Professional Documents
Culture Documents
Accounting For Banking Institutions
Accounting For Banking Institutions
net/publication/339177857
CITATIONS READS
0 22,025
1 author:
Christian Nchendeh
Pan afrikan wood company
5 PUBLICATIONS 2 CITATIONS
SEE PROFILE
Some of the authors of this publication are also working on these related projects:
performance measurement in micro finance institutions operating under the CAMCCUL and RECOCAM networks : A Cameroonian context View project
All content following this page was uploaded by Christian Nchendeh on 11 February 2020.
Page 1
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
NCHENDEH CHRISTIAN +237 674 101 690
Page 2
NCHENDEH CHRISTIAN +237 674 101 690
Page 3
NCHENDEH CHRISTIAN +237 674 101 690
Page 4
ACCOUNTING FOR BANKING INSTITUTIONS
CHAPTER 0:
OVERVIEW OF BANKING COMPANIES
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
A bank is a commercial institution, licensed to accept deposits and acts as a safe custodian of
the spendable funds of its customers. Banks are concerned mainly with the functions of banking, i.e.,
receiving, collecting, transferring, buying, lending, investing, dealing, exchanging and servicing (safe
deposit, custodianship, agency, trusteeship) money and claims to money both domestically and
internationally. The principal activities of a bank are operating current accounts, receiving deposits,
taking in and paying out notes and coins, and making loans.
1. Receive demand deposits and pay customers’ cheques drawn against them, and operate
Automated Teller Machines (ATM);
2. Receive time and savings deposits, issue negotiable orders of withdrawal, and pay interest
thereon, as well as provide Automatic Transfer Service (ATS) for funds from serving accounts
to cover cheques;
3. Discount notes, acceptances and bills of exchange;
4. Supply credit to business firms with or without security, issue letters of credit and accept bills
drawn thereunder;
5. Transfer money at home and abroad;
6. Make collections and facilitate exchanges;
7. Issue drafts, cashier’s cheques, money orders, and certify cheques;
8. Furnish safe deposit vault service;
9. Provide custodianship for securities and other valuables;
10. Provide personal loans, credit and services to individuals, and lend or discount customer
installment receivables of vendors;
11. Act in a fiduciary capacity for individuals, as well as establish common trust funds;
12. Provide corporate trust services (stock transfer agent, registrar, paying agent, escrow agent, and
indenture trustee);
13. Act as factors and engage in equipment leasing;
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
15. Invest in government and other debt securities;
16. Act as fiscal agent or depository for the Central Government, states and subdivisions of states;
17. Provide miscellaneous services such as place orders in securities for customers; act as insurance
agent of incidental to banking transactions; serve as finder to bring buyers and sellers together;
act as travel agent and issue letters of credit and traveler’s cheques; provide club accounts and
other special purpose accounts; act as agent for accepting service of legal process of incidental
normal banking or fiduciary transactions of the bank; act as pay role issuer; establish charitable
foundations, invest in small business investment corporations and bank service corporations;
deal in foreign exchange; buy and sell gold bullion under license from the Treasury Department,
and foreign coin; provide domestic and international correspondent banking services, etc.
NCHENDEH CHRISTIAN +237 674 101 690
In Cameroon, banking activities are governed by COBAC Regulation Act, 1999. As per the
provision of the said Act, “banking” means the accepting, for the purpose of lending or investment, of
deposits of money from the public, repayable on demand or other-wise, and with-drawable by cheque,
drafts, order or otherwise.
“Banking Companies” can be defined as any company which transacts the business of banking
in Cameroon. However, any company which is engaged in the manufacture of goods or carries on any
trade and which accept deposits of money from the public merely for the purpose of financing its
business as such manufacturer or trader shall not be deemed to transact the business of banking within
the meaning of this clause.
As per the provision of Section 6 of the Banking Regulation Act, 1949, a banking company may
engage in any one or more of the following forms of business, in addition to the business of banking.
