1. The document discusses types of partnerships including general, limited, and limited liability partnerships. It defines essential features of partnerships such as two or more persons, agreement to share profits, engagement in a business.
2. Key components of a partnership deed are outlined including names of partners, capital contributions, profit sharing ratios, and dispute resolution procedures.
3. Two methods for maintaining partner capital accounts are described: the fluctuating capital method and fixed capital method. The fluctuating method records all partner transactions in one capital account whereas the fixed method uses a separate partner's current account.
Ramesh and Raju are partners sharing profits in the ratio of 2:1. They admit Ranjan as a new partner. Ramesh surrenders 1/5 of his share and Raju surrenders 2/5 of his share in favor of Ranjan. To calculate the new profit sharing ratio, the share sacrificed by each old partner is calculated as the old share multiplied by the proportion surrendered. The new ratio is determined as the old share minus the sacrificed share. The new profit sharing ratio is determined to be 12/25 for Ramesh, 6/25 for Raju, and 7/25 for Ranjan.
This document discusses financial ratio analysis and various types of ratios used to analyze companies. It provides definitions and formulas for current ratio, quick ratio, stock turnover ratio, debtors turnover ratio, creditors turnover ratio, working capital turnover ratio, debt-equity ratio, proprietary ratio, net profit ratio, operating profit ratio, return on investment ratio, and capital gearing ratio. These ratios are used to analyze different aspects of a company's financial health and performance, including liquidity, activity, solvency, profitability, and leverage. The document also notes some limitations of ratio analysis.
This document discusses dividend policy and the factors that affect it. It defines dividends as payments made by corporations to shareholders from profits. There are different types of dividends including cash dividends, stock dividends, scrip dividends, property dividends, and bond dividends. Factors that influence a company's dividend policy include the state of the economy, legal restrictions, tax policy, shareholders' desires, the company's financial needs and stability of earnings, management's control desires, and liquidity position.
Este documento discute rácios financeiros e econômicos importantes para analisar o desempenho de uma empresa, como liquidez, solvabilidade, rentabilidade e rotatividade de ativos. Fornece fórmulas para calcular cada rácio e explica o que cada um mede. Também fornece detalhes sobre rácios de mercado e funcionamento.
A gestão financeira de uma empresa é obrigatória para o sucesso do empreendimento, tendo como função principal o gerenciamento do fluxo de capitais e do controle do capital de giro.
FINANCIAL MANAGEMENT PPT BY FINMANDividend policy joseph agayatin&jezza deaunaMary Rose Habagat
This document discusses dividend policy and various types of dividends. It defines dividends as distributions to shareholders proportionate to share ownership. There are various types of dividends including cash, stock, and property dividends. The document outlines relevant dates for dividends including declaration, record, and payment dates. It also discusses the accounting entries related to dividends. Additionally, it covers dividend reinvestment plans, factors in determining dividend policy, and different approaches to dividend policy including constant payout ratio and regular dividend policies.
1. The document discusses types of partnerships including general, limited, and limited liability partnerships. It defines essential features of partnerships such as two or more persons, agreement to share profits, engagement in a business.
2. Key components of a partnership deed are outlined including names of partners, capital contributions, profit sharing ratios, and dispute resolution procedures.
3. Two methods for maintaining partner capital accounts are described: the fluctuating capital method and fixed capital method. The fluctuating method records all partner transactions in one capital account whereas the fixed method uses a separate partner's current account.
Ramesh and Raju are partners sharing profits in the ratio of 2:1. They admit Ranjan as a new partner. Ramesh surrenders 1/5 of his share and Raju surrenders 2/5 of his share in favor of Ranjan. To calculate the new profit sharing ratio, the share sacrificed by each old partner is calculated as the old share multiplied by the proportion surrendered. The new ratio is determined as the old share minus the sacrificed share. The new profit sharing ratio is determined to be 12/25 for Ramesh, 6/25 for Raju, and 7/25 for Ranjan.
This document discusses financial ratio analysis and various types of ratios used to analyze companies. It provides definitions and formulas for current ratio, quick ratio, stock turnover ratio, debtors turnover ratio, creditors turnover ratio, working capital turnover ratio, debt-equity ratio, proprietary ratio, net profit ratio, operating profit ratio, return on investment ratio, and capital gearing ratio. These ratios are used to analyze different aspects of a company's financial health and performance, including liquidity, activity, solvency, profitability, and leverage. The document also notes some limitations of ratio analysis.
This document discusses dividend policy and the factors that affect it. It defines dividends as payments made by corporations to shareholders from profits. There are different types of dividends including cash dividends, stock dividends, scrip dividends, property dividends, and bond dividends. Factors that influence a company's dividend policy include the state of the economy, legal restrictions, tax policy, shareholders' desires, the company's financial needs and stability of earnings, management's control desires, and liquidity position.
Este documento discute rácios financeiros e econômicos importantes para analisar o desempenho de uma empresa, como liquidez, solvabilidade, rentabilidade e rotatividade de ativos. Fornece fórmulas para calcular cada rácio e explica o que cada um mede. Também fornece detalhes sobre rácios de mercado e funcionamento.
A gestão financeira de uma empresa é obrigatória para o sucesso do empreendimento, tendo como função principal o gerenciamento do fluxo de capitais e do controle do capital de giro.
FINANCIAL MANAGEMENT PPT BY FINMANDividend policy joseph agayatin&jezza deaunaMary Rose Habagat
This document discusses dividend policy and various types of dividends. It defines dividends as distributions to shareholders proportionate to share ownership. There are various types of dividends including cash, stock, and property dividends. The document outlines relevant dates for dividends including declaration, record, and payment dates. It also discusses the accounting entries related to dividends. Additionally, it covers dividend reinvestment plans, factors in determining dividend policy, and different approaches to dividend policy including constant payout ratio and regular dividend policies.
