Accounting Education

Credits in Finance

2010-02-08T20:50:00.000-08:00

In finance, credit means to get money as debt. It also means to gets current asset or fixed asset without pay its price immediately. A person or company who gets money will be responsible to repay its principle amount with interest after certain time. In case, if he purchases goods on credit, then there is no need to pay interest on the credit amount. Bonds are issued if company gets credit from public, then company is also responsible to pay interest.
In credit, a party who gets loan will be debtor of other part and other party will become creditor for the first party who gets cash. If debtor does not pay the amount of credit then it becomes bad debts which is the loss of loan providing party. It is very necessary to maintain provision for doubtful debts for creating reserve for purchasing stock or paying other expenses if we will receive fund from debtors for given credit in reality.

Bond

2010-02-08T20:21:00.000-08:00

Definition of Bond

Bond is that financial product of company which is issued for getting loan. Government and semi-government bodies issue bonds. Its other name is debenture when it is issued by private company.

When company issues bonds, at that time company writes a certificate and accepts that it will repay the mention amount of loan after fixed time with fixed rate of interest.

The following things must be clear, if you or your company is issuing bonds.

1. Amount of Principle

You should tell bonds holder or investor, what amount you are taking. Investor should sure that amount will not demanded more than given principle amount.

2. Issue Price

Sometime, it may possible that company can issue bonds at discount. Then, at maturity, investor will have the right to receive only issue price not principle amount.

3. Maturity Date

It is the date when companies repay or redeem the loan to investor. It may possible that loan is taken for short period or long period. In short term loan, bonds amount will repay with in one year and in long term loan, bonds amount will repay more than 5 years.

4. Coupon

Almost all the bonds are bearer and interest coupons are attached with it. After one year or six months, interest is payable to that person who holds these bonds on coupon date.

Kinds of Bonds

We can classify bonds or debenture with following way.

Ist Kind of bonds

Fixed rate bonds

If bonds are issued with fixed rate of interest, then these bonds are called fixed rate bonds. For example Mr. James takes bonds of $ 5000 and he gets the interest coupon with fixed rate of interest at the time of purchasing of bonds, then these types of bonds will be fixed rate bonds.

2nd Kind of bonds

Floating rate bonds

If interest is not fixed and it is changeable according to the condition of financial market, then these bonds are called floating rate bonds.

Easiest Way to Increase Return on Adwords Investment

2010-02-08T08:24:00.000-08:00

Google company is providing two types of commercial products. One is Google adsense and other is Google Adwords. Google shows Ads in his search engine. On every click, google pays some percentage to its partners adsense publishers. On the other side, Google gets money from advertisers under Google adwords programs. So, this money will be the investment of advertisers. If you are the advertiser who is showing the ads online, then you can increase your return on Adwords Investment ( ROI )by using following simple idea.

#1. Creating report by selecting campaign performance button and clicking invalid click and invalid clicks Rate.

{ Note: Google does not charge your account for invalid clicks that we determine were generated by prohibited methods. Data about Invalid Clicks and Invalid Clicks Rate (the percentage of clicks filtered out of your total number of clicks) can be included in Account Performance and Campaign Performance reports. }

#2. To Reduce the Number of Invalid Clicks by Contact the Ad Traffic Quality team at Adwords Help Center

If you are seeing high percentage of invalid clicks in report, then for protecting your adwords investment, you can contact the ad traffic quality team at adwords help center. Google employees are ready for providing 24 hrs service to advertisers. They will check and response you.

# 3. Use Website Optimizer Tools with Google Adwords Tool

With using website optimizer, you can test your site's quality landing page by changing image or contents for making a good impression and will bring many visitors to your site. A poor quality landing site will hurt you and only bring traffic that really doesn’t care about your site or what you are selling.

# 4. Use Geotargeting

AdWords allows you to reach people in 250 countries. But you can not deliver in 250 countries. Due to this, you should not waste money on all those clicks?

Define your target geographicaly. You have the possibility to choose the places you want your ads to be shown, in your AdWords account. Try not to play the generous, because your budget is at risk.

Svtuition Channel's Most Discussed Video of Today in Youtube

2010-02-06T05:20:00.000-08:00

Today, in the morning time at 5.00a.m. I have uploaded a very small video of (7 minutes and 43 second ). It has become most discussed Video of Today in Youtube. It is honor which is given by youtube to me.

