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Modern Accountancy
Volume II
Third Edition
Modern Accountancy
Volume II
Third Edition
Mohammed Hanif
Sr. Professor of Accounting & Finance
St. Xavier’s College (Autonomous), Kolkata
Amitabha Mukherjee
Former Sr. Professor of Accounting & Finance
St. Xavier’s College (Autonomous), Kolkata
McGraw Hill Education (India) Private Limited

Chennai
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McGraw Hill Education (India) Private Limited
Published by McGraw Hill Education (India) Private Limited
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Modern Accountancy (Volume II), 3e
Copyright © 2019, 2002, 1992 by McGraw Hill Education (India) Private Limited.
No part of this publication may be reproduced or distributed in any form or by any means, electronic, mechanical, photocopying,
recording, or otherwise or stored in a database or retrieval system without the prior written permission of the publishers. The program
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neither McGraw Hill Education (India) nor its authors shall be responsible for any errors, omissions, or damages arising out of use of this
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Preface
During the last few years a lot of changes have taken place in the world of accounting and finance,
particularly in India. This rapidly changing business environment in India is attracting foreign investors
as well as manufacturers. The Companies Act, 2013 has already been implemented and accordingly
different professional institutes, and universities have changed their syllabi.
In the third edition of Modern Accountancy, Volume II, much emphasis has been given to ‘Accounting
Standards’ which have been thoroughly incorporated in relevant chapters. The company related chapters
have been revised meticulously as per the provisions of the Companies Act, 2013, Companies Rules
2014 and 2015.
In this edition, the following new chapters have been included:
∑ Buy Back of Shares
∑ Cash Flow Statement
∑ Funds Flow Statement
∑ Ratio Analysis
∑ Employee Stock Option Scheme/Plan
∑ Conceptual Framework
∑ Banking Companies
∑ Accounts for Insurance Companies
All the above chapters have been discussed as per latest provisions of the related Acts. Sufficient
examples have been given for better understanding of the new topics.
The updated edition also comprises enriched web resources. New chapters on ‘Liquidation of
Companies’ and ‘Accounting Standards’ can be accessed via www.mhhe.com/hanifma-vol2.
Volume II provides an exhaustive coverage of accounting concepts and illustrations to reinforce the
fundamentals. Chapter summary have been provided for quick recapitulation of the topics. Multiple-
choice questions have been included at end of each chapter to test conceptual clarity. In addition, scores
of unsolved problems have been provided, with guide to answers.
We would like to thank the readers for overwhelming support showered over the last 25 golden years.
Utmost care has been taken to make it an error free book, but if you still find any error please email us
at pmhanif@gmail.com. All suggestions are welcome.
Preface
vi
We specially thank Mr. S. Rangarajan for typesetting, formatting this book and bearing with us.
Our students have always been our source of inspiration and happiness. Curiously, they never cease
to raise good points and we have tried to incorporate their points in this book.
Authors
Preface to the First Edition
We are indeed gratified by the readers’ response to our first very effort, Modern Accountancy, Volume
II. Since its release in 1992, we have actively sought feedback from students, teachers and other
professionals in the field.
Modern Accountancy, Volume II, almost three years in the making benefitted from all the comments,
suggestions and enthusiasm showered on the first volume.
Essentially, we have retained all the winning ways of Volume I. Each topic has been developed
gradually and special care has been taken to ensure conceptual clarity. Topics of examination focus and
those of particular relevance for students in their later-day professional careers have been given utmost
importance.
As in Modern Accountancy, Volume I, we have followed a pattern of theory, examples, illustrations
(solved problems), theoretical questions, practice problems and hints to answers in each chapter.
Topics like Company Final Accounts, Branch Accounts, Royalty Accounts, Department Accounts,
Hire Purchase Accounts, Amalgamation, Absorption and Reconstruction, Capital Reduction, Holding
Companies, Packages and Containers, and Insurance Claims have been dealt with elaborately.
In all, the book has 474 solved problems, 73 theory questions and 374 unsolved problems with guide
to answers. Almost all the problems presented in the book have been taken from different university and
professional examinations.
We have taken sufficient care to ensure that the book meets the needs of a variety of students. B. Com
and M. Com students as well as students of professional courses such as CA, ICWAI, ICSI and ICFAI
would benefit equally.
A number of colleagues and friends helped us in the preparation of this book. We thank each and
every one of them.
Mr. S. Rangarjan of LOGS, our typesetter, deserves special thanks. The much-lauded presentation
and layout, tables and columns you see in the book are entirely his effort.
While we have taken all possible care to see that the book has no errors, we would be grateful if
mistakes or lacunae are pointed out. Suggestions for further improvement would be more than welcome
from fellow teachers and students.
Authors
Brief Contents
1. Departmental Accounts 1.1–1.50

2. Branch Accounting 2.1–2.102
3. Royalty Accounts 3.1–3.44
4. Hire Purchase Accounts 4.1–4.70
5. Packages and Containers 5.1–5.28
6. Voyage Accounts 6.1–6.12
7. Investment Accounts 7.1–7.28
8. Introduction to Indian Government Accounting 8.1–8.10
9. Social Accounting 9.1–9.6
10. Company Final Accounts 10.1–10.114
11. Buy Back of Shares 11.1–11.44
12. Cash Flow Statement 12.1–12.58
13. Funds Flow Statement 13.1–13.56
14. Ratio Analysis 14.1–14.86
15. Employee Stock Option Scheme/Plan 15.1–15.20
16. Valuation of Goodwill and Shares 16.1–16.62
17. Underwriting of Shares and Debentures 17.1–17.24
18. Profit or Loss Prior to Incorporation 18.1–18.24
19. Holding Company 19.1–19.124
20. Amalgamation 20.1–20.120
21. Capital Reduction/Internal Reconstruction 21.1–21.98
22. Conceptual Framework 22.1–22.8
23. Computerised Accounting 23.1–23.16
Brief Contents
x
24. Banking Companies 24.1–24.72

25. Accounts for Insurance Companies 25.1–25.70
26. Liquidation of Companies*
27. Accounting Standards*
*
Chapters 26, 27 can be accessed at: www.mhhe.com/hanifma-vol2
Contents
Preface v
Preface to the First Edition vii
Brief Contents ix
1. Departmental Accounts ........................................................................ 1.1–1.50

Introduction 1.1
Advantages of Departmental Accounting 1.1
Methods of Departmental Accounts 1.2
Where Separate Set of Books are Kept for Each Department 1.2
Where Accounts of All Departments are Kept Together on Columnar Books 1.2
Allocation of Departmental Expenses 1.2
Technique of Departmental Accounts 1.4
Columnar Purchases and Sales Books, etc. (Manual System) 1.4
Distinction between Departmental Accounts and Branch Accounts 1.4
Inter-Departmental Transfer 1.18
Cost-based Transfer Price 1.19
Market-based Transfer Price 1.22
Dual Pricing 1.23
Memorandum Stock Account and Memorandum Mark-up Account 1.34
Accounting Arrangement 1.34
Key Points 1.39
Theoretical Questions 1.40
Objective Questions 1.40
Practical Questions 1.40
Guide to Answers 1.50
Contents
xii
2. Branch Accounting ............................................................................. 2.1–2.102