How to Manage working Capital in Hotel-Basic accounting principles #9 by Din...DINOLEONANDRI
The document discusses managing working capital in hotel industries. It defines working capital as the short-term assets used to fund daily operations, such as cash, receivables, and inventory. It also discusses the cash conversion cycle where cash is used to purchase inventory, turned into receivables through sales, and then collected as cash. Managing working capital involves balancing current assets and liabilities to ensure sufficient short-term funds and liquidity. The goal is to efficiently manage resources and improve cash flow.
Non-profit organizations are formed by promoters to provide social services and activities that enhance public welfare, not to earn profits. They have separate legal identities from their members and trustees manage them. Non-profits prepare annual financial statements including a receipts and payments account showing cash flows, an income and expenditure account in place of a profit and loss statement, and a balance sheet showing assets, liabilities, and capital at a given date. Their main sources of funding are donations and government grants.
This document provides an overview of various valuation models and concepts. It begins with an introduction to discounted cash flow (DCF) valuation, comparative valuation ratios like P/E, and valuation approaches. It then discusses specific valuation models in more detail, including DCF, dividend discount models, and relative valuation models. It also covers valuation concepts such as enterprise value, EV/Sales, EV/EBITDA, and the steps involved in a DCF valuation such as projecting free cash flows, determining the discount rate, estimating terminal value, and discounting future cash flows.
Este documento apresenta os conceitos fundamentais de equilíbrio financeiro em três frases:
1) Discute como as entradas e saídas de fundos de uma organização devem manter-se em equilíbrio constante;
2) Explica a regra do equilíbrio financeiro mínimo de igualar o ativo circulante ao passivo circulante e o ativo fixo aos capitais permanentes;
3) Introduz o conceito de fundo de maneio como a diferença entre os capitais permanentes e o ativo fixo, devendo ser posit
Ratio analysis involves calculating and comparing various financial ratios to evaluate a company's profitability, liquidity, asset use efficiency, and financial stability. Key ratios include return on investment, return on equity, debt-to-equity, and current ratio. Calculating ratios from multiple periods or against industry benchmarks provides insights into a company's performance over time and relative to its peers.
risk and return. Defining Return, Return Example, Defining Risk,Determining Expected Return , How to Determine the Expected Return and Standard Deviation, Determining Standard Deviation (Risk Measure), Portfolio Risk and Expected Return Example, Determining Portfolio Expected Return, Determining Portfolio Standard Deviation, Summary of the Portfolio Return and Risk Calculation, Total Risk = Systematic Risk + Unsystematic Risk,
Administração finaceira e orçamentária estrutura de capitalLuciana Roncarati
O documento discute a estrutura de capital de uma empresa, definindo-a como a composição dos fundos de longo prazo usados para financiar ativos. Apresenta os tipos básicos de capital próprio e de terceiros e explica que a estrutura de capital é determinada pela proporção de endividamento de longo prazo. Também discute teorias como a de Modigliani e Miller sobre o custo do capital.
CONTABILIDADE é um instrumento da função administrativa que tem por finalidade controlar o patrimônio, apurar o resultado e prestar informações sobre o patrimônio das empresas.
This document provides an analysis of various financial ratios for a company over two years. It begins with an introduction to ratio analysis and its importance. It then calculates and interprets various ratios including current ratio, debt to equity ratio, net profit margin, gross profit margin, inventory turnover, debtors turnover, creditors turnover and return on capital employed. The analysis found that the current ratio and return on capital employed increased slightly but debt to equity ratio also increased, indicating less financial stability. Profit margins were low. Inventory turnover and creditors turnover decreased. The conclusion recommends the company improve utilization of assets, pricing strategies and timely payment of creditors.
The document discusses various aspects of financial management including its objectives, scope, sources of finance, and types of shares. Financial management deals with procuring and utilizing funds in a balanced manner to maximize profit and returns. The basic objectives are profit maximization and maintaining liquidity, while other objectives include fair returns, building reserves, and ensuring efficiency. Sources of finance discussed include equity shares, preference shares, debentures, and retained earnings.
This document summarizes the key differences between dissolution of a partnership and dissolution of a partnership firm. Dissolution of a partnership refers to a change in the existing agreement between partners, while the business continues. Dissolution of a partnership firm refers to closing the business and ending the economic relationship between partners. Upon dissolution of a firm, the books must be closed, assets sold, liabilities paid, capital returned to partners, and any remaining amount divided according to profit sharing ratios.
Profitability Ratio
A profitability ratio is a measure of financial ratio defining the profit percent and return percent from the business using data from financial statements at a specific point of time
It assess business’s ability to generate gross profit, operating profit and net profit from the sales using data from profit& loss statement
It even takes into consideration various return generating ability of business in terms of return on assets, return on capital employed, return on equity, return on investment using data from balance sheet
Types of profitability ratio
Gross Profit Ratio, Net Profit Ratio, Operating Profit Ratio, Return on Assets, Return on Equity, Return on Investment, Return on Capital Employed
Gross Profit Ratio
Gross Profit Ratio(GPR) is a profitability ratio that shows the relationship between gross profit and the revenue from net sales
GPR = (퐆퐫퐨퐬퐬 퐏퐫퐨퐟퐢퐭)/(퐍퐞퐭 퐒퐚퐥퐞퐬)
Net Profit Ratio
The net profit ratio is equal to how much net profit is generated as a ratio of revenue earned through sales
Net Profit Ratio = (퐍퐞퐭 푷풓풐풇풊풕)/(퐍퐞퐭 푺풂풍풆풔)
Operating Profit Margin is a profitability ratio used to calculate the percentage of operating profit a company produces from its operations, prior to deduction of taxes and interest charges
Operating Profit Ratio
Operating Profit Ratio = (퐎퐩퐞퐫퐚퐭퐢퐧퐠 퐏퐫퐨퐟퐢퐭)/(퐍퐞퐭 퐒퐚퐥퐞퐬)
Return on assets (ROA) is a kind of profitability measure used to determine returns on assets relevant when compared across the companies or previous performance of the company
Return On Asset = (퐍퐞퐭 퐏퐫퐨퐟퐢퐭)/(퐀퐯퐠.퐓퐨퐭퐚퐥 퐀퐬퐬퐞퐭퐬)
Return on equity (ROE) is a measure of financial performance calculated by dividing net profit by average shareholders' equity
ROE = (퐍퐞퐭 퐏퐫퐨퐟퐢퐭)/(퐀퐯퐠.퐓퐨퐭퐚퐥 퐄퐪퐮퐢퐭퐲)
Return on capital employed is a profitability ratio used in valuation of company’s financial position depicting the return out of capital employed
ROCE = 퐄퐁퐈퐓/(퐂퐚퐩퐢퐭퐚퐥 퐄퐦퐩퐥퐨퐲퐞퐝)
Return on investment is a profitability measure used by businesses to identify the efficiency of business in generating return out of an investment
ROI = (퐍퐞퐭 퐏퐫퐨퐟퐢퐭)/(퐂퐨퐬퐭 퐨퐟 퐈퐧퐯퐞퐬퐭퐦퐞퐧퐭)
Ratio analysis refers to the analysis and interpretation of the data collected from the financial statements (i.e., Profit and Loss Statement, Balance Sheet and Fund/Cash Flow statement etc.)
