10 July Accounting

Accounts Afterschoool – developing change makers CENTRE FOR SOCIAL ENTREPRENEURSHIP PGPSE PROGRAMME – OPEN FOR ALL FREE FOR ALL

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Accounts Dr. T.K. Jain. AFTERSCHOOOL Centre for social entrepreneurship Bikaner M: 9414430763 [email protected] www.afterschool.tk www.afterschoool.tk www.afterschoool.tk

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Name some current assets?  Current

assets are those, which will change in next accounting year / financial year / operating cycle.  Examples: cash, inventory, debtors, bills receivables, prepaid expenses, etc.

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What are direct expenses?  These

are the expenses, which are directly identifiable with production – as production goes up – these expenses will also increase.  Example: purchase, wages, carriage inward, octroi etc.

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What is suspense account – where will it go?  When

there is some difference in trial balance, we prepare suspense account for the difference. It will go to balance sheet.

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Which are errors in accounting ?  Error

of commission  Error of omission  Error of principle  Compensating error  Error of posting – this will affect only one account. (part of commission)  Totaling errors (part of commission ) www.afterschoool.tk

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Which is negotiable instrument?  Options:

bill of exchange, promisory note, cheque, crossed cheque  Answer: all except crossed cheque – because all other can be transferred with good rights.

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Which is the book of original entry?  Journal

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Accounting equation approach is based on which rule?  Dual

aspects

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Which convention says: value inventory at cost or market price – whichever is lower?  Convention

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of conservatism.

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We have installed a new machinery – where should we show the expenses of Rs. 100000?  Machinery

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account (real account).

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What is overriding commission?  It

is a commission calculated on Sale price – invoice price / cost  For example invoice price is 100, and sale price is 120, and we pay 50% overriding commission, the commission amount will be 10 per piece.

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Wages of Rs. 5000 was shown as salary, actually they were paid for installing new machinery. Pass rectifying entry.  Machinery

Account Dr. 5000  To salary account credit 5000

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Purchase : 100000, sales 90000, margin = 20%. What is closing stock?  Cost

of sales is : 90000 *100/120  = 75000.  Thus closing stock is 100000-75000  =25000 answer.

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I get 5% commission on profit after charging commission. Profit is 58000. what is my commission?  58000

* 5/105  = 2762 answer

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Mohan drew bill on Gopal of Rs. 100000 for 3 month. Proceeds are to be shared euqally. Mohan gets the bill discounted for 12%. How much amount should Mohan send Gopal?  This

is accommodation bill. The basic purpose is to finance working capital.  100000- 3000 = 97000.  Thus Mohan will send Rs. 48500 to Gopal. Answer.

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A bill is drawn on 12 June for 2 months. What will be due date of this bill?  Add

2 months, we get 12 august + add three days – we get 15 august – but 15 August is public holiday – so due date is 14 August. Answer.

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I purchased a building of Rs. 200000 against debentures (issued at 20% discount). What should be entry ?  

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Building Account Dr. 200000 To Firm Account (from whom we have purchased building). 200000 Next: .. 200000*20/80 = 50000 discount Firm Account Dr. 200000 Discount on issue of debentures Dr.50000 Debentures Account Credit 250000

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Who are the main users of accouning information?  Customers,

employeees, lenders  Government, public, investors, suppliers and creditors.

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What are basis of accouning?  Cash

basis of accounting  Accrual basis of accounting  (generally accrual basis of acounting is followed).

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What are essential characteristics of accounting statements?  They

should be comparable  They should be reliable  They should give true and fair view of the company  They should be understandable  They should be relevant.

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Define asset? A

resoruce controlled by company – which will give a stream of earnings in the future. The resource may be physical or non- physical resource. It must have a measurable cost / value.

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Define liability?  Present

obligation of the company arising out of past events – which will result in outflow of resources emboding economic benefits.

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Define current assets and current liability?  Assets

and liability which will change in next business cycle or in next one year are called current assets and current liability.

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Define equity?  Residual

interest in the assets of a company – after deducting all liability is called equity. It is the excess of assets over liability.  Equity = Assets – liability.

