revised standard quantity

Revised standard Quantity of A material = Actual Quantity of A - % of reduction

= 200 units - 200 X 15% = 170 Units

Revised Standard Quantity of B Material = Actual Quantity of B + % of Increase

= 100 units + 100 X 30% = 130 units

Material Mix Variance of A Material = $ 12 ( 170 - 160 ) = $ 120 ( Favourable because actual quantity is less than revised standard quantity)

Material Mix Variance of B Material = $ 10 ( 130 - 140 ) = $ 100 ( Unfavourable because actual is more than revised standard quantity)

--------------------------------------------------------------------------------
Total of Material Mix Variance = = $ 20 ( Favourable)

======================================================


2. When Both Actual and standard weight of materials are different : 

From the data given below, calculate the material mix variance

Standard weight of material A and b is 100 which is different from actual weight of material A and B which is 110 units.

Material Mix Variance ( Formula) = { Total weight of actual mix/ total weight of standard mix ) X Standard cost of standard mix } - Standard cost of actual mix

Important steps : First, calculate

Total weight of actual mix = 50 units of A material + 60 units of B material = 110 units

Total weight of standard mix = 40 units of A material + 60 units of B material = 100 units

Put the value in the formula

MMV = { 110/100 X ( 40 units X $ 50 + 60 units X $ 40 ) } - ( $ 50 X 50 units + $ 40 X 60 units )

$ 4840 -$ 4900 = $ 60 Unfavourable

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Office Work safety tips

What are some safety tips of office???? eg don't put your hand in your mouth when checking money. or safety rules you use to keep working in the account office safe???

 Elison from  Trinidad

 Elison ! I think you want to know office work safety tips. Buzzle.com and Torbay.gov.uk have given good tips of office work safety. You can read there. Here, I am writing some of their tips as quote.

1. Ensure that all your doors and windows have security locks.
2. Switch off all electric appliance after use.
3. First aid boxes should available in the office for quick treatment of injuries after accident in office.
4. Payroll department must keep all documentation filed in locked cabinets.
5. Install fire alarms. Practice fire drills with your employees.

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Interest Rate Swap

Interest rate swap is contract between two companies through any financial intermediary. This contract is of exchange of  interest rate. In this contract, one company exchanges his fixed interest rate in to floating interest rate and other company exchanges his floating interest rate in to fixed interest rate. This deal is done in international money market or by derivative in OTC market. This is good way to hedge in the fluctuation of interest rates. Main aim of interest rate swap to reduce the cost of debt.  

Interest Rate Swap Example


Interest rate swaps are simply the exchange of one set of cash flows. Generally speaking, swaps are sought by firms that desire a type of interest rate structure that another firm can provide less expensively. For example, let's say B company is seeking to loan funds at a fixed interest rate, but A company has access to marginally cheaper fixed-rate funds. Company A can issue debt to investors at its low fixed rate of 5%  and then trade the fixed-rate cash flow obligations to Company B for floating-rate obligations issued by Company A. Even though Company B may have a higher floating rate than Company A, by swapping the interest structures they are best able to obtain, their combined costs are decreased - a benefit that can be shared by both parties. I again summarize :

A) Company A exchanges his fixed interest rate for floating interest rate through interest rate swap. For this, his obligation will be 5% (Floating LIBOR) - ( 10 BPS + 1.5 basis of points (LIBOR).)

B) Company B exchanges his floating interest rate for fixed interest rate through interest rate swap. For this, his obligation will be 5% interest (Fixed) + (20 BPS + 1.5 BPS)

Types of Interest Rate Swap 

1. Fixed-for-floating rate swap, same currency
2. Fixed-for-floating rate swap, different currencies
3. Floating-for-floating rate swap, same currency
4. Floating-for-floating rate swap, different currencies
5. Fixed-for-fixed rate swap, different currencies

Related : How to Control Foreign Exchange Risk

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Cost Reduction

Cost reduction means reduction of per unit cost of production by increasing efficiency or productivity. It is permanent process and after reducing cost, any company can survive in stiff competition. There are lots of ways, with this, we can reduce our cost. By changing the layout design, changing the production method, new innovation in marketing, getting cheap advertising like online google ads or facebook ads. Here, I am giving some examples of Cost Reduction

Ist Example

Suppose, we had produced 1000 units of product A and its cost was $ 10,000 and per unit cost was $ 10. Now, company uses cost reduction techniques and gives more stress to increase efficiency and to manage waste. After this, cost of production of same 1000 units was reduced to $ 9000. Due to this, per unit cost was reduced by $ 1. This is the simple example of cost reduction. Now, we give some examples of corporate sector.

2nd Example

Previous year, NACIL had succeeded to reduce its cost when company saw there is not economic benefit from Govt. side, it tried to change the system to pay wages and salaries to employees. With every appointment of employee on load, it reduced its cost.

3rd Example

Recently, the company who is making third pull on hindon river has reduced its cost. Total cost of making third pull was decided to Rs. 32 Crores, now, its cost is Rs. 28 Crore 72 lakhs. It means govt. saves 3.28 Crores due to this decreasing of cost. With this, society will get benefit because govt. money is public money and cost reduction in it will be helpful to complete other big projects of public interest.

Related : Benefits of ERP 

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How to Manage Classroom

Bad  Classroom

 Many years ago, I listened from a great teacher about good way to manage classroom and students. If you want to manage classroom effective way, you also follow that great teacher's tips. That teacher told me that a student needs three things from a teacher. One is love, second is security and third is honor for his work. If a teacher provides these three things, his student will satisfy from him. You should love your students, you should provide security to your students and you should give honor for every creativity of your students. All other things should also be controlled for proper management in classroom. 

Good Classroom

1. Lesson Plan

Before going to class, make good lesson plan.

2. Agenda

You should have good agenda of all your teaching duties 


3. Clear and Well Written Syllabus

You should know what you teach and what is your syllabus.

4. Be Consistent with Punishment

 Be consistent with all students, you give punishment. Never give small punishment to those which are your favorite.

5. Get to Know your Students

Make good relation with your student. But never mix with students. If you become a teacher  who can make a difference in a student’s life, you can manage classroom good way.

6. Homework and Feedback

Always give some homework and take some feedback of your students' home work.

7. Clear Communication

Your communication with students must be clear. If any student could not understand, try to teach again in simple language.

8. Freedom of Creativity

 Freedom of creativity is also part of management of classroom. Student should feel that school is just like a place of fun not a jail.

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