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DevTech Finance
This document discusses the treatment of accumulated profits and losses when a new partner is admitted to a partnership. When there are accumulated profits, journal entries are made to credit reserves accounts and profit and loss account and debit the old partners' capital accounts individually in their old profit sharing ratios. When there are accumulated losses, the journal entry debits the old partners' capital accounts individually and credits the profit and loss account. An example is provided where general reserve of Rs. 30,000 exists and the profit and loss account shows a debit balance of Rs. 6,000.
FOR ANY HELP CONTACT ME ON INSTAGRAM OR MY MAIL ARYASHASHWAT34 SHASHWATARYA013@GMAIL.COM
The modern approach views finance function in broader sense. It includes both rising of funds as well as their effective utilization under the purview of finance. The finance function does not stop only by finding out sources of raising enough funds; their proper utilization is also to be considered. The cost of raising funds and the returns from their use should be compared.
The cash flow statement summarizes the inflows and outflows of cash and cash equivalents over a period of time. It has three sections - operating, investing, and financing activities. The operating section deals with cash from core business operations. The investing section includes cash from the purchase and sale of long-term assets. The financing section includes cash from activities related to changes in a company's capital structure and borrowing arrangements.
Financial ratios and their use in understanding Financial StatementsPranav Dedhia
An introduction and in-depth understanding on the importance of Financial ratios in understanding financial statements of business entities along with relevant examples
The profit and loss appropriation account shows how net profit or loss from the profit and loss account is distributed among partners. It begins with the profit or loss amount brought forward from the profit and loss account. The account credits net profit and interest on drawings, and debits interest on capital, partner salaries, and commissions. After adjustments, it shows the profit or loss amount. A portion may be transferred to reserves, with the remaining amount distributed to partners according to their profit sharing ratios and transferred to their capital accounts.
The cash flow statement summarizes the cash inflows and outflows for A Ltd. for the year ended March 31, 2012. It shows that cash from operating activities was Rs. 40,000, which was primarily from net profit adjusted for depreciation. Cash used in investing activities was Rs. Nil. Cash from financing activities was Rs. Nil as bank loan repayment was offset by dividend payment. Overall, cash and cash equivalents increased by Rs. 8,000 to Rs. 30,000.
Estudo das contas da classe 5-completo Ali AidarCalculos Na Veia
O documento discute o conceito de capital próprio e suas contas contabilísticas. Explica que o capital próprio representa os recursos gerados pela empresa através de capital inicial, lucros e reservas. Detalha as contas de capital, reservas obrigatórias e facultativas, e fornece exemplos de lançamentos contabilísticos relacionados a aumentos de capital e aquisição de ações próprias.
Ration analysis basic information by yata veerabrahmam brahmam yata
This document discusses various financial ratios used for ratio analysis. It defines ratios that measure liquidity, activity, leverage, and profitability. Common liquidity ratios include current ratio, quick ratio, and cash ratio. Activity ratios measure inventory turnover, receivables turnover, payables turnover, and asset efficiency. Leverage ratios compare debt to equity. Profitability ratios relate profits to sales, assets, and equity. Alternative ratios are also presented.
Ratio analysis is a technique used to analyze and interpret financial statements. It involves calculating and comparing various financial ratios to evaluate the overall performance and financial position of a company. The document discusses various types of financial ratios including profitability ratios like gross profit ratio and net profit ratio, liquidity ratios like current ratio and quick ratio, turnover ratios like inventory turnover ratio and debtors turnover ratio, and ownership/solvency ratios like debt-equity ratio. It also provides examples of calculating ratios from financial statements and discusses the usefulness and limitations of ratio analysis.
How to Manage working Capital in Hotel-Basic accounting principles #9 by Din...DINOLEONANDRI
The document discusses managing working capital in hotel industries. It defines working capital as the short-term assets used to fund daily operations, such as cash, receivables, and inventory. It also discusses the cash conversion cycle where cash is used to purchase inventory, turned into receivables through sales, and then collected as cash. Managing working capital involves balancing current assets and liabilities to ensure sufficient short-term funds and liquidity. The goal is to efficiently manage resources and improve cash flow.
Non-profit organizations are formed by promoters to provide social services and activities that enhance public welfare, not to earn profits. They have separate legal identities from their members and trustees manage them. Non-profits prepare annual financial statements including a receipts and payments account showing cash flows, an income and expenditure account in place of a profit and loss statement, and a balance sheet showing assets, liabilities, and capital at a given date. Their main sources of funding are donations and government grants.
This document provides an overview of various valuation models and concepts. It begins with an introduction to discounted cash flow (DCF) valuation, comparative valuation ratios like P/E, and valuation approaches. It then discusses specific valuation models in more detail, including DCF, dividend discount models, and relative valuation models. It also covers valuation concepts such as enterprise value, EV/Sales, EV/EBITDA, and the steps involved in a DCF valuation such as projecting free cash flows, determining the discount rate, estimating terminal value, and discounting future cash flows.