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Define income?  Increase

in economic benefits during an accounting period is called income.  Income = revenue + gain  Revenue = income from ordinary business activities (selling)  Gain = other income (like income from interest). www.afterschoool.tk

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Define Expense?  Expense

is decrease in economic benefit during an accounting period.  It may be outflow of money or depletion of assets or incurrence of liability.

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Your financial profit is Rs. 125000 as per your statement – what is true profit– with the following information.    

Cost of Asset of Rs. 25000 has been taken as expense. Salary payable Rs. 7000 – ignored Purchased assets for 75000 – market value Rs. 85000. Recorded at market value. Expected profit of Rs. 10000 has been taken into account (Rs. 10000 has not yet been realised – because it will be there when car is sold – which will take some time).

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What is the mistake in accounting in previous question and what should be done?  We

have failed to use historical and accrual concepts of accounting – so we should follow these principles.

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Answer:  125000  Add:  25000

(assets shown as expense)  Subtract:  7000, (salary)  10000 (unrealised income)  = 133000 (answer) www.afterschoool.tk

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What is profit & stock as per the following transactions:  1-4-7

purchased 10 units @50  2-4-7 purchased 10 units @ 70  3-4-7 sold 6 units @ 65  4-4-7 sold 9 units @ 65

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Solution .. 

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Cost : (we can use only FIFO or Weighted average method, LIFO is not permitted as per AS2) 10*50 +10*70 = 1200 Selling price = 65*15= 975 Inventory = 350 (As per FIFO)300 (As per weighted average method). Profit = (975+350)-1200 (fifo) = 125 Or (975+300) -1200 = 75

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Solution continued ..   

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Calculation of inventory: Total = 20 – used 15 = inventory of 5 Under FIFO, the left out goods are those which have been purchased last. Thus their rate is 70 per unit 5*70 =350. In case of weighted average, we shall calculate their average cost: 1200/20= 60 per unit. 5*60 = 300

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You have sold an assets of Rs. 50000 at a profit of Rs. 10000. how much amount will you show in your cash flow statement under cash from operating activities?  NIL  (in

in cash from operating activities – we mention only regular sale. Sale of assets is not part of regular sale).

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You have set up a plant in notified backward area. You have got a subsidy of Rs. 1 crore from government. Where will you transfer it?  You

will transfer it to capital reserve account.

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What is capital reserve?        

It includes following: Profits before incorporation Profit from sale of fixed assets Profit not available for distribution Profit on reissue of forfeited shares Premiums received on debentures etc. (share premium is not capital reserve) (Share premium and capital redemptin reserve accounts are separate.)

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You have made investment of Rs. 500000. their market price is now Rs. 400000. At what price will you record them in balance sheet?  Rs.

500000 (at cost itself). (if you do revaluation – you may show it at 400000, after preparing revaluation account).

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You have found that your goodwill is worth Rs 400000. How much will you record in balance sheet?  Nil

– internally generated goodwill is generally not recorded.

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What are final accounts of a company?  Balance

sheet and P& L account  (as per section 210 of company act and as per schedule VI

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Which are statutory books?        

Register of investments – sec. 49 Register of mortgages and charges – sec 143 Register of members and index – sec. 150 Debenture holders – sec. 152 Minute book – sec193 Contracts etc. sec. 301 Directors & Directors’s shareholding – sec. 303 & 307 Investment in securities other companies

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What is annual return?  Every

company has to prepare in 60 days (from AGM) annual return and submit in prescribed proforma to the registrar. (part I & II of schedule V) and sec. 149.

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What is maximum remuneration to directors?  5%

of profit – if one director only  10% of profit - if two whole time directors  11% of profit – if 2 whole time directors, 1 part time director and one manager.

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4a +7b = 17 & 4a-2b=21, what is a&b?  Let

us subtract II equation from I. 4a gets cancelled. We get 9B = -4 or b = -4/9  Let us put this value in I equation, we get: 4a – 28/9 =17 or 4a =17+28/9  4a = 181/9  A = 181/9 *1/4  =181/36 answer. www.afterschoool.tk

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ABO UT A FTERSCH OOO L Afterschoool conducts three year integrated PGPSE (after class 12th along with IAS / CA / CS) and 18 month PGPSE (Post Graduate Programme in Social Entrepreneurship) along with preparation for CS / CFP / CFA /CMA / FRM. This course is also available online also. It also conducts workshops on social entrepreneurship in schools and colleges all over India – start social entrepreneurship club in your institution today with the help from afterschoool and help us in developing society.

