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Lesson Posted on 12 Jan Learn Accountancy

Definitions of Bank Reconciliation Statement

Subhash Chandra Thakur

Teaching last 20 years WRITTEN ACCOUNTANCY Notes BOOKS FOR 11TH 12TH, SUBHASH THAKUR,MBA, M.Com, B.Com...

A Bank Reconciliation Statement (BRS) is a financial document that compares the bank's records of an individual or a company's account with the corresponding entries in their own accounting records. It helps identify any discrepancies between the two sets of records, such as unrecorded transactions or... read more

A Bank Reconciliation Statement (BRS) is a financial document that compares the bank's records of an individual or a company's account with the corresponding entries in their own accounting records. It helps identify any discrepancies between the two sets of records, such as unrecorded transactions or errors, ensuring the accuracy of the financial information. The reconciliation process typically involves adjusting the accounting records to match the bank statement and vice versa.

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Lesson Posted on 10 Jan Learn Accountancy +2 Tuition Class 11

Differences Between book Keeping and Accountancy

Subhash Chandra Thakur

Teaching last 20 years WRITTEN ACCOUNTANCY Notes BOOKS FOR 11TH 12TH, SUBHASH THAKUR,MBA, M.Com, B.Com...

Bookkeeping involves the systematic recording, storing, and retrieving of financial transactions. It's more about data entry and maintaining accurate financial records. Accountancy encompasses a broader scope, involving the interpretation, analysis, and summarization of financial data. Accountants use... read more

Bookkeeping involves the systematic recording, storing, and retrieving of financial transactions. It's more about data entry and maintaining accurate financial records.

Accountancy encompasses a broader scope, involving the interpretation, analysis, and summarization of financial data. Accountants use the information recorded by bookkeepers to generate reports, provide insights, and make financial decisions. Essentially, accounting involves understanding and communicating the financial health of a business or individual.

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Lesson Posted on 10 Jan Learn Accountancy +2 Tuition Class 11

GST Goods and Service Tax Meaning and Type

Subhash Chandra Thakur

Teaching last 20 years WRITTEN ACCOUNTANCY Notes BOOKS FOR 11TH 12TH, SUBHASH THAKUR,MBA, M.Com, B.Com...

The goods and services tax (GST) is a tax on goods and services sold domestically for consumption. The tax is included in the final price and paid by consumers at point of sale and passed to the government by the seller. The GST is usually taxed as a single rate across a nation. Types. Different Types... read more

The goods and services tax (GST) is a tax on goods and services sold domestically for consumption. The tax is included in the final price and paid by consumers at point of sale and passed to the government by the seller. The GST is usually taxed as a single rate across a nation.

Types.

Different Types of GST Tax
  • State Goods and Services Tax or SGST.
  • Central Goods and Services Tax or CGST.
  • Integrated Goods and Services Tax or IGST.

 

 

 

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Lesson Posted on 05/05/2023 Learn Tuition +1 Unit 1-Financial Accounting(Part A)Theoretical Framework

Why Capital is considered as Internal Liability

Swati V.

I am an educator Currently i am working as a PGT COMMERCE and have 8 years of teaching experience I...

Capital is the amount of money invested by the owner in the business. Say Reena is interested in doing a chocolate business , after sometime she has taken ₹ 40000 from her piggy bank which she collected since her childhood . This 40,000 Reena wants to invest in her chocolate business , so it will be... read more

Capital is the amount of money invested by the owner in the business. Say Reena is interested in doing a chocolate business , after sometime she has taken ₹ 40000 from her piggy bank which she collected since her childhood .

This 40,000 Reena wants to invest in her chocolate business , so it will be termed as Capital.

Now Business and Owner are treated as two different entities. If they both would be considered one entity then profit calculation can be misleading and false too.

Say Reena takes out some chocaltes everyday from her business and distribute free of cost to her cousins. In this case we can never calculate correct profit of Reena because she is using business products and giving free of cost to her relatives , thats why business and owner should be treated separate.

If Reena gives any chocolate to her cousin it should be treated as a transaction of personal use and should be termed as Drawings.

So when any amount is invested by owner in the business and as owner and business are two separate entities, therefore money invested by owner in the business will be treated as burden on the business

And technical word used for burden is called as Liability .

So Capital which owner invests in the business is considered as a burden on business .

So we call Capital as Internal Liability 

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Lesson Posted on 05/05/2022 Learn Accountancy

Provisions of Indian Partnership Act 1932- In Absence of Partnership deed

Madhura Sagar Gadre

With over more than ten years of experience as a tutor for accountancy, finance, Taxation, Costing and...