You know that there are many different honors that are granted to the top producing videos and channels on YouTube. When a video or a channel receives an honor, they appear on YouTube's browse pages. To view these videos and channels, visit the Videos and Channels tabs from the YouTube homepage.

Youtube has made following condition for providing honor.

In general, to qualify for video honors, a video must have been uploaded within a particular time frame. To qualify for some channel honors, a channel must have been created within a particular time frame.

•For "Today" honors, this time frame is within approximately the past 48 hours.

See this Video, if you have not seen already.

This video is lecture of my previous article" Which is better Job or Business for Indian Students. " I am thankful for youtube for giving me honor.

Which is Better Job or Business for Indian Students?

2010-02-06T04:31:00.000-08:00

I think business is better than job because if you have learned the skill to sell the product, it is sure that you will succeed in business. At that time, you need not to do job for earning money.
These days, everything is product; even you are providing education or other services. If you are expert in it, then business is better. In Business, you are the boss.
Now, Indian students should leave their mentality of earning Rs. 25000, Rs.50000, Rs. 100000 or more per month package just by doing only job. If you want to do job just for learning experience and skill, then it is good but never depend on jobs. Start to make customers because your income potential is unlimited in your own business.

Watch following Video Lecture which has been given by Prof. Vinod Kumar for Indian Students.
Note:{ If you are not seeing video, then please download flash latest version }

Equity

2010-02-05T09:15:00.000-08:00

In finance, equity means owner’s claim in business. It can say also the capital of owner. Its other name is owner’s equity. Owner in small business may be individual and can do business with his family members. At that time, his invested money in business will be his equity but if he has gotten secured loan from outside, then total equity will divide into two parts one is owner’s equity and other is creditor’s equity. Due to his business has unlimited liability, so his own equity can be used for payment of secured loan in case of insolvency.
The definition of equity will change in case of purchasing of other company’s shares. After purchasing other company’s share, company’s equity will be the total amount of equity share capital. It is also called shareholder’s equity. Large numbers of businessmen are using equity for succeeding in company type business.
They make company just getting fund in the form of share capital, after getting fund, they operate business, and then if they need money they take only loan not share capital. That technique is called trading on equity. One more thing, I have reminded that owner’s claim will be junior claim but liability of shareholder will be limited.

Lecture: 1 Advice to Indian Students

2010-02-05T08:37:00.000-08:00

Lecture Series on Education by Prof. Vinod Kumar. For more details on Educational Topics.

Hedge Funds

2010-02-04T19:28:00.000-08:00

Definition of Hedge Funds

Hedge Funds are that funds which are created by investment managers or professional investors to reduce the risk of small and medium investors. These investors invest some amount of his investment in hedge funds instead of direct investment in share or bonds. With this, return on investment will also increase. Investor chooses and decides hedge fund investment. Subscription amount is paid to the custodian. Custodian confirms receipt of payment to fund administrator. Fund administrator instructs issue of share to investor. Fund administrator issues reports on hedge fund performance. Investment manager instructs custodian to move funds to prime broker for investment in market. During the process the prime broker and custodian are in direct contact with fund administrator.

Hedge funds used to occupy a dark, undisturbed corner of the financial world, but over the last year theyve been thrown under the spotlight. Still, many people dont know exactly what hedge funds are, or what hedging actually means. Senior Editor Paddy Hirsch explains.

hedge funds in india

List of hedge funds operating in India :-

Indea Capital Pte Ltd.
India Capital Fund.
India Deep Value Fund
Absolute India Fund (AIF)
Naissance Jaipur (India) Fund
Avatar Investment Management
Passport India Fund
HFG India Continuum Fund
Monsoon Capital Equity Value Fund
Karma Capital Management, LLC
Vasishta South Asia Fund Limited
Atyant Capital
Atlantis India Opportunities Fund

{* see also the list of mutual funds companies in India }

Hedge funds vs mutual funds

Hedge funds and mutual funds are both useful to increase ROI with minimum risk of losing principle amount in investment. But, there are many differences between hedge funds and mutual funds.

* Mutual Funds are highly regulated, restricting the use of short selling and derivatives
* Hedge Funds, on the other hand, are unregulated and therefore unrestricted.
* Mutual Funds generally remunerate management based on a percent of assets under management.

* Hedge Funds always remunerate managers with performance-related incentive fees as well as a fixed fee.

* The future performance of Mutual Funds is dependent on the direction of the equity markets.

