JAIIB / Diploma in Banking & Finance ACCOUNTING AND FINANCE FOR BANKERS.

Book Keeping - MODULE B CA R. C. JOSHI B.Com(Hons.),LL.B,CAIIB,FCA

DEFINITION AND SCOPE ACCOUNTING STANDARDS.
‡ ACCOUNTING IS LANGUAGE OF BUSINESS. ‡ COMMUNICATE THE RESULT OF BUSINESS OPERATIONS AND ITS OTHER ASPECTS. ‡ ACCOUNTING IS AN ART OF RECORDING CLASSIFYING AND SUMMARIZING IN A SIGNIFICANT MANNER AND IN TERMS OF MONEY TRANSACTIONS AND EVENTS WHICH ARE IN PART AT LEAST OF FINANCIAL CHARACTER AND INTERPRETING THE RESULTS THEREOF.

DIFFERENCE BETWEEN ACCOUNTANY AND BOOKKEEPING.
‡ BOOK KEEKPING IS MERELY RECORDING THE BUSINESS TRANSACTIONS IN BOOKS AND LEDGERS . ‡ ACCOUNTANCY IS WIDER CONCEPT: COMPILATION OF ACCOUNTS IN SUCH A WAY THAT ONE IS IN A POSITION TO UNDERSTAND STATE OF AFFAIRS OF BUSINESS. ‡ USERS OF FINANCIAL STATEMENTS ARE INCOME TAX DEPT., S.T DEPARMENT SHAREHOLDERS, INVESTORS,BANKS AND FIS AND SO ON APART FROMMANAGEMENT OF ENTITY FOR MAKING POLICY DECISIONS. ‡ IT IS IN THE INTEREST OF ALL THAT FINANCIAL STATEMENTS REFLECT TRUE AND FAIR VIEW OF STATE OF AFFIAIRS OF A BUSINESS ENTITY.

‡ SUMMARIZING : TRIAL BALANACE AND B/S ‡ INTERPRETING THE FINANCIAL TRANSACTIONS. .ACCOUNTANCY ‡ ACCOUNTANCY INVOLVES: ‡ SYSTAMATIC(including regulatory compliance) CLASSIFICATION OF BUSINESS TRANSACTIONS IN TERMS OF MONEY AND FINANCIAL CHARACTER.

PURPOSE OF ACCOUNTANCY ‡ TO KEEP A SYSTAMATIC RECORD ‡ TO ASCERTAIN THE RESULTS OF OPERATIONS ‡ TO ASCERTAIN FINANCIAL POSITION OF BUSINESS. ‡ TO FACILITATE RATIONAL DECISION MAKING ‡ TO RAISE FINANCE. . ‡ TO SATISFY REQUIREMENT OF LAW AND USEFUL IN MANY RESPECTS.

‡ UNREALIZED GAINS ARE IGNORED. ‡ EVERY TRANSACTION IS RECORDED WITH PRESENT VALUE AND NOT ANY FUTURE VALUE. ‡ COST CONCEPT: BUSINESS TRANSACTIONS ARE RECORDED IN BOOKS AT COST PRICE. BUT SUCH DEPRECIATION HAS NO RELATION TO MARKET VALUE OF ASSET. ‡ FIXED ASSETS ARE KEPT AT COST OF PURCHASE AND NOT AT THEIR MARKET PRICE. .CONCEPTS OF ACCOUNTANCY. ‡ COST OF AN ASSET THAT HAS LONG BUT LIMITED LIFE IS SYSTAMATICALLY REDUCED BY A PROCESS CALLED DEPRECIATION.

. ‡ INFLATION OR DEFLALTION NOT INCLUDED IN VALUE OF ANY ASSET.MONEY MEASUREMENT CONCEPT ‡ MONEY MEASUREMENT CONCEPT: EVERY TRANSACTION IS MEASURED IN TERMS OF MONEY. VIZ PRODUCTION/SALES/WAGES ETC ALL CONVERTED TO MONEY.

BUSINESS ENTITY CONCEPT
‡ THIS CONCEPT SEPARATES THE ENTITY OF PROPRIETOR FROM THE BUSINESS TRANSACTION. ‡ CAPITAL CONTRIBUTED BY THE OWNER IS LIABILITY FOR BUSINESS BECAUSE BUSINESS IS DIFFERENT FROM OWNER. ‡ ANY MONEY WITHDRAWN BY PROP. IS DRAWINGS. ‡ PROFIT IS LIABILITY AND LOSS IS AN ASSET. ‡ ALL ENTRIES ARE KEPT DISTINCT FROM THE POINT OF VIEW OF BUSINESS AND NOT FROM OWNER. ‡ AN ENTERPRISE IS ECONOMIC UNIT SEPARATE FROM OWNER.

