Concept of Prospectus : Meaning, Features,Content, Registration

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In this article we will study about the Concept of Prospectus. we will discuss the meaning and features of prospectus and also we will discuss its content and Registration.

Concept of Prospectus :


Prospectus means any document issused  by any authorised body for notice, circular, advertisement or other document inviting public for the subscription or purchase of any securities of any corporate body.

Concept of Audit Work Paper, Types and Advantages

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In this article we will study about Concept of Audit Work Paper. We will discuss the meaning of Audit work paper, its types an also we will discuss the advantages of Audit work paper.

Concept of Audit Work Paper



  • Audit Work Paper are the documents prepare or obtained by the auditors and retain by them in connection with the audit.

  • They are used to support Audit work in order to provide the assurance that the audit was completely as per the Auditing Standards.

  • It having the connecting link between the client records and auditing records.

  • They  are permanently historical records

Concept of Internal Audit : Meaning, Benefits, Advantages and Disadvantages

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In this article we will study the Concept of internal audit.  We will discuss its meaning, benefits and also the advantages and disadvantages of Internal Audit.

Concept of Internal Audit :


Internal Audit is a process of  evaluating and analysis of business operations conducted by audit staff and it is an independent activity within the organisations .It is a dynamic process which helps organisations to achieve their organisational goal and it helps them to prepare for final audit.Internal audit is conducted by management internal staff, who verifying accounts and deduct errors and frauds from financial statements.

Some basic Concept of Macroeconomics and Aggregates of economy

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In this article we will discuss about Some basic concept of macroeconomics and aggregates of economics,  types of goods produced in economy and classification of consumer goods.






Some basic concept of macroeconomics and aggregates of economics


Macroeconomics is that economy in which we study aggregates of economic system. Aggregates of economic means those variables which represent economy as whole.Some aggregates are :

  1. Aggregate Consumption ⇒ In an accounting period consumption of goods and services of economy.

  2. Aggregate Investment ⇒ In includes all the expenditure by the producers on the purchase of goods which added to capital during the year.

  3. Aggregate Demand ⇒ Total expenditure on the purchase of goods and services  during accounting period.

  4. Aggregate Supply ⇒ Total production of goods and services .

  5. Domestic Income ⇒ Income generated within the domestic territory of a country .

  6. General Price Level ⇒ It included the prices of all goods and services at the end of specific period of time.

TYPES OF GOODS PRODUCED IN ECONOMY :

  • Final Consumer Goods - Those goods which are ready for their final users and consumers are their final users. For example : Bread and Butter.

  • Final Producer Goods -  Those goods which finally produced for its final users and producers are their final users. For example : Tractors and Harvesters, are used by farmer.

Consumption Expenditure refers to that expenditure by the household on final consumption. Expenditure on final goods by producers is Investment expenditure.

Expenditure on Final Goods = Consumption Expenditure + Investment                                                                                                          Expenditure

  • Intermediate Goods ⇒ Those goods which are purchased by the one firm from others for the purpose of resale, using them as a raw material.

Some basic Concept of Macroeconomics and Aggregates of economy


Consumer or Consumption Goods :


These are those goods which are used by the consumer for his satisfaction and these goods are used in production of oher goods. For example : Ice cream and milk used by households.

Classification of Consumption / Consumer Goods :

  1. Durable Consumer Goods →  Those goods which are used for several time.

  2. Semi-durable consumer goods → Those goods which are used for a period of time.

  3. Non-durable or Single-use Consumer Goods → Those goods which are only used for single time.

  4. Services → Those non-material goods which directly satisfy human wants.

Difference between Intermediate and Final goods :







              Intermediate Goods 

1). These goods may be used as raw material.

2). These goods are resold by the firm for profit.

3). These goods are remain inside the boundary line.
                       Final Goods

1). These goods are not used as raw material.

2). These goods are not resold for the purpose of profit.

3). These goods are outside the boundary line of production.

So we have discussed the Some basic concept of macroeconomics and aggregates of economics. If you have any query please let us know in the comments section below.