* The future performance of many Hedge Fund strategies tends to be highly predictable and not dependent on the direction of the equity markets. Link

Latest Risk of Euro Currency - Global Opinion

2010-02-04T09:02:00.000-08:00

The euro is facing the most serious crisis in its 11-year history. Greece, one of 16 European Union members that uses the currency, must raise $76 billion this year — more than $50 billion of it before June 30 — or default. A default would threaten the euro’s global credibility, scare investors away from other struggling European economies and likely reverse Europe’s fragile recovery.

Despite those very real dangers, Europe’s richer nations — most loudly Germany — have been acting as if this is someone else’s problem. Last week, the French newspaper Le Monde reported that Germany and France had begun contingency planning for possible financial assistance. Both governments denied it. We hope the report turns out to be true. Failing to develop a plan to step in if needed would be incredibly shortsighted.

The euro is wondrously convenient for travelers and international businesses. There’s one catch: Fiscal discipline is up to each participating country, and Greece has been anything but disciplined. It is running a deficit of nearly 13 percent of total output, more than four times the nominal limit for countries using the euro. Its national debt is almost double the permitted limit. With its credit rating sharply downgraded, Greece must pay a stiff premium to finance that deficit.

The economic fortunes of all the euro-using countries are too tightly linked to contain the crisis to one of them. And Greece may not be alone for long. Similar financing crises could soon hit Ireland, Spain and Portugal. Market anxieties threaten the currencies of Poland, Hungary and the Czech Republic.

For years, Greece fiddled its figures. In flusher times, too few questions were asked. Now the truth, and its consequences, must be faced: Corruption and tax evasion hobble the Greek economy. Millions work off the books. The private sector generates too few jobs and tax revenues, and one in four Greeks works for the state. It is a system designed to produce deficits.Link

Mutual Fund Fees Chart

2010-02-04T08:45:00.000-08:00

When you buy or sell the mutual funds, you have to pay some fees. These fees are expenses of investors which are charged on given investment. All these fees can be represented in following chart.

1. Brokerage Fees

This fees is chargeable to broker. Sometime, it is given by Mutual fund company or sometime investor.

2. Loads Fees

It is the commission on buying or selling of mutual fund which is given by investors.

3. Management and Expenses fees

This fee is charged for providing management facility to investors.

4. 12B-1 Fees

This is marketing fees. The professional investors or fund managers are so smart. They want to get more investors through charging marketing fees on small and individual investors.

5. Hidden Load Fees

If load is not chargeable, then hidden load must be charged.

6. Exit or Redemption Fees

This is very small fees for sale of mutual fund. After spending of 6 years, if you sell the mutual fund, you need not pay any exit or redemption fees. thanks Craig Ford

Mutual Fund

2010-02-03T10:13:00.000-08:00

Definition of Mutual Fund

Mutual fund is that fund which is created by professional investors. Money of this fund is collected from public. Then, this money is invested in share market, bond market or money market. These professional investors are very expert in dealing in shares and bonds. Almost all banks have mutual fund and public can buy or sell the shares of mutual fund like any other shares of companies. A mutual fund gives return on given investment, but it is not given under fixed rate like interest income on debentures or loan.

To invest in mutual fund is more useful for small individual investors who do not understand the stock market analysis and they earn higher earning than deposit their money in fixed deposit schemes. Its history is connected with USA mutual funds and in India; this system of investment was started by UTI. But after passing of time, large number of banks and private professional investors made mutual funds. These days more than 22 mutual funds which are provided by companies in India.Following video will be useful for understanding mutual fund.

List of Mutual Fund Providers in India

2010-02-03T09:17:00.000-08:00

Following is the list of Indian's largest mutual fund providers. They offer to public to invest in the these mutual funds. In these providers include the companies of banking sector, insurance sector and finance sectors. In 1963, there was only one provider of mutual fund known as UTI but now, there are 22 Top companies who are the providers of mutual funds.

Ist State Bank of India Mutual Fund

Today it is the largest Bank sponsored Mutual Fund in India. They have already launched 35 Schemes out of which 15 have already yielded handsome returns to investors. State Bank of India Mutual Fund has more than Rs. 5,500 Crores as AUM. Now it has an investor base of over 8 Lakhs spread over 18 schemes.

