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Financial accounting
Financial accounting
Financial accounting
Financial accounting
Financial accounting
Financial accounting
Financial accounting
Financial accounting
Financial accounting
Financial accounting
Financial accounting
Financial accounting
Financial accounting
Financial accounting
Financial accounting
Financial accounting
Financial accounting
Financial accounting
Financial accounting
Financial accounting
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Financial accounting

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  • 1.  What is Finance?   1) Money & Capital markets.   which deals with securities markets & financial institutions. 2) Investments..   Finance is the science of managing financial resources in an optimal pattern i.e. the best use of available financial sources. Finance consists of three interrelated areas: which focuses on the decisions of both individual and institutional investors as they choose assets for their investment portfolios. 3) Financial Management or business finance.  which involves the actual management of firms 10/26/2013 11:35 PM
  • 2.    Accounting: It is and art of identifying, recording, communicating and relevant reliable and comparable business information. Identify    Evidence Voucher Document 10/26/2013 11:35 PM
  • 3.  Record   Classification & summarize Communicating     Reports Preparing Analyzing Interpretation 10/26/2013 11:35 PM
  • 4.   It is the maintenance of daily record of All financial transactions in such a manner that it would help in the preparation of suitable information regarding the financial affairs of a business or an individual. Why is Financial Accounting needed?  The need for recording financial transactions arises because the individual or business wants to know the performance of the business and to assist the person in making decisions related to the business. 10/26/2013 11:35 PM
  • 5.     Profit oriented or commercial entities are those entities where the main aim of carrying out business is to earn profit for the owners of the business. Profit oriented entities are of following types: Sole Proprietorship Partnership Companies 10/26/2013 11:35 PM
  • 6.  Sole Proprietorship It is an unincorporated business owned by one individual. Going into a business as a sole proprietor is simple – one merely has to begin business operations.  Proprietorship consists of 80% of the total number of businesses worldwide.  10/26/2013 11:35 PM
  • 7.  It is easily & inexpensively formed.  It is subject to few government regulations.  The business pays no corporate income tax; only personal income tax is paid by the proprietor. 10/26/2013 11:35 PM
  • 8.    It is difficult for a proprietorship to obtain large sums of capital. The proprietor has unlimited personal liability for the business debts, which can result in losses hat exceed the money invested by him in the business. The life of the business organized as proprietorship is limited to the life of the individual who created it. 10/26/2013 11:35 PM
  • 9.   A partnership exists whenever two or more persons associate to conduct a non-corporate business. It could be registered or unregistered. Advantages:    Low cost involved Ease of formation Limitations Unlimited Liability.  Limited life of the organization.  Difficulty of transferring ownership.  Difficulty of raising large amounts of capital.  10/26/2013 11:35 PM
  • 10.  It is incorporates association enjoys the advantage of heaving a large number of members who contribute money to a common pool for running large undertakings. The interest or share of each member can be purchased, sold and transferred without the consent of other members.  (Companies Ordinance 1984)s 10/26/2013 11:35 PM
  • 11.       Non-profit oriented entities are those business entities / concerns where the main purpose of doing business is not to earn profits for the owners / sponsors. but to provide benefit to general public or to carryout a social cause. Profits of a non-profit oriented entity can only be utilized for the purpose for which the entity is established NGO’s Trusts Societies 10/26/2013 11:35 PM
  • 12.    ―Company Limited by Shares" is a company in which the liability of the members (shareholder) of the company is limited to the amount of share capital that they have contributed. Section 2 (8) of the Companies Ordinance 1984 sates: "company limited by shares‖ means a company having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them. 10/26/2013 11:35 PM
  • 13.    Private Limited Companies Single Member Companies Public Limited Companies   Public Listed Companies Public Unlisted Companies 10/26/2013 11:35 PM
  • 14.    are those companies that restrict the right of shareholders to transfer their shares to a person other than the existing shareholders. If a member wishes to sell his shares he will first have to offer the shares to the existing members. In case, none of the existing members accepts the shares and at the same time does not object to the selling of the shares to an outsider only then the shares can be sold to an outsider. Private Limited companies use the words ―Private Limited‖ or ―(Pvt) Ltd‖ at the end of their name. 10/26/2013 11:35 PM
  • 15.    are those companies in which there is no restriction of transfer of shares. There is also no limit as to the maximum number of shareholders. However, the minimum number cannot be less than three. Public Limited Companies uses the words ―Limited‖ or ―Ltd‖ at the end of their name. Public Limited Company is defined in Companies Ordinance 1984 in Section 2 (30) as:  "Public company" means a company which is not a private company 10/26/2013 11:35 PM
  • 16.   Companies Ordinance also permits formation of non-profit oriented companies which means that the company will not distribute its profits among its share holders. These companies have to take special permission from SECP and are also allowed to dispense with the phrases ―Private Limited‖ or ―Limited‖. 10/26/2013 11:35 PM
  • 17. The maximum numbers of shareholders allowed in a private limited company is 50.  Private Limited Company is defined in Companies Ordinance 1984 in Section 2 (28) as:  "Private company" means a company which, by its articles,— I. restricts the right to transfer its shares, if any; II. limits the number of its members to fifty not including persons who are in the employment of the company; III. and prohibits any invitation to the public to subscribe for the shares, if any, or debentures of the company: Provided that, where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this definition, be treated as a single member;  10/26/2013 11:35 PM
  • 18.    are also private limited companies but there is only one shareholder in the company. Before 2002 there was a limit of two for the minimum number of shareholders in a private limited company. However the limit was relaxed and companies with only one member were also allowed. In case of a single member company two persons are required to be nominated to takeover the company in case of the death of the member. 10/26/2013 11:35 PM
  • 19.    are those public companies whose shares are traded on stock exchanges. These are also called ―quoted companies‖. Public Unlisted Companies – are those public limited companies whose shares are not traded on any stock exchange.  These are also ca lled ―public unquoted companies‖. 10/26/2013 11:35 PM

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