REALISATION CONCEPT.
‡ THIS CONCEPT TELLS US WHEN REVENUE IS TREATED AS REALISED OR EARNED. IT IS TREATED AS REALIZED ON THE DATE WHEN PROPERTY IN GOODS PASSES TO BUYER AND HE BECOMES LEGALLY LIABLE TO PAY. ‡ NO FUTURE INCOME IS CONSIDERED. ‡ GOODS SOLD ON APPROVAL WILL BE INCLUDED IN SALES BUT ON COST ONLY.

GOING CONCERN CONCEPT
‡ BUSINESS IS A GOING CONCERN AND TRANSACTIONS ARE RECORDED ACCORDINGLY. ‡ IF AN EXPENSE IS INCURRED AND UTILITY IS CONSUMED DURING THE YEAR, THEN IT IS TREATED AS AN EXPENSE OTHERWISE IT IS RECORDED AS AN ASSET. ‡ RESERVES AND PROVISIONS ARE CREATED FOR ANY FUTURE LIABILITY. ‡ DEFERRED REVENUE EXPENDITURE IS WRITTEN OFF OVER A NUMBER OF YEARS. ‡ WHY LOSS IS SHOWN UNDER ASSETS SIDE ?

‡ ACCOUNTING EQUATION: ASSETS= CAP+ LIABILITY. .DUAL ASPECT CONCEPT ‡ EVERY TRANSACTION HAS DOUBLE EFFECT.

‡ BUT ONE IS INTERESTED IN KNOWING PERIODICALY OPERATING RESULTS OF BUSINESS SAY YEARLY OR HALF YEARLY OR QUARTERLY. ‡ HENCE ALL THE EXPENSES OR INCOME DURING THIS ACCOUNTING PERIOD HAS TO BE TAKEN INTO CONSIDERATION IRRESPECTIVE OF WHETHER THEY ARE REALISED IN CASH OR PAID IN CASH.ACCOUNTING PERIOD CONCEPT. HENCE ACCOUNTS OF EACH PERIOD IS RECORDED. . ‡ BUSINESS WILL RUN THROUGH LONG PERIOD. ‡ RESULTS OF OPERATIONS CAN BE KNOWN PRECISELY ONLY AFTER BUSINESS CEASES TO OPERATE AND ENTIRE ASSETS ARE SOLD AND ENTIRE LIABILITIES PAID.

ACCOUNTING FOR FULL DISCLOSURE ‡ DISCLOSURE OF MATERIAL FACTS. . ‡ CHANGE IN METHOD OF DEPRECIATION/VALUATION OF GOODS ETC.( MATERIAL AND IMMATERIAL FACT IS A MATTER OF JUDGEMENT) ‡ CONTINGENT LIABILITY ‡ MARKET VALUE OF INVESEMENTS.

‡ CREATION OF PROVISION FOR DOUBTFUL DEBTS. . ‡ VALUE OF STOCK ‡ CONVENTION OF CONSISTENCY: METHOD OF DEPRECIATION.CONVENTION OR PRINCIPLES OF CONSERVATISM ‡ ALL POSSIBLE LOSSES TO BE TAKEN INTO CONSIDERATION AND ANTICIPATED PROFITS TO BE IGNORED.

.DOUBLE ENTRY SYSTEM ‡ SCIENTIFIC SYSTEM: ‡ EVERY TRANSACTION HAS TWO ASPECTS. ‡ CRUX OF ACCOUNTANCY IS TO FIND OUT WHICH TWO ACCOUNTS ARE EFFECTED AND WHICH IS TO BE DEBITED AND WHICH IS TO BE CREDITED.

‡ BUT TO FIND OUT A TRANSACTION EFFECTING A PERSON. ‡ HENCE TRANSACTIONS ARE POSTED FROM JOURNAL TO PARTICULAR PAGES OF LEDGER. EXPENSES ACCOUNT OR ASSET ONE HAS TO TURNOVER ALL PAGES OF JOURNAL.F .JOURNAL ‡ JOURNAL RECORDS EACH AND EVERY RECORD BY WAY OF JOURNAL ENTRY. ‡ HENCE JOURNAL CONTAINA COLUMN L.

F DEBIT RS. CREDIT RS.JOURNAL FORMAT DATE PARTICULARS L. .

.E CASH RECEIPTS AND CASH PAYMENTS. ‡ CASH BOOK IS BOOK OF ORIGINAL ENTRY. ALL RECEIPTS ARE RECORDED ON RIGHT SIDE AND ALL PAYMENTS ON LEFT SIDE.CASH BOOK ‡ CASH BOOK KEEPS RECORDS OF ALL CASH TRANSACTIONS I.