Introduction 2.1
Need for Branch Accounting 2.1
Types of Branches 2.2
Home Branches 2.2
Foreign Branches 2.2
Dependent Branches 2.2
Service Branches 2.3
Retail Selling Branches 2.3
Accounting Arrangements of Retail Dependent Branches 2.3
Debtors System 2.3
Stock and Debtors System 2.18
Final Accounts System 2.44
Wholesale and Retail Profit at Branch 2.48
Independent Branch 2.53
Some Special Items 2.54
Goods-in-Transit 2.54
Cash-in-Transit 2.55
Head Office Expenses Chargeable to Branch 2.56
Depreciation on Branch Fixed Assets 2.57
Inter-branch Transfers 2.58
Incorporation of Branch Trial Balance in the Head Office Books 2.61
Incorporation of Branch Profit and Loss 2.62
Detailed Incorporation 2.62
Abridged Incorporation 2.63
Incorporation of Branch Assets and Liabilities 2.63
Closing the Books of Account of the Branch 2.71
Foreign Branches 2.77
Classification of Foreign Operations 2.77
Translation of Foreign Integral Operations 2.77
Translation of Foreign Non-integral Operations 2.80
Key Points 2.84
Contents
xiii
3. Royalty Accounts ................................................................................ 3.1–3.44

Introduction 3.1
Some Terms/Expressions Used in Connection with Accounting for Royalty 3.1
Minimum Rent/Dead Rent 3.1
Shortworkings/Redeemable Dead Rent 3.2
Excess Workings/Surplus 3.2
Ground Rent/Surface Rent 3.2
Recoupment of Shortworkings 3.2
Creation of Provision Against Shortworkings 3.3
Purpose of Fixing Minimum Rent 3.3
How does Minimum Rent and Shortworkings Arise? 3.3
Strike and Lockout, etc 3.4
Income Tax 3.4
Accounting Entries in the Books of User [Lessee/Licencee/Publisher] 3.4
Accounting Entries in the Books of Landlord [Lessors/Authors/Patent owner] 3.17
Sub-Lease 3.24
Accounting Arrangements 3.25
Key Points 3.33
4. Hire Purchase Accounts........................................................................ 4.1–4.70

Introduction 4.1
Nature of Hire Purchase Agreement 4.1
Legal Position 4.2
Accounting Arrangements of Hire Purchase Transaction 4.2
Books of the Hire Purchaser 4.3
Recording of Asset 4.3
Books of the Hire Vendor 4.14
Sales Method 4.15
Interest Suspense Method 4.17
Ascertainment of Total Cash Price 4.19
Calculation of Total Cash Price when the Annuity Table is not Given 4.19
Calculation of Total Cash Price when the Annuity Table is Given 4.23
Ascertainment of Interest 4.24
When the Cash Price, Rate of Interest and the Amount of Different Instalments are
Given 4.24
When the Cash Price and the Amount of Different Instalments are Given, But the Rate of
Interest is not Given 4.25
Contents
xiv
Repossession 4.26
Complete Repossession 4.26
Partial Repossession 4.31
Hire Purchase Agreements for Goods of Small Value 4.38
Relevant Expressions in Regard to Hire Purchase Sales of Small Items 4.38
Ascertainment of Profit/Loss 4.39
Hire Purchase Trading Account Method 4.39
Calculation of Missing Figures 4.42
Repossession 4.46
Stock and Debtors System 4.49
Instalment Payment System 4.54
The Books of the Buyer 4.55
The Books of the Seller/Vendor 4.56
Key Points 4.61
5. Packages and Containers ...................................................................... 5.1–5.28

Meaning of Important Terms/Expressions 5.2
Objectives of Keeping Separate Accounts for Containers 5.2
Income from Containers 5.2
Expenses/Losses on Containers 5.2
Accounting Arrangements in the Books of the Seller 5.2
Non-returnable Containers 5.2
Returnable Containers 5.3
Method-1 [Stock and Trading Method] 5.3
Containers Stock Account 5.3
Containers Trading Account 5.3
Containers Deposit/Suspense/Provision/Reserve Account 5.4
Containers Debtors Account 5.4
Method-2 [Stock and Suspense Method] 5.13
Method-3 [Trading and Suspense Method] 5.18
Contents
xv
6. Voyage Accounts ................................................................................ 6.1–6.12

Introduction 6.1
Important Terms/Expressions in Connection with Voyage Accounting 6.1
Key Points 6.10
7. Investment Accounts ............................................................................. 7.1–7.28

Introduction 7.1
Cost of Investments 7.2
Reclassification of Investments 7.2
Fixed Income Bearing Securities 7.2
Variable Income Bearing Securities 7.3
Accounting Arrangements of Fixed Income Bearing Security 7.3
Purposes of Investment Ledger 7.3
Sale of Investments 7.3
Purchase/Sale of Investment on the Date of Payment of Interest 7.4
Purchase/Sale of Investment before the Date of Payment of Interest 7.5
Cum-interest/Dividend Purchases 7.6
Ex-interest/Dividend Purchases 7.7
Cum-interest/Dividend Sales 7.8
Ex-interest/Dividend Sales 7.9
Some Adjustments for Equity Shares Investment Account 7.19
Dividend Received 7.19
Bonus Shares 7.20
Rights Shares 7.21
Key Points 7.25
Contents
xvi
8. Introduction to Indian Government Accounting .............................................. 8.1–8.10

Commercial Accounting and Government Accounting 8.1
Accounting Methods 8.2
Financial Statements 8.2
Classification of Account Heads 8.3
Objectives of Government Accounting 8.3
Information about Revenue 8.3
Information about Expenditure 8.3
Information about Loans and Deposits 8.3
Information about Cash Availability 8.3
Some Terms and Expressions of Government Finance 8.3
Basic Principles of Government Accounting in India 8.5
Pinpointing Responsibility 8.5
Accounting Systems 8.5
Public Sector Commercial Enterprises 8.5
Recording and Consolidation of Transactions 8.5
Incomes and Expenditures Classifications 8.5
Maintaining Internal Accounts 8.5
Combined Accounts 8.5
Government Financial Administration 8.6
Consolidated Funds 8.6
Contingency Funds 8.6
Public Accounts 8.6
Budget 8.6
Appropriation Act 8.7
Disbursement of Grants 8.7
Supplementary Budget 8.7
Financial Control and Audit 8.7
Classification of Government Accounting in India 8.7
Consolidated Fund of India 8.7
Public Account 8.8
Contingency Fund 8.8
Accounting Procedure of Government Expenditure 8.8
Consolidated Fund 8.8
Contingency Fund 8.9
Public Account 8.9
Contents
xvii
9. Social Accounting ................................................................................. 9.1–9.6

Introduction 9.1
Constitution of Social Costs 9.2
Objectives of Social Accounting 9.4
Scope of Corporate Social Responsibility 9.5
Social Income Statement and Social Balance Sheet 9.6
10. Company Final Accounts ................................................................... 10.1–10.114

Introduction 10.1
Annual Accounts 10.1
Books of Account to be kept by Company 10.2
Statutory Books 10.3
Annual Return 10.3
Signature and Certification of Annual Report 10.3
Manner of Books of Account to be kept in Electronic Mode 10.4
Forms and Contents of Balance Sheet and Statement of Profit and Loss 10.4
Transitional Provisions with Respect to Accounting Standard 10.4
Authentication of Financial Statements 10.5
Circulation of Financial Statements 10.5
Copy of Financial Statements to be Filed with Registrar of Companies 10.5
Filing of Financial Statements in XBRL Format 10.6
Schedule III of the Companies Act, 2013 10.6
Main Features of Schedule III 10.6
Structure of Schedule III 10.7
Some Important Points in Respect of Preparation of Balance Sheet 10.7
Schedule III at a Glance 10.8
Equity and Liabilities 10.8
Shareholder’s Funds 10.9
Share Application Money Pending Allotment 10.12
Non-Current Liabilities 10.12
Current Liabilities 10.14
Issues Relating to Current/Non-current Classification 10.16
Conditions for Classification of Liabilities as Current Liabilities 10.16
Conditions for Classification of Assets as Current Assets 10.17
Meaning of Operating Cycle 10.18
Assets 10.19
Non-current Assets 10.19
Current Assets 10.21
Statement of Profit and Loss 10.24
Meaning of Exceptional Items 10.27
Contents
xviii
Meaning of Ordinary Activities 10.27