These are:
a) The borrowing, raising, or taking up of money; the lending or advancing of money either upon
or without security; the drawing, making, accepting, discounting, buying, selling, collecting and
dealing in bills of exchange, hundis, promissory notes, coupons, drafts, bills of lading, railway
receipts, warrants, debentures, certificates, scrips and other instruments, and securities whether
transferable or negotiable or not; the granting and issuing of letters of credit, traveler’s cheques
and circular notes; the buying, selling and dealing in bullion and specie; the buying and selling
of foreign exchange including foreign bank notes: the acquiring, holding, issuing on
commission, underwriting and dealing in stock, funds, shares, debentures, debenture stock,
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
and advances; the receiving of all kinds of bonds, scrips or valuables on deposit or for safe
custody or otherwise, the providing of safe deposit vaults; the collecting and transmitting of
money and securities;
b) Acting as agents for any Government or local authority or any other person or persons; the
carrying on of agency business of any description, including the clearing and forwarding of
goods, giving of receipts and discharges, and otherwise acting as an attorney on behalf of
customers; but excluding the business of a managing agent or secretary and treasurer of a
company;
c) Contracting for public and private loans and negotiating and issuing the same;
d) The effecting, insuring, guaranteeing, underwriting, participating in managing and carrying out
of any issue, public or private, of State, municipal or other loans or of shares, stock, debentures,
NCHENDEH CHRISTIAN +237 674 101 690
or debenture stock of any company, corporation or association, and the lending of money for the
purpose of any such issue;
e) Carrying on and transacting every kind of guarantee and indemnity business;
f) Managing, selling and realizing any property which may come into the possession of the
company in satisfaction or part satisfaction of any of its claims;
g) Acquiring and holding and generally dealing with any property or any right, title or interest in
any such property which may form the security or part of the security for any loans or advances
or which may be connected with any such security;
h) Undertaking and executing trusts;
i) Undertaking the administration of estates as executor, trustee or otherwise;
j) Establishing and supporting or aiding in the establishment and support of associations,
institutions, funds, trusts and conveniences calculated to benefit employees or ex-employees of
the company or the dependents or connections of such persons; granting pensions and
allowances and making payments towards insurance; subscribing to or guaranteeing money for
charitable or benevolent objects or for any exhibition or for any public, general or useful object;
k) The acquisition, construction, maintenance and alteration of any building or works necessary or
convenient for the purposes of the company;
l) Selling, improving, managing, developing, exchanging, leasing, mortgaging, disposing of or
turning into account, or otherwise dealing with all or any part of the property and rights of the
company;
m) Acquiring and undertaking the whole or any part of the business of any person or company,
when such business is of a nature enumerated or described in this sub-section;
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
o) Any other form of business which the Central Government may, by notification in the Official
Gazette, specify as a form of business in which it is lawful for a banking company to engage.
NCHENDEH CHRISTIAN +237 674 101 690
Sponsored by OHADAZONE.com
Tel: +237 674 101 690;
Facebook page: ohadazone;
Email: fosoh69@yahoo.com.
CHAPTER 1:
CUSTOMERS’ DEPOSITS
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
1- DEPOSIT IN ORDINARY ACCOUNTS
All deposits (lodgment) made by customers (either by cash or by cheque) are credited in the
customer’s account while all withdrawals or payments effected by the customer (either by cash or by
cheque) is debited in the customer’s account. The following accounts are used for customer’s deposits:
Work Required
Journalize the above transactions at BICEC Bank
SOLUTION
10/10/N
571 Cash 25,000,000
373 Passbook accounts 8,000,000
371 Current accounts 33,000,000
371 Opening of Akweseh Ltd current account
25/10/N
371 Current accounts 12,000,000
571 Cash 12,000,000
Withdrawal of funds by Akweseh Ltd
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
These accounts are not entitled to a cheque booklet. They are opened by physical persons and
remunerated at a minimum rate of 5% per annum. Hence, the interest rate is negotiable for huge
amounts.
Example
On the 14/09/2018, in other to save part of his salary, Mr. Selebobo decides to open a passbook
account at NFC bank by lodging the sum of 360,000F by cash.