1. Interest on Loan taken by Firm should be 6 percent per annum. 2. Interest on Loan given by the Firm should be nil 3. No partner could be admitted in the firm without the consent of the exisiting partners. 4. Interest on Capital, Interest on Drawings and Partner's Salary/comission should be nil. 5.... read more

1. Interest on Loan taken by Firm should be 6 percent per annum.

2. Interest on Loan given by the Firm should be nil

3. No partner could be admitted in the firm without the consent of the exisiting partners.

4. Interest on Capital, Interest on Drawings and Partner's Salary/comission should be nil.

5. The Profit sharing ratio between the partners, for both profit and loss should be equal.

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Lesson Posted on 11/02/2022 Learn Unit 1-Financial Accounting(Part A)Theoretical Framework

Rules of Accounting

Mohita G.

I am NET qualified in Management and have done MBA with dual specialization ( finance & HR) and also...

There are three types of accounts: 1. Personal account 2. Real account 3. Nominal accountR 1. Rule for personal account - "debit the receiver and credit the giver." 2. Rule for real account is- "debit what comes in and credit what goes out" 3. Rule for nominal account is-"debit all expenses and... read more

There are three types of accounts:

1. Personal account

2. Real account

3. Nominal accountR

1. Rule for personal account -  "debit the receiver and credit the giver."

2. Rule for real account is- "debit what comes in and credit what goes out"

3. Rule for nominal account is-"debit all expenses and losses and credit all incomes and gains"

 

 

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Lesson Posted on 02/08/2021 Learn Accountancy +5 ICWA Coaching BBA Tuition BCom Tuition Commerce CA Coaching

Valuation of Goodwill

Gayatri D.

I am an experienced, qualified Chartered Accountant and tutor having teaching experience of 7 years in...

This is one of the introductory chapters at the graduation level as well as in professional exams. The brief notes on methods and calculation of goodwill in easy steps are presented below: Methods of Valuation of Goodwill Average Profits Method Super Profits Method Annuity Method Capitalisation... read more

This is one of the introductory chapters at the graduation level as well as in professional exams.

The brief notes on methods and calculation of goodwill in easy steps are presented below:

Methods of Valuation of Goodwill

  1. Average Profits Method
  2. Super Profits Method
  3. Annuity Method
  4. Capitalisation Method
    1. By Average Profits Method
    2. By Super Profits Method

Let us discuss each method in detail.

  1. AVERAGE PROFITS METHOD

STEPS for calculation

  1. Adjusted average annual profits (See note 1)
  2. Number of years of purchase (given in question)
  3. Value of Goodwill= Adjusted average annual profits multiplied by the number of years of purchase

Note :

  • If several years of purchase for goodwill valuation are not given in the question, then the number of years for which data of profit or loss are provided should be taken.

Calculation of Adjusted average annual profits:

Steps for calculating it are as follows:

  • Calculation of Adjusted profits OR Adjusted Future profits OR Future Maintainable Profits

Particulars

Rs.

Profits   (given in Question)

---

Add: All expenses and losses not likely to occur or incur in future (e.g. extraordinary salary of a person, loss from fire or theft, abnormal losses, capital expenses etc.)

---

Add: All profits likely to come in the future

(e.g. profit due to new line of business)

---

Less: All expenses and losses likely to occur in future (e.g. salaries on new appointments etc.)

---

Less: Profits not likely to occur

---

ADJUSTED PROFIT /FUTURE PROFIT

---

  • Calculation of Adjusted average profits

There are two methods:

Simple average method

(If there is fluctuation in the profits for given periods with no specific trend, then use this method). The formula is

 Total adjusted profits of all the given years divided by the number of years.

Weighted average method

(An increasing or decreasing trend in the profits for periods given in the question then use this method). The format for calculating it is as follows.

Profits

weights

Product

(profits for all years

(greater weightage for recent years and less weightage for earlier or past years)

(profits multiplied by weights)

 SUPER PROFITS METHOD

STEPS for calculation

  1. Adjusted average annual profits (See Note below)
  2. Average Capital Employed (See Note below)
  3. Expected Rate of Return (given in question)
  4. Regular Profits = Average Capital Employed multiplied by Normal Rate of Return
  5. Super Profits = Adjusted average annual profits less Normal Profits
  6. Value of Goodwill = Super Profits multiplied by the number of years of purchase

Note

  • Calculation of Adjusted average annual profits (as discussed earlier)
  • Calculation of Average Capital Employed

           There are two ways to ascertain Average Capital Employed. 

Particulars

rupees

Assets (other than non-trading assets , intangible assets and fictitious assets) at market value

---

Less: Liabilities to outsiders at revised values

---

CAPITAL EMPLOYEDAT THE END OF THE YEAR

---

Less: Half of the profit earned during the year

---

AVERAGE CAPITAL EMPLOYED FOR THE YEAR

---

 

Liabilities Based Approach

Particulars

rupees

rupees

Equity Share Capital

 

---

Preference Share Capital

 

---

Reserves and Surplus

 

---

Profit on Revaluation of Assets and Liabilities

 

---

 

 

---

Less: Goodwill at book value

---

 

Accumulated Losses and expenses not yet written off

---

 

Loss on Revaluation

---

---

CAPITAL EMPLOYEDAT THE END OF THE YEAR

 

---

Less: Half of the profit earned during the year

 