Top Performing Schemes – AUM as on 30th April 09

+ Magnum Contra (1,958.50 cr)
+ Magnum Balanced (333.11 cr)
+ Magnum Multiplier Plus (687.15 cr)

2nd Canbank Mutual Fund

Canbank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as the sponsor. Canbank Investment Management Services Ltd. incorporated on March 2, 1993 is the AMC.

3rd Prudential ICICI Mutual Fund

The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one of the largest life insurance companies in the US of A. Prudential ICICI Mutual Fund was setup on 13th of October, 1993 with two sponsorers, Prudential Plc. and ICICI Ltd.

4th Sahara Mutual Fund

Sahara Mutual Fund was set up on July 18, 1996 with Sahara India Financial Corporation Ltd. as the sponsor. The paid-up capital of the AMC stands at Rs 25.8 crore.

5th HDFC Mutual Fund

HDFC Mutual Fund was setup on June 30, 2000 with two sponsorers nemely Housing Development Finance Corporation Limited and Standard Life Investments Limited.

6th HSBC Mutual Fund

HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and Capital Markets (India) Private Limited as the sponsor. Board of Trustees, HSBC Mutual Fund acts as the Trustee Company of HSBC Mutual Fund.

7th ING Vysya Mutual Fund

ING Vysya Mutual Fund was setup on February 11, 1999 with the same named Trustee Company. It is a joint venture of Vysya and ING. The AMC, ING Investment Management (India) Pvt. Ltd. was incorporated on April 6, 1998.

8th Bank of Baroda Mutual Fund (BOB Mutual Fund)

Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992 under the sponsorship of Bank of Baroda. BOB Asset Management Company Limited is the AMC of BOB Mutual Fund and was incorporated on November 5, 1992.

9th Birla Sun Life Mutual Fund

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life Financial. Sun Life Financial is a golbal organisation evolved in 1871 and is being represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart from India.

10th Tata Mutual Fund

The sponsorers for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. The investment manager is Tata Asset Management Limited and its Tata Trustee Company Pvt. Limited. Tata Asset Management Limited's is one of the fastest in the country with more than Rs. 7,703 crores (as on April 30, 2005) of AUM.

11th Kotak Mahindra Mutual Fund

Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL. It is presently having more than 1,99,818 investors in its various schemes.

12th Unit Trust of India Mutual Fund

UTI Asset Management Company Private Limited, established in Jan 14, 2003, manages the UTI Mutual Fund with the support of UTI Trustee Company Privete Limited. UTI Asset Management Company presently manages a corpus of over Rs.20000 Crore.

13th Reliance Mutual Fund

Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882. The sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Limited is the Trustee. It was registered on June 30, 1995 as Reliance Capital Mutual Fund which was changed on March 11, 2004.

14th Standard Chartered Mutual Fund

Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored by Standard Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd. Standard Chartered Asset Management Company Pvt. Ltd. is the AMC which was incorporated with SEBI on December 20,1999.

15th Franklin Templeton India Mutual Fund

The group, Frnaklin Templeton Investments is a California (USA) based company with a global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one of the largest financial services groups in the world.

16th Morgan Stanley Mutual Fund India

Morgan Stanley is a worldwide financial services company and its leading in the market in securities, investmenty management and credit services. Morgan Stanley Investment Management (MISM) was established in the year 1975. It provides customized asset management services and products to governments, corporations, pension funds and non-profit organisations.

17th Escorts Mutual Fund

Escorts Mutual Fund was setup on April 15, 1996 with Excorts Finance Limited as its sponsor. The Trustee Company is Escorts Investment Trust Limited. Its AMC was incorporated on December 1, 1995 with the name Escorts Asset Management Limited.

18th Alliance Capital Mutual Fund

Alliance Capital Mutual Fund was setup on December 30, 1994 with Alliance Capital Management Corp. of Delaware (USA) as sponsorer. The Trustee is ACAM Trust Company Pvt. Ltd. and AMC, the Alliance Capital Asset Management India (Pvt) Ltd. with the corporate office in Mumbai.

19th Benchmark Mutual Fund

Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services Pvt. Ltd. as the sponsorer and Benchmark Trustee Company Pvt. Ltd. as the Trustee Company. Incorporated on October 16, 2000 and headquartered in Mumbai, Benchmark Asset Management Company Pvt. Ltd. is the AMC.

20th Chola Mutual Fund

Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee Co. Ltd. is the Trustee Company and AMC is Cholamandalam AMC Limited.

