All business transactions are first recorded in Journal or Subsidiary Books. They are transferred to Ledger and balanced it. The main object of keeping the books of accounts is to ascertain the profit or loss of business and to assess the financial position of the business at the end of the year. The object is better served if the businessman first satisfies himself that the accounts written up during the year are correct or al least arithmetically accurate. When the transactions are recorded under double entry system, there is a credit for every debit, when on a/c is debited; another a/c is credited with equal amount. If a Statement is prepared with debit balances on one side and credit balances on the other side, the totals of the two sides will be equal. Such a Statement is called Trial Balance.

WHAT IS A BUDGET? A budget is a document that translates plans into money - money that will need to be spent to get your planned activities done (expenditure) and money that will need to be generated to cover the costs of getting the work done (income). It is an estimate, or informed guess, about what you will need in monetary terms to do your work. Why is it important for an organisation, project or department to have a budget? The budget is an essential management tool. Without a budget, you are like a pilot navigating in the dark without instruments. The budget tells you how much money you need to carry out your activities. The budget forces you to be rigorous in thinking through the implications of your activity planning. There are times when the realities of the budgeting process force you to rethink your action plans. Used properly, the budget tells you when you will need certain amounts of money to carry out your activities. The budget enables you to monitor your income and expenditure and identify any problems. The budget is a basis for financial accountability and transparency. When everyone can see how much should have been spent and received, they can ask informed questions about discrepancies. You cannot raise money from donors unless you have a budget. Donors use the budget as a basis for deciding whether what you are asking for is reasonable and well-planned. Who should be involved in budgeting? Budgeting is a difficult and responsible job. Your organisation’s ability to do what it has planned to do and to survive financially depends on the budgeting process. Whoever does the budgeting must: Understand the values, strategy and plans of the organisation or project; Understand what it means to be cost effective and cost efficient (see Glossary of Terms); Understand what is involved in generating and raising funds. To ensure you have all these understandings, it is usually a good idea to have a small budgeting team. This may only mean that one person does a draft budget which is then discussed and commented on by the team. Where staff is competent to take full responsibility for the financial side of the organisation or project, the following would normally be involved in the budgeting process: The Finance Manager and/or Bookkeeper; The Project Manager and/or Director of the organisation or department. Where staff lack confidence to do the budgeting, then Board members can be brought in. Some Boards have a Finance Committee or a Budget Sub-Committee. It is a good idea to have someone on your Board with financial skills. S/he can then help the staff with budgeting. The budget is the business of everyone in the organisation. At the very least, senior staff should understand the budget, how it has been drawn up, why it is important, and how to monitor it. Where an organisation has branches and/or regions, or several departments, then each branch, region or department should draw up the budget for its own work. These budgets then need to be consolidated (put together) in an overall budget for the organisation. Each branch, region or department should be able to see how its budget fits into the overall budget, and should be able to monitor its budget on a monthly basis. Financial monitoring works best when those closest to the spending take responsibility for the budget. DIFFERENT BUDGETING TECHNIQUES The two main techniques for budgeting are incremental budgeting and zero based budgeting. Incremental budgets are budgets in which the figures are based on those of the actual expenditure for the previous year, with a percentage added for an inflationary increase for the new year. This is an easy method that saves time but it is the “lazy” way and is often inaccurate. This budgeting technique is only suitable for organisations where each year is very similar to the previous one in terms of activities. Very few dynamic organisations or projects are so stable that this budgeting technique really works for them. In zero based budgets, past figures are not used as the starting point. The budgeting process starts from “scratch” with the proposed activities for the year. The result is a more detailed and accurate budget, but it takes more time and energy to prepare a budget in this way. This technique is essential for new organisations and projects, but it is also probably the best route to go in a dynamic organisation that is proactive in taking on new challenges

The simplest way to show how a business is organised is to look at an organisation chart. This shows the management hierarchy in a business and works from top to bottom. Here is an example organisational chart: Hierarchy The levels of hierarchy refer to the number of layers within an organisation. Traditional organisations were tall with many layers of hierarchy and were often authoritarian in nature. The organisation chart above shows a business with four levels of hierarchy – from the Managing Director at the top, to assistants and team members at the bottom. Below is another organisation chart, which shows a taller hierarchy.