Meaning of Extraordinary Items 10.27
Typical Adjustments Related to Company Final Accounts 10.27
Depreciation 10.27
Interest on Debentures 10.31
Tax Deducted at Source 10.31
Advance Payment of Income Tax 10.32
Provision for Taxation 10.32
Dividend 10.34
Corporate Dividend Tax (CDT) 10.35
Suspense Accounts 10.36
Calls-in-Arrear 10.36
Forfeited Share Account 10.36
Managerial Remuneration 10.36
Overall Maximum Managerial Remuneration 10.36
Summary of Different Limits Based on Net Profit of the Company 10.37
Meaning of Remuneration 10.37
Remuneration Payable by Companies having ‘No Profit’ or ‘Inadequate Profit’ 10.37
Calculation of Net Profit for Managerial Remuneration 10.40
Commission after Charging such Commission 10.47
Commission Payable to More than One Member of Managerial Staff 10.47
Declaration and Payment of Dividend 10.48
Declaration of Dividend Out of Reserves 10.49
Preparation of Statement of Profit and Loss and Balance Sheet 10.49
Suggested Steps for Preparation of Statement of Profit and Loss and Balance Sheet 10.49
Preparation of Statement of Changes in Equity 10.85
Key Points 10.98
Appendix-1 XBRL: The Future Language of Business and Financial Reporting 10.108
11. Buy Back of Shares .......................................................................... 11.1–11.44

Introduction 11.1
Objectives of Buy Back 11.1
Benefits of Buy Back 11.2
Buy Back of Securities Under Companies Act, 2013 11.3
Sources of Buy Back 11.3
Basic Conditions and Limits for Buy Back of Shares 11.3
Explanatory Statement 11.4
Contents
xix
Time Limit for Buy Back 11.4

Alternative Ways for Buy Back 11.4
Declaration of Solvency by Directors 11.4
Extinguishment of Share Certificate 11.5
Restriction on Issue of Shares Within 6 Months 11.5
Maintenance of Register 11.5
Filing of Return to Registrar and SEBI 11.5
Penalty 11.5
Creation of Capital Redemption Reserve 11.5
Prohibition of Buy Back in Certain Circumstances 11.5
Rule 17 of the Companies (Share Capital and Debentures) Rules, 2014 11.6
SEBI (Buy Back of Securities) Regulation, 1998 11.8
Applicability 11.8
Methods of Buy Back 11.9
Buy Back from Existing Security-holders (Through Tender Offer) 11.9
Odd-lot Buy Back 11.10
Buy Back from the Open Market 11.10
Buy Back of Physical Shares or Other Specified Securities 11.11
Escrow Account 11.11
Buy Back through Book Building 11.12
Key Points 11.37
12. Cash Flow Statement ........................................................................ 12.1–12.58

Introduction 12.1
Advantages of Cash Flow Statement 12.1
Limitations of Cash Flow Statement 12.2
Preparation of Cash Flow Statement 12.2
Definitions 12.3
Cash and Cash Equivalents 12.3
Operating Activities 12.4
Investing Activities 12.4
Financing Activities 12.5
Some Special Items 12.5
Interest and Dividend 12.5
Income-tax 12.6
Extraordinary Items 12.6
Acquisitions and Disposals of Subsidiaries and other Business Units 12.6
Contents
xx
Foreign Currency Cash Flows 12.6

Cash Flows from Future Contracts, Forward Contracts, Option Contracts and Swap
Contracts 12.6
Non-Cash Transactions 12.6
Calculating Cash Flows 12.7
Net Cash Flows from Operating Activities 12.7
Net Cash Flows from Investing Activities 12.12
Net Cash Flows from Financing Activities 12.13
Suggested Steps for Preparation of Cash Flow Statement 12.14
Key Points 12.43
13. Funds Flow Statement....................................................................... 13.1–13.56

Introduction 13.1
Meaning of Funds Flow Statement 13.2
Meaning of Funds 13.2
Meaning of Flow 13.2
Objectives of Funds Flow Statement 13.3
Advantages of Funds Flow Statement 13.3
Limitations of Funds Flow Statement 13.3
Preparation of a Funds Flow Statement 13.5
Some Important Items 13.10
Investments 13.10
Advance Payment of Income Tax 13.10
Provision for Taxation 13.10
Proposed Dividend 13.11
Interim Dividend 13.12
Provision for Bad Debts 13.12
Preparation of Statement/Schedule of Changes in Working Capital 13.12
Key Points 13.42
Contents
xxi
14. Ratio Analysis ................................................................................ 14.1–14.86

Meaning of Ratio 14.1
Meaning of Ratio Analysis 14.1
Objectives of Ratio Analysis 14.1
Advantages of Ratio Analysis 14.1
Limitations of Ratio Analysis 14.2
Standards of Comparison 14.2
Users of Ratios 14.2
Classification of Ratio 14.2
Liquidity Ratios 14.3
Current Ratio 14.4
Acid Test Ratio/Quick Ratio/Liquid Ratio 14.5
Solvency Ratios 14.11
Debt Equity Ratio 14.12
Total Assets to Debt Ratio 14.14
Proprietory Ratio 14.14
Interest-coverage Ratio 14.15
Activity (Assets Utilisation) Ratios 14.16
Inventories/Stock Turnover Ratio 14.16
Debtors Turnover Ratio 14.20
Creditors Turnover Ratio 14.22
Working Capital Turnover Ratio 14.22
Total Assets Turnover Ratio 14.24
Profitability Ratios 14.25
Gross Profit Ratio 14.25
Net Profit Ratio 14.27
Operating Ratio 14.30
Return on Capital Employed 14.34
Return on Networth/Equity 14.35
Gearing Ratio 14.35
Market Value/Investors’ Ratios 14.35
Earnings Per Share (EPS) 14.36
Price Earnings Ratio (P/E Ratio) 14.36
Earning Yield 14.36
Dividend Ratios 14.36
Key Points 14.74
Contents
xxii
15. Employee Stock Option Scheme/Plan ..................................................... 15.1–15.20

Employees Stock Option Scheme (ESOS) 15.1
The Companies (Share Capital and Debentures) Rules, 2014 15.2
SEBI (Share Based Employee Benefits) Regulations, 2014 15.4
Accounting Treatment of Employee Stock Option 15.7
Employee Stock Purchase Scheme (ESPS) 15.16
Accounting Treatment of Employee Stock Purchase Scheme (ESPS) 15.16
Key Points 15.17
16. Valuation of Goodwill and Shares ......................................................... 16.1–16.62

Goodwill 16.1
Distinguishing Features of Goodwill 16.2
Elements of Goodwill 16.2
Types of Goodwill 16.2
Purchased Goodwill 16.2
Non-purchased or Inherent Goodwill 16.3
Positive and Negative Goodwill 16.4
Accounting for Goodwill 16.4
Valuation of Non-purchased Goodwill 16.4
Average Profit Method 16.4
Super Profit Method 16.6
Capitalisation of Average Profit Method 16.13
Capitalisation of Super Profit Method 16.16
Annuity Method 16.19
Valuation of Purchased Goodwill 16.19
Valuation of Shares 16.19
Need for Valuation 16.20
Factors Affecting Valuation of Shares 16.20
Methods of Valuation 16.20
Asset Backing Method 16.20
Yield Valuation Method 16.25
Key Points 16.47
Contents
xxiii
17. Underwriting of Shares and Debentures.................................................. 17.1–17.24