Este documento apresenta os conceitos fundamentais de equilíbrio financeiro em três frases:
1) Discute como as entradas e saídas de fundos de uma organização devem manter-se em equilíbrio constante;
2) Explica a regra do equilíbrio financeiro mínimo de igualar o ativo circulante ao passivo circulante e o ativo fixo aos capitais permanentes;
3) Introduz o conceito de fundo de maneio como a diferença entre os capitais permanentes e o ativo fixo, devendo ser posit
Ratio analysis involves calculating and comparing various financial ratios to evaluate a company's profitability, liquidity, asset use efficiency, and financial stability. Key ratios include return on investment, return on equity, debt-to-equity, and current ratio. Calculating ratios from multiple periods or against industry benchmarks provides insights into a company's performance over time and relative to its peers.
risk and return. Defining Return, Return Example, Defining Risk,Determining Expected Return , How to Determine the Expected Return and Standard Deviation, Determining Standard Deviation (Risk Measure), Portfolio Risk and Expected Return Example, Determining Portfolio Expected Return, Determining Portfolio Standard Deviation, Summary of the Portfolio Return and Risk Calculation, Total Risk = Systematic Risk + Unsystematic Risk,
Administração finaceira e orçamentária estrutura de capitalLuciana Roncarati
O documento discute a estrutura de capital de uma empresa, definindo-a como a composição dos fundos de longo prazo usados para financiar ativos. Apresenta os tipos básicos de capital próprio e de terceiros e explica que a estrutura de capital é determinada pela proporção de endividamento de longo prazo. Também discute teorias como a de Modigliani e Miller sobre o custo do capital.
CONTABILIDADE é um instrumento da função administrativa que tem por finalidade controlar o patrimônio, apurar o resultado e prestar informações sobre o patrimônio das empresas.
This document provides an analysis of various financial ratios for a company over two years. It begins with an introduction to ratio analysis and its importance. It then calculates and interprets various ratios including current ratio, debt to equity ratio, net profit margin, gross profit margin, inventory turnover, debtors turnover, creditors turnover and return on capital employed. The analysis found that the current ratio and return on capital employed increased slightly but debt to equity ratio also increased, indicating less financial stability. Profit margins were low. Inventory turnover and creditors turnover decreased. The conclusion recommends the company improve utilization of assets, pricing strategies and timely payment of creditors.
The document discusses various aspects of financial management including its objectives, scope, sources of finance, and types of shares. Financial management deals with procuring and utilizing funds in a balanced manner to maximize profit and returns. The basic objectives are profit maximization and maintaining liquidity, while other objectives include fair returns, building reserves, and ensuring efficiency. Sources of finance discussed include equity shares, preference shares, debentures, and retained earnings.
This document summarizes the key differences between dissolution of a partnership and dissolution of a partnership firm. Dissolution of a partnership refers to a change in the existing agreement between partners, while the business continues. Dissolution of a partnership firm refers to closing the business and ending the economic relationship between partners. Upon dissolution of a firm, the books must be closed, assets sold, liabilities paid, capital returned to partners, and any remaining amount divided according to profit sharing ratios.
Profitability Ratio
A profitability ratio is a measure of financial ratio defining the profit percent and return percent from the business using data from financial statements at a specific point of time
It assess business’s ability to generate gross profit, operating profit and net profit from the sales using data from profit& loss statement
It even takes into consideration various return generating ability of business in terms of return on assets, return on capital employed, return on equity, return on investment using data from balance sheet
Types of profitability ratio
Gross Profit Ratio, Net Profit Ratio, Operating Profit Ratio, Return on Assets, Return on Equity, Return on Investment, Return on Capital Employed
Gross Profit Ratio
Gross Profit Ratio(GPR) is a profitability ratio that shows the relationship between gross profit and the revenue from net sales
GPR = (퐆퐫퐨퐬퐬 퐏퐫퐨퐟퐢퐭)/(퐍퐞퐭 퐒퐚퐥퐞퐬)
Net Profit Ratio
The net profit ratio is equal to how much net profit is generated as a ratio of revenue earned through sales
Net Profit Ratio = (퐍퐞퐭 푷풓풐풇풊풕)/(퐍퐞퐭 푺풂풍풆풔)
Operating Profit Margin is a profitability ratio used to calculate the percentage of operating profit a company produces from its operations, prior to deduction of taxes and interest charges
Operating Profit Ratio
Operating Profit Ratio = (퐎퐩퐞퐫퐚퐭퐢퐧퐠 퐏퐫퐨퐟퐢퐭)/(퐍퐞퐭 퐒퐚퐥퐞퐬)
Return on assets (ROA) is a kind of profitability measure used to determine returns on assets relevant when compared across the companies or previous performance of the company
Return On Asset = (퐍퐞퐭 퐏퐫퐨퐟퐢퐭)/(퐀퐯퐠.퐓퐨퐭퐚퐥 퐀퐬퐬퐞퐭퐬)
Return on equity (ROE) is a measure of financial performance calculated by dividing net profit by average shareholders' equity
ROE = (퐍퐞퐭 퐏퐫퐨퐟퐢퐭)/(퐀퐯퐠.퐓퐨퐭퐚퐥 퐄퐪퐮퐢퐭퐲)
Return on capital employed is a profitability ratio used in valuation of company’s financial position depicting the return out of capital employed
ROCE = 퐄퐁퐈퐓/(퐂퐚퐩퐢퐭퐚퐥 퐄퐦퐩퐥퐨퐲퐞퐝)
Return on investment is a profitability measure used by businesses to identify the efficiency of business in generating return out of an investment
ROI = (퐍퐞퐭 퐏퐫퐨퐟퐢퐭)/(퐂퐨퐬퐭 퐨퐟 퐈퐧퐯퐞퐬퐭퐦퐞퐧퐭)
Ratio analysis refers to the analysis and interpretation of the data collected from the financial statements (i.e., Profit and Loss Statement, Balance Sheet and Fund/Cash Flow statement etc.)