Accounting for Non-Trading Concerns:

Definition and Explanation of Nontrading Concerns: Individuals or institutions with activities other than trade are known as non-trading concerns. Examples of nontrading concerns are clubs, hospitals, libraries, colleges, athletic clubs etc. These institutions are started not for carrying on a business and making a profit but for some charitable, religious or similar purpose. Their income, which is derived from donations, subscriptions, entrances fees etc., is spent on the objects for which they are started. Final Accounts of Non-Trading Concerns: Non-trading concerns usually maintain their accounts by the double entry system and periodically prepare their final accounts for the submission to their members and subscribers. The method of preparing final accounts by non trading concerns is different than trading concerns. The method of preparing final accounts by non trading concerns is different than trading concerns. As these concerns do not deal in any goods like trading concerns, so they cannot prepare a trading and profit and loss account. At the end of the year they make out an account called an Income and expenditure account and balance sheet. The Income and expenditure account serve the same purpose as the profit and loss account in the case of trading concerns and is made out exactly in the same manner. Usually the non-profit making institutions do not maintain a full set of books but merely a cash book in which all receipts and payments are entered. At the end of the year the cash book is summarised under suitable heads and the summary thus prepared is called a Receipt and Payment Account. In order to know the result of the year's working it should be converted into Income and expenditure account. Receipt and Payment Account: Receipt and payment account is a mere summary of cash book for a year. It begins with the cash in hand at the commencement and ends with that at the close of the year. Similarly to cash account, in receipts and payments account receipts are shown on the debit side while payments are shown on the credit side. Receipt and payment account is a mere summary of cash book for a year. It begins with the cash in hand at the commencement and ends with that at the close of the year. Similarly to cash account, in receipts and payments account receipts are shown on the debit side while payments are shown on the credit side, without any distinction between capital and revenue. Moreover, it does not include an unpaid expenditure not any unrealized income relating to the period under review and so fails to reveal the financial position on the concern. Income and expenditure account is merely another name for profit and loss account. Such type of profit and loss account is generally adopted by non trading concerns like clubs, societies, hospitals, and like etc. This account is credited with all earnings (both realized and unrealized) and debited with all expenses (both paid and unpaid) The difference represents a surplus of deficiency for a given period which is carried to the capital account. It should be noted that items of receipts or payments of capital nature such as legacies, purchases or sales of any fixed assets must not be included in this account. Income and expenditure account is merely another name for profit and loss account. Such type of profit and loss account is generally adopted by non trading concerns like clubs, societies, hospitals, and like etc. This account is credited with all earnings (both realized and unrealized) and debited with all expenses (both paid and unpaid) The difference represents a surplus of deficiency for a given period which is carried to the capital account. It should be noted that items of receipts or payments of capital nature such as legacies, purchases or sales of any fixed assets must not be included in this account. How to Convert a Receipt and Payment Account into Income and Expenditure Account: The following steps will be necessary to convert a receipt and payment account into an income and expenditure account: Opening and closing balances of receipt and payment account should be excluded. All items of capital receipts and payments should be excluded. All incomes of previous years or for years to come should be excluded. All expenditures of previous years and years to come should be excluded. All accrued income and outstanding expenditures relating to the period should be included. Item such as bad debts, depreciation, etc. will have to be provided. Treatment of Peculiar Items: Generally in exercises the instructions are given as to the treatment of special items. Such instructions are based on the rules of the concern. These should be followed while solving questions. Incases where no specific instructions are given the following guidelines may be considered. Legacy: It is the amount received by the concern as per the will of the donor. It appears in the receipt side of receipt and payment account. It should not be considered as as an income but should be treated as capital receipt i.e., credited to capital fund account. Donation: Amount received from any source by way of gift is described as donation. It appears on the receipts side of receipt and payment account. Donations are usually credited to income. Rules of the association may provide that a part of donations are to be treated as capital. However, if donations are received for a specific purpose viz., building, free dispensary etc., then it should require special treatment. Donations for specific purposes should not be credited to income and expenditure account. Similarly donations representing heavy amount may also be treated as capital receipts. Subscription: The members of the associations, as per rules, are generally required to make annual subscription to enable it to serve the purpose for which it was created. It appears on the receipts side of the receipt and payment account and is usually credited to income. Care must be exercised to take credit for only those subscriptions which are relevant. Life Membership Fees: Generally the members are required to make the payment in a lump sum only once which enables them the members for whole of life. Life members are not required to pay the annual membership fees. As life membership fees is substitute for annual membership fees therefore, it is desirable that life membership fees should be credited to separate fund and fair portion be credited to income in subsequent years. In the examination question if there is no instruction as to what portion be treated as income then whole of it should be treated as capital. Entrance Fees: Entrance fees is also an item to be found on the receipt side of receipts and payments account. There are arguments that it should be treated as capital receipt because entrance fees is to be paid by every member only once (i.e., when enrolled as member) hence it is non-recurring in nature. But another argument is that since members to be enrolled every year and receipt of entrance fees is a regular item, therefore, it should be credited to income. In the absence of the instructions any one of the above treatment may be followed but students should append a note justifying their treatment. Sale of News Papers, Periodicals etc. As the old newspapers, magazines, and periodicals etc. are to be disposed of every year, the receipts on account of such sales should be treated as income, and therefore to be credited to income and expenditure account. Sales of Sports Material: Sale of support materials (used) is also a regular feature of the clubs. Sales proceeds should be treated as income, and therefore to be credited to income and expenditure account. Honorarium: Persons may be invited to deliver lectures or artists may be invited to give their performance by a club (for its members). Any money so paid is termed as honorarium and not salary. Such honorarium represents expenditure and will be debited to income and expenditure account. Special Fund: Legacies and donations may be received for specified purchases. As discussed above these should be credited to special fund and all expenses related to such fund are shown by way of deduction from the respective fund and not as expenditure in income and expenditure account. Capital Fund: Any concern - whether profit seeking or non profit seeking - requires money for conducting day to day functions. In the case of profit seeking concerns such money is called "capital", while in the case of non - profit seeking concerns it is called "capital fund". The excess of total assets over total external liabilities of a concern is called capital fund. Capital fund is created with surplus revenue and capital receipts and incomes. It is shown on liabilities side of balance sheet. Receipts & Payment Account Income & Expenditure Account 1 It is a summary of the cash book 1 It takes the place of profit and loss account in non-trading concerns. 2 It begins with an opening balance and ends with a closing balance. 2 Does not commence with any balance 3 It records all sums received and paid whether they relate to revenue or capital items 3 It includes revenue items only 4 It include all sums actually received during the year whether they relate to the past, current or next year. 4 It includes the items relating to year for which it is prepared. Provision is made for all outstanding expenses and accrued income. 5 The receipts are shown on the debit side and the payments on the credit side. 5 Income is shown on the credit side and expenses on the debit side. 6 It simply ends with a closing balance of cash and does not show the result for the period. 6 It definitely shows whether there has been an excess of income over expenditures or vice versa. 7 It is not accompanied by a balance sheet. 7 It is always accompanied by a balance sheet.

