Human Resource Reporting Structure

Human Resource reporting structure is that structure in which all reports relating to employees are made and transfer to related authorities  with systematic and easy way without manual workload. Today, there are many software, with this, we can make automatic structure of different human resource reporting. In these software, we can include ERP, HRMS, SAP and Oracle. With these software, we can generate following reports very fastly.

1. Payroll
2. Work Time
3. Appraisal performance
4. Benefits Administration
5. HR management Information system
6. Recruiting/Learning Management 
7. Performance Record
8. Employee Self-Service

These days, E-HRM is also playing very important role for networking and reporting of HR activities. 

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Inspiration for Students

There are many problems of students whose answer they want from teacher. But when teacher do not answer their problems, student may feel upset. At that time, students may be out of line. Sometime, study may be bore for students. Difficulty in study may be biggest barrier for students. But, if students get inspiration from other great persons or happening of the world, they will not fear from difficulty. They will learn to face the problems. They will love to their problems because they will know that problems will support him to fight and make a path of their target. So, my 2 days, I spent my time for watching some of good inspirational videos for students. After watching these videos, I have decided to write something which will be inspiration for my students of Accounting Education.

1. I can Run without Legs 

I remember, when I was in illness in school days, I did not study. When my mother asked me, I told my mother that I was in fever. How can I study? Main reason was I did not see John Prenguber's inspiration video. In this video,John Prenguber, who lost both legs to diabetes, run in the front of Students at the Kunsberg School. He has no legs but with two iron sticks, he runs. I think, he is giving inspiration to students. He is saying, when he can create his will power and run, then students should also not fear from their illness. If they start fight to illness. It is sure that they will win in this fight. 

2. I did Graduation in Hotel Management  for Feeding to Poor and Helpless Only

Why are you doing graduation, post-graduation, degree, diploma or any course? You may answer for earning money, to set up their profession. 40% of total population is young and all are doing same. Some of them studied and earned money just for family. But some do something different. One of them is Naryanan Krishnan. When he completed his hotel management degree, he was going for working in hotel But when he saw the poor and hungry people in his village, he remembers his aim of study. He starts to feed all poor, needy, helpless and hungry people. See this video at here.

Are you doing CA, MBA or other professional course. Did you fix your aim to help to helpless. If yes, it is sure you will get success in your course because to help the helpless is the duty of God. If you have this aim, God will help you in your aim.

3. Failure is Gift for US 

Sometime ago, I read in the newspaper that a student did suicide due to fail in examination. Do you think that some persons pray to God for their failure in examination? Failure is gift for them. Failure is challenge for them.  In reality, they want to fail in the examination. Do you think, the reason behind this? Actually no one want to fail in examinations but when some of great personalities fail in the examination, they say that they want to fail because God has given one more chance to deep in their study. If they never failed, they never learnt. Great Lucille Ball failed in drama school. Great Abraham Lincoln failed in State elections many times.Great Michael Jordan failed in playing of basketball due to not going in competition day. Teacher told Great Thomas Edison stupid to learn anything. But you know that all these personality became great because they never give any importance to fail and pass.

4.  I want to Get Success not to Survive

If anybody asks from you, what will do with future? You can say, "I will survive." It is not good answer. You should say that I will get success because

a) You were born to succeed.
b) You best can be still in your future.
c) Your future is in your hand.
d) Inside you is untapped potentials.
e) You have unlimited value.
f) Your dreams can definitely come true.
g) You are unique and special.
h) You can achieve what ever you put your mind to.

So, increase your confidence and attract the good around you. Step forward daily. Positively engage your relationships.

Related : Interview of Great Motivator Dr. MD Swatanter

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Corporate Financial Reporting

Introduction of Corporate Financial Reporting 

Corporate financial reporting is not only to show the financial statements of corporate but it includes to highlight important financial data and to show the application of financial policy. A good financial reporting will show true financial position of company. Company can save from hidden losses, if its accountant highlights critical points in it. In this way, it is helpful tool to investors for better decision making.

Definition of Corporate Financial Reporting 

Corporate financial reporting is the system of making corporate financial reports. These corporate financial reports are income statement, balance sheet, cash flow statement, statement of retained earning and financial policies explanation. Corporate financial reporting may be shown at the end of month or at the end of each quarter or at the end of year.

1st Corporate Financial Report : Income Statement

It is also called profit and loss account. In income statement, we come to know whether company is earning profit or suffering loss. We can find the main expenses of company and main sources of earning. What amount , it is giving in the form of dividend which is showed in statement of retained earning. Net income after all adjustments is transferred to reserve and surplus section in the liability side of balance sheet. 

2nd Corporate Financial Report : Balance Sheet 

This corporate financial report shows the financial position at given point of time. It provides the information of  all assets and liabilities. This financial report is useful for balance sheet analysis.

