SBI Current Account

1.5.2018 Capital 1,000,000

Capital Account
1.5.2018 SBI CA 1,000,000
What is Asset ?
What is Cost ?
What is Expenditure ?
What is Expense ?
Raise Fund
1. Brought into business from own sources Rs.10,00,000/-
Dr. SBI CA 1,000,000
Cr. Cpaital 1,000,000
2. Borrowed Rs.15 lakhs from SBI on 7th May 2018
Dr. SBI CA 1,500,000
Cr. SBI Loan AC 1,500,000

3. Paid a security of Rs. 2lakhs and a rental of Rs.25,000pm

for the business premises
Security Deposit -
Dr. Business Premises 200,000
Cr. SBI CA 200,000
4. Paid Rent of Rs.25000/- on 10th May
Dr. Rent 25,000
Cr. SBI CA 25,000
5. Purchased Air C for Rs.50,000/-

6. Purchased furnitures of Rs.60,000/-

7.Purchased a computer & Printer for Rs.60,000/-

8. Purchased 50 computers for sale @ Rs.30,000each

9. Sold 10 computers @50,000each and received payment thru bank

10. On 31st May 2018 paid Rs.5,000/- for electricity, Rs.20,000/- towards salary, Rs.2,500for transportation.

11. On 1.6.2018 sold 2 computers @ 47000each for cash

12. On 5.6.2018 purchased 10 computers @ 35000each from C ltd. on credit
13. Sold 5 computers @ 50000each to Alfa Ltd. 50 % on credit
14. Purchased printing ribbons and paper roll for office use by cash amounting to Rs.1200/-

15. Sold 3 computers @ 45000each on credit to Techno Ltd.

16. On 22nd June, paid rent by cash

17. On 30th June 2018 paid Rs.4,000/- for electricity, Rs.20,000/- towards salary, Rs.2,000for transportation,
Rs.1,700 for local conveyance. Rs. 350 for office maintenance. All payments made by cash
ransportation.

transportation,
Profit & Loss Statement
Income

PL I Sales 979,000

Total 979,000
Expenses
PL Exp COGS 600,000
PL Exp Electricity 9,000
PL Exp Transport 4,500
PL Exp Local Coveyance 1,700
PL Exp Rent 50,000
PL Exp Salary 40,000
PL Exp Printing & Stat 1,200
PL Exp Maintenance 350
Profit 272,250
Total 979,000
Balance Sheet

Source
BS S Capital 1,000,000
BS S SBI Loan 1,500,000
BS S Cltd 350,000
2,850,000
Profit 272,250

BS A Purchases 1,250,000
BS A SBI CA 1,202,500
BS A Cash in Hand 39,750
BS A Furniture 60,000
BS A Computer 60,000
BS A Air Con 50,000
BS A Alfa Ltd. 125,000
BS A Techno Ltd. 135,000
BS A Security Deposit 200,000
3,122,250
 TRIAL BALANCE
DEBIT CREDIT
BS S Capital 1,000,000
BS S SBI Loan 1,500,000
BS A Purchases 1,250,000
PL I Sales 979,000
PL Exp COGS 600,000
BS A SBI CA 1,202,500 1077500
BS A Cash in Hand 39,750 164,750 1,242,250
PL Exp Electricity 9,000 1242250
PL Exp Transport 4,500
PL Exp Local Coveyance 1,700
PL Exp Rent 50,000
PL Exp Salary 40,000
PL Exp Printing & Stat 1,200
BS A Furniture 60,000
BS A Computer 60,000
BS A Air Con 50,000
BS A Alfa Ltd. 125,000
BS S Cltd 350,000
BS A Techno Ltd. 135,000
BS A Security Deposit 200,000
PL Exp Maintenance 350
3,829,000 3,829,000
 Purchase Account
Date Particulars Quantity Amount Date Particulars Quantity Amount
4.4.2018 Bank 10000*10 100000 5.4.2018 cogs 7000 70000
9.4.2018 Bank 10000*10 100000 11.4.2018 10000 100000
19.4.2018 Bank 5000*13 65000 20.4.2018 5000 56000
25.4.2018 Bank 7000*14 98000 26.4.2018 2000 26000
30.4.2018 Bank 9000*15 135000 30.4.2018 5000 69000
41000 498000 29000 321000
Closing Stock = 41000-29000 = 12000 units