consolidated balance sheet

Consolidated Balance Sheet Accounting of holding & Subsidiary Company Definition Holding Company: - A company is one which acquire all or a 50% or above equity share of any other company, which is called holding company. Holding Company: - any company obtains the right of appoint of director in other company, which is called holding company. Subsidiary Company: - Share of a company which is acquired by any other company & a company sold their rights to other company, which is called subsidiary company. Preparation of consolidated balance sheet:- Consolidated balance sheet as on 31 Mar 2009 For Mr. Ravi As per Schedule 6 Liabilities Assets 1. Share & Capital XX 1. Fixed Assets XX 2. Reserve & Surplus XX 2. Investment XX 3. Secured Loan XX 3. Current Assets, Loan & Advances a. Current Assets b. Loan & Advances XX 4. Unsecured Loan XX 4. Miscellaneous Assets XX 5. Current Liabilities & Provisions a. Current Liabilities b. Provisions XX 5. P&L Dr. (Balance) XX How to Calculate Holding Ratio of Holding Company? Holding % = Number of share acquired by holding company ---------------------------------------------------------- X 100 Total Share of Subsidiary Company Working Note – 1 Calculation of Pre & Post Part of P&L Pre Post Opening Balance (A) Closing Balance (B) XXX (C) Difference (Closing Balance – Opening Balance) Distribution (According To Month) XXX (D) XXX (E) ----------- ----------- XXX (F) XXX (G) ----------- ----------- Note: - Here Total of (F) = (A) + (D) & Total of (G) = (E) Working Note – 2 Calculation of Pre & Post Part of General Reserve Same as Calculation of Pre & Post Part of P&L Working Note – 3 Calculation of Net Worth:- Particular Pre Post Equity Share Capital Of Subsidiary Company XXX ----- Security Premium XXX ----- General Reserve XXX XXX Profit & Loss XXX XXX Other Reserve XXX ----- Less :- Miscellaneous Assets (XXX) ----- Total XXX (A) XXX (B) *Note: - Opening balance of P&L and general reserve will be added in pre profit. Net Wealth of Subsidiary Company = (A) + (B) Net Wealth = (A) + (B) % of Holding Company (C) % of Minority Interest (D) Holding % of (A) Holding 90 % of (B) Holding % of Post P&L Holding % of Post General Reserve Working Note – 4 Calculation of Goodwill & Capital Reserve Cost of investment of Holding Company (B/S – Assets) = XX Less: - Pre Part of analysis = (XX) ----------------------------------------------------------------- Goodwill / Capital reserve XXXX ----------------------------------------------------------------- If (+) then it will be added in goodwill If (-) then it will be added in capital reserve Working Note -5 Calculation of consolidated P&L Balance of P&L of holding company = XX Add: - Post P&L of analysis = XX ----------------------------------------------------------------- Consolidated P&L XXXX ----------------------------------------------------------------- Working Note -6 Calculation of Consolidated General Reserve Balance of General Reserve of holding company = XX Add: - Post General reserve of analysis = XX -------------------------------------------------------------------------- Consolidated General Reserve XXXX -------------------------------------------------------------------------- Working Note – 7 Adjustment for miscellaneous Assets Miscellaneous Assets  Preliminary Expenses  Discount on issue of share & Debenture  Underwriting Commission  Advertisement Expenses  Fictitious Assets All Miscellaneous assets Is to be deducted from pre part of analysis See Working note 3. Working Note- 8 Adjustment for revaluation of fixed assets URD (Upward Revaluation) DRD (Downward Revaluation) (Revised Value – Book Value) (Book Value – Revised Value) URD Additional Depreciation DRD Saving In Depreciation Add to Pre Part Deduct From Deduct From Add to Post Part Of Analysis Post Part of Analysis Pre Part of Analysis of Analysis See Working Note See