Introduction 17.1
SEBI (ICDR) Regulations, 2009 Regarding Underwriting 17.2
Payment of Underwriting Commission 17.2
Types of Underwriting Agreement 17.3
Marked and Unmarked Applications 17.3
Full and Partial Underwriting 17.3
Determination of Liability in Respect of Underwriting Contract 17.3
When the Issue is Fully Underwritten [without Firm Underwriting] 17.4
When the Issue is Fully Underwritten [with Firm Underwriting] 17.6
When the Issue is Partially Underwritten [without Firm Underwriting] 17.21
When the Issue is Partially Underwritten [with Firm Underwriting] 17.22
Key Points 17.22
18. Profit or Loss Prior to Incorporation ....................................................... 18.1–18.24

Introduction 18.1
Methods of Computing Profit Prior to Incorporation 18.1
First Method 18.2
Second Method 18.2
Accounting Treatment of Pre-incorporation Profit/Loss 18.3
Profit Prior to Incorporation 18.3
Loss Prior to Incorporation 18.3
Accounting Treatment of Post-incorporation Profit/Loss 18.3
Key Points 18.17
19. Holding Company ........................................................................... 19.1–19.124

Introduction 19.1
Determining the Types of Control 19.1
Legal Definition and Requirements 19.2
Meaning of Holding Company and Subsidiary 19.2
Requirements of Companies Act, 2013 in Respect of Consolidation of Financial Statements 19.3
Advantages of Consolidation of Financial Statements 19.4
Contents
xxiv
Disadvantages of Consolidation of Financial Statements 19.4

Consolidation of Financial Statements and Accounting Standards 19.4
Introduction 19.4
Objective 19.4
Scope 19.4
Definitions 19.5
Presentation of Consolidated Financial Statements 19.5
Scope of Consolidated Financial Statements 19.6
Consolidation Procedures 19.7
Disclosure 19.9
Basic Rules for Preparing a Consolidated Balance Sheet 19.10
Rule 1 : Cancellation of Investment and Share Capital 19.10
Rule 2 : Minority Interest Calculation 19.11
Rule 3 : Goodwill/Capital Reserve on Consolidation 19.12
Rule 4 : Reserves of the Holding and Subsidiary Company 19.16
Rule 5 : Pre- and Post-acquisition Profit of Subsidiary 19.17
Rule 6 : Cancellation of Inter-company Debts and Acceptances 19.18
Rule 7 : Cancellation of Inter-company Loans and Advances 19.18
Rule 8 : Adjustment of Bank Balances 19.19
Forms and Techniques 19.20
Forms 19.20
Techniques 19.20
Some Special Adjustments 19.25
Unrealised Profit on Trading Stock 19.25
Unrealised Profit on Fixed Assets 19.28
Revaluation of Assets 19.28
Issue of Bonus Shares 19.32
Preference Shares held by the Holding Company 19.35
Debentures 19.35
Inter-company Dividends 19.38
Proposed Dividend 19.47
Acquisition of Shares during the Accounting Period 19.66
Key Points 19.99
Contents
xxv
20. Amalgamation ............................................................................... 20.1–20.120

Introduction 20.1
Forms of Amalgamation 20.1
Merger 20.1
Acquisition 20.2
Motive for Amalgamation 20.2
Requirement of the Companies Act, 2013 in Respect of Mergers/Amalgamation 20.5
Merger of Listed Companies with Unlisted Companies 20.5
Fast-track Merger or Amalgamation 20.5
Procedures 20.6
Accounting for Amalgamation 20.6
Types of Amalgamation 20.7
Amalgamation in the Nature of Merger 20.7
Amalgamation in the Nature of Purchase 20.7
Calculation of Purchase Consideration 20.7
Methods of Accounting for Amalgamation 20.10
Pooling of Interests Method 20.10
Inter-Company Debts and Inventories 20.34
Mutual Indebtedness 20.34
Mutual Acceptances 20.34
Inter-Company Inventories 20.40
Purchase Method 20.47
Inter Company Investments 20.79
Key Points 20.105
21. Capital Reduction/Internal Reconstruction............................................... 21.1–21.98

Meaning 21.1
Objective of Capital Reduction 21.1
Reduction of Share Capital Under the Companies Act, 2013 21.1
Form of Reduction 21.2
Scheme for Capital Reduction 21.69
Key Points 21.75
Contents
xxvi

Guide to the Answers 21.98
22. Conceptual Framework ........................................................................ 22.1–22.8

Introduction 22.1
Purpose of the Framework 22.1
Status of Framework 22.2
Scope 22.2
Objective of Financial Statements 22.3
Notes and Supplementary Schedules 22.3
Underlying Assumptions 22.3
Accrual Basis 22.3
Going Concern 22.3
Consistency 22.4
Qualitative Characteristics of Financial Statements 22.4
Understandability 22.4
Relevance 22.5
Reliability 22.5
Comparability 22.5
Elements of Financial Statements 22.6
Definitions 22.6
Assets 22.6
Liability 22.6
Recognition of the Elements of Financial Statements 22.7
Recognition of Assets 22.7
Recognition of Liabilities 22.7
Recognition of Income 22.7
Recognition of Expenses 22.7
Measurement of Elements of Financial Statements 22.8
Concept of Capital and Capital Maintenance 22.8
Concept of Capital 22.8
Determination of Profit 22.8
Capital Maintenance 22.8
Necessity of Conceptual Framework 22.8
Contents
xxvii
23. Computerised Accounting .................................................................. 23.1–23.16

Introduction 23.1
An Overview of Computerised Accounting System — Salient Features and Significance 23.1
Features of Computerised Accounting System 23.2
Significance of Computerised Accounting System 23.3
More Power and Greater Standardization 23.3
Enterprise Resource Planning Defined a New Era 23.3
E-Commerce and E-Business 23.4
Security Aspect of the System 23.4
Maintaining the Hierarchy of Ledger 23.4
Grouping of Accounts 23.6
Codification of Accounts 23.7
Coding Techniques 23.7
Accounting Packages and Consideration for their Selection 23.8
Business Needs and the Basic Considerations 23.9
Using of Spread Sheets as Accounting software 23.9
Pre-packaged Accounting Software 23.10
Customised Accounting Software 23.12
Accounting Software as a Part of Enterprise Resource Planning (ERP) 23.13
Outsourcing of Accounting Function 23.14
Generating Accounting Reports 23.15
24. Banking Companies ......................................................................... 24.1–24.72

Introduction 24.1
Functions of a Bank 24.1
Business of Banking Companies 24.2
Restriction on Business 24.3
Some Important Provisions of the Banking Regulation Act, 1949 24.3
Disposal of Non-Banking Assets (Section 9) 24.3
Minimum Capital and Reserves 24.4
Restriction on Commission, Brokerage, Discount, etc., on Sale of Shares (Section 13) 24.5
Restrictions as to Payment of Dividend (Section 15) 24.5
Statutory Reserve (Section 17) 24.6
Cash Reserve (Section 18) 24.6
Statutory Liquidity Ratio (SLR) 24.6
Contents
xxviii
Restrictions on Loans and Advances (Section 20) 24.6

Return of Unclaimed Deposits (Section 26) 24.6
Books of Account 24.7
Subsidiary Books 24.7
Memorandum Books 24.7
Principal Books of Account 24.7
Special Features of Bank Accounting 24.7
Final Accounts 24.8
Balance Sheet 24.8
Profit and Loss Account 24.9
Some Special Transactions 24.22
Rebate on Bills Discounted 24.22
Acceptance, Endorsement and Other Obligations 24.28
RBI’s Prudential Norms Relating to Advances 24.29
Introduction 24.29
Assets Classification 24.29
Income Recognition 24.32
Provisioning of Loans and Advances 24.34
Advances Covered by ECGC Guarantee 24.37
Guidelines for Provisions Under Special Circumstances 24.39
Capital Adequacy Ratio 24.58
Capital 24.58
Risk-Adjusted Assets and Off-Balance Sheet Items 24.59
Key Points 24.63
25. Accounts for Insurance Companies ....................................................... 25.1–25.70