Work Required
Present the accounting entry at NFC Bank
SOLUTION
14/09/2018
NCHENDEH CHRISTIAN +237 674 101 690
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
Date of operation Operations Value dates
01/04/2018 Opening balance 01/04/2018
11/04/2018 Lodgment of 7,000,000 06/04/2018
19/05/2018 Withdrawal of 6,000,000 15/05/2018
22/05/2018 Deposit of 5,000,000 01/06/2018
08/06/2018 Withdrawal of 4,000,000 31/05/2018
14/06/2018 Deposit of 9,000,000 16/06/2018
2- Calculation of net interest as at the 30th June 2018
Value Movements No of
Operations Balance Numbers
dates Dr Cr days
01/4/2018 Opening balance 8000000 5 days 40000000
NCHENDEH CHRISTIAN +237 674 101 690
3- ACCOUNTING ENTRIES
11/04/2018
571 Cash 7,000,000
373 Passbook accounts 7,000,000
Initial deposit
19/05/2018
373 Passbook accounts 6,000,000
571 Cash 6,000,000
Withdrawal
22/05/2018
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
571 Cash 5,000,000
373 Passbook accounts 5,000,000
Deposit
08/06/2018
373 Passbook accounts 4,000,000
571 Cash 4,000,000
Withdrawal
14/06/2018
571 Cash 9,000,000
373 Passbook accounts 9,000,000
Deposit
30/06/2018
613 Interest on passbook accounts 150,000
373 Passbook accounts 145,722
NCHENDEH CHRISTIAN +237 674 101 690
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
5% per annum. There exist three types of term deposits:
2.3.1 TERM DEPOSIT ACCOUNTS (361)
The funds received by the banker from clients are blocked. These funds are unblocked or put at
the disposal of the customer only the expiry date of the predefined duration specified when the account
was opened. There is no movement on the account during the blocked period.
Example
On the 4th November 2019, Ndetseh opened a term deposit account at BICEC under ther
following terms and conditions:
- Amount: 6,800,000F
- Duration: 10 months
NCHENDEH CHRISTIAN +237 674 101 690
SOLUTION
ACCOUNTING ENTRIES
04/11/2019
571 Notes and currencies 6,800,000
361 Term deposits 6,800,000
Opening of account
04/08/2020
612 Interest on term deposit 408,000
361 Term deposits 6,800,000
571 Notes and currencies 7,208,000
Withdrawal
04/11/2019
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
571 Notes and currencies 6,800,000
361 Term deposits 6,800,000
Opening of account
04/08/2020
361 Term deposits 6,800,000
571 Notes and currencies 6,800,000
Withdrawal of term deposit
do
612 Interest on term deposit 408,000
571 Notes and currencies 408,000
Interest on term deposit
do
571 Notes and currencies 67,320
435 Other amounts payable to the state 67,320
NCHENDEH CHRISTIAN +237 674 101 690
PTIS on interest
Remark: in the example above, we have assumed that Ndetseh a cheque or current account in the bank.
Example
Let’s consider the example above assuming that Ndetseh is a customer at BICEC. The opening
of the term account was done by a reduction of his current account.
SOLUTION
04/11/2019
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
a predetermined period of time. The duration ranges from 1 day to 1 year. (Not yet existing in
Cameroon)
2.3.3 CASH BONDS (351)
The lodgment duration ranges from 1 month to 2 years. The remuneration rate is 5% per annum.
The client has the possibility to negotiate the interest rate during lodging depending on the amount of
his deposit. We can distinguish 2 types:
- Registered bonds (having a name on it)
- Bearer certificate (anonymous)
Interests on cash bonds are pre-empted that is, paid in advance to customers during the
subscription. These interests are not liable to PTIS.
NCHENDEH CHRISTIAN +237 674 101 690
Example
On the 26th October 2019, Mr Njuh acquired some investment securities from Afriland. The
nature of these securities are as follows:
- Bearer certificate : 4,000,000F
- Registered bonds : 6,500,000F
Terms and conditions:
- Interest rate: 6% per annum
- Duration: 9 months
Work Required
1- Record the above transactions at Afrilad Bank on the date of subscription and maturity.
SOLUTION
26/10/2019
372 Cheque accounts 10,500,000
351 Cash bonds 10,500,000
Subscription of cash bonds
do
6111 Interest on cash bonds 472,500
372 Cheque accounts 472,500
Interest on cash bonds
26/07/2020
351 Cash bonds 10,500,000
372 Cheque accounts 10,500,000
Reimbursement of funds to customer
2.4 OTHER DEPOSIT ACCOUNTS
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
remunerated. They are recorded in account “38 OTHER CUSTOMER ACCOUNTS”. The sub
accounts are as follows:
- 3811 Dispositions for cheques to pay
- 3812 Dispositions for certified cheques
- 3813 Provisions
- 3814 Dispositions for loans
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
A Cr
A
2.4.2 Provisions
These are funds that guarantee the execution of certain operations (purchase of securities,
safe/till deposit box rentals) required by the bank for customers who do not have provisions in the
account. The accounting entries are as follows:
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
- 16/04/2019: Customer Nchendeh requested a bank cheque to pay his supplier Na-Beans.