Thank You for Watching
DevTech Finance
This document discusses the treatment of accumulated profits and losses when a new partner is admitted to a partnership. When there are accumulated profits, journal entries are made to credit reserves accounts and profit and loss account and debit the old partners' capital accounts individually in their old profit sharing ratios. When there are accumulated losses, the journal entry debits the old partners' capital accounts individually and credits the profit and loss account. An example is provided where general reserve of Rs. 30,000 exists and the profit and loss account shows a debit balance of Rs. 6,000.
FOR ANY HELP CONTACT ME ON INSTAGRAM OR MY MAIL ARYASHASHWAT34 SHASHWATARYA013@GMAIL.COM
The modern approach views finance function in broader sense. It includes both rising of funds as well as their effective utilization under the purview of finance. The finance function does not stop only by finding out sources of raising enough funds; their proper utilization is also to be considered. The cost of raising funds and the returns from their use should be compared.
The cash flow statement summarizes the inflows and outflows of cash and cash equivalents over a period of time. It has three sections - operating, investing, and financing activities. The operating section deals with cash from core business operations. The investing section includes cash from the purchase and sale of long-term assets. The financing section includes cash from activities related to changes in a company's capital structure and borrowing arrangements.
Financial ratios and their use in understanding Financial StatementsPranav Dedhia
An introduction and in-depth understanding on the importance of Financial ratios in understanding financial statements of business entities along with relevant examples
The profit and loss appropriation account shows how net profit or loss from the profit and loss account is distributed among partners. It begins with the profit or loss amount brought forward from the profit and loss account. The account credits net profit and interest on drawings, and debits interest on capital, partner salaries, and commissions. After adjustments, it shows the profit or loss amount. A portion may be transferred to reserves, with the remaining amount distributed to partners according to their profit sharing ratios and transferred to their capital accounts.
The cash flow statement summarizes the cash inflows and outflows for A Ltd. for the year ended March 31, 2012. It shows that cash from operating activities was Rs. 40,000, which was primarily from net profit adjusted for depreciation. Cash used in investing activities was Rs. Nil. Cash from financing activities was Rs. Nil as bank loan repayment was offset by dividend payment. Overall, cash and cash equivalents increased by Rs. 8,000 to Rs. 30,000.
Estudo das contas da classe 5-completo Ali AidarCalculos Na Veia
O documento discute o conceito de capital próprio e suas contas contabilísticas. Explica que o capital próprio representa os recursos gerados pela empresa através de capital inicial, lucros e reservas. Detalha as contas de capital, reservas obrigatórias e facultativas, e fornece exemplos de lançamentos contabilísticos relacionados a aumentos de capital e aquisição de ações próprias.
Ration analysis basic information by yata veerabrahmam brahmam yata
This document discusses various financial ratios used for ratio analysis. It defines ratios that measure liquidity, activity, leverage, and profitability. Common liquidity ratios include current ratio, quick ratio, and cash ratio. Activity ratios measure inventory turnover, receivables turnover, payables turnover, and asset efficiency. Leverage ratios compare debt to equity. Profitability ratios relate profits to sales, assets, and equity. Alternative ratios are also presented.
Ratio analysis is a technique used to analyze and interpret financial statements. It involves calculating and comparing various financial ratios to evaluate the overall performance and financial position of a company. The document discusses various types of financial ratios including profitability ratios like gross profit ratio and net profit ratio, liquidity ratios like current ratio and quick ratio, turnover ratios like inventory turnover ratio and debtors turnover ratio, and ownership/solvency ratios like debt-equity ratio. It also provides examples of calculating ratios from financial statements and discusses the usefulness and limitations of ratio analysis.
The document defines and provides formulas for various financial ratios used to evaluate companies, including liquidity ratios, leverage ratios, profitability ratios, return ratios, valuation ratios, and risk measures. It also defines financial terms related to raising capital, costs of capital, discounted cash flow analysis, and company valuation approaches.
This document provides an overview of various accounting topics including partnerships, corporate liquidation, revenue recognition, decentralized operations, cost accounting, and more. It includes templates, journal entries, and accounting treatments for different situations within each topic such as admission of a new partner, allocation of partnership profits and losses, valuation of assets and liabilities for corporate liquidation, revenue recognition for construction contracts, and cost flow assumptions for job order and process costing systems.
This document discusses various types of financial ratios used in analyzing companies. It describes ratios that measure liquidity, debt, profitability, activity/efficiency, and market performance. Liquidity ratios indicate a company's ability to pay short-term debts, debt ratios measure financial leverage, and profitability ratios evaluate how efficiently assets are converted into net income. Activity/efficiency ratios assess asset utilization and turnover. Market ratios reflect investor perceptions of growth potential. Limitations of ratio analysis include difficulties in industry comparisons and the risk of distortions from accounting differences or inflation.
The document summarizes key concepts about common stock, including shareholders' rights, distributions to shareholders, fundamental and technical analysis techniques. It discusses characteristics of common stock like voting rights and residual claims, as well as how earnings and dividends are distributed. Methods of fundamental analysis like CAPM, P/E ratios, and book values are covered. Technical analysis indicators including moving averages and point-and-figure charts are also introduced.
The document discusses various aspects of issuing shares by a company to raise capital. It covers topics like types of share capital, issue of shares for cash or consideration other than cash, accounting treatment of share issuance including entries for issue at par, premium and discount. It also discusses treatment of application money, allotment, calls and different scenarios of over and under subscription of shares on issue.
The document provides information about types of companies and final accounts preparation for limited companies in Hong Kong. It discusses key aspects such as types of limited companies (private and public), share capital structure, means of funding, reserves, appropriation of profits, and bonus share issues. The final accounts include the trading and profit & loss account and balance sheet, with details on treatment of expenses like debenture interest and dividends for limited companies.