CR DISCO UNT .CASH BOOK FORMAT DR. LF CASH Rs. DATE PARTI CULA RS VR. BANK Rs.NO . BANK Rs. DISCO UNT DATE PARTI CULA RS VR.F CASH Rs. NO L.

JOURNAL IS BOOK OF ORIGINAL OR FIRST ENTRY. ‡ IT IS CUSTOMARY TO USE TO AND BY WHILE POSTING LEDGER. ‡ SUMMASRISING: LAST STAGE IS TO PREPARE THE TRIAL BALANCE AND FINAL ACCOUNTS WITH A VIEW TO ASCERTAIN THE PROFIT OR LOSS DURING PARTICULAR PERIOD. ‡ CLASSIFYING: ALL ENTRIES IN JOURNAL OR SUBSIDIARY BOOKS ARE POSTED TO LEDGER ACCOUNT(POSTING) TO FIND OUT AT A GLANCE THE TOTAL EFFECT OF ALL SUCH TRANSACTIONS.RECORD KEEPING BASIS ‡ RECORDING: JOURNALISING AS AND WHEN TRANSACTION TAKES PLACE. LEDGER IS BOOK OF SECONDARY ENTRY.. ‡ BALANCING AN ACCOUNT MEANS EQUALIZING TWO SIDES. . ‡ IF DEBIT SIDE OF ACCOUNT EXCEED CREDIT SIDE. DIFFERENCE IS PUT ON CREDIT SIDE AND IT IS SAID TO HAVE DEBIT BALANCE AND VICE VERSA.

F AMOUN T RS. .LEDGER DR CR DATE PARTICU LARS J.F AMOUN T(RS) DATE PARTICU LARS J.

AN EXPENSE ‡ D. NONE OF THESE. LIBILITY ‡ B. . ‡ CREDIT BALANCE IN CAPITAL ACCOUNT IS LIABILITY OR AN ASSET: ‡ A. A REVENUE ‡ C.Questions.

DRAWINGS ACCOUNT ‡ B.ASSET ACCOUNT ‡ D.QUESTION ‡ AMOUNT BROUGHT IN BY PROPRIETOR IN BUSINESS SHOULD BE CREDITED TO ‡ A. ‡ C. NONE OF THE ABOVE ANS: B .CAPITAL ACCOUNT OF PROPRIETOR.

CASH D.QUESTIONS ‡ ‡ ‡ ‡ ‡ WAGES PAID TO RAJU TO BE DEIBED TO A. RAJU B WAGES C. BANK ANS: B .

‡ Q. PURCHASE ‡ C. CREDIT SALES MADE TO ROHIT TO BE DEIBTED TO ‡ A. SALES ‡ B.QUESTIONS. CASH ‡ D. ROHIT ANS: D .

DEBIT FURNITURE AND CREDIT BANK ACCOUNT. ‡ B.DEBIT BANK AND CREDIT FURNITURE SHOP ACCOUNT Ans:A . ‡ D.QUESTIONS ‡ FURNITURE PURCHASED BY ISSUING CHEQUE ‡ WHAT ENTRIES TO BE PASSED ‡ A.DEBIT FURNITURE AND CREDIT CASH. ‡ C.DEBIT BANK ACCOUNT AND CREDIT FURNITURE.

CUSTOMER ACCOUNT ‡ D. GOODS ACCOUNT Ans:C .QUESTIONS ‡ ENTRY FOR RETURN OF GOODS. IN RESPECT OF SALES EFFECTED ON CREDIT. SHOULD BE CREDITED TO : ‡ A. SALES RETURN ‡ B PURCHASE RETURN ‡ C.

MATCH FOLLOWING A A B C D E F RAMESH DENA BANK RENT COMPUTER LAND DISCOUNT 1 2 3 4 5 6 B REAL PERSONAL NOMINAL REAL NOMINAL PERSONAL .

QUESTION ‡ ‡ ‡ ‡ ‡ WHAT IS JOURNAL ENTRY A. DOUBLE ENTRY C DUPLICATE ENTRY NONE Ans: A . ORIGINAL ENTRY B.

QUESTION ‡ TRANSACTION IN BANK COLUMN ON CREDIT SIDE OF THREE COLUMNAR CASH BOOK INDICATE ‡ A.BOTH A AND B ‡ D. NONE Ans: A . AMOUNT PAID FROM THE BANK A/C. ‡ B.AMOUNT DEPOSITED IN BANK ‡ C.