Amount 24,000,000F
- 17/04/2019: Customer Nchendeh obtains the said cheque from BICEC and send it to his
supplier
- 18/04/2019: Certification of Nchendeh’s cheque for payment:
o Social contributions: 1,500,000F
o Taxes: 1,250,000F
- 19/04/2019: Presentation for the payment of cheque by supplier Na-Beans
- 22/04/2019: Presentation for the payment of the cheque at the NSIF
Work Required
Journalize the above transactions at BICEC Bank
SOLUTION
NCHENDEH CHRISTIAN +237 674 101 690
16/04/2019
371 Current accounts 24,000,000
3811 Dispositions for cheques to pay 24,000,000
Payment of investment loan
18/04/2019
371 Current accounts 1,500,000
3812 Dispositions for certified cheques 1,500,000
Payment of investment loan
do
371 Current accounts 1,250,000
3812 Dispositions for certified cheques 1,250,000
Payment of investment loan
19/04/2019
3812 Dispositions for certified cheques 472,500
371 Current accounts 472,500
Payment of investment loan
22/04/2019
3812 Dispositions for certified cheques 472,500
371 Current accounts 472,500
Payment of investment loan
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
Cameroon investment credit realized the following transactions:
- 15/04/2018: Subscription for a bearer certificate of 12,000,000F at the rate of 6% per
annum. Duration: 6 months
- 01/05/2018: Subscription for a term deposit of 30,000,000F at the rate of 9% per annum.
Duration: 4 months
Work Required
Present the accounting entries:
- Of subscription
- Quarterly closure of account
- The repayment
Exercise 2
NCHENDEH CHRISTIAN +237 674 101 690
Community credit limited carried out the following operations on Mr Ndetseh saving account:
- 01/04/2019: Initial balance 15,000,000F
- 12/04/2019: Lodgment of 6,500,000F
- 18/04/2019: Withdrawal of 6,000,000F
- 10/05/2019: Lodgment of 12,000,000F
- 17/05/2019: Withdrawal of 3,000,000F
- 05/06/2019: Deposit of 8,000,000F
- 23/06/2019: Withdrawal of 3,500,000F
Work Required
1- Present the saving account and calculate the interest to be credited on the 30th June 2019 at the
rate of 4.5% civil year (retain at source 16.5%).
2- Post the accounting entries relative to this account up to the payment of the accrued interest
integrated monthly on the income statement.
Exercise 3
On the 22nd of May 2019, Mr SELEBOBO opened a saving account at SGBC and deposited the
same day 500,000F. He made anther lodgment of 300,000F on the 27th May 2019. On the 13th June
2019, he withdrew 400,000F and made a deposit of 300,000F two week later. On the 14 th of July, he
withdrew 150,000F.
Work Required
Post the accounting entries relative to this account knowing that the credit interest rate was 3.25% since
the creation of this account up to the 14th July 2019.
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
an investment plan maturing on the 31st December 2019. The interest rate per annum is 4.25%
Work Required
Present the accounting entries on prepaid interest and on postpaid interest:
- At subscription
- At the disposal of funds
- At maturity
NCHENDEH CHRISTIAN +237 674 101 690
Chapter 3:
LOANS
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
1. CHARACTERISTICS OF LOANS
The accounting entries of loans depends on the following particularities:
1.1. THE DURATION OF THE LOAN
It is established at the origin of the loan and it is also called the initial duration. We can
distinguish:
- Short term loans: these are loans or credit with a duration less than 2 years
- Medium term loans: these are loans or credit with a duration between 2 to 7 years
- Long term loans: these are loans or credit with a duration strictly more than 7 years
1.2. THE OBJECTIVE OF THE LOAN
NCHENDEH CHRISTIAN +237 674 101 690
We distinguish:
- Housing or real estate loans
- Equipment loans
- Personal loans
- Loans link to commercial debts
1.3. THE NATURE OF THE LOAN
We distinguish:
- Loans by discount
- Loans by account (overdraft)
1.4. THE CATEGORIES OF LOAN BENEFICIARY
We distinguish:
- Loans to physical persons
- Loans to moral persons
1.5. CHARGES INVOLVE
The loan contract between the bank and her customer results to some charges in the customer’s
account, amongst which are:
- Commissions,
- VAT (collected uniquely on commissions)
- Subscription to an insurance policy (life insurance)
1.6. ACCOUNTS USED
30 LONG-TERM CREDITS/LOANS
31 MEDIUM-TERM CREDITS/LOANS
32 SHORT-TERM LOANS
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
The procedure for obtaining credit consists of setting it up and releasing (paying) it. During the
setting up, the amount of the loan is posted on the debit side of one of the following sub-accounts:
Account 30 (LONG-TERM CREDITS/LOANS), Account 31 (MEDIUM-TERM CREDITS/LOANS)
and Account 32 (SHORT-TERM LOANS) depending on the nature of the loan. The customer’s
account (Account 371 or 372) is credited with the net to be collected after deduction of expenses
(commissions 717, insurance 461, VAT 434). The summary of the accounting entry can be depicted as
follows:
Dr Insurance (461) Cr
NCHENDEH CHRISTIAN +237 674 101 690
Dr VAT (434) Cr
D
𝑬 = 𝑨 − (𝑩 + 𝑪 + 𝑫)
Example
On the 24th October, Dady-Chris PLC requested and obtained from BICEC Bank Bamenda a
loan for the acquisition of an industrial equipment worth 45,000,000F to be reimbursed in 8 years.