---

AVERAGE CAPITAL EMPLOYED FOR THE YEAR

 

---

 ANNUITY METHOD 

STEPS for calculation

  1. Super Profits (Refer Super Profits method )
  2. Annuity Value (given in question)
  3. Value of Goodwill = Super profits multiplied by Annuity Value
  1. CAPITALISATION METHOD

By Average Profits Method

STEPS for calculation

  1. Adjusted average annual profits (See Note below)
  2. Expected Rate of Return (given in question)
  3. Total Value of Business = (Adjusted average annual profits divided by Normal Rate of Return) multiplied by 100
  4. Value of Goodwill = Total Value of Business Less Capital Employed

 Note: Capital Employed = Assets minus Liabilities

By Super Profits Method

 STEPS for calculation

  1. Super Profits (Refer Super Profits method )
  2. Average Rate of Return (given in question)
  3. Value of goodwill = (Super Profits divided by NRR) multiplied by 100
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Lesson Posted on 02/08/2021 Learn Accountancy +4 BBA Tuition BCom Tuition ICWA Coaching CA Coaching

Preparation of Final Accounts From Incomplete Records or Single Entry System:

Gayatri D.

I am an experienced, qualified Chartered Accountant and tutor having teaching experience of 7 years in...

Preparation of Final Accounts From Incomplete Records or Single Entry System: There are two methods for the preparation of final accounts from single entry books/ incomplete records. Method 1: Under this system, two statements are prepared: Statement of profit and loss and Statement of affairs. Step1... read more

Preparation of Final Accounts From Incomplete Records or Single Entry System:

There are two methods for the preparation of final accounts from single entry books/ incomplete records.

Method 1: Under this system, two statements are prepared:

  1. Statement of profit and loss and
  2. Statement of affairs.

Step1 - Prepare a statement of affairs at the beginning and at the year-end to find out the opening and closing capital, respectively.

Proforma of the statement of affairs:

Statement of affairs as on....(date).

Liabilities Amount (Rupees) Assets Amount (Rupees)
Capital (Bal.fig.) --- Building  ---
Loans, Bank Overdraft --- Machinery ---
Sundry Creditors --- Furniture ---
Bills Payable --- Inventory ---
Outstanding Expenses --- Sundry Debtors ---
    Bills receivable ---
    Loans and advances ---
    Cash and Bank ---
    Prepaid Expenses ---
  ----   ----

Sources to find out details like assets and liabilities of a business enterprise:

  1. Cash Book for cash balance
  2. Bank Passbook for the bank balance
  3. Personal Ledger for Debtors, Creditors, Bills receivable and other current assets/ liabilities etc.
  4. Inventory by actual counting and Valuation
  5. Written down value of Fixed assets from the list prepared by the proprietor disclosing the original cost, the date of purchase and written down value after deducting a reasonable amount of deprecation.

Step2 - Prepare a statement of profit and loss to ascertain the trading profit. It can be prepared either in the statement form or in the form of a ledger. Both the formats are explained below.

Format: Statement of Profit and Loss for the year ended.

  1. In the statement form
Particulars Amount Amount
Capital at the end (a) ---  
   Add : Drawings ---  
   Less: Fresh Capital Introduced ---  
Capital at the beginning (b) ---  
PROFIT /LOSS (a-b)   ----
Less : Adjustments, if any say, Bad debts, Depreciation etc ---  
Net Profit/Loss for the period   ---

    Less : Appropriation items:

  1. Interest on partner’s capital
  2. Partners’ salaries etc.

 

---

---

 

Divisible Profit

  ----

 

 2. In the form of Ledger

Particulars Amount (Rupees) Particulars Amount (Rupees)
    By Balance b/d ---
To Drawings --- By Additional Capital ---
   
By Interest on partner’s capital
---
    By Partners’ salaries ---
To Net Loss (Bal.fig.) --- By Net Profit (Bal.fig.) ---
To Balance c/d ---    
  ----   ----

 

Step3 - Prepare a statement of affairs as at the YEAR-END to show the business’s financial position.

Method 2: Conversion of single entry to double entry

Step1 - various ledger accounts are prepared, e.g. sales, purchases, debtors, creditors, Trading A/c, cash book to locate missing details.

Step2 - Find all the required details from the available information. For example, if we know opening & closing balances in Debtors’ A/c and the cash received from debtors, the balancing figure will indicate sales figures. Similarly, with the opening and closing balances of creditors & credit purchases figures, we can find cash paid to creditors from the creditor’s ledger.

Step3 - Once all these figures required to prepare financial statements are calculated through their respective ledgers, it is easy to prepare the financial statements in regular formats.

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Lesson Posted on 26/01/2021 Learn Unit 1-Financial Accounting(Part A)Theoretical Framework

Price Earnings Ratio

S. Lakshmi Priya Sankaran

With a robust academic background and a wealth of teaching experience, I specialize in Financial Cost...

Formula for Price Earnings Ratio
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