Overdraft--bank overdraft refers to a withdrawal of money that is greater than the available balance in

an account. Banks can provide overdraft protection, which is a service that allows a withdrawal to occur
even though there are insufficient funds in the account.It is a liability of any company.

Overdraft Facility-- Overdraft facility is a financial facility or instrument that enables you to withdraw
money from your bank account (savings or current), even if you do not have any account balance. It has
a certain limit and bank levies Ineterest on it but does not have EMI system like Loan and short term in
nature.The overdraft facility is one that can truly help you when you need money.

Asset-- An asset is an owned economic resource of a company which is expected to provide future
economic benefits.

It has mainly 2 types-

1. Current Assest - Which can be converted into Cash or Cash equivalent whithin a year like Cash, Bank
Balance, Stock/Inventory, Short Term Marketable Securities, Short Term Deposit, Debtor, Receivable,
Prepaid Expenses.

2. Fixed or Non- Current Asset-- Which can not be converted within a year like Land, Investment,
Building, Furniture, Machinery , Patent.

Also Some Assests are Tangible and Intangible Assest.

Goodwill, Patent, Trade Mark, Copy Right are Intangible Asset.

Liability-- liability is a present obligation of the enterprise arising from past events.

It has mainly 2 types-

1. Current Liability-- Current Liability is one which the entity expects to pay off within one year. like
Overdraft, Sundry Creditor, Accounts Payable, Dividend, Outstanding Wages, Salary, Tax Payable etc.

2. Non Current Liability-- is one which the entity expects to settle after one year. Like Debenture, Long
Term Loan, Bonds etc.

Shareholder's Fund-- Shareholders' funds refers to the amount of fund in a company, which belongs to
the shareholders like Share Capital, Reserve & Surplus, Retained Earning.

Shareholder's Fund = Assets - Liability.

A contingent asset is a potential asset or economic benefit that is dependent on future events whic is
out of a company's control.

A contingent Liabilities is a potential obligation that is dependent on future events which is out of a
company's control.

Both Contigent Assets and Liabilities are disclosed in Balance Sheet as Footnote.
Debenture-- A debenture is a type of debt instrument which is generally unsecured, issued by Company
or Govt. having some rate of Interest (Fixed or Floating) and having a tenure.

Debentures may be Convertible or Non Covertible, may be Redeemable or Irredeemable.

Covertible means covertable into shares.

Redeemable means payed off fully after completion of tenure.

Irredeemable means they are infinite and can't be reedemed. Generally received the interest.

Bond-- same as Debentures (type of debt instruments having a coupon rate with tenurity) but bonds are
Secured (Physical Asset, Properties etc).

Bonds are safer than debentures and Bonds are generally hold lower interest than debentures.

Loan-- loan is the lending of money or asset by one or more individuals, organizations, or other entities
to other individuals, organizations etc. The recipient (i.e., the borrower) incurs a debt and is usually
liable to pay interest on that debt until it is repaid as well as to repay the principal amount borrowed.

Loans can be secured by collateral such as a mortgage or unsecured such as a credit card.

Revolving loans or lines can be spent, repaid, and spent again like Credit Card, while term loans are
fixed-rate, fixed-payment loans.

Syndicate Lending-- When a group of Banks raise fund and lend money to Single Brrower is called a
Syndicate Lending. It's generally requires when project amount is soo high.

Collateral-- Collateral is an asset or property or money that an individual or entity offers to a lender as
security for a loan.

Depreciation-- a reduction in the value of an asset over time, due in particular to wear and tear.

Land is never depreciable.

Depreciation is a non cash item.

Treatment- Depreciation reflect in the Debit Side of PL account as expenses and also we deduct the
depreciation amount from that particular asset in the Balance Sheet.

A reduction in the value of Intangible asset are called Amortization.

A reduction in the value of natural assets are called Depletion.