21st LIC Mutual Fund

Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. It contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund was constituted as a Trust in accordance with the provisions of the Indian Trust Act, 1882. . The Company started its business on 29th April 1994. The Trustees of LIC Mutual Fund have appointed Jeevan Bima Sahayog Asset Management Company Ltd as the Investment Managers for LIC Mutual Fund.

22nd GIC Mutual Fund

GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), a Government of India undertaking and the four Public Sector General Insurance Companies, viz. National Insurance Co. Ltd (NIC), The New India Assurance Co. Ltd. (NIA), The Oriental Insurance Co. Ltd (OIC) and United India Insurance Co. Ltd. (UII) and is constituted as a Trust in accordance with the provisions of the Indian Trusts Act, 1882.

Investment

2010-02-03T04:01:00.000-08:00

Investment means to give money to other for earning profit, interest , dividend or increase in the given amount. Its process to start from saving and completes after real investing money in business or other works. A person who has cash in his pocket can invest. It is not necessary to know the business. For example Mrs. Arora the wife of Mr. Sham Arora has invested $ 2000 in domestic company. This shows that investment can be done by household women, school going students and old persons.

Now, it is the task to understand that in which we should invest our money. We can invest our money either in securities or in assets. Even many people are investing in foreign currencies for gaining due to change the exchange rates. History reminds us that large numbers of investors have suffered loss of principle amount due to invest in wrong and corrupted company. These companies want to earn money by fair or foul way. So, they attract investors by false advertising online through google adword system. So, it is necessary for new investors to analyze the investment project before actually investing the money online.

They can use capital budgeting technique of finance for better investment out of large number of investment proposals. They can also choose low risky projects of banks, govt. insurance companies and mutual funds of financial companies. They are intermediaries and they invest their collected saving in capital market for earning higher profit. AS 13 has explained its accounting treatment.

Investment in India

For increasing foreign investment in India, investment commission was made in Dec. 2004 by Govt. of India.
The Investment Commission has been set up to enhance and facilitate investment in India. The Commission makes recommendations to the Government of India on policies and procedures to faciliate investment, recommends projects and investment proposals that should be fast tracked/mentored and promotes India as an investment destination.

Investment opportunities in India are today perhaps at a peak. Supported by India's natural strengths, India offers investment opportunities in excess of US$850 billion in diverse sectors over the next five years.

Retained Earning

2010-02-02T07:14:00.000-08:00

Retained earning is that part of net profit of company which has not been issued in the form of dividend. Before providing dividend, board of directors looks the financial environment and also sees future uncertainties. After this, they reserve their net profit in the form of retained earning according to the given situation.

It is just like fund for development of business but it can be used for the purpose of distribution of dividend in future. It is shown in the liability side of the balance sheet of company under owner’s equity head.

For example

A company has earned 103 million dollar and distribute only 30 million dollar balance amount of net profit will be 73 million dollar will be shown as retained earning.

Return on Investment (ROI)

2010-02-02T05:04:00.000-08:00

In the financial decisions, return on investment is powerful tool to evaluate the performance of any investment. Return on investment is the ratio which shows the relation of net profit with investment. Before, invest the money, investor should see the company’s rate of return. If we multiply return on investment with 100, we can calculate rate of return.

Formula of Return on Investment

Net Profit on investment can be calculated with total revenue from investment minus total expenses for purchasing such investment. Large number of accounting software calculates return on investment automatically, if you have entered whole year's transactions of company.

Use Of Return on Investment (ROI)

1. If we want to take the decision of investment in one company’s one financial product, then we can use this metric

• By comparing two or more company’s ROI.
• By Comparing ROI of two or more financial products of Same Company.

2. ROI is also useful for deciding to invest in govt. securities or private securities because high rate of return on investment will increase the risk of investment. So, you can decide in whose securities, you have to invest.

3. Accountant can use ROI for analysis the financial position of company. They can compare it with return on assets or return on equity.

4. One of the method of capital budgeting is return on project is based on ROI. Company can decide to invest in one of best project by using ROI in selection of different projects.

Assets

2010-02-02T03:49:00.000-08:00

Resources of business are called assets. Any thing which is purchased by business or company for the purpose of using in business will be the assets. When we make financial statements of company, it is showed in balance sheet. We show all assets with their book value in balance sheet. Assets are divided into current assets and fixed assets. Depreciation is deducted only from fixed assets. Assets can also be divided on the basis of their physical existence. All assets which can be touched will be tangible assets and all assets which can not be touched and we can just take their benefits in market place, all these assets will be intangible assets.