 

 

 


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Concept of business Entrepreneurship

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In this article we will study the Concept of business Entrepreneurship its characteristics. Also we will discuss about Importance of Entrepreneurship and How the process of entrepreneurship works.

Money and Supply of money & Drawbacks of Barter System

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In this article we will study Money and Supply of Money. we will discuss the meaning of money and its evolution, Barter system with drawbacks and also the supply of Money and How it works.

Hire Purchase and Installment Purchase System : Meaning, Features,Types and Calculation Formula

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In this article we will discuss about Hire Purchase and Installment Purchase System : Meaning, Features, Types and calculation Formula. 




Meaning :

Hire Purchase and Installment Purchase System


There are different methods by which goods can be sold means ownership or Possession of goods will be passes from one person to another i.e seller to purchaser. Goods can be sold for cash in which seller passed goods to purchaser and purchaser make payment in cash at the time of taking. Goods can be sold on credit basis in this case ownership or possession transfer immediately  to the buyer but they make payment  after time or on installments.

Under HIRE PURCHASE System, the buyer acquires ownership of the goods immediately but make payments on installments maybe it is on monthly basis or year basis.In case if buyer fails to make payments on the the seller having right to repossess these goods and forfeit received amount as hire charges.If they make all payment on time seller don’t having right to repossess these goods.  This system is advantageous both to the buyer as well as to seller.



Features of Hire Purchase System :


Hire Purchase and Installment Purchase System

  • Agreement.

  • Possession.

  • Installments.

  • Ownership.

  • Repossession.

  • Option of goods return.







HIRER : It means the person who obtain delivery of possession of goods from the owner under the hire purchase  agreement.

HIRE : It means sum payable periodically by the Hirer under agreement.

Hire Purchase Price : Total sum payable by the hirer under hire purchase.

Net Hire Purchase Price : Total amount payable under hire purchase .If following price is included shall be deducted to determine net price.                                                                                             (1). Delivery expenses.                                                                                                                                             (2). Fess in respect of goods sold.                                                                                                                         (3). Cost of Insurance.

Hire Purchase and Installment Purchase System : Meaning, Features, Types and calculation Formula. 


Down Payment : 
concept of down payment in installment purchase


That amount which is paid at the time of taking delivery of the goods or signing under hire  purchase or installments.





Installment :Installment :   The amount which is inclusive of interest    together with principal amount paid periodically as                                                                                       per agreement.






Cash Purchase Price =  Hire Purchase Installment   × Net Cash Price                                                                                                                                                                             Hire Purchase Price

Limitation of Hire Purchase Charges :

The maximum statutory charges should not exceed 30% of the installments or amount calculated according to formula;

SC =  CI × R × T                                                                                                                                                                                                                               100

Where,        SC = Statutory Charges                                                                                                                                                     CI =  The amount of Cash Price Installment.                                                                                                                      R =  The rate 10% or higher as maybe determined by central Govt. in consultation with RBI.                                          T =  Time.

Rate of the Hirer to purchase with Rebate :

Rebate = 2  ( Hire Purchase Charges × No. of installments not yet due )                                                                                          3                                                                    Total no. of installments

Calculation of Cash Price when reference to annuity table , interest rate and installments are given :

A reference to annuity table where in present value of the annuity for a no of year at a certain  rate of interest is given, cash price is calculated by multiple of installment and addition on down payment.

Cash Price = Installments × Ref. to annuity table + Down payment .

So we have discussed Hire Purchase and Installment Purchase System : Meaning, Features, Types and calculation Formula. For any query comment below.



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Entries on ISSUE of Shares : At Par, At Premium and At Discount

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In this article we will discuss about Entries on ISSUE of Shares : At Par, At Premium and At Discount.





Share

concept of share in company



Shares means total Capital of the company is divided into small unit, each unit is called as shares of the company. For example : If the total capital of the company is 1,00,000 divided into 10,000 units of 10 each , each unit of Rs. 10 is called a Share.