3rd Corporate Financial Report : Cash Flow Statement 

In cash flow statement tells us the net cash flow in operating, investing and financial activities. This indications are helpful to analyze cash flow. This report explains the sources and applications of liquidity of company.

4th Corporate Financial Report : Explanation of Financial Policies and Notes

Big corporates also makes some financial notes and explain the financial policies in detail with above financial reports. In these policies, company shows its inventory policy, depreciation policy, debt terms and dividend policy. It also shows list of loss of impairment on fixed assets.

Financial Reporting Explanation

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How to Prepare Statement of Affairs

At the time of liquidation of company, a very important statement is made for showing estimated realizable value and liabilities expected to rank. That statement is called statement of affairs. To prepare statement of affairs is also important because by making statement of affairs we can know what amount of surplus or deficiency in balance. Company act 1956 has given its format. Different items are estimated as per different lists. Now, we are preparing and explaining statement of affairs according to list of assets and liabilities. You should remember statement of affairs all item thoroughly. Difference between the estimated value of assets and liabilities will be estimated value of surplus or deficiency.

1. List A : Assets not specifically pledged 

First of all, we make the list of assets which are not on pledge. you should not take any loan by giving these assets as security. We write these assets' estimated realizable value instead of book value because creditors are interested to know what amount will they receive after selling of these assets in market. Value of call in area will be assets under list A.In these assets, we can include

i) Balance at bank

ii)) Cash in hand

iii) Marketable Securities

iv) Bills Receivable

v) Trade Debtors

vi) Loan and Advance

vii) Unpaid calls

viii) Stock in trade

ix) Freehold property

x) Leasehold property

xi) Plant and property

xii) Furniture Fittings, Utensils etc

xiii) Investment other than marketable securities

xiv ) Livestock

xv) Other property

2. List B : Assets Specifically Pledged 

In list B, we include estimated realizable value of all the assets specially mortgaged, pledged, or otherwise given as security. We also classify these pledged assets into under possession of company and not under the possession of company. We will calculate surplus or deficiency after deducting these assets' estimated realizable value from amount of secured loan and then adjusted it in estimated realizable value of  assets which are not pledged.




3. List C : Preferential Creditors

Now, we deduct preference creditors of list C from the total of List A and List B amount

4. List D : Debenture holders Secured by a floating charges

The balance after deducting list c preference creditors is used for deducting the amount of debentures secured by a floating charges and its payable interest.

5. List E : Unsecured Creditors

The balance of assets after deducting list d debenture holders amount   is used for deducting the amount of unsecured creditors.

6. List F : Preference Shares 

In this list, we include all the payable amount of preference shares which is deducted from realizable asset's balance after deducting list E's liability.

7. List G : Equity Shares 

In this list, we include all the payable amount of  equity shareholders  which is deducted from realizable asset's balance after deducting List F's liability. For calculating equity shares exact value, we deduct irrecoverable unpaid calls.

8. List H : Surplus or Deficiency 

Balance will be surplus or deficiency which will be included in list H

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Accounting for Corporate Restructuring

Introduction

In the accounting for corporate restructuring, we treat the cost and losses of simple and internal restructuring, asset based restructuring, capital restructuring, amalgamation and absorption. This is CA Final's financial reporting topic. Examiner expects your knowledge of this topic. First of all we discuss about the treatment of cost and losses of simple and internal restructuring. In this treatment, we have to record of cost of changes in operation, cost of closing any plant or product line, cost of termination the services of employees and other legal and advertising charges.

{A} Accounting Treatment for Simple and Internal Corporate Restructuring 

Following Steps will be useful in this accounting :

1. # All cost and losses which have been identified in corporate restructuring will be shown in the liability side before actual payment.

2.# In accounting for corporate restructuring, it is must to know the commitment date. For example, on 15th Oct. 2010m we have decided to terminate the service of our 500 employees by giving million dollar under our corporate restructuring contract, but it has approved from both parties in 1st march 2011 but before closing of our financial year. So, in our financial statement, final payment to 500 employee will be shown as liability.

3. # Cost of future benefit will not include in it.

4. # Liability will be recognized when company has obligated to pay due of contract.

{B} Accounting for Corporate  Asset based Restructuring

In corporate asset based restructuring, we include merger, acquisition, demergers and asset swap. merger means to join two or more company for working. Acquisition means to buy other company. Demergers means to transfer of part of company in other by giving the free shares of new company to existing shareholders. Asset swap means to sell the asset of company for restructure. In the accounting for these corporate restructuring, we have to pass proper journal entries and to show the effect of these restructure in our financial statement. Following is its example

Journal Entries in the books of Diverse Ltd. 

In this question, diverse ltd demerge into two companies One is sunrise ltd and other is khajana ltd.

1. Our investment is taken over by khajana ltd. So, receiver of khajana ltd will be debit, our investment goes out, so our investment will credit

Khajana Ltd Account Dr.  800 Crores

Investment Account Cr.  800 Crores

2. Khajana Ltd also has taken over our unsecured loan, with this, our unsecured loan liability decreased, so it will be debit and khajana ltd will become the giver of the payment of our this  liability, so khajana ltd account will credit. 