Working Note See Working Note See Working Note Working Note Particular Pre Post Equity Share Capital Of Subsidiary Company XXX ----- Security Premium XXX ----- General Reserve XXX XXX Profit & Loss XXX XXX Other Reserve XXX ----- Add:- URD XXX ----- Less:- Additional Depreciation ----- (XXX) Less:- DRD (XXX) ----- Add:- Saving in Depreciation ----- XXX Less :- Miscellaneous Assets (XXX) ----- Total XXX (A) XXX (B) Consolidated Assets = Assets Balance of holding company + Assets Balance of Subsidiary Company + URD –DRD – Additional Depreciation + Saving In Depreciation Working Note – 9 Adjustment of mutual transaction:- A) Inter Company Debtor’s & Creditor’s  In Assets side = Debtor’s of holding company + Debtor’s of subsidiary company - Mutual Debts  In Liabilities side = Creditor’s of holding company + Creditor’s of Subsidiary company – Mutual Debts B) Inter Company Bills Transaction’s  In Assets Side = B/R of holding company + B/R of Subsidiary company – Mutual Debts  In Liabilities Side = B/P if holding company + B/P Of Subsidiary Company – Mutual Debts C) Inter Company Loan Transaction’s  In Assets Side = Loan Amount Is Not To Be Shown.  In Liabilities Side = Loan Amount Is Not To Be Shown. Working Note – 10 Inter Company Stock Transaction’s A) When ROP is Given At Cost Price Profit = Stock Amount x ROP / 100 + ROP B) When ROP Is Given At Invoice Price Profit = Stock Amount x ROP / 100 Condition 1 When Holding Company Purchased Goods from Subsidiary Company Amount of profit % of holding company X Profit % of Minority Interest X Profit Deduct from Consolidated P&L Deduct from Minority interest Amount Condition 2 When Subsidiary Company Purchased Goods from Holding Company In this condition the entire amount of profit is to be deducted from Consolidated P&L In Balance sheet => Stock of Holding Company + Stock of Subsidiary Company – Amount of Profit Working Note 11 Adjustment for Dividend: 1. Dividend From Pre Profit 2. Interim Divided Deduct From Opening Balance Deduct from Working Note 4 Deduct from Working Note 5 Of P&L & after that we have to (Cost of investment) (Consolidated P&L) Calculate Pre & Post P&L Amount Amount (Dividend X H %) (Dividend X H %) Working Note 12 Adjustment of unclaimed or proposed dividend:- Add to closing balance of P&L & Deduct from working note 5 After that we have to calculate Pre & Post P&L (Consolidate P&L) (Dividend X H %) Working Note 13 Adjustment of dividend on preference share Deduct from working note 3 Add to working note 5 (Net Worth) According to month (Consolidated P&L) (Means it will dividend in to parts Pre month & Post month) Pre Post (Dividend X H %) Equity Share Capital XX --- General Reserve XX XX P&L XX XX Less:- Pref; Sh. Dividend (XX) (XX) -------- --------- XXX XXX -------- --------- Working Note 14 Adjustment of Preference share capital Having Investment Not Having Investment Prepare Separate New Worth Entire amount of preference share capital Will be add to minority interest Pre Post Preference Share Capital XX --- -------- --------- XXX XXX -------- --------- Effect of having investment Effect 1. Calculation of Goodwill or Capital Reserve Cost of investment of Holding Company (Equity + Preference) = XX Less: - Pre Part of analysis (Main Net Worth) = (XX) Less: - Pre Part of analysis (Separate Net worth of Preference Share) = (XX) ----------------------------------------------------------------- Goodwill / Capital reserve XXXX ----------------------------------------------------------------- Effect 2. Calculation of Minority Interest Minority of equity share capital or % Holding in main net worth (Working note 3) = XX Minority of Preference share capital or % Holding in Preference share capital = XX ---------------- XXXX ---------------- Working Note 15 Adjustment of Bonus Share At the time of calculation of Holding % of Holding Company number of bonus share is not considered.