Introduction 25.1
Classification of Insurance Business 25.2
Life Insurance Business 25.2
Ledgers 25.3
Life Insurance Fund Ledger 25.3
Revenue Ledger 25.3
Miscellaneous Ledger 25.3
Cash Books 25.3
Receipts Cash Book 25.3
Expenditure Cash Book 25.4
Journal 25.4
Contents
xxix
Books of Record 25.5

Statutory Books 25.5
Other Books and Registers 25.5
Types of Policies 25.5
Whole-life and Endowment Policies 25.5
With-profit and Without-profit Policies 25.5
Some Important Items 25.6
Re-insurance 25.6
Annuities 25.6
Policies Discontinued 25.6
The Insurance Regulatory and Development Authority (Preparation of Financial Statements
and Auditor’s Report of Insurance Companies) Regulations, 2002 25.6
Schedule A 25.7
Revenue Account [Form A – RA] 25.12
Main Items of Revenue Account 25.12
Benefits Paid (Net) 25.13
Interim Bonus Paid 25.13
Appropriations 25.13
Profit and Loss Account [Form A – PL] 25.13
Balance Sheet [Form A – BS] 25.14
Sources of Funds 25.14
Application of Funds 25.14
Valuation Balance Sheet 25.29
Disposal of Surplus 25.30
General Insurance Business 25.33
Schedule B 25.34
Revenue Account 25.39
Main Items of Revenue Account 25.39
Claims Incurred 25.40
Commission 25.44
Operating Expenses Related to Insurance Business 25.44
Profit and Loss Account [Form B – PL] 25.44
Balance Sheet [Form B – BS] 25.44
Sources of Funds 25.44
Application of Funds 25.45
Key Points 25.62
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9. Tou] In 2 Samuel viii. 9 “Toi” (so Hebrew, but LXX. “Tou”).
Hamath] see above verse 3. Hamath is sometimes referred to as

the northern boundary of Israel, compare 1 Kings viii. 65; 2 Kings xiv.
25, 28.
¹⁰he sent Hadoram his son to king David, to

salute him, and to bless him, because he had
fought against Hadarezer and smitten him; for
Hadarezer had wars with Tou; and he had with
him all manner of vessels of gold and silver
and brass.
10. Hadoram] In 2 Samuel viii. 10, “Joram.” Both these forms are
probably Hebrew adaptations of the real name.
he had with him all manner of vessels] Such informal tribute was
an acknowledgment of David’s suzerainty made in order to claim
David’s protection in war. Compare the action of Asa (1 Kings xv. 18,
19) and of Ahaz (2 Kings xvi. 7, 8). In all three cases the policy was
the same, i.e. to acknowledge a distant suzerain and so gain the
benefit of a valuable alliance while losing the minimum of
independence.
¹¹These also did king David dedicate unto the

Lord, with the silver and the gold that he
carried away from all the nations; from Edom,
and from Moab, and from the children of
Ammon, and from the Philistines, and from
Amalek.
11. from Amalek] So 2 Samuel viii. 12, but we have no record of
any war of David with Amalek except the account in 1 Samuel xxx.
¹²Moreover Abishai ¹ the son of Zeruiah smote
of the Edomites in the Valley of Salt eighteen
thousand. ¹³And he put garrisons in Edom;
and all the Edomites became servants to
David. And the Lord gave victory ² to David
whithersoever he went.
¹ Hebrew Abshai. ² Or, saved David.
12. Abishai the son of Zeruiah] In 2 Samuel viii. 13 David, and in

Psalms lx. (title) Joab, receives the credit of this victory. Abishai
might have commanded in the battle, while Joab (compare 1 Kings
xi. 16) completed the conquest of the country; but it is highly
probable that the reading Abishai the son of Zeruiah has arisen here
through a copyist’s mistake and that the true reading is And when
he (David) returned he smote Edom, etc.
of the Edomites] Literally “of Edom,” so Psalms lx. (title), but in 2

Samuel “of the Syrians,” literally “Aram.” The two words “Edom” and
“Aram” when written in Hebrew are very much alike and are easily
confused. The reading “Edom” is right here.
the Valley of Salt] Probably the marshy flat (Bädeker, Palestine⁵,

p. 174) at the south end of the Dead Sea. This valley is dominated
by the Jebel Usdum, a hill consisting “almost entirely of pure
crystallised salt” (Bädeker, Palestine⁵, p. 174).
eighteen thousand] Psalms lx. (title), “twelve thousand,” not an

important variation.
14‒17 (= 2 Samuel viii. 15‒18; compare 2 Samuel xx. 23‒26).

David’s Officials.
¹⁴And David reigned over all Israel; and he
executed judgement and justice unto all his
people.
14. unto all his people] David was his own chief justice, but
probably the work was too much for one man; compare 2 Samuel xv.
2‒4.
¹⁵And Joab the son of Zeruiah was over the

host; and Jehoshaphat the son of Ahilud was
recorder ¹.
¹ Or, chronicler.
15. recorder] margin, chronicler; LXX., ὑπομνηματογράφος. His

business was probably to remind the king of his various duties of
state.
¹⁶And Zadok the son of Ahitub, and Abimelech

the son of Abiathar, were priests; and
Shavsha was scribe ¹;
¹ Or, secretary.
16. Abimelech the son of Abiathar] In 2 Samuel viii. 17,

Ahimelech the son of Abiathar, but read Abiathar son of Ahimelech
in both passages. Compare xv. 11, xxiv. 3, notes; and Kirkpatrick on
2 Samuel viii. 17.
Shavsha] 2 Samuel viii. 17, Seraiah; 2 Samuel xx. 25, Sheva;

and 1 Kings iv. 3 (perhaps), Shisha. Shisha and Shavsha probably
represent two different attempts to pronounce a foreign name,
perhaps Shamsha; Seraiah and Sheva are mere errors of
transcription. Foreigners were admitted to posts of authority in the
empire of David and Solomon; Ittai the Gittite and Uriah the Hittite
are instances.
scribe] margin, secretary. See 2 Kings xii. 10, xviii. 18, xxii. 3;
compare 2 Kings xxv. 19, a passage which suggests that there was
a second scribe with military duties. The first, the king’s scribe, would
formulate the king’s orders and conduct his correspondence with
foreign powers. Shavsha’s sons held the office in the reign of
Solomon, 1 Kings iv. 3.
¹⁷and Benaiah the son of Jehoiada was over

the Cherethites and the Pelethites; and the
sons of David were chief about the king.
17. Benaiah] Compare xi. 22‒25.
the Cherethites and the Pelethites] David’s bodyguard. The

Cherethites were almost certainly Philistines (1 Samuel xxx. 14;
Ezekiel xxv. 16; Zephaniah ii. 5), the Pelethites were probably also
Philistines (2 Samuel xv. 18). Foreign bodyguards are well-known in
history.
chief about the king] Literally, the chief at the kings hand, i.e.
formed the executive to carry out his commands; compare
Nehemiah xi. 24. In 2 Samuel viii. 18 (Revised Version) David’s sons
are described as priests, a statement which is in all probability
correct, but which the Chronicler, following the later theory of the
priesthood, could not accept (see Introduction, pp. xli. f.).
Chapter XIX.
1‒19 (= 2 Samuel x. 1‒19).
War with the Ammonites and their Aramean Allies.
Chronicles here omits the story of David’s kindness in seeking
out and befriending Mephibosheth (Merib-baal) the son of Jonathan
(2 Samuel ix.), because he has ignored the story of David’s relations
with Saul. Further the Court History of David which occupies an
important place in 2 Samuel is passed over altogether in Chronicles
Consequently the shameful episode of Bath-sheba, and the rebellion
of Absalom vanish from the account of David. It is obvious how
greatly the presentation of David’s life and character is affected by
these omissions. Yet from his point of view the Chronicler is right in
passing these matters by in silence. He was concerned to present
David essentially as the founder of the religious life of Israel as a
kingdom and of the Temple as an institution of religion.
There are several variations in text between 2 Samuel x. and 1