Rs.20.10. Dr.QUESTION ‡ PASS JOURNAL ENTRY: ‡ RENT PAID FOR OFFICE PREMISES RS. Rs.10000 PAID BY CHEQUE AND REST BY CASH. Rs.000 To Bank Cr.000 .30.30000 OUT OF WHICH PART AMOUNT OF RS. Ans: By RENT A/c.000 To Cash Cr.

Rs.000 To Bank Cr. Dr. Ans:By Investment A/c.10.10000 . Rs.QUESTION ‡ PASS JOURNAL ENTRY: ‡ PURCHASED 100 SHARES OF CENTRAL BANK OF INDIA FOR RS.100 PER SHARE.

Rs.QUESTIONS ‡ PASS JOURNAL ENTRIES: ‡ SOLD GOODS TO TENDULKAR RS. Rs. B) When Sold on Credit.15000 To Sales A/c.15000 B) By Tendulkar A/c. Cr. Rs.15000 To Sales A/c.Dr. Rs.15000 .15000 A) When Sold on Cash. A) By Cash A/c Dr. Cr.

12000 To Cash A/c Cr.: A) On Cash Purchase B) On Credit Purchase A) By Purchase A/c Dr. Cr.12000 B) By Purchase A/c. Rs.QUESTIONS ‡ PASS JOURNAL ENTRY: ‡ DRAVID SOLD GOODS FOR RS. Rs.12000 . Rs. Dr. Rs.12000 TO us.12000 To Dravid A/c.

Dr.QUESTIONS ‡ PASS JOURNAL ENTRY: ‡ RECEIVED DUES( Which was sold on Credit at Rs. Rs.15000) AMOUNT FROM TENDULAKAR AND ALLOWED HIM DISCOUNT OF 10% Ans: By Bank A/c. 1500 To Tendulkar Rs.500 By Discount A/c Dr. Rs. 15000 .13.

Dr. Cr.1200 AND 1500 RESPECTIVELY. Rs.2700 .QUESTIONS ‡ PASS JOURNAL ENTRY: ‡ PAID SALARY AND RENT RS. Ans: ‡ By Salary A/c. Dr. 1500 To Cash A/c. 1200 ‡ By RENT A/c.

Rs.QUESTIONS ‡ PASS JOURNAL ENTRY: ‡ KIRAN BECAME INSOLVENT. HE HAD TO PAY 10000 TO US.10000 . ‡ By Cash A/c Dr.7500 To Kiran A/c.2500 ‡ By Bad Debts Rs. Cr. BUT WE RECEIVED ONLY 25 PAISE A RUPEE. Rs.

12000 By Drawings A/c.12000 To Bank A/c Cr. Rs.QUESTION ‡ PASS JOURNAL ENTRY: ‡ PAID MONTHLY CAR INSTALMENT OF PROPRIETOR S PERSONAL CAR RS.12000 . Dr. Rs.

Dr.QUESTION ‡ PASS JOURNAL ENTRY: ‡ BOUGHT FURNITURE FROM GODREJ AND PAID BY CHEQUE RS.50000 ‡ By Furniture A/c. Rs. 50000 To Bank Cr. Rs.50000 .

Dr Rs.1000 ‡ BY Bank A/c. Cr.QUESTION ‡ PASS JOURNAL ENTRY: ‡ DEPOSITED CASH IN BANK RS. 1000 .1000 To Cash A/c. Rs.

QUESTION
JOURNALIZE FOLLOWING: COMMENCED BUSINESS WITH Rs.15000 OF WHICH RS.5000 WAS BORROWED FROM HIS WIFE AT 12% INTEREST P.A. By Cash Rs. 15000 To Capital A/c. Cr. Rs.10000 To Loan A/c Cr. Rs. 5000

QUESTIONS
‡ PASS JOURNAL ENTRY: ‡ PURCHASED GENERATOR FROM RAMA & CO. RS.50000 on credit. ‡ BY Generator A/c. Dr. Rs. 50000 (furniture) ‡ To Rama & Co. Cr. Rs.50000

QUESTIONS
‡ PASS JOURNAL ENTRY: ‡ PAID CARRIAGE AND CARTERAGE of Rs.1,000 ON GOODS SOLD TO NAYAN ON HIS BEHALF. By Nayan A/c. Dr. Rs. 1000 ‡ To Bank Cr. Rs.1000

Mr.3900 . Cr. Rs. OUT OF WHICH HALF WAS INVOICED TO MR.6000 ‡ B. Dr. Dr.6000 To Satish A/c. Cr. A.6000 B. 3900 To Sales A/c.QUESTION ‡ PASS JOURNAL ENTRY: ‡ A. Rs. RAM AT 30% ABOVE COST ON CREDIT.BOUGHT GOODS FROM SATISH AT ONE MONTHS CREDIT RS. Purchase A/c. RAM A/c. Rs.