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Why such a programme? 

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To promote people to take up entrepreneurship and help develop the society To enable people to take up franchising and other such options to start a business / social development project To enable people to take up social development as their mission To enable people to promote spirituality and positive thinking in the world

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Who are our supporters?  Afterschoolians,

our past beneficiaries, entrepreneurs and social entrepreneurs are supporting us.  You can also support us – not necessarily by money – but by being promotor of our concept and our ideas.

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About AFTERSCHOOOL PGPSE – the best programme for developing great entrepreneurs     

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Most flexible, adaptive but rigorous programme Available in distance learning mode Case study focused- latest cases Industry oriented practical curriculum Designed to make you entrepreneurs – not just an employee Option to take up part time job – so earn while you learn The only absolutely free course on internet

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Workshops from AFTERSCHOOOL         

IIF, Delhi CIPS, Jaipur ICSI Hyderabad Branch Gyan Vihar, Jaipur Apex Institute of Management, Jaipur Aravali Institute of Management, Jodhpur Xavier Institute of Management, Bhubaneshwar Pacific Institute, Udaipur Engineering College, Hyderabad

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Flexible Specialisations:          

Spiritualising business and society Rural development and transformation HRD and Education, Social Development NGO and voluntary work Investment analysis,microfinance and inclusion Retail sector, BPO, KPO Accounting & Information system (with CA / CS /CMA) Hospital management and Health care Hospitality sector and culture and heritage Other sectors of high growth, high technology and social relevance

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Salient features: The only programme of its kind (in the whole world)  No publicity and low profile course  For those who want to achieve success in life – not just a degree  Indepth knowledge and expertise  Professional approac: World class approach  Strong intellectual and business capabilities  Flexible – you may stay for a month and continue the rest of the education by distance mode. / you may attend weekend classes  Scholarships for those from poor economic background  Latest and constantly changing curriculum – keeping pace with the time  Placement for those who are interested  Admissions open throughout the year  Latest and most advanced technologies, books and study www.afterschoool.tk AFTERSCHOOOL MATERIAL FOR PGPSE PARTICIPANTS material 

Components              

Pedagogy curriculum and approach based on IIM Ahmedabad and ISB Hyderabad (the founder is alumnus from IIMA & ISB Hyderabad) Meditation, spiritualisation, and self development Essential softwares for business Business plan, Research projects Participation in conferences / seminars Workshops on leadership, team building etc. Written submissions of research projects/articles / papers Interview of entrepreneurs, writing biographies of entrepreneurs Editing of journals / newsletters Consultancy / research projects Assignments, communication skill workshops Participation in conferences and seminars Group discussions, mock interviews, self development diaryng Mind Power Training & writing workshop (by Dr. T.K.Jain)

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Pedagogy          

Case analysis, Articles from Harvard Business Review Quiz, seminars, workshops, games, Visits to entrepreneurs and industrial visits Presentations, Latest audio-visuals Group discussions and group projects Periodic self assessment Mentoring and counselling Study exchange programme (with institutions out of India) Rural development / Social welfare projects

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Branches  AFTERSCHOOOL

will shortly open its branches in important cities in India including Delhi, Kota, Mumbai, Gurgaon and other important cities. Afterschooolians will be responsible for managing and developing these branches – and for promoting social entrepreneurs.

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Case Studies  We

want to write case studies on social entrepreneurs, first generation entrepreneurs, ethical entrepreneurs. Please help us in this process. Help us to be in touch with entrepreneurs, so that we may develop entrepreneurs.

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Basic values at afterschoool        

Share to learn more Interact to develop yourself Fear is your worst enemy Make mistakes to learn Study & discuss in a group Criticism is the healthy route to mutual support and help Ask fundamental questions : why, when, how & where? Embrace change – and compete with yourself only

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www.afterschoool.tk social entrepreneurship for better society

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