Chronicles xix., e.g. verses 6, 7 (addition in Chronicles), 16
(omission from Chronicles), 18 (variation in reckoning).
¹And it came to pass after this, that Nahash

the king of the children of Ammon died, and
his son reigned in his stead.
1. after this] The war with Ammon has already been referred to
by anticipation in xviii. 11.
Nahash] Probably the Nahash mentioned in 1 Samuel xi. 1.
Ammon] The Ammonites were a kindred race to the Hebrews,

being descended according to tradition from Lot, the nephew of
Abraham; compare Deuteronomy ii. 19. The two Ammonite names
here given are pure Hebrew, Nahash (= “Serpent”) and Hanun (=
“Favoured, Fortunatus”); the Ammonite language, like the Moabite,
was doubtless very similar to Hebrew.
²And David said, I will shew kindness unto

Hanun the son of Nahash, because his father
shewed kindness to me. So David sent
messengers to comfort him concerning his
father. And David’s servants came into the
land of the children of Ammon to Hanun, to
comfort him.
2. sent messengers to comfort him] A customary act of
international courtesy; compare 2 Kings xx. 12. Its breach was
resented. Thus in the Tell el-Amarna letters (x. 16) the king of
Kardunias writes, “Should not my brother (i.e. the king of Egypt)
have heard that I am sick? Why has he not comforted me? Why has
he not sent his messenger, not looked into it?” (editor H. Winckler, p.
23).
³But the princes of the children of Ammon said

to Hanun, Thinkest thou that David doth
honour thy father, that he hath sent comforters
unto thee? are not his servants come unto
thee for to search, and to overthrow, and to
spy out the land?
3. the land] 2 Samuel x. 3, the city, i.e. Rabbah (see xx. 1).
⁴So Hanun took David’s servants, and shaved

them, and cut off their garments in the middle,
even to their buttocks, and sent them away.
4. shaved them] 2 Samuel x. 4, shaved off the one half of their
beards. Of course a great insult; compare Isaiah l. 6.
cut off their garments] Jewish ambassadors are represented on

the Black Obelisk (a monument of Shalmaneser II, king of Assyria,
now preserved in the British Museum) as wearing robes reaching to
the feet; Hanun reduced ambassadors to the level of captives;
compare Isaiah xx. 4.
⁵Then there went certain, and told David how

the men were served. And he sent to meet
them; for the men were greatly ashamed. And
the king said, Tarry at Jericho until your
beards be grown, and then return.
5. Tarry at Jericho] Thus (1) the feelings of the ambassadors
would be spared, (2) the insult would be less widely known until it
had been avenged.
⁶And when the children of Ammon saw that

they had made themselves odious to David,
Hanun and the children of Ammon sent a
thousand talents of silver to hire them chariots
and horsemen out of Mesopotamia, and out of
Aram-maacah, and out of Zobah.
6. a thousand talents of silver] A very large sum; for a hundred
talents Amaziah hired a hundred thousand men (2 Chronicles xxv.
6).
chariots and horsemen] The Israelite armies on the contrary

consisted chiefly of infantry, the country being for the most part
unsuitable for horses.
Mesopotamia] Hebrew “Aram (Syria) of the two rivers” (compare

Genesis xxiv. 10, Revised Version margin), i.e. probably the land
between the Euphrates and the Chaboras. The Greeks used the
term Mesopotamia of a wider district, i.e. of the country between the
Euphrates and the Tigris. This mention of Mesopotamia is probably
premature, for in verse 16 the summons of Syrians from beyond the
Euphrates is spoken of as a new thing. The corresponding
expression in 2 Samuel x. 6 is Beth-rehob, a district which has not
yet been identified.
Aram-maacah] compare vii. 15, note; Deuteronomy iii. 14;

Joshua xii. 5, xiii. 11.
Zobah]. compare xviii. 3, note.
⁷So they hired them thirty and two thousand

chariots, and the king of Maacah and his
people; who came and pitched before
Medeba. And the children of Ammon gathered
themselves together from their cities, and
came to battle.
7. thirty and two thousand chariots] Compare 2 Samuel x. 6,
which reckons the army (including Maacah) at 33,000, of whom
20,000 are expressly described as footmen. The word “chariots” may
have slipped in from verse 6 instead of “men” or may be an
intentional alteration, magnifying the war.
Medeba] In the territory of Reuben; Joshua xiii. 26. The country

round is a table-land suited for the manœuvres of chariots. The
place of the rendezvous of the allies is not mentioned in 2 Samuel x.,
some words having probably fallen out of the text.
⁸And when David heard of it, he sent Joab,

and all the host of the mighty men. ⁹And the
children of Ammon came out, and put the
battle in array at the gate of the city: and the
kings that were come were by themselves in
the field.
8. David ... sent Joab] Why in such a crisis did he not go himself?
Perhaps because he could watch the gathering of the more serious
storm described in verses 16‒19 better from Jerusalem.
¹⁰Now when Joab saw that the battle ¹ was set

against him before and behind, he chose of all
the choice men of Israel, and put ¹¹them in
array against the Syrians. And the rest of the
people he committed into the hand of Abishai ²
his brother, and they put themselves in array
against the children of Ammon. ¹²And he said,
If the Syrians be too strong for me, then thou
shalt help me: but if the children of Ammon be
too strong for thee, then I will help thee.
¹ Hebrew the face of the battle was against.
² Hebrew Abshai.
10. he chose of all the choice men] The Syrians were the more
formidable because of the chariots they had; Joab therefore opposed
to them the flower of his army.
¹³Be of good courage, and let us play the men

for our people, and for the cities of our God:
and the Lord do that which seemeth him
good.
13. the cities of our God] The cities which our God has given us
and in which He is worshipped. If these were captured by the enemy,
false gods would be worshipped in them. Religious feeling often
supplies the place of patriotism in the East.
¹⁴So Joab and the people that were with him
drew nigh before the Syrians unto the battle;
and they fled before him.
14. drew nigh before the Syrians] Without fear for their own rear
advanced against the Syrian front.
¹⁵And when the children of Ammon saw that

the Syrians were fled, they likewise fled before
Abishai his brother, and entered into the city.
Then Joab came to Jerusalem.
15. Joab came to Jerusalem] Probably because he was wanted
for the new danger gathering in the North.
16‒19.
The End of the Aramean War.
Three stages are apparent in the war with Zobah as related in