Examples of Assets

A. Fixed Assets

1. land

2. buildings

3. machinery

4. furniture

5. tools

6. real estate

7. vehicles

8. equipment

9. precious metals

10. Live Stock

B. Intangible Assets

1. goodwill

2. copyrights

3. trademarks

4. patents

5. computer programs

6. franchises

7. trade names

C. Fixed Assets in the form of Long-term investments

1. In the form of securities such as bonds, common stock, or long-term notes.

2. In the form of fixed assets not used in operations (e.g., land held for sale).

3. By creating special funds (e.g., sinking funds or pension funds).

D. Current Assets

1. Cash and cash equivalents
2. Short-term investments
3. Receivables
4. Inventory
5. Prepaid expenses

Interest

2010-02-01T03:22:00.000-08:00

Definition of Interest

" Interest is the payment which is given for taking of money. It is the award of sacrificing the fund. When a businessman invests his money in securities, he can either earn dividend or interest. Dividend is not fixed income but interest is fixed income on investment. "

In the financial market, main income of banks is interest. Bank accepts the small saving of public at low rate of interest and distributes this cash to productive and non productive area for getting higher rate of interest. Difference of received and paid interest is the net income of bank. Interest is calculated always on the principle amount.

There are two main methods to calculate of interest. First is simple interest method. Under this we can calculate interest by applying simple basic formula. In this method, interest is not calculated on previous amount of interest.

Simple Interest =

We can also calculate compound interest. If the contract states the condition for paying compound interest on borrowed money, then it should be calculated with following formula.In this method, previous year interest will be included in the current year principle.

Compound Interest =

Provision for Doubtful Debts Account

2010-01-31T09:37:00.000-08:00

In this video, you will learn the simple steps for preparing provision for doubtful debts account. For showing the correct amount of provision for doubtful debt, provision for doubtful debts account is made.

Before watching the video, you can also read previous article " Accounting Treatment of Provision for doubtful debts"

Simple Steps for making provision for doubtful debts account

1st: Show the opening balance of provision for doubtful debts account in the credit side of it.
2nd: Show total amount of bad debts (bad debts in trial balance + bad debts in outside of trial balance) in the debit side of provision for doubtful debt account
3rd: Show the closing balance of provision for doubtful debts in the debit side with new rates which is charged on sundry debtors.
4rd: If debit side is more than credit side, difference will be shown in the credit side with writing profit and loss account as balancing figure. Now total of both side of provision for doubtful debts account will match.

{ Important Notes: This balancing figure will go to the debit side of profit and loss account but if the total of credit side of provision for doubtful debs account is more than debit side total then difference will be go to the credit side of profit and loss account }

Solution of Problem Which is Faced in Teaching Journal Entry in Accounts

2010-01-30T03:24:00.000-08:00

Many accounting teachers may face following problem in teaching of journal entry in accounts.

Which account should be debited or credited

Basic rules of double entry system are three and every rule have further two parts. But some time teacher can not teach perfectly these rules to 10+1 commerce students about which account should be debited or credited. I can explain this problem with following example.

Mrs. Rekha buys goods from Mrs. Sulekha of Rs. 500000 with cash.

It is possible that accounting teacher will write three rules of double entry on the black/ white board and then write its journal entry

Purchase account Dr. 500000
 
Cash account Cr.             500000

Accounting teacher can argue that goods are being come in business so, it will be debited and cash is going from business, so it will be credited in journal entry.

But student may confuse or puzzle. He asks his accounting teacher. Why has he not debited to Mrs. Rekha account? Because goods are received by Mrs. Rekha. First rule's first part says who is receiver will be debited. This is the problem which is often faced in teaching journal entry in accounts.

I can help teacher to solve this problem. Persuade your student affectionately just like below

My dear student, it is very good that you are using your brain. You have asked me question. You are confused which rule of double entry will apply first or second for debiting or crediting account. Dear, first of all one important thing is that businessman can not be debited or credited himself in his own accounting books. You can ask me. Why can businessman not be debited or credited? Because business is separate from businessman. So, if we have to pass the journal entry in the books of Rekha, then even Rekha has received the goods, then we can not debited owner of business. Moreover, there is not a specific person, it may possible the goods can be received by employee of Rekha's business or even relative of Rekha can receive the goods. So, second rule is more powerful than first rule of double entry. What comes in business must be debited. So, I have debited Purchase account. I have also credited cash. If we purchase the goods with cash or via cheque. There is no need to know who is the giver of money . Forget his name. In one day, it is possible that you are dealing with 1000000000000000000000000000 people for purchasing or selling. Record their names only in books, if you have to pay or get money. Otherwise your accounts book will become just list of customers or suppliers. If you are interested to know customer. Determine the aim of your life as salesman not accountant. So, if Rekha has purchased goods with cash, then who only credit what goes from business and that is cash. So, cash will be credited.