The document discusses investment accounts and related journal entries. It explains that an investment account is maintained for each security/script to record transactions separately. It also discusses entries for purchase and sale of investments at interest dates and before interest dates. For purchases/sales before an interest date, it explains the treatment for cum-interest and ex-interest quotations. Cum-interest means the quoted price includes accrued interest, while ex-interest means it does not. The accounting entries record the purchase/sale price and treat accrued interest separately.
The document discusses various time value of money concepts such as compounding, discounting, and the time value principle that money today is worth more than money in the future. It also provides formulas for calculating future and present value of single and annuity cash flows. The document then discusses capital budgeting methods like payback period, accounting rate of return, net present value, internal rate of return, and profitability index. It also discusses working capital, its estimation using the operating cycle method, and financial leverage analysis.
Long term financing involves raising funds for periods of 7 years or more, typically to finance fixed assets or permanent working capital needs. Common sources of long term financing include equity such as common stock or preferred stock, as well as debt instruments like bonds or bank loans. The costs of these various long term financing options must be calculated, taking into account factors like interest rates, dividend yields, maturity periods, tax rates, and flotation costs. The appropriate price or value is then determined for equity and debt instruments based on these cost of capital calculations and future cash flow expectations.
Return on investment (ROI) is a performance measure used to evaluate the efficiency of an investment. It is calculated as income from operations divided by invested assets. A higher ROI means the investment's earnings compare favorably to its costs.
The DuPont formula is another useful performance evaluation tool that breaks down ROI into its components. It expresses ROI as the product of profit margin and investment turnover. Profit margin measures profitability per sales dollar, while investment turnover measures sales per dollar of assets.
Residual income is income exceeding a minimum acceptable return on invested assets, set by management. It encourages managers to maximize income above this minimum and accept projects expected to exceed the minimum ROI.
Return on investment (ROI) is a performance measure used to evaluate the efficiency of an investment. It is calculated as income from operations divided by invested assets. A higher ROI means the investment's earnings compare favorably to its costs.
The DuPont formula is another useful performance evaluation tool that breaks ROI down into its components. It expresses ROI as the product of profit margin and investment turnover. Profit margin measures profitability per sales dollar, while investment turnover measures sales per dollar of assets.
Residual income is income exceeding a minimum acceptable return on invested assets, set by management. It encourages managers to maximize income above this minimum and accept projects expected to exceed the minimum ROI.
Equity refers to shareholders' capital paid into a company. Shareholders are not required to pay the full share capital upfront, but must pay at least 25% of the funds invested. Earnings per share is the ratio of net earnings divided by the average number of shares, demonstrating the company's profitability on a per share basis. Net profit represents the increase in equity from all business transactions. Paid-up capital refers to the initial price paid by the company when shares were first issued. Assets are things of value owned by the company, which can be tangible or intangible. Liabilities are future obligations to pay third parties resulting from past events. Revenue is income from sales, which can decrease if prices are
- A share indicates a unit of ownership in a company. Shareholders own a percentage of the company and are entitled to potential profits as well as facing risks of losses.
- Share capital is the total capital of a company divided into equal units called shares. There are different types of shares like preference shares that give preferential rights, equity shares that are ordinary shares with voting rights.
- When a company earns a profit, it may choose to pay a dividend to shareholders by distributing some of the earnings. The dividend is decided by the board of directors.
This document provides an overview of key financial statements including the balance sheet, income statement, and statement of cash flows. It also discusses various types of financial analysis that can be performed including profitability analysis, activity/turnover analysis, and liquidity ratio analysis. The balance sheet presents a company's assets, liabilities, and equity. The income statement summarizes profitability, and the statement of cash flows shows changes in a company's cash balance over a period from operating, investing, and financing activities.
- IAS 33 provides guidance on calculating and presenting earnings per share (EPS) and related disclosures. It covers entities with publicly traded ordinary shares or potential ordinary shares.
- EPS is calculated as basic EPS and diluted EPS. Basic EPS uses existing shares, while diluted EPS shows what EPS would be if all potential ordinary shares were issued. Both require adjusting earnings and shares for various factors.
- The standard outlines specific calculation methods and requires disclosure of EPS amounts and reconciliations in the financial statements.
This document provides definitions and formulas for various financial ratios used in ratio analysis. It includes ratios that measure liquidity (current ratio, quick ratio, etc.), activity (inventory turnover, accounts receivable turnover, etc.), debt (debt-equity ratio, long-term debt ratio, etc.), profitability (gross profit margin, net profit margin, return on assets, etc.), and market ratios (price-earnings ratio, market-to-book ratio, dividend yield). Formulas are given for key ratios along with standard benchmarks. Current assets, current liabilities, and components of equity and debt are defined for calculating various leverage and return ratios.
Nhoeb sokla presentation slide 2010( what is financial statement)sokladdd
This document discusses financial statements and provides examples. It defines financial statements as records that provide an indication of a business or organization's financial status, including balance sheets, income statements, cash flow statements, and statements of retained earnings. It then provides examples of these statements for a sample company called Larean Fashion Company, including income statements, statements of retained earnings, balance sheets, and statements of cash flow. It also defines various accounts that appear on the financial statements such as assets, liabilities, cash, inventory, and expenses.
This is a presentation on AS 20 for calculation of BASIC and DILUTED EPS as prescribed by ICAI with examples for better understanding for CA Final and IPCC
Similar to BBS 1st year account Accounting for shareholders equity (20)
Dear students and teachers, It is more useful slide for you. It is related to Rectification of accounting errors Account Class 11 account Account rectification of accounting errors Rectification of one sided errors Rectification of two sided errors लेखा सम्बन्धी गल्तिको सुधार . Please like, comment, share and subscribe this slide. #Rectification of accounting errors #Account #Class 11 account #Account rectification of accounting errors # Rectification of one sided errors #Rectification of two sided errors #लेखा सम्बन्धी गल्तिको सुधार
This document provides information about accounting for provisions and reserves. It discusses the journal entries needed for provisions for bad and doubtful debts. Specifically, it outlines 4 steps for the provision for bad debts account, including debiting the bad debt account and crediting the provision for bad debts. It also provides an example, showing journal entries to write off a bad debt, create a provision for estimated bad debts, and close the estimated bad debts account to the profit and loss account. The document was prepared by Pralhad Sapkota for a class at Pragati Secondary School in Nepal.