Facts About Mahatma Gandhi

Here is a brief summary of some of the major facts associated with Mahatma Gandhi. These facts highlight some of the major achievements of Mohandas Gandhi and provide valuable information on Mahatama Gandhi.

Birth: October 2, 1869
Death: January 30, 1948
Place of Birth: Porbandar, Gujarat
Father: Karamchand Gandhi
Mother: Putlibai
Wife: Kasturbai

1888-1891: Studied law in London

1893: Sailed for South Africa

1906: Began Satyagraha campaign in South Africa to protest the requirement that Indians be fingerprinted and carry identification cards

1915: Returned to India from South Africa

1917: Initiated Champaran Satyagraha to alleviate the condition of indigo planters

1919: Instituted Satyagraha campaign in India to protest the Rowlatt Acts, which deprived all Indians of important civil liberties.

1922: Ended Non-Cooperation movement against British Raj after his followers were involved in a series of riots and disturbances that violated his policy of nonviolence

1930: Led Dandi March to collect salt in protest of the British salt tax.

1931: Signed a pact with Lord Irwin to suspend the Civil Disobedience Movement and went to London to attend Round Table Conference.

Consolidated Balance Sheets Group Accounts & Consolidated Balance Sheets

Consolidated Balance Sheets Group accounts are required when a company acquires another company. The first company is called the holding or parent company and it controls the latter company, which is called the subsidiary. Group accounts basically consist of a consolidated balance sheet, which is a balance sheet that shows the net assets that the Holding Company controls and the ownership of those assets. The Group’s Capital and Reserves consist of the holding company’s capital and reserve and the group share of post-acquisition retained reserves of the subsidiary company. It also consists of what is called Minority Interest. The Preparation of the Group’s Consolidated Balance Sheet Step 1 You must first make sure at what date the acquisition took place. The reason for this is to have a clear picture in your mind concerning the events that occurred at the acquisition date and those of which occurred since. Step 2 The next step is to find out whether other parties hold a minority interest of the subsidiary’s consolidated net assets. This is done by dividing the amount of shares acquired by the subsidiary’s total share capital. The percentage of minority interest should be noted down. Step 3 when separate calculations of post acquisition profits, goodwill or minority interest are needed rather than all of them, just take a look at the column of each category to find out how to calculate it. Going through the calculations in this manner ensures that the possibility of your errors is minimal, and if they do occur you can systematically find out where they did. 80% Total of Total Equity Read more: Chapter 27 Group Accounts & Consolidated Balance Sheets http://www.friendsmania.net/forum/acca-notes-acca-past-papers/101678.htm#ixzz1nNV1QNEh