Adjusting and closing entries. . All expenses and income should properly be adjusted through accounting entries.liabilities for unpaid amount should be created before the accounts can be said to show the actual profit and loss. ‡ While preparing trading and profit and loss account all expenses and income for the full period are to be taken into consideration. If expenses have been incurred but not paid during that period .

Final accounts are the final process of accounting. ‡ Now all adjusting entries passed at the time of preparing the final accounts have dual effect i. Once the trial balance is prepared the books are half way closed. ‡ Trial balance is prepared from the books of accounts of organiztion.Adjusting and closing entries. . ‡ Hence all adjusting entries passed after Trial balance drawn will have two effects.e both debit and credit.

Adjusting and closing entries. ‡ One in either trading and profit and loss account and other in Balance sheet or one in trading account and other in Profit and loss account. .

Adjusting and closing entries. ‡ Some examples: ‡ Closing stock adjustment: ‡ Will be shown in asset side of balance sheet and will be shown in credit side of trading account. ‡ Goods lost by fire: ‡ Will be shown in credit side of trading account. ‡ Will be shown on debit side of profit and loss account. .

‡ Will be shown in liabilities side of balance sheet.Adjusting and closing entries. . ‡ Outstanding expenses: ‡ Will be shown in debit side of profit and loss account. ‡ Prepaid expenses: ‡ Prepaid expenses shown in Asset side ( Dr Pre paid expenses) and Credit P&L Expenditure as they do not pertain to current year.

‡ To asset account. ‡ Depreciation: It is fall in value of asset due to use or passage of time. .Adjusting and closing entries. ‡ Depreciation Dr.

‡ ASB FORMULATE ACCOUNTING STANDARDS SO THAT COUNCIL OF ICAI MAY MANDATE SUCH STANDARDS. ‡ INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA RECOGNISING THE NEED TO HARMONISE THE DIVERSE ACCOUNTING POLICIES AND PRACTICES CONSTITUTED AN ACCOUNTING STANDARDS BOARD IN THE YEAR 1977. .ACCOUNTING STANDARDS.

2006. .ACCOUNTING STANDARDS ‡ IT MAY BE NOTED THAT THE ACCOUNTING STANDARDS MENS THE ACCOUNTING STANDARDS AS PROMULGATED BY THE ACCOUNTING (ACCOUNTING STANDRADS) RULES . ‡ SO IT A PART OF COMPANY LAW NOW.

DO NOT COMLY WITH ACCOUNTING STANDRDS SUCH COS. . SHOULD DISCLOSE: ‡ THE DEVIATION FROM THE ACCOUNTING STANDARDS: ‡ THE REASON FOR SUCH DEVIATION : AND ‡ FINANCIAL EFFECT IF ANY DUE TO SUCH DEVIATION.ACCOUNTING STANDRADS ‡ WHERE P&L AND B/S OF THE CO.

INFORM TO MANAGEMENT OF COMPANY ‡ C. ‡ Ans: A . MANDATORY ACCOUNTING STANDARD IF NOT FOLLOWED REQUIRES AUDITORS WHO ARE MEMBERS OF ICAI TO : ‡ A. ‡ B.OBJECTIVES QUESTIONS ON ACCOUNTING STANDARDS ‡ Q. QUALIFY THEIR AUDIT REPORTS. INFORM TO ICAI ‡ D. NEED NOT REPORT ANYTHING.

THAT DO NOT CONFORM TO MANDATORY ACCOUNTING STANDARDS. ‡ B. CONFORM TO MANDATORY ACCOUNTING STANDARDS. ‡ D .QUESTIONS ‡ SEBI AND COMPANY S ACT REQUIRE AUDITORS TO QUALIFY AUDIT REPORTS THAT ‡ A. ‡ C. NO RESPOSIBILITY ON AUDITORS. ‡ Ans: A . DO NOT CONFORM TO ACCOUNTING STANDARDS.

SECTION 217(2AA) ‡ B. SECTION 44. SECTION 215 ‡ C.QUESTIONS. SECTION 125 ‡ D. ‡ Q WHICH SECTION OF COMPANIES ACT CAST RESPONSIBILITY ON BOARD OF DIRECTORS TO COMPLY WITH MANDATORY ACCOUNTING STANDARDS: ‡ A. ‡ Ans: 217(2AA) .