Unsecured Loan Account Dr. 600 crores 

Khajana Ltd. Account Cr. 600 crores 

3. Because difference between investment takeover and unsecured loan account is 200 Crores, it means same will be equity share capital of khajana ltd transferred from diverse ltd. 

Equity share capital account Dr. 200 crores

Khajana Ltd account Cr. 200 crores

4. Entry for transfer of assets and liabilities to sunrise ltd. (Amount in crores)

Sunrise ltd Dr. 10

Provision for depreciation account Dr 30 

Secured loan against fixed assets account Dr. 300

Secured loan against working capital account Dr.  100

Current liability account Dr. 1700 

Fixed asset account Cr. 600

Current asset account Cr.  1500

Capital Reserve Cr. 40

5. Transfer of Equity shares in Sunrise ltd

Equity shares of sunrise ltd Dr. 10 crores

Sunrise ltd Cr. 10 crores 

6. Issue of convertible debentures by sunrise to diverse ltd will be 

Investment in Debentures account Dr. 500 crores

Bank account Cr. 500 crores

7. Diverse ltd bonus shares issue to existing shareholders 

Revenue Share to Equity Share Capital account Dr. 250 Crores

Equity Share capital account Cr.  250 Crores

You can now easily make balance sheet of diverse ltd, khajana ltd and sunrise ltd. For more reference, see the example in ICAI's pdf at http://www.icai.org/resource_file/19329sm_finalnew_cp4.pdf

Accounting for Amalgamation Restructuring

If you want to know accounting for amalgamation, you can learn it at here.

Related : CA Financial Reporting Notes

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What is Depreciation Tax Shield

In simple words, depreciation tax shield is the proper management of asset for saving the tax. In this proper management, we give special care for the deduction of depreciation. This is not cash amount but we get deduction from our taxable income. This will become our major source of cash inflow which we saved by not giving tax on depreciation amount. Suppose, company's depreciation is Rs. 100000 and tax rate is 30%, then Rs. 30000 will be depreciation tax shield. In the optimistic scenario of NPV, depreciation tax shield is used for calculating net cash flow.

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Answer of Accounting Question of the Student of Nigeria

Alesinloye Funke from Nigeria

Question { Asked on 8/19/2011 14:22:12}

In preparing Bank Reconciliation Statement for an account based in foreign currency but translated in Naira in the Financial statement and for transaction purposes the foreign currencies are purchased from black market, how do you reconcile. What rate do you use to translate your Bank closing balance at the end of the month?

Also if there are no transactions in a particular period, from the scenario stated above,what rate do you use to translate the existing bank closing balance?


Also if there are no transactions in a particular period, from the scenario stated above,what rate do you use to translate the existing bank closing balance?

Then how do you treat this in cash flow analysis?"


Answer { Given 8/27/2011 - 10:50 P.M}

Alesinloye Funke! First of all it is not good to get foreign currency from black market. As per accounting rule,  accounting should not use for illegal purpose. OK, I deem, it is just example. Suppose, your company buys some advance hardware but for this, you need for this purpose, your company exchanged own currency into USA Dollar. It may be costly because this is illegal market.  Suppose, you bought 1-1-2011 and payment was done in 30-3-2011. Now, if there is fluctuation in the currency rate, then you may be loss or gain in Forex. You can reconcile it by checking of bank statement, that is not any difficult task.

"What rate do you use to translate your Bank closing balance at the end of the month?"  I think, you want to know if there is gain or loss at payment date, what will be its re-translate rate in your own currency? It depends on you, when you will give this, that day rate will be applicable.

What will its effect on cash flow analysis will be dependent on its nature of expense. If it is operating expenses, we will check its effect on operating cash flow otherwise we will check its effect on financial or investment.

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Accounting and Reporting of Financial Instruments

Accounting and reporting of financial instruments is on of important topic of CA-Final's subject "Financial Report." Accounting and reporting of financial instrument also include in IFRS 9 phase 1 (Part 1). According to this, "Financial instrument will show in the books at fair value. All debt securities, securitized instrument, bonds, commercial papers and municipal securities will be financial instruments."

Accounting Treatment of Financial Instruments 

(A) Recording of Buying and Selling Value of Financial Instruments 

Students should understand that which value should investor or issuer of financial instruments record in his books? Value will not be original cost but it will be fair market value and its information will be find from stock  exchange or money market. For example on the date of recording of financial instrument, fair market value of A financial instrument is $ 500 and its original cost is $ 400, we will record that financial instrument on $ 500

(B) Recording of Interest Payable 

Every financial instrument is issued with a coupon. After checking coupon, issuer will pay the the interest to investor. If interest is not paid, then both party will record this interest as outstanding. For issuer, it will be outstanding or payable interest and for investor, it will be interest receivables.