Funds are deposited to his account less the following expenses for file study:
- Commissions 200,000F (tax exclusive)
- Insurance 354,000F
Work Required
Journalize the payment of this loan at BICEC Bank
SOLUTION
24/10/N
301 Loans for fixed assets investments 45,000,000
7171 Commission from long-term loans 200,000
461 Insurance and capitalization companies 354,000
434 Taxes and rates collected 38,500
371 Current accounts 44,407,500
Payment of investment loan
24/10/N
b) LOAN AMORTIZATION PROCESS
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
bi-annually or annually. The periodic repayment is made up of:
- The amount to be reimbursed and the corresponding interest
- Commissions
- VAT calculated on interests and commissions to be recorded in account 434
The accounting entries relative to the repayment of loan is summarized below
Dr Interest (71) Cr
C
Dr VAT (434) Cr
NCHENDEH CHRISTIAN +237 674 101 690
𝑨= 𝑩+𝑪+𝑫+𝑬
Example 1
UBA granted to Atechupe a medium term loan for the acquisition of a car worth 16,000,000F.
Expenses relative to the setting up of the loan amounted to 46,000F tax exclusive and life insurance at
100,000F.
Work Required
1- Journalize the payment of this loan by UBA Bank
2- Present the accounting entries relative to the 1st repayment knowing that quarterly repayment is
950,000F made up of:
- Loan amortization 804,000F
- Interest tax exclusive 146,000F
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
a
313 Equipment loans 16,000,000
7172 Commission from long-term loans 46,000
461 Insurance and capitalization companies 100,000
434 Taxes and rates collected 8,855
371 Current accounts 15,845,145
Payment of equipment loan to Atechupe
b) Accounting entries of the loan amortization
b
371 Current accounts 978,105
313 Equipment loans 804,000
712 Interest from medium-term loans 146,000
434 Taxes and rates collected 28,105
Repayment of equipment loan by Atechupe
NCHENDEH CHRISTIAN +237 674 101 690
Example 2
Assume that the above loan was granted under the following conditions:
- Loan duration: 5years
- Repayment by constant amortizations
- Interest rate: 12% per annum
Work Required
1- Present the loan amortization table
2- Present the accounting entries at the end of the 1st and 4th year
SOLUTION
a) Presentation of the loan amortization table
Loan Loan
Years outstanding Interest VAT Amortization Annuities outstanding at
at start the end
1 16,000,000 1,920,000 369,600 3,200,000 5,489,600 12,800,000
2 12,800,000 1,536,000 295,680 3,200,000 5,031,680 9,600,000
3 9,600,000 1,152,000 221,760 3,200,000 4,573,760 6,400,000
4 6,400,000 768,000 147,840 3,200,000 4,115,840 3,200,000
5 3,200,000 384,000 73,920 3,200,000 3,657,920 0
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
371 Current accounts 5,489,600
313 Equipment loans 3,200,000
712 Interest from medium-term loans 1,920,000
434 Taxes and rates collected 396,600
1st Repayment of equipment loan by Atechupe
2nd year
371 Current accounts 4,115,840
313 Equipment loans 3,200,000
712 Interest from medium-term loans 768,000
434 Taxes and rates collected 147,840
2nd Repayment of equipment loan by Atechupe
NCHENDEH CHRISTIAN +237 674 101 690
CHAPTER 4:
VALUE RECOVERY OPERATIONS
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
1- VALUE RECOVERY OPERATIONS WITHIN THE BANK
Diverse operations are carried out between the bank’s units through accounting documents
(debit advice, credit advice,…)
- Sending cheques or bills to be cashed from one agency to another or between
headquarters and the agency;
- Customer’s transfer order from one bank agency to another;
- The transfer of customer’s account from one agency to another.