‡ IN THE CONTEXT OF ACCOUNTING IN BANKS DAY BOOK OR CASH BOOK (BOTH ARE USED IN SAME CONTEXT : SOME BANKS CALL IT CASH BOOK SOME BANKS CALL IT DAY BOOK) HAS SUMMARY OF TOTAL TRANSACTIONS IN RESPECT OF EACH ACCOUNTING HEAD OF BALANCESHEET AND PROFIT AND LOSS ACCOUNT. ‡ THE AMOUNT OF EACH OF TRANSACTIONS DONE IN BRANCH OF BANK IN THE DAY ARE ..DAY BOOK AND GLB POSTING IN A BANK.

. .DAY BOOK AND GLB POSTING IN A BANK. WHICH ARE BROUGHT FROM SUPPLEMENTARY BOOKS WHICH ARE AGAIN SUB SUMMARY OF TRANSACTIONS IN AN ACCOUNT SAY SAVINGS OR CD. FOR INSTANCE ALL THE TRANSACTIONS IN SAVINGS ACCOUNTS OR ALL TRANSACTIONS IN CURRENT DEPOSITS ACCOUNTS ARE RECORDED IN SUMMARIZED FORM WITH REGARD TO BOTH DEBIT AND CREDIT SIDE. ‡ SUMMARIZED AND RECORDED HERE.

SIMILARLY FOR SAVINGS ACCOUNT OR FURTNIUTE ACCOUNT OR STATIONERY ACCOUNT AND SO ON. GENERAL LEDGER IS NOTHING BUT BOOK CONTAINING INDIVIDUAL LEDGERS FOR EACH INDIVIDUAL TYPE OF ASSET OR LIABILITIES. ..DAY BOOK AND GLB POSTING IN A BANK. ‡ FROM DAY BOOK THE FINAL DEBITS AND CREDITS ARE POSTED IN THE RESPECTVE LEDGERS WHICH IS KNOWN AS GENERAL LEDGER. FOR INSTANCE ENTIRE CURRERNT DEPOSIT TRANSACTIONS ARE POSTED IN CURRENT ACCOUNTING HEAD IN GENERAL LEDGER.

WHILE PREPARING BALANCESHEET AND PROFIT AND LOSS ACCOUNT OF BRANCH OF BANK THE GLB BALANCES ARE TAKEN.DAY BOOK AND GLB POSTING IN A BANK. IT REFLECT THE BALANCES OF ALL ACCOUNTS .. ‡ BALANCE SHEET OF ALL BRANCHES TOGETHER WHEN CONSOLIDATED BECOMES THE BALANCE SHEET OF BANK. . ‡ THE GENERAL LEDGER BALANCE IS VIRTUALLY TRIAL BALANCE OF THE BANK ON A PARTICULAR DAY.

standards and procedures that companies use to compile their financial statements. GAAP are a combination of authoritative standards (set by policy boards) and simply the commonly accepted ways of recording and reporting accounting information. .GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. ‡ The common set of accounting principles.

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ‡ GAAP are imposed on companies so that investors have a maximum level of consistency in the financial statements they use when analyzing companies for investment purposes. GAAP cover such things as revenue recognition. . Companies are expected to follow GAAP rules when reporting their financial data via financial statements. balance sheet item classification.

. What is important that its underlying objectives are followed in true perspective.GENERALLY ACCEPTED ACCOUNTING PRINCIPLES That said. keep in mind that GAAP is only a set of standards.

‡ ANY CHANGE IN ACCOUNTING POLICIES WHICH HAS MATERIAL EFFECT IN CURRENT PERIOD OR IN LATER PERIOD SHOULD BE DISCLOSED. .ACCOUNTING STANDARDS ‡ AS -1 ‡ ALL SIGNIFICANT POLICIES ADOPTED IN PREPARATION OF FINANCIAL STATEMENTS SHOULD BE DISCLOSED.

‡ AVERAGE COST OR FIFO METHODS ARE PERMITTED IN CASE WHERE GOODS ARE INTERCHANGEABLE. .AS 2 ‡ DEALS WITH DETERMINATION OF VALUE AT WHICH INVENTORIES ARE CARRIED/VALUED ‡ INVENTORIES TO BE VALUED AT LOWER OF COST OR NET REALISABLE VALUE.

AS-3 ‡ PREPARATION OF CASH FLOW STATEMENT AND ITS PRESENTATION ALONGWITH FINANCIAL STATEMENTS ‡ CASH FLOW TO BE CLASSIFIED BY OPERATING/INVESTING/FINANCING ACTIVITIES. .