Provision-- A provision is an amount set aside for the probable future obligations of an enterprise.
Reflect in Liability side of Balance and Debit side of PL as expenses.
Reserve-- when any amount set aside from profit for the future improvement or expansion of business
is called reserve or Retained Earning. Reflect Liability side of BS as Shareholder's Fund.

Surplus-- Profilt.

Reserve is of 2 types 1. General Reserve and 2. Capital Reserve.

Capital Reserve used for Fixed Asset or Long term purpose.

Shares-- When total no of capital divided into a small no of script. Each such script is called Share.

Financial Statements-- Financial statements are reports prepared by a company's management to

present the financial performance and position at a point in time.

Financial statements are often audited by government agencies, accountants, firms, etc. to ensure
accuracy and for tax, financing, or investing purposes.

Generally there are 4 types of Financial Statement-

1. Balance Sheet-- is a statement Prepared at the end of the accounting year to know the financial
position of the company which shows the overview of Asset is right hand side and overview of Liabilities
and Shareholder's Fund in the left hand side and automatically balanced both the side. Currently
companies are using Vertical BS

2. Profilt and Loss -- is a statement which shows the financial performance of the company. statement
primarily focuses on a company’s revenues and expenses during a particular period. Once expenses are
subtracted from revenues, the statement produces a company's profit figure called net income or Net
Profile. Also called Income Statement.

For Manufacturing company a additional statement is there called Trading or Manufacturing account.

For NPO, it is called Deficit and Surplus account.

3. Cash Flow statement-- it shows the company cash inflow and out flow at the particular period. It
meansures how well a company generate cash to pay its debt obligations, fund it's operating expenses
and funds investment.

It has generally 3 activities Operating, Investing and Financing.

4. Notes and Schedules to support the above 3 statement.

Accounting Equation-- Assets= Liabilities + Shareholder's Fund

We follow Dual entry Book Keeping System on Accural Basis not cash Basis.

Golden Rule--

Personal Account-- Debit the Reciever and Credit the Giver

Real Account-- Debit What comes in, Credit what goes out

Nominal Account-- Debit All expenses and Losses, Credit all Incomes and gains.

Journal-- is a Primary book of Account in which transactions are recorder chronological order.

Ledger-- is a Principal book where are recoded transaction are posted into their Particular account.

Trail Balance-- trial balance is a statement which summarise the balance of all ledgers account into
respective debit and credit account column totals that are equal. ... The purpose of producing a trial
balance is to ensure the entries in a company's bookkeeping system are mathematically correct.

Securities-- security is a financial instrument, typically any financial asset that can be traded. Like Share,
Bonds, Debentures etc.

Secured Loan examples are Car Loan, Home Loan, Personal Loan

Unsecured Loan examples are Credit Card, Education Loan, Overdraft.

Basel-- Basel Committee on Banking Supervision (BCBS) in Basel, Switzerland is the primary global
standard setter for the prudential regulation of banks and provides a forum for regular cooperation on
banking supervisory matters. Its 45 members comprise central banks and bank supervisors from 28
jurisdictions.

Basel 1-- Basel I is a set of international banking regulations that lay out the minimum capital (8%)
requirements for financial institutions with the goal of minimizing credit risk and promoting financial
stability.

Basel 2 or II-- Basel II is the second set of international banking regulations defined by the Basel
Committee on Bank Supervision (BCBS). It is an extension of the regulations for minimum capital
requirements as defined under Basel I. The Basel II framework operates under three pillars:

Capital adequacy requirements - include operational risk including credit risk

Supervisory review- The supervisor is responsible for ascertaining whether the bank uses appropriate
assessment approaches and covers all risks they may face during the operation.

Market discipline- aims to ensure market discipline by making it mandatory to disclose relevant market
information.

Basel 3 or III-- Basel III was introduced to improve the banks’ ability to handle shocks from financial
stress and to strengthen their transparency and disclosure.

Under Basel 3 Capital requirement increased to 12.9 %