It is very very useful PPT slide for online class in Nepali medium. It is prepare by using different books and websites. So, Please follow, like, comment and suggest me for other slide like this.
This ppt slide is preparing by collecting from difference books and educational websites. It is in Nepali and English both medium , Please follow me with positive comments and suggestion for other slide like this.
The document summarizes Chapter 6 of an accounting textbook on the final accounts of a company. It discusses the key components of final accounts, which include the trading account, profit and loss account, profit and loss appropriation account, and balance sheet. It explains the purpose and importance of each component. The trading account is used to determine gross profit or loss. The profit and loss account shows net profit or loss. The profit and loss appropriation account details the distribution of net profit. And the balance sheet presents the company's overall financial position by reporting its assets, liabilities, and equity.
The document provides information about Chapter 6 of a class 12 accounting textbook. It discusses the key components of a company's final accounts, which include the trading account, profit and loss account, profit and loss appropriation account, and balance sheet. It explains that the final accounts ascertain the operating results and financial position of a company. Each component serves a specific purpose, such as the trading account determining gross profit/loss, and the balance sheet reflecting the company's assets, liabilities, and equity.
This document provides an overview of planning as part of a Business Studies class in Nepal. It was prepared by Pralhad Sapkota of Pragati Secondary School in Hetauda, Nepal. The document defines planning as deciding in advance what to do, how to do it, when to do it, and by whom. It then outlines the learning objectives of understanding the concept of planning, types of planning, the planning process, need for planning, benefits of planning, and limitations of planning. The document proceeds to explain the concept of planning and provide examples of definitions from various management theorists. It also describes the different types of planning based on managerial hierarchy, uses, flexibility, and time period.
This document provides an overview of debentures, which are a type of loan taken by companies from the public. It discusses the key characteristics of debentures, including that they are a written promise to repay the principal plus interest at a fixed rate by the company. The document also outlines the importance of debentures for companies and debenture holders. Finally, it describes the various types of debentures, such as secured vs unsecured debentures and redeemable vs irredeemable debentures.
It is in Nepali Medium. It is prepared by using difference basic and reference books & google. I hope it is very very useful for Nepali readers (Teachers and Students). Please follow, like, comment and share it for motivating me to prepare other slides like this.
Pralhad Sapkota presented the course contents and evaluation scheme for Class 12 Business Studies. The course covers 14 units on topics related to the principles and functions of management. Students will be evaluated based on their performance on 10 short answer questions and 3 long answer questions, with the short answer questions each worth 8 marks and the long answer questions each worth 18 marks, for a total of 100 marks. The document provides an overview of the key concepts and topics that will be covered in each of the 14 units of the Business Studies course.
This document discusses filing systems for Grade 10 students. It introduces traditional filing systems like misil filing and box filing that are still used in some Nepali government offices. It explains that filing is the systematic storage of important documents so they can be easily retrieved when needed. The key objectives of filing are safety, easy retrieval of documents, and to provide guidelines to staff. Students are assigned homework to define filing and explain the importance and objectives of filing in an office.
Pralhad Sapkota of Pragati Secondary School presented on Principles of Accounting - II. The presentation covered the unit-wise weightage and syllabus breakdown, including chapters on accounting for companies, final accounts of a company, financial statement analysis, and cost accounting. It provided the theoretical and numerical weightings and number of questions for each chapter. The presentation concluded with thanks for active participation in learning.
Here are the answers to the questions:
1. Office procedures refer to the set of rules, processes, and guidelines that define how work gets done in an office. They establish standards for tasks like communication, document filing, meetings, and general work flow. Office procedures help ensure consistency, efficiency and compliance.
2. Office procedures are needed for the following reasons:
- To establish consistency in office operations and ensure tasks are performed uniformly. This helps improve efficiency.
- To comply with legal and regulatory requirements that govern business operations. Procedures help maintain compliance.
- To define roles and responsibilities of staff so there is clarity in expectations. This helps improve accountability.
- To provide guidance to new employees
Office procedures provide the rules and policies for conducting operations in an office or business. They establish a formal process for collecting necessary information to make efficient and effective decisions. Key benefits of office procedures include performing jobs in an organized and uniform way, complying with relevant laws, and properly addressing organizational problems by considering input from all staff levels. Tippani/memos are written statements used in organizations to submit facts, information, rules, opinions and suggestions to higher levels for decision making regarding various issues. They must include all relevant information and documents to support important decisions.
Office procedures are the set of rules and policies that guide operations in an office or business. They establish a formal process for collecting necessary information to make efficient and effective decisions. Office procedures are important for performing jobs in an organized way, complying with relevant laws, and properly addressing organizational problems by considering input from all staff levels. A memo or tippani is a written statement of facts, information, related rules and regulations, opinions and suggestions prepared by lower-level staff and submitted to higher-level staff or officers for decision making. It allows important decisions to be made after verifying all relevant information and documents are included.
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Philippine Edukasyong Pantahanan at Pangkabuhayan (EPP) CurriculumMJDuyan
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𝐃𝐢𝐬𝐜𝐮𝐬𝐬 𝐭𝐡𝐞 𝐄𝐏𝐏 𝐂𝐮𝐫𝐫𝐢𝐜𝐮𝐥𝐮𝐦 𝐢𝐧 𝐭𝐡𝐞 𝐏𝐡𝐢𝐥𝐢𝐩𝐩𝐢𝐧𝐞𝐬:
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Chapter wise All Notes of First year Basic Civil Engineering.pptxDenish Jangid
Chapter wise All Notes of First year Basic Civil Engineering
Syllabus
Chapter-1
Introduction to objective, scope and outcome the subject
Chapter 2
Introduction: Scope and Specialization of Civil Engineering, Role of civil Engineer in Society, Impact of infrastructural development on economy of country.