. ‡ EVENTS AFTER BALANCE SHEET DATE AND BEFORE APPROVAL OF BOARD OF DIRECTORS SHOULD BE APPROPRIATELY ADJUSTED IN VALUE OF ASSETS AND LIABILITIES. ‡ EG.AS 4 ‡ TREATMENT OF CONTINGENCIES AND EVENTS IN FINANCIAL STATEMENTS. ‡ IF INSUFFECIENT EVIDENCE. DISCLOSURE TO BE MADE ‡ CONTINGENT GAINS ARE NOT RECOGNIZED. ‡ CONTINGENCIES MUST BE PROVIDED IF LOSSES CAN BE ESTIMATED. CASES IN HIGH COURT OR PENALTY PROCEEDINGS UNDER LAW.

‡ DEBITS OR CREDITS WHICH ARISE IN CURRENT YEAR OR AS A RESULT OF OMMISSION/MISTAKES IN PRIOR YEAR. ‡ DISPOSAL OF FIXED ASSETS. ‡ ALSO EXTRAORDINARY ITEMS LIKE WRITING OFF INVENTORIES. .AS-5 ‡ DEALS WITH TREATEMENT OF PRIOR PERIOD AND EXTRAORDINARY EVENTS.

.AS -6 ‡ DEPRECIATION IS A MEASURE OF WEARING OUT ASSETS. ‡ DEPRECIATION METHOD SHOULD CAREFULLY BE SELECTED AND CONSISTENCY APPLIED FOR YEAR TO YEAR. ‡ TREATMENT FOR REVALUATION OF ASSETS ‡ DEPRECIATION METHOD TO BE DISCLOSED.

‡ ACCOUNTING ISSUES OF REVENUE.AS-7 ‡ ACCOUNTING OF CONSTRUCTION CONTRACTS . WORK IN PROGRESS. TREATMENT OF ADVANCE RECEIVED. IN FINANCIAL STATEMENTS. . ‡ AMOUNT AND METHOD USED TO DETERMINE REVENUE RECOGNIZED. ‡ TYPES OF CONTRACTS: FIXED PRICE CONTRACT + ESCALATION COST OR COST PLUS A FIXED FEE.CONTRACT FOR CONSTRUCTION EXCEED ONE YEAR OR SO.

4.03 R&D EXPENSES ARE NOW COVERED IN AS-10 .AS-8 ‡ STAND DELETED FROM 1.

E INCOME AND TIME WHEN INCOME IS SAID TO HAVE ARISEN ‡ WHEN REVENUE RECOGNITION POSTPONED . DISCLOSURE OF CIRCUMASTANCES TO BE MADE. .AS-9 ‡ BASIS FOR RECOGNITION OF REVENUE I.

‡ COMPONENTS OF COST.AS-10 ‡ ACOUNTING OF FIXED ASSETS AND DISCLOSURE THERE OF. ‡ FINANCING COST TO THE EXTENT SUCH COST RELATE TO PERIOD AFTER SUCH ASSETS ARE READY TO USENOT TO BE CAPITALIZED. ‡ TEST RUN EXPENSES CAPITALIZED. . ‡ PURCHASE PRICE: + IMPORT DUTY+TAXES+DIRECT COST TO BRING ASSET TO ITS WORKING CONDITIONTRADE DISCOUNTS.

‡ EXCHANGE DIFFERENCE INCLUDED I. ‡ FINANCIAL STATEMENT OF FOREIGN OPERATIONS ‡ FORWARD EXCHANGE CONTRACTS.E PROFIT OR LOSS TO BE DISCLOSED. .AS-11 ‡ TRANSLATION OF ACOUNTING TRANSACTION IN FOREIGN CURRENCIES IN REPORTING CURRENCY.

‡ SUBSIDIES/CASH INCENTIVE/DUTY DRAWBACK ‡ DOES NOT INCLUDE ANY TAX EXEMPTION OR TAX HOLIDAY. .AS-12 ‡ GOVERNMENT GRANTS RECEIVED BY AN ENTITY.

.AS-13 ‡ ACCOUNTING FOR INVESEMENTS MADE BY AN ENTITY. ‡ CURRENT AND LONG TERM.

.AS-14 ‡ AMALGAMATION OF TREATMENT OF RESULTANT GOODWILL OR RESERVES ‡ TAKE OVER OF EXISTING BUSINESS AND FORMATION OF NEW BUSINESS.

AS-15 ‡ ACCOUNTING OF RETIREMENT BENEFIT TO EMPLOYEES IN FINANCIAL STATEMENTS ‡ PF/PENSION/GRATUIITY LEAVE ENCASHMENT POST RETIREMENT WELFARE SCHEME ‡ METHOD BY WHICH RETIREMENT BENEFITS VALUED. .

.AS-16 ‡ CAPITALIZATION OF BORROWING COST ATTTRIBUTABLE TO ACQUISITION/CONSTRUCTION OR PRODUCTION WHERE QUALIFYING ASSET TAKES SUBSTANTIAL PERIOD TO GET IT READY FOR INTENDED USE OR SALE.

