Accounting involves systematically recording, analyzing, and summarizing financial transactions. Transactions are first recorded in books of original entry, then analyzed and posted to ledgers. Finally, they are summarized in financial statements. Financial statements aim to provide useful information to various users for economic decision making. Their key components are the balance sheet, income statement, statement of changes in equity, and cash flow statement.

2. WHAT IS ACCOUNTING?
Accounting is a systematic process of recording, analyzing and
summarizing transactions of an entity.
* The transactions are recorded in the books of original entry
* The transactions are then analyzed and posted in the Ledgers
• Finally, the transactions are summarized in the Financial Statements
The Objective of Financial Statements
The Objective of Financial Statements is to provide information about
the reporting entity’s financial position and financial performance that
is useful to a wide range of users in making economic decisions.

3. Users of Financial Statements
1) Present and potential investors
2) Employees
3) Lenders
4) Suppliers and other trade creditors
5) Customers
6) Governments and their agencies
7) The Public

4. Accounting Concept
Going
Concern
Accrual
concept
Materiality
concept
Consistency
concept
Accounting Concept:
Accounting concepts is basically the accounting rules that should be
followed while preparing the financial statements. Some Accounting
concepts on which financial statements are prepared:

5. Every transaction must have two parts. One is Debit and another
is Credit. Assets and Liabilities are always will be equal.
Liabilities
Owner’s
Equity
Assets
Luca Pacioli, an Italian Mathematician, Father of Modern Accounting
was invented the equation.

6. COMPONENT OF FINANCIAL STATEMENTS
A complete set of financial statements comprises:
Balance Sheet
Income Statement
Statement of Changes in Equity
Cash Flow Statement; and
Notes to the Financial Statements

7. The elements of Financial Statements
In the Balance Sheet
a) Assets
b) Liabilities
c) Equity
In the Income Statements
a) Income
b) Expenses

8. Definitions of Elements
Asset: A resource controlled by an entity as a result of past events and
from which future economic benefits are expected to flow to the
entity.
Liability: A present obligation of the entity arising from the past
events, the settlement of which is expected to led to the outflow from
the entity of resources embodying economic benefits.
Equity: The residual amount found by deducting all of the entity’s
liabilities from all of the entity’s assets.
Income: Increase in economic benefits in the form of asset
increases/liability decreases not resulting from contributions from
equity participants.
Expenses: Decreases in economic benefits in the form of asset
decreases/liability increases not resulting from distributions to equity
participants.

9. PREPARATION OF FINANCIAL STATEMENTS
The Financial Statements are prepared in accordance with:
The guidelines of
Islamic Banking issued
by Bangladesh Bank
through BRPD Circular #
15 dated 09.11. 2009
The Company Act 1994
The Bank Company Act
1991 (Amendment up
to 2018)
The Securities and
Exchange Rules ,1987
Bangladesh Financial
Reporting Standards
(BFRS)
International
Accounting Standard
(IAS) as adopted by the
ICAB
The Financial Reporting
Act 2015
Listing Regulation of
Dhaka Stock Exchange &
Chittagong Stock
Exchange, and
Other applicable laws
and regulations.

10. An accounting information system (AIS) is a system of
collecting, storing and processing financial and accounting
data that are used by decision makers. An accounting
information system is generally a computer-based method for
tracking accounting activity in conjunction with information
technology resources.
AIS is a structure that a business uses to collect, store,
manage, process, retrieve and report its financial data so that it
can be used by accountants, consultants, business analysts,
managers, chief financial officers (CFOs), auditors, regulators
and tax agencies.

11. The elements work together to provide reliable information effectively and efficiently.
Fig: Elements of AIS

12. Chart of accounts is
simply a list of account
names that a company
uses in its general ledger
for recording various
business transactions.
It provides guidance to
accountants or other
relevant persons in using
specific account names
while entering
transactions in journal
and posting them to
ledger
There is no common
structure or template of
chart of accounts
available for the use of all
types of businesses.
Each company prepares
its own chart of accounts
depending on its
individual requirements.
The structure of a chart of
accounts is normally as complex as
the business structure of the
company. For example, the type
and number of accounts needed by
a large corporation would
significantly differ from those
needed by a small retailer.
Similarly many accounts that are
essential in banking companies
are not used by manufacturing
companies.