Sales Acoount
Date Particulars Quantity Amount Date Particulars Quantity Amount
5.4.2018 Bank 7000*13 91000
11.4.2018 Bank 10000*14 140000
20.4.2018 Bank 5000*17 85000
26.4.2018 Bank 2000*15 30000
30.4.2018 Bank 5000*16 80000
29000 426000

If there is difference between physical stock and book stock at the end of the year following steps need to be taken:
1 Recheck the sales, Purchase & Inventory register for any calculation error
2 Check if any qty given as sample or gif
3 Check if there is any sales or purchase return
4 Check with quality control department if any stock rejected and lying at their end
5 If all above are found in order check the technicality of the product for shrinkage or evaporation.
6 Check for pilferages, thef and unreported damages

ABC Analysis
Qty Value
A 10% 70%
B 20% 20%
C 70% 10%
 FIFO Method
Balance Stock Profit
3000 105000
3000 Inventory
3000 177000
1000 Weighted Mean Method
Price 12.14634
Inventory 145756.1
tock = 41000-29000 = 12000 units COGS 352243.9
Profit 73756.1

year following steps need to be taken: Chapter - Inventory

Starting Pg. 181 - 216
Inventory Valuation

age or evaporation.
Inventory Valuation
1 Specific Identification - Designer Jewellary and Fashion product COGS = Purchase - Closing Stock
2 FIFO Priciple of Conservatism
3 LIFO Account for all anticipated losses but do not a
4 Weighted Average
5 HIFO Anticipation:
6 Retail Inventory Method Apprehension for Losses

Inventory Valuation
The closing inventory will be valued at cost or market price which ever is lower.
The market price can also be substituted with net realization value.
If value of Closing Stock dereases profit will also decrease
hase - Closing Stock

anticipated losses but do not account for any expected profits

Expectation
Profit
Accounting for Revenue
US GAAP FASB
Indian GAAP SEBI
IAS SEC
IFRS Indian Accounting Standards

Expense
Loss in value of Asset
Expired/Utilized portion of Asset

Income
Return on expired asset
Revenue generated in exchange of expired portion of asset

Matching Concept
Expenses will be accounted only to the extent, the corresponding income has been accounted for.

Going concern concept:

A business entity is expected to continue in the business over a period of time in a long run

1 Laptop Price: 60,000 Life: 5 Years

Expense: 12,000/- per year Assuming it will be in business for 5 years

2 Credit Sales
Credit Sales: Rs 1,00,000 /-
Income: Rs 1,00,000 /-
Dr. Trade Receivables 100000 Debt Actual Receipt 97500/- ( Afer 1 Year)
Cr. Sales 100000 Income Provisions for Doubtful Debts
(Based on principle of conservatism)
Provisions for Bad Debts

Whenever, there will be a reduction in any liability without corresponding reduction in assets,
the same shall be treated as Income.

Source
Capital 100
Loan 200
C Ltd 50 This credit purchase is settled for 45.5 will be treated as Income.
350
Bank 200
Other Assets 150
350

OTS
Principal = 20 Crores + Interest Accrued but not paid 20 crores = 40 crores
Settled for 30 Crores. Therefore income will be equal to 10 Crores
Interest on borrowings will be allowed as deduction from the income provided the same has been paid before filing of T
1. Certainity is the criteria for recognizing the income for a particular period
2. Bank deposit made on 1.10.2017 for 366 days. Interest accrued but not due as on 31.03.2018 is Rs 25 Lakhs.
The same shall be treated as Income for the period ended on 31.03.2018
3. Dividend declared on 30.6.2018 for the financial year 2017-18 amounting to Rs 20 Lakhs.
The same shall be treated as Income for the financial year 2018-19
 2500

me has been paid before filing of Tax return.