AS-17 ‡ SEGMENT REPORTING ‡ REPORTING OF INFORMATION ABOUT DIFFERENT TYPES OF PRODUCT AND SERVICES OF AN ENTERPRISE AND ITS OPERATIONS IN DIFFERENT GEOGRAPHICAL AREAS. ‡ FOR ASSESSING RISK AND RETURN OF DIVERSIFIED OR MULTILOCATIONAL ENTERPRISE. .

‡ NAME OF RELATED PARTY AND RELATIONSHIP WHERE CONTROL EXIST TO BE DISCLOSED. .AS-18 ‡ REPORTING OF RELATED PARTY RELATIONSHIP AND TRANSACTIONS BETWEEN A REPORTING ENTERPRISE AND RELATED PARTY.

‡ ACCOUNTING POLICIES FOR LESSOR AND LESSEE AND DISCLOSURE IN RELATION TO FINANCIAL LEASE AND OPERATING LEASE. .AS-19 ‡ LEASE: A LEASE AN AGREEMENT WHEREBY THE LESSOR CONVEYS TO THE LESEE IN RETURN FOR A PAYMENT OR SERIES OF PAYMENTS THE RIGHT TO USE AN ASSET FOR A AGREED PERIOD.

.AS-20 ‡ PRINCIPLES & DETERMINATION OF EARNING PER SHARE ‡ COMPARISON BETWEEN ENTERPRISES. ‡ NET PROFI(LOSS)/ WEIGHTED AVERAGE NUMBER OF SHARES.

.AS 21 ‡ CONSOLIDATED FINANCIAL STATEMENT OF PARENT AND SUBSIDARIES.

AS-22 ‡ METHOD OF DETERMINATION OF AMOUNT OF EXPENSES OR SAVING RELATING TO TAXES ON INCOME IN RESPECT OF AN ACCOUNTING PERIOD. ‡ DEFERRED TAX ASSETS AND LIABILITIES SHOULD BE DISTINGUISHED FROM CURRENT TAX ASSETS AND LIABILITIES .

AS-23 ‡ ACCOUNTING FOR INVESTMENT IN ASSOCIATES. .

‡ DISCLOSURE OF PRE TAX PROFIT OR LOSS FROM ACTIVITIES ATTRIBUTABLE TO DISCONTINUING OPERATIONS.AS-24 ‡ DISCONTINUATION OF OPERATION OF PARTICULAR SEGMENT. .

. ‡ CONDENSED B/S ‡ CONDENSED P&L ‡ CONDENSED CASH FLOW STATEMENT ‡ EXPLANATORY NOTES.AS-25 ‡ INTERIM REPORTING WHICH IS NOT FOR COMPLETE REPORTING PERIOD.

.AS-26 ‡ OTHER THAN INTANGIBLE ASSETS COVERED IN AS22( DEFERRED TAX ASSETS) ‡ RELATE TO START UP COST ( EG ADVT ETC) ‡ R&D ‡ PATENTS AND COPY RIGHT ‡ GOODWILL ‡ DISCLOSURE: USEFUL LIFE OR AMORATIZATION RATE ‡ AMORATIZATION METHOD.

. ‡ DISCLOSURE: ANY CONTINGENT LIABILITY INCURRED BY VENTURER AND ITS SHARE. ‡ ANY CAPITAL COMMITMENT AND ITS SHARE.AS-27 ‡ TWO OR MORE PARTIES UNDER TAKE ECONOMIC ACTIVITY WITH JOINT CONTROL ‡ ACCOUNTING FOR JOINT VENTURE IN A CONSOLIDATED FINANCIAL STATEMENT.

50 CRORES ‡ PRINCIPLE OF THIS A. ‡ NOT APPLIED TO INVENTORIES AS 2 ‡ CONSTRUCTION CONTRACT AS 7 ‡ FINANCIAL ASSETS AS 13 & DEF TAX AS 22 .AS-28 ‡ EQUITY OR DEBT LISTED ‡ TURNOVER EXCEED RS.S IS TO ENSURE CARRYING COST OF ASSET IS NOT MORE THAN RECOVERABLE VALUE OF ASSET.

.AS-29 ‡ AS-29 DEALS ‡ ACCOUNTING FOR PROVISIONS. THOSE ARISING IN INSURANCE FROM CONTRACT WITH POLICY HOLDERS AND THOSE COVERED UNDER ANOTHER ACCOUNTING STANDARD.CONTINGENT LIABILITIES AND CONTINGENT ASSETS WITH EXECEPTIONS AS TO EXECUTORY CONTRACTS.

‡ THANK YOU. .

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