13. Balance Sheet
Assets
Liabilities & Owner’s
Equity
Income Statement
Operating Revenue
Non- Operating Revenue
Operating Expenses
Non- Operating Expenses

14. Asset GL
• It starts with the numeric “901”. That means, all the GL numbers
starting with “901” are assets.
Liability and
Equity GL
• Liability and Equity GLs begin with the numeric “902”. That is, all
the GL numbers starting with “902” are either Liability or Equity.
Income GL
• It starts with the numeric “904”. Therefore, all GL numbers starting
with “904” are incomes.
Expense GL
• It starts with the numeric “903”. So, all GL numbers starting with
“903” are expenses.

15. GL is an account or record used to sort, store and summarize a bank's transactions. These
accounts are arranged in the chart of accounts with the balance sheet accounts appearing
first followed by the income statement account.
GL
Balance Sheet
Assets
Liabilities &
Owners’ Equity
Income
Statement
Income
Expense

16. Reconciliation of inter-branch transactions:
Books of Account in regard to inter-Bank are reconciled and un-reconciled entries in case of inter-
branch transactions on the reporting date are not mentionable, which are, due to the time-gap before
finalizing the same.
Example of inter-branch transactions:
Cash Deposit in other Branch’s Account (i.e. Online Cash Deposit), the following entries will be
passed:
a) At Originating Branch [Through Cash Mode] :
GLAccount No. GL Name Debit/Credit
9010101010200 Cash in Hand Debit
9010901000000 SJIBL General Account Credit
b) At Home/ Responding Branch [Through Transfer Mode]:
GLAccount No. GL Name Debit/Credit
9010901000000 SJIBL General Account Debit
Respective Customer Account Credit

17. Compliance with Financial Reporting Standards as applicable in Bangladesh
Sl. No. BAS No. BAS Title Compliance Status
1 1 Presentation of Financial Statements Complied *
2 2 Inventories Not Applicable
3 7 Statement of Cash Flows Complied *
4 8 Accounting Policies, Changes in Accounting Estimates and Errors Complied
5 10 Events after Reporting Period Complied
6 11 Construction Contracts Not Applicable
7 12 Income Taxes Complied
8 16 Property, Plant & Equipment Complied
9 17 Leases Complied
10 18 Revenue Complied
11 19 Employee Benefits Complied
12 20 Accounting for Government Grants and Discloser of Government
Assistance
Not Applicable
13 21 The Effects of Changes in Foreign Exchanges Rates Complied
14 23 Borrowing Costs Not Applicable

18. Compliance with Financial Reporting Standards as applicable in Bangladesh
Sl. No. BAS No. BAS Title Compliance Status
15 24 Related Party Disclosures Complied
16 26 Accounting and Reporting by Retirement Benefit Plans Not Applicable
17 27 Consolidated and Separate Financial Statements Complied
18 28 Investment in Associates Not Applicable
19 31 Interest in Joint Venture Not Applicable
20 32 Financial Instruments: Presentation Complied *
21 33 Earnings per Share Complied
22 34 Interim Financial Reporting Complied
23 36 Impairment of Assets Complied
24 37 Provisions, Contingent liabilities and Contingent Assets Complied *
25 38 Intangible Assets Complied
26 39 Financial Instruments: Recognition and Measurement Complied *
27 40 Investment Property Not Applicable
28 41 Agriculture Not Applicable

19. Compliance with Financial Reporting Standards as applicable in Bangladesh
Sl. No. BFRS
No.
BFRS Title Compliance Status
1 1 First-time Adoption of Bangladesh Financial Reporting Standards Not Applicable
2 2 Share-based Payment Not Applicable
3 3 Business Combinations Not Applicable
4 4 Insurance contracts Not Applicable
5 5 Non-Current Assets Held for Sale and Discontinued Operations Not Applicable
6 6 Exploration for and Evaluation of Mineral Not Applicable
7 7 Financial Instruments: Disclosures Complied *
8 8 Operating Segments Complied
9 10 Consolidated Financial Statements Complied
10 11 Joint Arrangements Not Applicable
11 12 Disclosure of Interest in other Entities Not Applicable
12 13 Fair Value Measurement Complied
13 14 Regulatory Deferral Accounts Not Applicable

20. Misreporting
Branch [GB,
Investment,
Foreign
Exchange]
Financial
Administration
Division
Treasury
Division
Alternative
Delivery
Channel (ADC)
– Card Division International
Division
Central
Processing
Center (CPC)
Bangladesh
Automated
Clearing House
(BACH)