Issue of Shares at Par :

1). Bank A/c              Dr.                                                                                                                                       To Equity Share Application A/c                                                                                                                          [ Being application money received ]

Equity shares Application A/c           Dr.                                                                                                              To Equity  Share Capital A/c                                                                                                                                 [ Transfer of money to share capital a/c ]

2). Equity Share Allotment A/c                 Dr.                                                                                                   To Equity Share Allotment A/c                                                                                                                             [ Allotment money due ]

Bank A/c                Dr.                                                                                                                                                 To equity Share Allotment A/c                                                                                                                           [ Allotment money received ]

3). Equity share first & final call A/c         Dr.                                                                                                    To Equity share capital A/c                                                                                                                                  [ Money received on first & final call ]

Bank A/c               Dr.                                                                                                                                             To Equity share first & final call A/c                                                                                                                   [ First 7 final call due ]

⇒ Issue of Shares at Premium :

1).Bank A/c                Dr.                                                                                                                                            To Share Application A/c                                                                                                                                        [ Application money received including premium ]

2).Share Application A/c        Dr.                                                                                                                         To Share Capital A/c                                                                                                                                            To Security Premium A/c                                                                                                                                          [ Application money transferred to Share Capital A/c and securities Premium A/c ]



If the amount of premium is received along with allotment money :

1). Share Allotment A/c        Dr.                                                                                                                             To Share Capital A/c                                                                                                                                            To Security Premium A/c                                                                                                      
                            [ Allotment money due including premium ]

Bank A/c                             Dr.                                                                                                 To Share Allotment A/c                                                                                                         [ Allotment money received, including premium ]

If the amount of Discount is recorded along with Allotment money :

Share Allotment A/c            Dr.                    Share Discount A/c             Dr.                                                                                                                          To Share Capital A/c                                                                                                                                              [ Amount due on allotment , excluding discount ]

Bank A/c         Dr.                                                                                                                                                  To Share Allotment A/c                                                                                                                                         [ Allotment money received ]



   So we have discussed  Entries on ISSUE of Shares : At Par, At Premium and At Discount. For any query comment below.

                                                            


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COMPANY ACCOUNTS - ISSUE OF SHARES, Meaning, Nature and Types of Shares

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In this article we will discuss about COMPANY ACCOUNTS - ISSUE OF SHARES,Meaning, Nature and Types of Shares.






Difference between Preference Shares and Equity Shares


Meaning of Shares :


meaning of share in compnay


Shares means total Capital of the company is divided into small unit, each unit is called as shares of the company. For example : If the total capital of the company is 1,00,000 divided into 10,000 units of 10 each , each unit of Rs. 10 is called a Share.

Nature of Shares :


The shares of the company are movable property, transferable in the manner provided by the Article of Association 0f the company. These can be bought, sold, hypothetical and bequeathed.



Types of Shares :


1). Preference Shares : Preference Shares are those which carry the following two rights:

  • Right to receive dividend at fixed rate before paying any dividend on equity shares.

  • At the time of wound up of company, they have right to return of capital before equity shares.

⇒ Types of Preference Shares :

  • Cumulative Preference shares → Those shares whose holder recover arrears of preference dividend, before paying dividend on equity shares.

  • Non-Cumulative Preference Shares → The holders of such shares get fixed amount of dividend out of the profit of each year.

  • Participating Preference Shares → Those shares who having right to participate in the surplus profit.

  • Non- Participating Shares →Such shares get fixed rate od dividend every year but do not get right to participate in surplus profit.

  • Redeemable Preference Shares → Those shares which will be repair by the company.

  • Irredemable Preference Shares → Those shares whose capital cant be refunded before winding up.

  • Convertible Preference Shares → Holders of these shares have a right to get their preference shares converted into equity shares at their option according to the terms of issue.

  • Non-Convertible Preference Shares → When the holder of preference shares have not been conferred the right of getting their preference shares converted into equity shares, such shares are called non-convertible preference shares.      

2).Equity Shares :


Equity shares are those shares which are paid dividends only when profits are left after the preference shareholders have been paid fixed rate of dividends and there will be no fir rate do dividends on equity shares.If the company earn more profits they get a higher rate of dividend.Capital of equity shares are returned when capital of preference shares is returned full. Equity shareholders have voting rights and control the affairs of the company.