The accounting entries of transactions within the bank is done using account 45 (LIAISON
ACCOUNTS).
NCHENDEH CHRISTIAN +237 674 101 690
Example
Mr Coyort, a client at BICEC Nkwen branch, made a transfer of 254,000F to the order of
Atechupe (client of BICEC Douala branch).
Work Required
Present the accounting entries:
- At the Nkwen branch
- At the Douala branch
SOLUTION
a) Accounting entries at the Nkwen branch
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
NCHENDEH CHRISTIAN +237 674 101 690
Sponsored by OHADAZONE.com
Tel: +237 674 101 690;
Facebook page: ohadazone;
Email: fosoh69@yahoo.com
Chapter 7:
FINANCIAL STATEMENTS OF BANKS
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
1- THE INCOME STATEMENT
This table regroups accounts of classes 6 and 7 which are respectively used to record expenses
or losses and revenues or incomes distinctly classified following the nature of activities (operational or
exceptional activities). The significant management balances are regrouped in class 8 and the
following balances are successively determined:
- NET BANKING INCOME (Account 80)
- VALUE ADDED
- GLOBAL OPERATING INCOME (Account 81)
- GROSS OPERATING INCOME (Account 82)
NCHENDEH CHRISTIAN +237 674 101 690
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
………… …………
Account 66 …………
Account 68 …………
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
Sponsored by OHADAZONE.com
Tel: +237 674 101 690;
NCHENDEH CHRISTIAN +237 674 101 690
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
Operational Exceptional TOTAL
N° HEADINGS Line
1 2 3 = 1+2
ACCOUNT 80: NET BANKING INCOME
60 Cash and interbank operations charges 1
61 Charges on customer and leasing operations 2
62 Charges on sundry banking operations 3
63 Expenses on permanent resources 4
80 Net banking income (credit balance) 5
TOTAL Line 01 to 05 6
ACCOUNT 81 : GLOBAL OPERATING INCOME
80 Net banking income (debit balance) 7
641 Supplies consumed 8
642 Transport and traveling expenses 9
643 Other services consumed 10
644 Technical assistance and inspection expenses 11
Value added (credit balance) 12
TOTAL line 07 to 12 13
NCHENDEH CHRISTIAN +237 674 101 690
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
Operational Exceptional TOTAL
N° HEADINGS Line
1 2 3 = 1+2
ACCOUNT 80: NET BANKING INCOME
70 Revenues from cash and interbank operations 1
71 Revenues from customer and leasing operations 2
72 Revenues from sundry banking operations 3
Revenues from portfolio of securities and loans on
73 4
obligatory subscription
80 Net banking income (debit balance) 5
TOTAL Lines 01 to 05 6
ACCOUNT 81 : GLOBAL OPERATING INCOME
80 Net banking income (credit balance) 7
74 Accessory revenues 8
VALUE ADDED (debit balance) 9
TOTAL Lines 07 to 09 10
VALUE ADDED (credit balance) 11
81 Global operating income (debit balance) 12
NCHENDEH CHRISTIAN +237 674 101 690
Total Line 11 to 12 13
ACCOUNT 82 : GROSS OPERATING INCOME
81 Global operating income (credit balance) 14
78 Depreciations written back 15
82 Gross operating income (debit balance) 16
TOTAL Lines 14 to 16 17
ACCOUNT 83 : CURRENT INCOME
82 Gross operating income (credit balance) 18
791 Provisions on bad debts written back 19
792 Abandoned debts recovered 20
83 Current income (debit balance) 21
TOTAL Lines 18 to 21 22
ACCOUNT 84 : EXCEPTIONAL INCOME
76 Operating and compensatory subsidies 23
77 Exceptional or previous year’s incomes 24
776 Capital gains on the disposal of assets 25
84 Exceptional income (debit balance) 26
Total Lines 23 to 26 27
TOTAL REVENUES AND PROFITS : Lines 1 to 26 28
ACCOUNT 85 : NET INCOME BEFORE TAX
83 Current income (transfer of credit balance of account 83 from table 1A) 29
84 Exceptional income (transfer of credit balance of account 86 from table 1A) 30
85 Net income before tax (debit balance) 31
TOTAL ACCOUNT 85 : lines 29 to 31 32
Excess relief 33
ACCOUNT 86 :
Income tax (debit balance) 34
INCOME TAX
TOTAL ACCOUNT 86 : lines 33 to 34 35
Net income before tax (transfer of credit balance of account 85 from table 1A) 36