All Pictures with Accounting Tag in Flickr in 2009 - Slideshow

2010-01-29T23:15:00.000-08:00

Following is the slideshow of all accounting pictures which were uploaded in flickr in 2009. I have made this slideshow by just writing accounting in flickr search engine and then click advance option and then selected picture by taking date after 31/12/2008 and before 31/12/2009. I hope you will enjoy to see all pictures of accounting in one place.

Bank

2010-01-29T19:15:00.000-08:00

Banks are just like commission agent. But, there are many differences between bank and commission agent. Bank secures the small saving of people and also provides interest on these savings. Bank uses this fund for productive area by providing loan to industries at cheap rates. Bank has very important role in economy. If we forget one exception of Swiss bank that saves black money, then we find bank as social worker for society. It is service area and it is very helpful to reduce cash in hand. By depositing fund daily in banks, businessman can sleep without tension. Every bank does his work under the strict rules and regulation of Central bank of every country. Central bank is just like boss but it works with co-ordination and co-operation. It can control credit by just applying different decisions.

Do you know?

1. In USA, banks can not do non financial activities. I try to make you understand. In USA bank can save the fund and give loan but it can not contract with any company for doing non financial activities or not do itself.
2. Earlier, I did not know that banks of Germany are allowed to do all non-financial activities with their financial activities.
3. Most of banks of France are providing the service of insurance.
4. System of bank accounting is so quick. After every transaction in the form of deposit money in bank or withdraw, you can find your bank balance through your pass book. After deposit money in bank, bank will credit your amount because, it is the liability of bank but it will increase your asset and if you withdraw the amount bank will debit the amount because, with this bank’s liability will reduce.

Functions of Bank

1. Bank provides overdraft and short term loan facility.
2. It also provide Safe deposit boxes to secure valuable possessions, such as gemstones, precious metals, currency, marketable securities, or important documents such as wills property deeds and birth certificates that need protection from theft, fire, flood, tampering or other reasons.
3. It also issues the bank draft and bank cheque on the request of customers.
4. It also gives the services of currency exchange. You can go to any bank and change your foreign currency into your country’s currency. For these services bank takes some commission.
5. Bank also sells the financial products.

Advance Techniques which are using in banks

1. Almost all banks are using Finacle software for bank accounting.
2. Banks have opened large number of ATM branches for fast payment to customers anytime and anyplace.
3. Mobile banking and Telephone banking.
4. Video banking and videoconference.
5. Online banking under secure website.

5 Steps for Filing e-TDS Return with No Trouble

2010-01-29T03:52:00.000-08:00

Filling e-TDS return is compulsorily for company and government deductors as per section 206 of Income tax law. So, it is the need of time to learn how to fill e-TDS return, if you are interested to work as accountant in company or government sector.

Before learning simple steps, you should know, what is e-TDS? E-TDS means electronic tax deducted at source. It is duty of above mentioned deductors to deduct the amount income tax when they pay to others and prepare return in form No.24, 26 or 27 or 24Q, 25Q or 26Q in electronic media as per prescribed data structure in either a floppy or a CD ROM. The floppy or CD ROM prepared should be accompanied by a signed verification in Form No.27A.

Central Board of Direct Taxes (CBDT) has appointed National Securities Depository Ltd. (NSDL), Mumbai as e-TDS Intermediary.

5 Simple Steps for filling e- TDS Return

Ist Step

Choose the format or data structure for preparing e-TDS return

Income tax department and NSDL have made different format according to nature of payments. So, accountant should choose any one from following format.