(C) Recording of Forex Profit and Loss 

If investor or issuer deal in foreign financial instruments, its foreign exchange profit and loss will be shown as revenue earning or loss in profit and loss account.

Financial Reporting of Financial Instruments 

In the balance sheet of investor, financial instrument will be shown as asset at fair market value and excess of unrealized earning provision of fair market value over cost will be shown in liability side.

Liabilities	Amount	Assets	Amount
Unrealized Earning  Provision ( excess of fair market value over cost)	$ 10000	Assets will be shown at fair market value	$ 50000

Related : CA Final - Financial Reporting Notes

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List of Hedge Funds in Canada

There are lots of financial companies in the world who are doing hedge based trading. But Hedge fund industry in Canada is in its beginning stage. Only 4% to 5% of total assets under hedge fund is in the hand of Hedge funds Canada. These hedge fund companies offer to investor to invest their money for getting return with minimum risk due to diversification of their investment in different projects. If you are interested to invest in hedge funds, following list of hedge funds in Canada will be useful for you.

1st Hedge Fund in Canada - Exhilway

Exhilway is a hedge fund company headquartered in Calgary, Canada. Exhilway is the sixth largest financial company in the world that masters in the art of proprietary arbitrage which includes global equity and commodity markets. Exhilway employs over 9500 people worldwide as of 2011.

2nd Hedge Fund in Canada - Sprott M.P. Corporation

Sprott Molybdenum Participation Corporation was a dedicaded commodity hedge fund created in April 2007 by prominent Canadian investor Eric Sprott to invest in molybdenum assets. The primary investment objective of the Corporation was to achieve capital appreciation by investing in securities of private and public companies that explore for, mine, and process molybdenum.  The fund was listed on Toronto Stock Exchange under the ticker MLY (TSX: MLY).

3rd Hedge Fund in Canada - APE Capital LLC

It is also hedge fund company in Canada whose official site is www.apecapital.com.APE Captial LLC has been started from a private investment fund in 2009.  

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Depreciation Problems and Answers

Asked by Rajeev Mantya from India

   Depreciation Problem 1.
Special Points : (a) Depreciation under Fixed Instalment Method; (b) Assets purchased on different dates, (C) Sale of Asset, (d) Loss on Sale

B. Co. Purchased machinery as follows :

Date of Purchase Cost of Machine (Rs.)

1.4.2006 → 60,000

1.10.2006→ 40,000

1.7.2007 →20,000

On 1.1.2008 one-third of the machinery which was purchased on 1.4.2006 became obsolete and was sold for Rs. 6,000. The machinery was to be depreciated by Fixed Instalment Method at
10% p a.

Show how the Machinery Account would appear in the ledger of the Company for the years
2006. 2007 and 2008. Assume that the accounting year of the Company ends on 31st December
every year.

(Ans: Loss on sale Rs. 10,500; Annual Depreciation 2006 Rs. 5,500: 2007 Rs. 11,000; 2008 Rs.
10,000. Balance at Machinery Account on 31. 12.2008 Rs. 77,000)



Answer 1 

Rajeev Mantya! You have to calculate depreciation, loss on sale of machinery first before making machinery account. See, how to?


a) Calculation of Depreciation for 2006


i) 10% on 60000 for 9 months = 60000X 9/12 X 10/100 = 4500
ii) 10% on 40000 for 3 months = 40000 X 3/12 X 10/100 = 1000
--------------------------------------------------------------------
Total Depreciation of 2006 = 5500
--------------------------------------------------------------------


b) Calculation of Depreciation for 2007


i) 10% on 100000 for one year = 100000 X 10% = 10000
ii) 10% on 20000 for 6 months = 20000 X 6/12 X 10% = 1000
----------------------------------------------------------------------
Total Depreciation for 2007 = 11000
===============================================


c) Calculation of Depreciation for 2008


i) 10% on ( 60000 - 60000 X 1/3) for one year = 4000
ii) 10% on other machinery ( 40000 +20000) for one year = 6000
-------------------------------------------------------------------------
Total Depreciation for 2008 = 10000
================================================


d) Calculation of Loss on Sale of Machinery


Cost of Machinery on 1-4-2006 = 60000 X 1/3 = 20000
Less Depreciation 10 % for 2006 = 20000 X 9/12X 10% =  (-) 1500
Less Depreciation 10% for 2007= 20000 X 10% = (-) 2000
----------------------------------------------------------------------
Cost of Machinery on 1-4-2008 = 16500
Less Sale Value on 1-4-2008 =  6000
---------------------------------------------------------------------
Loss on Sale of Machinery = 10500
===============================================


Now, it is easy to make machinery account. It is real account and all purchasing of assets will debit and sale will credit in this account and balance will show in the asset side of balance sheet. 