ACCOUNT 87 : Income tax (transfer of credit balance of account 86 from table 1A) 37
NET INCOME FOR THE
PERIOD NET LOSS FOR APPROPRIATION (debit balance of account 87) 38
TOTAL ACCOUNT 87 : lines 36 to 38 39
INCOME FROM THE DISPOSAL OF FIXED ASSETS
Depreciations relative to disposed items 40
Disposal price 41
Losses on disposal (debit balance) 42
TOTAL Line 40 to 42 43
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
Acc
Name Amount
No
60 Cash and interbank operations charges 400,00
72 Revenues from sundry banking operations 50,000
68 Depreciation of equipment and furniture for operating activities 10,500
62 Charges on sundry banking operations 14,500
74 Chargeback of sundry expenses 6,400
63 Expenses on permanent resources 8,500
64 General operating expenses 18,000
76 Operating and compensatory subsidies 7,000
NCHENDEH CHRISTIAN +237 674 101 690
Work Required
1- Present the income statement knowing that income tax amounted to 24,750F
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
SIGNIFICANT MANAGEMENT BALANCES (DEBIT)
Operational Exceptional TOTAL
N° HEADINGS Line
1 2 3 = 1+2
ACCOUNT 80: NET BANKING INCOME
60 Cash and interbank operations charges 1 40,000 40,000
61 Charges on customer and leasing operations 2 34,000 34,000
62 Charges on sundry banking operations 3 15,400 15,400
63 Expenses on permanent resources 4 8,500 8,500
80 Net banking income (credit balance) 5 196,800
TOTAL Line 01 to 05 6 294,700
ACCOUNT 81 : GLOBAL OPERATING INCOME
80 Net banking income (debit balance) 7
641 Supplies consumed 8 4,800 4,800
642 Transport and traveling expenses 9
643 Other services consumed 10
644 Technical assistance and inspection expenses 11
Value added (credit balance) 12 206,400
TOTAL line 07 to 12 13 211,200
NCHENDEH CHRISTIAN +237 674 101 690
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
Sponsored by OHADAZONE.com
Tel: +237 674 101 690;
NCHENDEH CHRISTIAN +237 674 101 690
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
SIGNIFICANT MANAGEMENT BALANCES (CREDIT)
Operational Exceptional TOTAL
N° HEADINGS Line
1 2 3 = 1+2
ACCOUNT 80: NET BANKING INCOME
70 Revenues from cash and interbank operations 1 90,000 90,000
71 Revenues from customer and leasing operations 2 109,700 109,700
72 Revenues from sundry banking operations 3 50,000 50,000
Revenues from portfolio of securities and loans on
73 4
obligatory subscription 45,000 45,000
80 Net banking income (debit balance) 5
TOTAL Lines 01 to 05 6 294,700
ACCOUNT 81 : GLOBAL OPERATING INCOME
80 Net banking income (credit balance) 7 196,800
74 Accessory revenues 8 14,400 14,400
VALUE ADDED (debit balance) 9
TOTAL Lines 07 to 09 10 211,200
VALUE ADDED (credit balance) 11 206,400
81 Global operating income (debit balance) 12
NCHENDEH CHRISTIAN +237 674 101 690
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
account balances has been established.
2.1The transition table of patrimonial account balances
This table schematically retraces the evolution of accounts from the balance sheet at the start of
the period by describing all the movements on the account during the accounting period. It permits to
establish a link between financial flows, resources and applications.
The transition table helps to overcome a number of shortcomings in the balance sheet and
dynamically analyses the evolution of the company’s net patrimonial situation. It helps to prepare the
financial plan and the notes to financial statements.
The movements of the period are distinctly posted on increase, decrease or transfer, only for
operations older than 1 year that is, fixed assets, results, depreciations, equity and long and medium
NCHENDEH CHRISTIAN +237 674 101 690
term loans. For short term loans, the movements of the period are globally posted on increase or
decrease depending on the nature of their variations.
The movements of the period are spread in external flows or internal flows. External flows
directly affects the consistency of the enterprise patrimonial situation while internal flows are purely
accounting adjustments which affects structure of the patrimony.
