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SECTION ONE
:ACCOUNTING
The importance of Accounting
MF BS is different from a bank or a company. MF havespecial requirements concerning accounting for thefund’s assets, liabilities and transactions withinvestors and other outside constituents such asbanks, securities custodians and registrars.
Follow accounting policies laid down by SEBIregulations 1996.
Knowledge is essential to explain the schemeperformance to the investors
 
 
Net Asset Value (NAV)Net Asset Value (
 
NAV)
Investors’ subscriptions are not accounted as liabilitiesor deposits but as Unit Capital
Investments made on behalf of the investors arereflected on the assets side.
Liabilities also form part of the balance sheet
NAV is asset minus liabilities and divided by totalnumber of outstanding units.
NAV =Assets - Liabilities
NAV = Net assets of the scheme =Number of units outstandingMarket value of investments + receivables + accruedincome + other assets -accrued expenses-payables-liabilitiesNo.of units outstanding on NAV date
 
 
Daily NAV for open-end schemes
Weekly NAV for close-end schemes
Those closed - end schemes which are notmandatorily required to be listed in any stockexchange may publish NAV at monthly or quarterlyintervals (for e.g. MIPs)
A fund’s NAV is affected by
Purchase and sale of investment securities
Valuation of all investment securities held
Other assets and liabilities
Units sold or redeemed
Valuation of investment securities must be at theirmarket prices.
DISCLOSURESDISCLOSURES
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