1.03.2018 is Rs 25 Lakhs.

Chapter - 4
Revenue Pg 112
Non-Current assets are abroadly divided into 3 parts:

1 Intangible Assets

2 Tangible Assets are divided into two:

a. Property, Plant & Equiment already put to use

b. Property, Plant & Equiment under WIP
Land is a non depriciable asset however if the same use for mining and extraction it will get depreciated (

Plant / Equipment what will be cost ?

1 Purchase Cost 4 Interest Paid
2 Cost of Experts 5 Till the asset is put to use
3 Forex Fluctuation Put to use - Successful trial run has taken place.
FG free from defect, Defects produced accounted in

Financial statements are produced on historical costs not on the basis of fair value subject to ce
Valuation of closing stocks or inventory.
Valuation of P.P.E - When the process of revaluation is initiated.

3 Financial Assets Inventory: corresponding notes on

Revenue Recognition of revenue : Measurement of
PPE
Non Current Trade Recievable
Current Trade Recievable
xtraction it will get depreciated (depleted).

ful trial run has taken place.

Defects produced accounted in Capital Expense

e basis of fair value subject to certain exception:

nding notes on
on of revenue : Measurement of Income

ent Trade Recievable

rade Recievable
Statement of Profit & Loss at 31.3.201 (can be written as on 31.3.2018 or for the year ended 31.3.2018 or for the period ended
as on 31.3.2018 as on 31.3.2017 as on 31.3.2016
Income
Sales 2,000,000 3,000,000 3,000,000
Interest on STD 500,000 300,000 300,000
Profit on Sale of land 2,000,000 - -
4,500,000 3,300,000 3,300,000
Expenses
COGS 1,200,000 1,500,000 1,500,000
Gross Profit 3,300,000 1,800,000 1,800,000
Admn Exp 300,000 300,000 300,000
Sales & Dist Exp 100,000 100,000 100,000
Finance Cost 15,000 60,000 60,000
Other Exp 15,000 17,000 17,000
Net Profit before Tax 2,870,000 1,323,000 1,323,000
Tax @ 25% 717,500 330,750 330,750
Profit afer Tax (PAT) 2,152,500 992,250 992,250
Dividend including DDT 500,000 100,000 100,000
Retailed Earnings 1,652,500 892,250 892,250
1,652,500,000
In Crores 165.25 89.225 89.225 343.70
EPS 16.53 31.24
Diluted EPS
If during 2018-19, IPO
Shares will be issued at a premium

Incase a company has the same EPS and Diluted EPS, It means that company has no convertible instrument as on the date of re
The EPS is one of the indicator for the rise or fall of market price of share.
3.2018 or for the period ended 31.3.2019)

instrument as on the date of reporting.

Share Capital Crores
Equity 10 Crore Shares of Rs. 10 each 100
8% Preference 10 Lakh pref. share of Rs. 100 each 10
Convertible
10% Debentures 10 Lakh debentures of Rs 100 each 10 200000
Total Capital Employed (CE) 120

Assets & Bank 120

Bonus Issue Acquisition Cost = Zero

Rights Issue First Right to the existing shareholders to buy additional shares
Buy Back of Shares Company buys back its own shares resulting in a lower equity base for distribution of dividends.

Tax Implications:
Shares Listed in Stock Exchange on which STT is Paid at time of Buying and Selling
15 % for short term & 10 % for long term gain
Long term = more than 12 months holding in case of shares or > 24 months in other assets other than depriciable assets
For other assets Long term gain tax is 20%

Bonus Issue (Capitalization of Reserve)

Converting the free reserves into equity

Concept of Deferred Tax

Wherever a tax is deferred, it gives rise to a deferred tax liability or deferred tax asset.
Deferred taxation arises primarily on account of a timing difference or a permanent difference b/w the profit as per the Compa
or distribution of dividends.

r than depriciable assets

/w the profit as per the Company's Act or the income taxable under the Income Tax\