2.2The specimen of the balance sheet
The balance sheet of banking institutions is a privileged situation drawn from the debit or credit
balances of the transition table of patrimonial accounts. The structure of the balance sheet can be
presented as follows:
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
BALANCE SHEET (Patrimonial Situation) ASSETS
Gross Depreciation Net
Lines
N° HEADINGS amount or provision amount
1 2 3=1-2
20 Deferred expenses 01
20 Intangible non-current assets 02
DEFERRED EXPENSES AND INTANGIBLE FIXED ASSETS
03
(TOTAL line 1 & 2)
21 Lands 04
22 Other tangible fixed assets in service 05
23 Other tangible fixed assets in process 06
TANGIBLE FIXED ASSETS: TOTAL line 4 to 6 07
24 Advances and payments on account for fixed assets 08
25 Deposits and cautions 09
NCHENDEH CHRISTIAN +237 674 101 690
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
FINANCIAL YEAR : BUSINESS NAME :
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
FINANCIAL YEAR : BUSINESS NAME :
Sponsored by OHADAZONE.com
Tel: +237 674 101 690;
Facebook page: ohadazone;
Email: fosoh69@yahoo.com
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
Acc
Name Amount
No
471 Management adjustment accounts-assets 32,000
101 Share capital 160,000
171 Debentures issued 45,000
321 Trade bills 37,000
931 Commitments received from customers 15,000
113 Premiums related to capital 48,000
235 Equipment and furniture for operating activities 75,000
191 Provisions for general banking risks 43,000
122 Statutory and contractual reserves 19,000
2023 Trademarks, software, licenses, trade names, models, designs. 88,000
221 Buildings for banking operations 54,000
NCHENDEH CHRISTIAN +237 674 101 690
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
FINANCIAL YEAR :31/12/2018 BUSINESS NAME : SGBC BANK
BALANCE SHEET (Patrimonial Situation) ASSETS
Gross Depreciation Net
Lines
N° HEADINGS amount or provision amount
1 2 3=1-2
20 Deferred expenses 01 88,000 88,000
20 Intangible non-current assets 02
DEFERRED EXPENSES AND INTANGIBLE FIXED ASSETS
(TOTAL line 1 & 2)
03 88,000 88,000
21 Lands 04
22 Other tangible fixed assets in service 05 54,000 20,000 34,000
23 Other tangible fixed assets in process 06 75,000 75,000
TANGIBLE FIXED ASSETS: TOTAL line 4 to 6 07 129,000 20,000 109,000
24 Advances and payments on account for fixed assets 08
NCHENDEH CHRISTIAN +237 674 101 690
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
FINANCIAL YEAR :31/12/2018 BUSINESS NAME : SGBC BANK
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
OFF-BALANCE SHEET COMMITMENTS TABLE
COMMITMENTS RECEIVED AMOUNT
Commitments received from customers 01 15,000
Commitments received from correspondents 02
Leasing contracts and related commitments 03
Sundry 04
TOTAL COMMITMENTS RECEIVED: Total line 01 to 04 05 15,000
CONSOLIDATION EXERCISE
The management accounts of Afriland First Bank are presented below in thousands.
Acc No Name Amount
60 Cash and interbank operations charges 60,000
72 Revenues from sundry banking operations 80,000
68 Depreciation of equipment and furniture for operating activities 30,500
62 Charges on sundry banking operations 24,500
74 Chargeback of sundry expenses 36,400
63 Expenses on permanent resources 18,500
64 Sundry operation expenses 28,000
76 Operating and compensatory subsidies 17,000
64 Transport and traveling expenses 34,800
66 Taxes and rates 39,200
86 Income tax 27,800
67 Transport and travelling expenses on previous year’s operations 42,000
77 Capital gains on the disposal of assets – exceptional income 13,600
69 Provisions and losses on bad debts 15,900
70 Revenues from cash and interbank operations 185,000
71 Commissions from operations with customers 134,700
61 Charges on customer and leasing operations 34,000
73 Revenues from portfolio of securities and loans on obligatory subscription 45,000
65 Payroll expenses 124,000
78 Depreciations written back 34,300
Work Required
1- Present the income statement of Afriland First Bank
Sponsored by OHADAZONE.com +237 674 101 690, Facebook page: ohadazone, Email: fosoh69@yahoo.com
Sponsored by OHADAZONE.com
NCHENDEH CHRISTIAN +237 674 101 690