21. Typing errors
Human errors due to discrepancies in the account
number
Record keeping – capital expenditure to revenue
expenditure or revenue expenditure to capital
expenditure
Posting in wrong GL account
Wrong posting
Consequences:
The overstatement/
understatement of
Assets
The overstatement/
understatement of
Liabilities
The overstatement/
understatement of
Income
The overstatement/
understatement of
Expenses

22. Example:
Total Income of X Bank Ltd. is Tk. 5,00,00,000 and Operating Expenses is Tk. 4,00,00 000 for the year 2018.
The Bank purchased an office equipment for Tk. 10,00,000/= during this year. Estimated useful life of the
equipment is 5 years. Use straight line method for depreciation. Calculate the Net Profit of the Bank for the year
2018. Rate of Depreciation is 20%.
1. If the cost of equipment is charged as revenue expenses, the result will be:
Particulars Taka Remarks
Operating Income 5,00,00,000
Less: Operating Expenses 4,00,00,000
Operating Profit 1,00,00,000
Less: Depreciation 2,00,000
Net Profit before tax 98,00,000
Income Tax @ 37.5% 36,75,000
Net Profit after Tax 61,25,000
2. If the cost of equipment is charged as capital expenditure, the result will be:
Particulars Taka Remarks
Operating Income 5,00,00,000
Less: Operating Expenses * 4,10,00,000
Operating Profit 90,00,000
Less: Depreciation ----
Net Profit before tax 90,00,000
Income Tax @ 37.5% 33,75,000
Net Profit after Tax 56,25,000
[ * Taka 4,00,00,000+10,00,000 = 4,10,00,000]

23. Using the same data mentioned as above. For 1st year the depreciation amount will
be the same but for the subsequent year, the amount of depreciation will be different.
Details are as under:
Particulars For 2nd year Remarks
Straight Line
method
Declining
method
Operating Income 5,00,00,000 5,00,00,000
Less: Operating Expenses 4,00,00,000 4,00,00,000
Operating Profit 1,00,00,000 1,00,00,000
Less: Depreciation 2,00,000 1,60,000
Net Profit before tax 98,00,000 98,40,000
Income Tax @ 37.5% 36,75,000 36,90,000
Net Profit after Tax 61,25,000 61,50,000

24. Transfer Pricing of SJIBL General Account
Transfer pricing means the determination of profit rate of SJIBL
General Account. We have some Branches who have surplus
deposit but do not have optimum investment opportunities, on the
other hand some branches have optimum investment opportunities
but do not have enough deposit balance to invest. In this cases
head office take deposits from surplus units and provide them to
the deficit units through general account. The rates offered by
head office for lending to head office and borrowing from head
office general account is called “Profit Rate on SJIBL General
Account”. The rate is decided by the Management of the Bank in
its ALCO meeting.

25. The effective rate of profit on SJIBL General Account with effect
from 01 July 2019:
1. Profit should be calculated on daily product basis on the balance
of SJIBL General Account on daily product basis.
2. The rate of profit would be:
a) 10% p.a, if branches borrow funds from Head Office (i.e credit
balance of SJIBL General Account)
b) 10% p.a, if branches lend funds to Head Office (i.e debit
balance of SJIBL General Account)
c) Branches will get reimbursement of excess amount of profit
paid against Deposits in excess of the rate above 10%.
d) The enhance rate which was allowed for rural branches will be
discontinued.

26. Budget Definition: A budget is a formal statement of estimated
income, expenses, operating profit, assets, liabilities and other business
issues based on future plans and objectives. In other words, a budget is
a document that management makes to estimate
the revenues and expenses for an upcoming period based on their goals
for the business.
Features of Budget
1. It is an estimate of the economic activities of an entity which related
to a specified future period.
2. It must be written and approved by the appropriate authority.
3. It should be modified or corrected, whenever, there is a change in
circumstances.

27. Features of Budget
4. It plays the role of a business barometer that helps in measuring the
performance of the business by comparing actual and budgeted results.
5. It is prepared on the basis of past experiences and trends in the
business.
6. It is a business practice, which is used to forecast the operating
activities and financial position of the business.
Deposit mix
Deposit mix is the combination of High cost, Low Cost and No Cost
Deposits. The deposit mix expected by Head Office of SJIBL is at least
60:40 i.e. 60% high cost deposit and 40% low cost & no cost deposit.
If a branch can achieve optimum deposit mix then, it well be easy to
achieve profit target by the branch. Optimum deposit mix will help to
reduce cost of fund resulting higher spread and higher profitability.

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