SHARE CAPITAL


Share capital means that capital which is raised by the company by the issue of shares.It helps company to raise long term funds.The amount of share capital of a company havs change over time.Company can raised its shares by issue of equity.

Kinds of Share Capital :


1). Authorised, Registered or Nominal Capital → That amount which is stated in Memorandum of Assocation. That is the maximum amount for which company issued shares during its lifetime.

2). Issued Capital →  It is a part of Authorized capital which is actually  offered to the public for subscription.

3). Subscribed Capital → Subscribed Capital is the part of Issued capital which is subscribed by the public.

* Subscribed and fully paid up.                                                                                                              * Subscribed but not fully paid up.


Difference between Preference Shares and Equity Shares :



     Basis of Distinction            Preference Shares                  Equity Shares          
Rate of DividendPreference Shares paid fixed rate of dividend.Rate of dividend is not fixed. It depends upon profits of the year.
Voting RightsPreference share holders do not having voting right.Equity shareholders enjoying voting rights.
Right to participant in ManagementThey do not having right to participate in management of the company.They have full right to participant in management of the company.

So we have discussed COMPANY ACCOUNTS - ISSUE OF SHARES,Meaning, Nature and Types of Shares. For any query comment below.





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Indian Capital Market : Meaning, Importance, Instruments , Primary and secondary Market

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In this article we will discuss about Indian Capital Market : Meaning, Importance, Instruments , Primary and secondary Market.




indian capital market notes

Meaning of Capital Market :




Capital Market is a place where long term funds are raised through trade on debt and equity securities.Capital Market also known as securities market, and it deals in long term loan. It supplies with fixed and working capital and long term and  medium term borrowing.

Concept of Bank, their functions, CREDIT MANAGEMENT and KYC (Know YourCustomer)

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In this article we will discuss about Concept of Bank, their functions, CREDIT MANAGEMENT and KYC (Know Your Customer) and how KYC helps banks to identify their customers. 




Concept of Bank, their functions, CREDIT MANAGEMENT and KYC (Know Your Customer)


Concept of BANK


concept of bank kyc notes






Banks are the financial institutions which accepts deposits from the general public and lending. it also provides loan facilities to household, firms, etc.Bank are those institutions which operate in money and also create credit.Bank provides safety, liquidity and profitability to its customers.

Concept of Management -Meaning ,Definition,Features, Objectives and Importance

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In this article we will discuss about Concept of Management -Meaning ,Definition,Features, Objectives and Importance.





Meaning of Management

concept of management

 


Management is a process of an organisation in which things has been done in proper manner with the objective of achieving organisational goal.

It is also known as internal environment of an organisation where individuals working in group effectively and efficiently to achieve goal of an organisation.

AUDITING Meaning, Definition , Objectives, Advantages and Disadvantages, Basic Principles of Auditing

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In this article we will discuss about AUDITING Meaning, Definition , Objectives, Advantages and Disadvantages, Basic Principles of Auditing.





Meaning Of Auditing :     

                                     
meaning of auditing
                           

Auditing is a process in which there is systemic and scientific examination of company accounts by a well qualified person.The word audit derived from Latin word" Au-dire " which means" to hear". Auditor can examine the books of accounts to ensure that accounts of the company is properly maintained or not. True and fair accounts of the company shows their financial position and deducting errors.

Concept of Directors and their different positions in a company

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In this article we will discuss about Concept of Directors and their different positions in a company.




Concept of Director




According to the Supreme Court of India “ A person who guides policy and superintends  the working of a company is a director”.

A director is a person in a company who lead, supervise company to meet their day to day operations  and director is a person who appointed as a board of director,Overseeing their specific department such as Finance, Marketing or Manufacturing.

Concept of Directors and their different positions in a company


The Position of the Directors in a company is explained in this article.



  1. As Agent

  2. As Trustee

  3. As Officers

  4. As Employees

  5. As Organ of the company

  6. As Managing partner