Machinery Account

Date (Dr. )		Amount	Date (Cr.)		Amount
1-4-2006	Bank a/c- purchase	60000	31-12-2006	Depreciation a/c	5500
1-10-2006	Bank a/c- purchase	40000	31-12-2006	Balance c/d	94500
		100000			100000
1-1-2007	Balance b/d	94500	31-12-2007	Depreciation a/c	11000
1-7-2007	Bank a/c- purchase	20000	31-12-2007	Balance c/d	103500
		114500			114500
1-1-2008	Balance b/d	103500	1-1-2008	Bank a/c- Sale	6000
			1-1-2008	Profit and loss account -loss	10500
			31-12-2008	Depreciation a/c	10000
			31-12-2008	Balance c/d	77000
		103500			103500

 Please wait for the answer of other depreciation problems. Soon, I will be update. 


Depreciation Problem 2.

Special Points : (a) Use of Provision for Depreciation Account, (b) Journal Entries, (c) Sale and Profit on
sale.

After Rs. 5,000 was provided for depreciation in the current year. the accumulated provision
for depreciation went up to Re. 50,000. The Machine concerned whose original cost had been
Rs. 55,000 was then sold as scrap for Rs. 20,000 (cash) and replaced thereafter by a new machine
costing Rs. 75,000. Give Journal entries to record the above transactions.
(Ans.: Profit on sale of scrap Rs.15000]


Depreciation Problem 3.

Special Points (a) Depreciation under diminishing balance method, (b) Purchase of Assets on different
dates, (c) Sale and profit or loss on sale.

Q Ltd, purchased on 1st January, 2008 a machine for Rs. 10,000. On 1.7.08 it again purchased

another machine for Rs. 5,000. On 1.7.09 the machine purchased on 1.1.2008 was sold for Rs.
4,000. On 1.7.2010 a new machine was purchased for Rs. 12,000. On the same date the machine
purchased on 1.7.2008 was sold for Rs. 4,200.
Depreciation was provided at 10% p.a. on the written down value every year. Show the Machinery
Account .
(Ans.: Loss on sale in 2009= Rs.. 4,550 Profit on sale in 2010 = Rs. 139)

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How to Get Online BBA Degree Programs in India

Online BBA Degree Programs in India

BBA  is  that degree program  in India which is very useful for doing MBA. All the subjects which is taught in BBA are repeated in MBA with advance knowledge. In simple words, BBA strong your managerial skills.  It includes all subjects of management like  personnel, marketing and financial management. Except these subjects, students also have to study business and basic accounting in BBA. There is no big opportunity after BBA but after BBA, MBA will become more easy for you. Getting BBA degree is good starting for becoming managerial professional. If you are interested to enroll in online BBA degree programs in India, we can help you in this.

Following are the tips which may be useful for you for selecting any institute for your online BBA Degree program.

1. Recognition with UGC

When you will write on Google "Online BBA Degree programs in India", you will find lots of universities, colleges and institutions who are offering you online BBA degree. Some of them are using advertising for reaching to you. They will show that they are recognized from UGC. First of all you should make the list of all these institutions. After this, Go to UGC's official site www.ugc.ac.in and search whether these institute are recognized from UGC or these institutions are just fooling to you. Recently, I have checked UGC site about an institution who is offering both BBA and MBA and is showing that these degrees are recognized by UGC. UGC site is showing it is fake. So, beware from such institutions.

2. Online Support 

You have to choose that institution for your online BBA Degree whose online support is better. BBA is an academic degree for you. This is not your 3 years time pass. We know, you want to do this online BBA degree because you also are doing other courses like CA or diploma in CFP  or doing professional work in any other organisation. So, it is very necessary for you to check online support. For example, you can see my Not-for- profit organisation. I have done everything for your support. I am not offering you any degree but I am ready to help you through Google talk, + Google hangout, YouTube, ask a question, solution and academic notes and moreover, I have shown my phone no. in the end of my website. Why did I do this? Just for your help. But organisation in which you are enrolling, has taken all fees for this. So, check what is it providing to you. You can also contact other past students to know whether online support is good or not. These students, you can easily find on Face book and online educational forums.

3. Guidance for Foreign Students

If you are not citizen of India, you can also take admission in such online BBA degree programs in India but you have to see whether is any center or branch office in your country or near your location. If not, then check whether institution is providing you the facility to give examination online. You also check whether that institution is approved by All India Council for Technical Education (AICTE).

Some institutions are very smart. They include some organizations that do not offer educational accreditation but have been falsely identified as accrediting bodies by organizations that claim to have been accredited by them. For example, some Indian Educational Institutions are showing that these are recognised from International University Accrediting Association (IUAA). But when you will search in Google with "International University Accrediting Association", you will not find this organisation's official site. It means it is false. After this, I will go more deep and find the List of unrecognized higher education accreditation organizations in  Wikipedia. You can read it at here. When I searched just press Ctrl + F and wrote same "International University Accrediting Association."  Same IUAA was in it. So, foreign students should know these things before admission in online BBA Degree Programs in India.  