Chronicles, (a) that in which David secured a position on the
Euphrates, xviii. 3‒8, (b) the stage during which troops from Zobah
acted as auxiliaries to the Ammonites, xix. 6‒15, (c) the final stage
which ended in the conclusion of a formal peace, xix. 16‒19. The
actual facts of David’s activities against the Arameans are by no
means easy to ascertain, as may be seen in the commentaries on
the more complex account which is given in Samuel.
¹⁶And when the Syrians saw that they were

put to the worse before Israel, they sent
messengers, and drew forth the Syrians that
were beyond the River, with Shophach the
captain of the host of Hadarezer at their head.
16. the Syrians that were beyond the River] i.e. the Syrians of
“Mesopotamia”; compare verse 6, note. 2 Samuel x. 16 adds, and
they came to Helam; the position of Helam however is unknown.
Shophach] In 2 Samuel x. 16 called “Shobach.” The whole allied

army was united under one general.
¹⁷And it was told David; and he gathered all

Israel together, and passed over Jordan, and
came upon them, and set the battle in array
against them. So when David had put the
battle in array against the Syrians, they fought
with him.
17. came upon them] or possibly read, as 2 Samuel x. 17, came
to Helam. According to 2 Samuel x. the Syrian army assembled at
Helam, and was there attacked by David.
¹⁸And the Syrians fled before Israel; and David

slew of the Syrians the men of seven
thousand chariots, and forty thousand
footmen, and killed Shophach the captain of
the host.
18. seven thousand] 2 Samuel x. 18, seven hundred: an
intentional change made by the Chronicler to enhance the
achievement of David.
forty thousand footmen] 2 Samuel x. 18, forty thousand

horsemen. Swarms of horsemen have usually formed the strength of
armies raised on the eastern bank of the Euphrates; but the reading
in Chronicles may well be correct.
¹⁹And when the servants of Hadarezer saw
that they were put to the worse before Israel,
they made peace with David, and served him:
neither would the Syrians help the children of
Ammon any more.
19. the servants] i.e. his vassals and tributaries; in 2 Samuel “all
the kings that were servants to Hadarezer.” We are not told what
course Hadarezer himself took; possibly, being deserted by his
allies, he ceased from hostilities without making any treaty with
David.
Chapter XX.
1‒3 (= 2 Samuel xi. 1, xii. 26‒31).
The Subjugation of Ammon.
The account of the siege of Rabbah is given more shortly in

Chronicles than in 2 Samuel From the latter we learn that the Ark
was in the besiegers’ camp (xi. 11), that the city was defended with
spirit (xi. 17), and finally taken piecemeal (xii. 26‒29).
¹And it came to pass, at the time of the

return of the year, at the time when kings go
out to battle, that Joab led forth the power of
the army, and wasted the country of the
children of Ammon, and came and besieged
Rabbah. But David tarried at Jerusalem. And
Joab smote Rabbah, and overthrew it.
1. at the time of the return of the year] i.e. in the spring, 2 Samuel
xi. 1; 1 Kings xx. 22.
the power of the army] The Hebrew phrase is quite general in

meaning: the host of war, the military forces.
Rabbah] the capital of the Ammonites; Jeremiah xlix. 2; Ezekiel

xxi. 20 (25, Hebrew). Its site, now called ‘Ammān, is covered with
important ruins of the Roman and Byzantine periods. The town lies
in a fertile basin, its citadel on a hill on the north side.
David tarried at Jerusalem] In 2 Samuel these words introduce

the story of David’s adultery with Bath-sheba, which is omitted from
Chronicles.
Joab smote Rabbah] In 2 Samuel xii. 27 Joab reports to David

the capture of the city of waters (i.e. the lower city), and invites him
to come and complete the conquest (presumably by capturing the
citadel) in person. Probably the citadel was dependent for water on
the river which flows through the town.
²And David took the crown of their king ¹ from

off his head, and found it to weigh a talent of
gold, and there were precious stones in it; and
it was set upon David’s head: and he brought
forth the spoil of the city, exceeding much.
¹ Or, Malcam See Zephaniah i. 5.
2. of their king] So also Authorized Version, perhaps rightly, but

many scholars prefer to treat the word as a proper name, rendering,
as margin, of Malcam (compare Zephaniah i. 5), i.e. Milcom, the
national god of the Ammonites (1 Kings xi. 5). LXX. has a double
translation of the one Hebrew word: Molchol (Molchom) their king.
The name of the god, whether the right form be Molech (1 Kings xi.
7) or more probably Milcom or Malcam, means either “king” or, less
probably, “counsellor.” In the former case his image would in all
probability wear a crown.
it was set upon David’s head] A symbolic action implying that

David completely annexed the Ammonite territory; other conquered
nations retained a partial independence on condition of the payment
of tribute.
he brought forth the spoil of the city, exceeding much] doubtless

a triumphal procession of captives and spoil, such as an Assyrian
relief in the British Museum represents passing before Sennacherib
at the capture of Lachish.
³And he brought forth the people that were

therein, and cut them with saws, and with
harrows of iron, and with axes. And thus did
David unto all the cities of the children of
Ammon. And David and all the people
returned to Jerusalem.
3. and cut them with saws] Read probably (compare 2 Samuel
xii. 31, Revised Version margin) and put them with saws, i.e. put
them to work with saws, etc. Compare 2 Chronicles ii. 17, 18;
Joshua ix. 21‒23. The implements mentioned here and in the
parallel passage of 2 Samuel suggest task-work, not massacre. The
Ammonites were reduced to bondage like that of Israel in Egypt. The
exceptionally harsh treatment of the Ammonites was doubtless due
to the exceptional insults which David’s ambassadors had received
from them. A very different spirit towards Ammon is shown in
Deuteronomy ii. 19.
4‒8 (= 2 Samuel xxi. 18‒22).

Philistine champions slain.
This section is the last in which the Chronicler notices David’s

wars. It is taken from 2 Samuel xxi., where, however, it is preceded
by an account (verses 15‒17) of David’s narrow escape in an
encounter with a Philistine.
Between the two sections of this chapter the Chronicler omits the
account of the rebellions of Absalom and of Sheba, and the story of
the Gibeonite vengeance on the house of Saul (2 Samuel xiii. i‒xxi.
14).
⁴And it came to pass after this, that there

arose war at Gezer ¹ with the Philistines: then
Sibbecai the Hushathite slew Sippai, of the
sons of the giant ²: and they were subdued.
¹ In 2 Samuel xxi. 18, Gob.
² Hebrew Rapha. According to another reading, giants; Hebrew

Rephaim.
4. at Gezer] See vi. 67, note. In 2 Samuel at Gob, but no place

called Gob is known. In 2 Samuel v. 25 it is said that David smote
the Philistines “from Geba until thou come to Gezer.”
Sippai] In 2 Samuel “Saph.”
giant] Hebrew “Rapha”; the same Hebrew word in the plural

“Rephaim” is translated “giants” in Deuteronomy ii. 11, Authorized
Version These “Rephaim” dwelt east of Jordan.
⁵And there was again war with the Philistines;

and Elhanan the son of Jair slew Lahmi the
brother of Goliath the Gittite, the staff of
whose spear was like a weaver’s beam.
5. Elhanan ... slew Lahmi the brother of Goliath] In 2 Samuel xxi.
19, Elhanan ... the Beth-lehemite slew Goliath (Revised Version).
The difference between the two sentences in Hebrew is very small,
and is due, no doubt, to the Chronicler, or a copyist, who felt that he
was making a certain emendation in substituting the brother of
Goliath for Goliath himself, since, according to 1 Samuel xvii.,
Goliath was slain by David before he became king.
slew Lahmi] read the Beth-lehemite slew, etc.
⁶And there was again war at Gath, where was

a man of great stature, whose fingers and toes
were four and twenty, six on each hand, and
six on each foot; and he also was born unto
the giant ¹.
¹ Hebrew Rapha.
6. a man of great stature] In 2 Samuel xxi. 20 (Hebrew) a man of

contention, i.e. a challenger or champion.
⁷And when he defied ⁴ Israel, Jonathan the son

of Shimea David’s brother slew him.
⁴ Or, reproached.
7. Shimea] See iii. 5, note.
⁸These were born unto the giant ¹ in Gath; and