1. (a) Annual e-TDS return:

o File Format for Form 24
o File Format for Form 26
o File Format for Form 27

(b) Annual e-TCS return:

o File Format for Form 27E

(c) Quarterly return:

o File Format for Form 24Q
o File Format for Form 26Q
o File Format for Form 27Q
o File Format for Form 27EQ

Data structure for Form 24Q of the quarter ending 31-March

2nd Step

E-TDS return for successful acceptance

1. E-TDS clean text ASCII format: You can use any software like ms excel, compu tax or Tally.ERP or NSDL’s software Return Preparation Utility (e-TDS RPU-Light) for making e-TDS return but E-TDS file formats must be in clean text ASCII format with 'txt' as filename extension.
2. Correct Tax deduction Account Number (TAN) of the Deductor is clearly mentioned in Form No.27A as also in the e-TDS return, as required by sub-section (2) of section 203A of the Income-tax Act.
3. The particulars relating to deposit of tax deducted at source in the bank are correctly and properly filled in the table at item No.6 of Form No.24 or item No.4 of Form No.26 or item No.4 of Form No.27, as the case may be.
4. The data structure of the e-TDS return is as per the structure prescribed by the e-Filing Administrator.
5. The Control Chart in Form 27A is duly filled in all columns and verified and as enclosed in paper form with the e-TDS return on computer media.
6. The Control totals of the amount paid and the tax deducted at source as mentioned at item No.4 of Form No.27A tally with the corresponding totals in the e-TDS return in Form No. 24 or Form No. 26 or Form No.27, as the case may be.
7. Bank Branch code or BSR code is a 7 digit code allotted to banks by RBI. This is different from the branch code which is used for bank drafts etc. This no. is given in the OLTAS challan or can be obtained from the bank branch or from www.tin-nsdl.com. It is mandatory to quote BST code both in challan details and deductee details. Hence, this field cannot be left blank. Government deductors transfer tax by book entry, in which case the BSR code can be left blank.

3rd Step

Validate or verify your prepared e-TDS return

After the file has been set as per the file format, it should be verified using the File Validation Utility(FVU) (download here ) provided by NSDL.

4th Step
Rectify the errors and verify the file

In case file has any errors the FVU will give a report of the errors. Rectify the errors and verify the file again through the FVU.

5th Step

Filling of e-TDS Return

A ) Go to TIN – FC ( center) near to your office

e-TDS returns can be filed at any of the TIN-FC opened by the e-TDS Intermediary for this purpose. Addresses of these TIN-FCs are available at the website on http://www.incometaxindia.gov.in/ or at http://www.tin-nsdl.com/ .

B) Filling of e-TDS Return Online

Now, you have also facility to file your e-TDS return online for this you have to register to NSDL.

Amendment in VAT in 2010

2010-01-25T08:40:00.000-08:00

According to the new notifications of different states govt., VAT has been increased from 4% to 5%. Traders are now responsible to pay 5% VAT on all goods which were charged 4% and 10% sercharge on VAT is also payable. In these states, we can include Punjab, Delhi and some other states.

According to Times of India

Delhi shifted to a 5% Value Added Tax (VAT) slab from 4%. The shift to the 5% slab will impact the prices of medicines, surgical and medical equipment, IT and electronic products like computers and software, and industrial inputs, among other things. The five percent slab will cover 170-odd items.

But Delhi Fianance Minister AK Walia is clear the shift to the 5% slab is in keeping with the Central Government's directions on the VAT regime. "All items under the 4% slab in the VAT Act are now under the 5% slab. The shift to a 5% slab will lead to an escalation in revenue collections," Walia said.

According to Punjab Newsline

The SAD-BJP two member committee formed BY Punjab Government to suggest new resources of revenue has recommended to increase VAT from 4 to 5 percent and impose an additional 10 percent VAT in lieu of octroi. The Committee also recommends the imposition of entry tax to protect the local industry.

History of Accounting

2010-01-25T08:12:00.000-08:00

History of Accounting is as old as business. If we open wikipedia's page about Accountancy, then we come to know it is old more than 7000 years. In that time, people were used accounting records for knowing profit or loss from their agricultural output. They had made clay accounting tokens for showing their personal property separted from other person's property. Watch "History of Accounting - Ist Part Video" in simple hindi which is specially made for indian 10+1 commerce students for making accounting interesting.

Video Tutorial for Passing Voucher Entries in Contra Voucher in Tally.ERP 9

2010-01-23T06:40:00.000-08:00

In this video, you will learn very easy steps of passing voucher entries in Contra voucher in Tally.ERP 9. Basically, we pass only the transactions in contra voucher ( F4) which are related to cash, bank and bank overdraft. If you have deposited the amount in bank or you have withdrawn cash from bank or get bank overdraft from bank or payment of bank overdraft to bank.