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What is the Eligibility for Assistant Professor in AICTE Approved Engineering Colleges

Respected Sir / Madam

I am R.Chokkalinggam from Coimbatore - TAMILNADU. I Have completed MBA Degree with 70% of Marks Under Distance Mode in PERIYAR UNIVERSITY – SALEM in June 2010 and Cleared UGC – NET Lectureship Exam in December 2010. Also I have 10 Years Managerial Experience in Private Company.

I had seen a Article About AICTE policy on distance education ( Advt No: 32
http://www.aicte-india.org/badvertisements.htm. ) Three Panel Approval Required for MBA ( Means AICTE / DEC / UGC ). Our Institution Where I am Studied my MBA in Distance Mode is UGC and DEC Approved . I have Completed My Studies Under ( 10+2+3+ 2) Pattern.


Here My Question is, am I Eligible for Working as ASST. PROFESSOR in AICTE approved Engineering Colleges . and I have a doubt Whether My MBA course is Valid in the View of AICTE . In TAMILNADU all other Universities ( except ANNA UNIVERSITY ..Which is for TECHINICAL / ENGINEERING Purpose ) offering MBA by what I said ( UGC + DEC ) mode Approval only.

Needed Your Guidance Regarding on this and Help.

Thanking You

R.CHOKKALINGGAM from India

R.Chokkalinggam! I read your given advertisement. According to my view, You have cleared UGC NET and you have also MBA degree. Both things are needed for  becoming professor. So, you are eligible for teaching in AICTE approved engineering college.

As per PDF 

First Class in Master’s Degree in Business Management/ Administration/ other relevant management related disciplines/ PGDBM/ PGDM/ Programmes (minimum 2 years duration) recognized by
AICTE/MHRD/UGC and declared equivalent to MBA by AICTE/ AIU 2 years relevant Experience is desirable.

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Sources of Finance

Just own capital is not sufficient to operate the business. The entrepreneur has to make planning for getting money. He has to decide when, where, how the money will collected? What security will be given for different loans.

Sources of finance are needed for short term, medium term and long term financial need. Sources of finance are collected under the financing planning of company. Cost of capital, return, risk, financial strategy are main  factors which we think before selecting any source of finance.

Following are main source of finance

(A) Long term Sources of Finance 

1. Equity share capital
2. Preference share capital
3. Retained Earning
4. Debentures and bonds
5.Loan from financial institutions
6. Loan from State financial corporations
7. Loan from commercial banks
8. Venture capital funding
7. Asset Securitization
8. International financing like euro issue, foreign currency loans

(B) Medium Term Sources of Finance

1. Preference shares
2. Debentures
3. Public deposits/ fixed deposits for a duration of 3 to 4 years
4. Medium term loan from commercial banks and other financial institutions
5.Lease financing/ hire purchase financing
6. External commercial borrowings
7. Euro - issues
10. Foreign currency bonds
11. Loan in bitcoins
12. Foreign currency bonds

(C) Short term Sources of Finance 

1. Trade Credit
2. Bank draft
3. Get Money from Public fixed deposit for a period of one year or less
4. Advance received from customers
5. Various short term provisions

Related : Financial Need

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Financial Need of Business

Financial need of a business may be for following purpose:

1. For buying fixed assets

For starting business, business needs fund for buying fixed assets like machinery, land, plant and building. This requirement may be of 10 to 15 years.

2. For Advertising and Other Revenue Expenses

Sometime, business require money for advertising and other revenue expenses. This will be medium term financial needs.

3. Short term Financial Needs

Short term financial needs are for fulfilling the working capital requirements. In this, we manage to get short term loan which will be repayable within one years. 

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Introduction of Capital Structure

Capital structure means the mixture of share capital and other long term liabilities. In the company, we know that liability of each shareholder is limited but how much be the total liability of shareholder is the important question? It can be decided by choosing best capital structure. In capital structure, we include, equity share capital, preference share capital, debenture and long term debt. Suppose, our company's capital structure may show 50% equity share capital, 30% pref. share capital and 20% debentures. But all companies' capital structure may not be equal because different business need different type of capital structure which will be suitable according to the need of business.

Some of companies want to become smart. They slowly decrease equity share capital and increases loan excessively which may be very risky because these company has to pay fixed cost of interest and has to manage repayment of loan after some time. Some mistake in it, may be risky for its solvency. So, decision relating to capital structure is very important for company

Related : Financial Management 

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How to Capitalize an Expense

"Dear sir,

I am a b.com student who came from science stream. I don't have a good base in accounting. Firstly my heartfelt thanks for opening an educational website like this. I was learning to make a balance sheet. In that an asset group termed 'fictitious assets came. l am not able to fully understand its meaning. The definition in my text book is as below

""These are virtually not assets.These are either the past accumulated loses or expenses which are incurred once in the life of a business and are capitalized for the time being''

I want to what is this capitalizing of loses. Also how can an expense be capitalized. Also will this continue to be in there in every balance sheet and if it will be, then whether in the same value or changed value.
sir please help me clear my doubt."

