Accounting & finance for bankers

1. ACCOUNTING & FINANCE FOR BANKERS

7. Methods of goodwill Average profit (AP) Super profit (SP) Capitalization of profit AP x Multiplier SP x multiplier SP = AP less NP NP=normal profit (Capitalised value) less Actual Capital Multiplier is given Multiplier is given

10. Joint life policy Premium treated as expenses Premium treated as asset Premium treated as reserves At the end of each year, premium w/o to P & L A/c Each year difference between surrender value and Book value is w/o to P & L A/c difference between SV and BV is w/o to Jt. Policy Reserve A/c receipt of policy amt. Amount received is credited to partners receipt of policy amt. If amount is > SV, the excess is credited to partners receipt of policy amt. Policy amount credited to partners

13. Balance sheet-Form A Capital & Liabilities Assets 1.Capital 6.Cash & Bank Bal. RBI 2. Reserves & surplus 7.Balances with Banks & Money at call and SN 3.Deposits 8.Investments 4.Borrowings 9Advances 5 Other Liabilities & Provisions 10.Fixed Assets 11.Other Assets

16. PROFIT & LOSS ACCOUNT-FORM B Income Interest Earned Other Income Schedule.13 Schedule.14 Expenditure Interest Expended Operating Expenses Provision for contingencies Schedule.15 Schedule.16 Profit /Loss Appropriations Transfer to Reserves Proposed dividend Balance carried to Balance sheet

17. NOTES TO ACCOUNTS Significant Accounting Policies Schedule.17 Notes forming part of Accounts Schedule.18

22. SLR & NON SLR DEPOSITS Held to maturity Available for sale Held for trading Investment should not exceed 25% of total investment Freedom available Freedom available -no marked to market. Profit on sale treated as cap. Reserve -Marked to market -profit on sale of investment.taken to P&L a/c Marked to market To be sold within 90 days

24. Types of companies On the basis of incorporation On the basis of ownership On the basis of liability Chartered company Private company Co.limited by shares Statutory company Public company Co. Ltd. by guarantee Registered company Government company Co. with unlimited liability Foreign company Holding company

28. SHARE ALLOTMENT/SHARE CALL Share allotment a/c Share capital a/c Debited - - Credited Bank a/c Share allotment a/c Debited - - Credited Share call a/c Share capital a/c Debited - - Credited Bank a/c Share call a/c Debited - - Credited Calls in arrears a/c Share allotment a/c Share call a/c Debited - - - Credited Credited

29. Issue of shares at premium Share application/ allotment a/c Share capital A/c Share premium A/c Debited - - - Credited Credited

30. Issue of shares at discount Share allotment A/c Discount on issue of shares A/c Share capital A/c Debited Debited - - - Credited

31. Forfeiture of shares Share capital A/c Call in arrears A/c Forfeited shares A/c Debited - - - Credited Credited

32. Re-issue of shares Bank A/c Forfeited shares A/c Share capital A/c Capital reserve A/c Debited Debited - - - - Credited Credited

33. Issue of Bonus shares Cap. Red. Reserve A/c Share premium A/c Capital reserve A/c Gen Reserve A/c Profit & Loss A/c Bonus to shareholders A/c Debited Debited Debited Debited Debited - - - - - - credited Bonus to shareholders A/c Equity share capital A/c Debited - credited

34. Balance sheet equation LIABILITIES ASSETS Capital 300.00 Fixed assets 700.00 Reserves 200.00 Current assets 300.00 Term Loans 300.00 Current Liabilities 300.00 Total 1000.00 Total 1000.00

35. Balance Sheet Equation Assets = Liabilities Assets = Liabilities (+) Capital Liabilities = Assets (-) Capital Capital = Assets (-) Liabilities