they fell by the hand of David, and by the hand
of his servants.
¹ Hebrew Rapha.
8. These were born unto the giant in Gath] Again “giant” is the
Hebrew “Rapha” as in verses 4, 6. The meaning is that these
belonged to a branch of the Rephaim which was settled in Gath.
Chapter XXI.
1‒27 (= 2 Samuel xxiv. 1‒25).
The Numbering and the Plague.
Comparison of these verses with the account given in Samuel

discloses not a few interesting divergences, the more important of
which are pointed out in the notes below (see especially the notes on
verses 1, 6, 25). In general it may be said that the account in
Chronicles curtails any features reflecting discredit on David and
expands such as do him honour. Some scholars consider that the
changes are of such a character that they may all be due directly to
the Chronicler, but others see in them motives so various as to
suggest the opinion that the Chronicler’s source is not Samuel but
an intermediate source. There may be a measure of truth in both
contentions. So famous a tale may well have been recounted with
modifications in the telling to suit the later idealisation of David. The
Chronicler may therefore have been working from the text of
Samuel, but some of the changes he introduced may have been
generally current, and for these he is in a sense not immediately
responsible, although of course all were more or less in accordance
with his taste.
The subject of the present section (David’s numbering of the

people and the plague which followed) is interesting in itself, quite
apart from the comparison with Samuel Why was the census
considered a sin? Various replies may be made. (1) Because the
pride of David and the ambitions which the census might promote
revealed a transference of trust from God to self, from spirit to
numbers, from justice to power. This view accords with our modern
moralistic standpoint, but other considerations call for mention.
(2) Because, unlike the two numberings in the wilderness (Numbers
i. 1‒16, iii. 39, xxvi. 1‒65), it was not made by Divine command
(compare verse 1, note). This thought may well have been present in
the mind of the Chronicler. To it we may add (3) the popular dread of
the census as a sinister and unlucky act. The ground of this dread
was no doubt mainly practical, being due to the fear that the records
might be used for purposes of fresh taxation or more stringent war-
levies, but it may have its roots in an instinct, handed down from the
thoughts of primitive ages, when written records were an uncanny
mystery. Thus S. I. Curtiss, Primitive Semitic Religion To-day, p. 69,
remarks that the persistence of this fear among modern Semites is
partially chargeable for the lack of correct statistics as to the
population of Oriental towns. Frazer (in Anthropological Essays to
E. B. Tylor, p. 174) refers to the dread of enumeration felt by the
Lapps and by a West African tribe.
¹And Satan ¹ stood up against Israel, and

moved David to number Israel.
¹ Or, an adversary.
1. And Satan stood up against Israel] In 2 Samuel “And again (a

former occasion being at the time of the famine, 2 Samuel xxi. 1) the
anger of the Lord was kindled against Israel, and he moved David
against them.” The change is significant of the late date of
Chronicles In an earlier stage of Hebrew thought human sin and folly
are at times naïvely ascribed to the agency of God, e.g. “He hardens
Pharaoh’s heart” (Exodus x. 1, etc.): “quem Deus vult perdere prius
dementat.” At a later date the instigation of some subordinate “evil”
spirit was adduced, e.g. 1 Kings xxii. 20‒24; and eventually this spirit
of temptation was expressly termed “The Satan” or “Satan,” i.e. “The
Adversary.” He was then regarded as a hostile spiritual being, the
opposite of a guardian angel such as the Michael of Daniel x. 13, 21,
xii. 1. In the book of Job the Satan is very definitely said to act under
the guidance and will of God. Here nothing is said of the Satan
having been directed by Jehovah.
to number] Only those of military age (verse 5), over twenty years
of age (xxvii. 23, 24), were included in the census.
²And David said to Joab and to the princes of

the people, Go, number Israel from Beer-
sheba even to Dan; and bring me word, that I
may know the sum of them.
2. to Joab] The object being to number “those who drew sword,”
the captain of the host was the most suitable person to entrust with
the business.
from Beer-sheba even to Dan] From the extreme south to the

extreme north of the land.
Dan] The modern Tell el-Kādī, about forty minutes distance from
Bāniās (Paneas), north of Lake Huleh (Waters of Merom). For its
original name Laish, see Judges xviii. 28.
that I may know] Either with a view to imposing a tax or to

undertaking some fresh great military expedition.
³And Joab said, The Lord make his people an

hundred times so many more as they be: but,
my lord the king, are they not all my lord’s
servants? why doth my lord require this thing?
why will he be a cause of guilt unto Israel?
3. The Lord make ... are they not all my lord’s servants?]
Counting will not increase their numbers, only Jehovah’s gracious
favour can secure that. What more then can David desire than to
know, as Joab now assures him, that one and all his subjects are
loyal?

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1. Departmental Accounts 1.1–1.50

24. Banking Companies 24.1–24.72

1. Departmental Accounts ........................................................................ 1.1–1.50

2. Branch Accounting ............................................................................. 2.1–2.102

3. Royalty Accounts ................................................................................ 3.1–3.44

4. Hire Purchase Accounts........................................................................ 4.1–4.70

5. Packages and Containers ...................................................................... 5.1–5.28

6. Voyage Accounts ................................................................................ 6.1–6.12

7. Investment Accounts ............................................................................. 7.1–7.28

8. Introduction to Indian Government Accounting .............................................. 8.1–8.10

9. Social Accounting ................................................................................. 9.1–9.6

10. Company Final Accounts ................................................................... 10.1–10.114

Meaning of Ordinary Activities 10.27

11. Buy Back of Shares .......................................................................... 11.1–11.44

Time Limit for Buy Back 11.4

12. Cash Flow Statement ........................................................................ 12.1–12.58

Foreign Currency Cash Flows 12.6

13. Funds Flow Statement....................................................................... 13.1–13.56

14. Ratio Analysis ................................................................................ 14.1–14.86

15. Employee Stock Option Scheme/Plan ..................................................... 15.1–15.20

16. Valuation of Goodwill and Shares ......................................................... 16.1–16.62

17. Underwriting of Shares and Debentures.................................................. 17.1–17.24

18. Profit or Loss Prior to Incorporation ....................................................... 18.1–18.24

19. Holding Company ........................................................................... 19.1–19.124

Disadvantages of Consolidation of Financial Statements 19.4

20. Amalgamation ............................................................................... 20.1–20.120

21. Capital Reduction/Internal Reconstruction............................................... 21.1–21.98

Objective Questions 21.76

22. Conceptual Framework ........................................................................ 22.1–22.8

23. Computerised Accounting .................................................................. 23.1–23.16

24. Banking Companies ......................................................................... 24.1–24.72

Restrictions on Loans and Advances (Section 20) 24.6

25. Accounts for Insurance Companies ....................................................... 25.1–25.70

Books of Record 25.5

Hamath] see above verse 3. Hamath is sometimes referred to as

¹⁰he sent Hadoram his son to king David, to

¹¹These also did king David dedicate unto the

12. Abishai the son of Zeruiah] In 2 Samuel viii. 13 David, and in

of the Edomites] Literally “of Edom,” so Psalms lx. (title), but in 2

the Valley of Salt] Probably the marshy flat (Bädeker, Palestine⁵,

eighteen thousand] Psalms lx. (title), “twelve thousand,” not an

14‒17 (= 2 Samuel viii. 15‒18; compare 2 Samuel xx. 23‒26).

¹⁵And Joab the son of Zeruiah was over the

15. recorder] margin, chronicler; LXX., ὑπομνηματογράφος. His

¹⁶And Zadok the son of Ahitub, and Abimelech

16. Abimelech the son of Abiathar] In 2 Samuel viii. 17,

Shavsha] 2 Samuel viii. 17, Seraiah; 2 Samuel xx. 25, Sheva;

¹⁷and Benaiah the son of Jehoiada was over

the Cherethites and the Pelethites] David’s bodyguard. The