Anju Jacob from India

Anju Jacob! Given definition in your accounting book is correct. Both loses and capitalized expenses can be shown in assets side of balance sheet as fictitious assets. First you should understand why these are assets?

When we earn net profit in the business, it will add in the capital or will show in reserve and surplus in the liability side of balance sheet because this increase our capital. When owner will close his business, it is the responsibility of business to give his past profit with his invested capital. But, in case if he got net loss, it will reduce opening capital because net loss decreases the capital. Instead of showing it as deduction from capital in liability side, we can show it as fictitious asset. Effect on capital will be same.

Instead of learning capitalize of loses, it is better to learn, how to capitalize an expense because after making profit and loss account, net loss must be transfer to fictitious asset. So, there is no problem. But you may confuse whether any expenses should be revenue nature or capital nature.

Following tips may be helpful to learn this.

1.# Check the benefits of any expense, if its benefit is more than one financial year, it will be capital expense and it will be shown as asset.

2. # When we paid expenses, see whether acquired asset's useful life is more than one year. If yes, it will be capital expense.

3.#  Remember, all capitalized expenses are not fixed asset some of them may be fictitious and some other intangible. For example preliminary expenses are capital example because we can get its benefit more than one year. Because there is no market value of this, we just show its original cost as fictitious asset. 

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What is more Important Experience or Education

   Dear Sir,

 I like your website very much I open it every day. So my question is I am studying in B.Com last year; I am 21yrs old I want to make my career in Accounting. I am thinking to Join chartered accountancy or doing accounting work in any company. So please tell what is more important to achieve success. I am ready to do every type of efforts.

 So guide me...............................

Samadhan Gade from India

Samadhan Gade! If you join chartered accountancy after your B.Com. it will enhance your professional education. If you start to do accounting work in any company. It will enhance your experience. According to my view both are important to you. Both are not enemy each other. Both will develop with the support of each other. If you got experience,  whole education will be just entertain for you because you have hand practically. If  you have all academic and educational qualification, you will feel that experience is also education for you. You will become habitual. 

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International Finance

International Finance is very advance area of finance and a MBA scholar must study of this. In international finance, we study international financing, international currency market and  rates, international  investment, international projects, capital inflow and outflow between two countries,  international financial system, effect of finance on international trade and trade deficits.

We can define international finance in very simple words,

 "International finance means to get and effective use of international funds"

Now, we explain all the important elements of study international finance

1. International Financing

There are lots of corporates who provide loans at international level. In these corporations, we can include international finance corporation (IFC), international bank for reconstruction and development. To calculate the rate of interest on international financing is not so easy. By solving following equation, we can calculate interest rate of foreign currency.

2. International Currency Market and Rates

In international finance, we also study international currency market and their rates. All these market shows current rate of Euro-dollar, Dollar-INR. Lots of investor buys and sell these currencies.

3. International Investment 

International investment is also called foreign direct investment (FDI). This investment may be in the form of equity share capital or participation in the foreign business assets for production or incorporating a wholly owned subsidiary in foreign country. 

4. International Projects 

There are many projects which can be started two or more country  with collaboration of each other. For example, Govt. of two developing countries contracted to increase the educational level. For this, they can invest money collectively for both countries' educational development.

5. Capital Inflow and Outflow between two countries

It is good research topic for international finance scholars. They study the capital inflow and outflow between two country. For example, the natural resources of developing countries are more than developed countries. Foreign companies brings small capital inflow in developing countries and carry big capital outflow in the form of our natural resources. This study is very important in international finance. Because, if we will do this study, we can study to misuse of our natural resources. 

6. International Financial System 

Like national financial system, international financial system operates under some rules and regulations. Both parties records each transactions in their accounts. Under this international financial system, they deal in financial instruments and shares .

7. Effect of International Finance on International Trade and Trade Deficit 

There is gap between import and sale of imported goods. If International financial organisation helps importers and exporters, then international trade may be boost. 

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Debt Securitization (Finance)

Debt secularization is loan which is given from financial institution to borrowers. But this debt of loan are given in the form of security or marketable instrument. Suppose, A gives loan to B. Loan is an Fixed asset for A and it is fixed liability of B. Now, B gives loan to C. But this loan is given in the form of marketable instrument. Now, it is current asset of B. We can see lots of car loan account in any financial company. There are also lots of amount in car loan receivables.  You know financial company gets cheap money from originator and sells debt in the form of debt securitization.

More Clear Example 

Before clear example, I want to tell three main parties in debt securitization.

1st Party : Originator 

This is the main organisation. It gives loan in the form of loan not in the form of debt securitization. In this party, we can include RBI or SBI.

2nd Party : Special Purpose Vehicle

Special Purpose vehicle are that party who gets loan or pool of loan from originator and convert it in marketable securities. After converting it in marketable securities or papers or Demat, it will become debt securitized. Now, SPV will sell it in the money or any other financial market. These parties include private banks and other private financial institution which you can find their office in your local city.

3rd Party : Qualified Institutional Buyers

Now SPV advertises for his debt securitization product. But they did not sell to all. SPV sells to those who clear its condition. All these parties are called QIN.

Now, we explain our example

Suppose, SBI finds 10 SPV and gave loan of Rs. 200 Crores. Now, 10 SPV converts this Rs. 200 loan in the form of debt securitization and sells to different qualified buyers. These buyers may be 1000 or 100000. One of the best benefit of debt securitization is to reduce risk. If SBI gives Rs. 200 crores to one party. It may be risky. But to give 10 SPV is less risky. For SPV, market instruments are also less risky to give 100000 persons. Following is its Graph.

Related : Banking

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How to Use Filter in Google Docs

Google Docs is great product of Google and it can easily be used by accountant, students and teachers. But sometime, most simple things can increase your efficiency in this. One of simple thing in Google Docs is Filter option. Filter means to get only useful data out of large number of data in Google Docs. In the main above menu right side you can see filter in your Google docs spreadsheet.

Now, question is how to use filter in Google Docs. I can explain with my own example. You know, I am an online teacher. I have many students who come to Accounting Education for learning. Some face problem and write in ask a question database. All these data is collected in Google docs spreadsheet. Now, I am interested to  know about a student who have asked questions many times. But, I do not know, how many times, he has asked question from me. Now, for knowing this question, I will use filter option. For this, I will select name column and then click filter button. Suppose, his name is Krishna. I will select Krishna. Only Krishna's data will show date wise. From this, I can see no. of times, he has asked me the different questions.

If you want to learn same, you can learn from my following video. Please don't forget to rate it.

{ Important Note : Some time, you can select sort Z to A in the filter of name. With this, your all name will be Z to A. But due to this, your time setting may be changed by Google docs system. Side-effect will be that some of data of today may go to middle of Google docs and other beginning data may be in end. There is no undo of this in google docs. But, you can again use filter option for timeline column. Just select timeline, then click filter and then choose A to Z sort and then OK. After this, your google docs shows from old time to current time because A's meaning in time is oldest time data and Z's meaning in time is new data}

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How to Apply ESI ACT to IT Services Organization with 200 Employees ?

How to apply ESI ACT to IT Services organization with 200 employees ?

Suresh Chalavadi from India ( Connect him at facebook)


Suresh Chalavadi! Employees state insurance is good scheme for employees welfare  under ESI Act. Because your organisation with 200 employees, you should apply for ESI scheme under ESI Act. For this, this is telephone through Toll Free Helpline no. 1800-11-2526 for personal query. For any other information about the scheme individuals or organizations may log on to  ESIC website: www.esic.nic.in  or contact any of the following Officers.

As per the PDF of ESI website,

1. An employer will apply in Form-01 for coverage under the ESI Act, within 15 days after the Act becomes applicable to a factory or establishment.
2. The employer will submit Declaration Form alongwith photograph of IP and Family in respect of all coverable employees in the unit.
3.  The employer will obtain the particulars in the Declaration Form & Obtain Signature Immediately on entering the Insurable Employment.
4.  The employer will collect temporary identity cards from the Branch Office concerned followed by permanent photo identity cards and pass them on to the employees concerned.
5.  The employer will deposit both employee’s and employer’s contribution as per specified rates within 21 days of the following month.
6.  The employer will maintain an Accident Book and submit accident reports to the Branch Office, involving insured worker(s) on the job, within 24 hours of an accident.
7.  The employer will maintain all such records and registers as are required under the Act and produce them for verification/inspection before the authorized officers of the Corporation.
8.  The employer will facilitate proper inspection of records/register and the premises by visiting officers of ESIC as and when so required.

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Introduction of Capital Budgeting

In the introduction part of capital budgeting, we can explain it as that decisions which are taken for buying long term and fixed assets. Working capital decisions and current assets investment decision do not come under capital budgeting. When we take the decision whether particular fixed asset should be purchased or not, its planning will be capital budgeting. In capital budgeting, we fix our total investment in best project which will provide us higher return. For capital budgeting, we use different techniques for evaluating different projects. All techniques are called capital budgeting techniques.

Capital budgeting uses in all the area like construction business, defense and other large scale business because without capital budgeting, our investment will not give better return and we may get risk of loss of return.

Related : NPV

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Video Tutorial : Impact of Leverage on Risk and Return

With the following video tutorial, you can learn impact of leverage on risk and return. In this video, you will also understand which combination of operating and financial leverage is risky and which is not.

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