Chapter 3
Surveying: Object Principles & Types of Surveying; Site Plans, Plans & Maps; Scales & Unit of different Measurements.
Linear Measurements: Instruments used. Linear Measurement by Tape, Ranging out Survey Lines and overcoming Obstructions; Measurements on sloping ground; Tape corrections, conventional symbols. Angular Measurements: Instruments used; Introduction to Compass Surveying, Bearings and Longitude & Latitude of a Line, Introduction to total station.
Levelling: Instrument used Object of levelling, Methods of levelling in brief, and Contour maps.
Chapter 4
Buildings: Selection of site for Buildings, Layout of Building Plan, Types of buildings, Plinth area, carpet area, floor space index, Introduction to building byelaws, concept of sun light & ventilation. Components of Buildings & their functions, Basic concept of R.C.C., Introduction to types of foundation
Chapter 5
Transportation: Introduction to Transportation Engineering; Traffic and Road Safety: Types and Characteristics of Various Modes of Transportation; Various Road Traffic Signs, Causes of Accidents and Road Safety Measures.
Chapter 6
Environmental Engineering: Environmental Pollution, Environmental Acts and Regulations, Functional Concepts of Ecology, Basics of Species, Biodiversity, Ecosystem, Hydrological Cycle; Chemical Cycles: Carbon, Nitrogen & Phosphorus; Energy Flow in Ecosystems.
Water Pollution: Water Quality standards, Introduction to Treatment & Disposal of Waste Water. Reuse and Saving of Water, Rain Water Harvesting. Solid Waste Management: Classification of Solid Waste, Collection, Transportation and Disposal of Solid. Recycling of Solid Waste: Energy Recovery, Sanitary Landfill, On-Site Sanitation. Air & Noise Pollution: Primary and Secondary air pollutants, Harmful effects of Air Pollution, Control of Air Pollution. . Noise Pollution Harmful Effects of noise pollution, control of noise pollution, Global warming & Climate Change, Ozone depletion, Greenhouse effect
Text Books:
1. Palancharmy, Basic Civil Engineering, McGraw Hill publishers.
2. Satheesh Gopi, Basic Civil Engineering, Pearson Publishers.
3. Ketki Rangwala Dalal, Essentials of Civil Engineering, Charotar Publishing House.
4. BCP, Surveying volume 1
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BBS 1st year account Accounting for shareholders equity
1. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Chapter – 11(BBS) : Accounting for Shareholders’ Equity
2. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Concept Shareholders’ / Stockholders’ Equity
Shareholders' equity (or business net worth) shows how much
the owners of a company have invested in the business—either by
investing money in it or by retaining earnings over time. It is the
amount of assets remaining in a business after all liabilities have
been settled. It is calculated as the capital given to a business by
its shareholders, plus donated capital and earnings generated by
the operation of the business, less any dividends issued.
3. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Components/Elements Shareholders’ Equity
1. Common Share/stock:
Common stock = Number of shares issued x Par value per share
2. Preferred stock/Preference share
Preferred stock=Number of preferred shares issued x Par per share
3. Additional paid in capital/share premium/paid in capital in
excess of par (APC)
APC = No. of issued shares x(Issue price – Par per share)
4. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
4. Contributed Capital/Capital stock:
It is the amount of shareholders’ equity the shareholders have
contributed to the company. The company received capital
amount from the sale of share(CS or PS) to the shareholders.
Contributed capital = Common & Pref. stock + Additional paid in capital
Or Contributed capital=No of issued shares x Issue price
5. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
5. Retained Earning/Undistributed profit / Accumulated earning
/ The amount of not paid as dividend:
RE for the end of a period = Net income–Dividend Paid
6. Treasury stock/Reacquired the co.’s own stock/buy back
share/repurchase shares:
Methods of retirement (purchase and reissue of TS): Negotiation,
Tender price, Open security market price, cost price and par value
6. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Balance Sheet Presentation of Shareholders’ Equity:
Partial balance sheet of ……Company Ltd. as on 31st ….
Particulars Amount Amount
Liabilities and Shareholder’s Equity:
Contributed capital & shareholders’ fund:
…….. % Preferred stock/Preference share capital (Old +…… share issued x Par ) (PSC)
Common stock ( Old +……. Share issued x par) (CSC)
Additional paid in capital {Old + …. Share issued x (issue price – par)} PS if (APC—PS)
Additional paid in capital {Old +…. Share issued x (issue price – par)} CS if (APC—CS)
Total contributed capital
Retained Earnings ending (Beg. RE + NI –Dividend paid): RE
xxx
xxx
xxx
xxx
xxx
xxx
Total contributed capital and Retained Earning
Less: Treasury stock If any (No. of TS x repurchase price)
Total Shareholders’ Equity or Net worth (TSE or TSF)
xxxx
xxx
xxxx
Statement of shareholders’ equity or shareholders’ equity account
7. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Analyzing the management of shareholders’ equity/Owners’ Equity
1. Total Shareholders’ equity/ Fund= Total contributed capital + RE – TS = Rs. …….
2. Total Shareholders’ equity = PSC+ CSC + APC +GR+ RE- TS = Rs. …….
3. Total SE= Assets- Liabilities or Debt (ie, Assets = Liabilities or Debt + Equity) = Rs. …….
4. Number of Shares:
No. of authorized/Registered shares = …… shares
No. of issued shares =
𝐶𝑜𝑚𝑚𝑜𝑛 𝑠ℎ𝑎𝑟𝑒 𝑐𝑎𝑝𝑖𝑡𝑎𝑙 𝑎𝑡 𝑝𝑎𝑟
𝑃𝑎𝑟 𝑣𝑎𝑙𝑢𝑒 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
= ………… shares
No. of common share outstanding (N) = no of issued shares- no of treasury shares
5. Par value or face value or recorded value in paper share certificate but now DEMAT is use.
Par value per share =
𝐶𝑜𝑚𝑚𝑜𝑛 𝑠ℎ𝑎𝑟𝑒 𝑐𝑎𝑝𝑖𝑡𝑎𝑙
𝑛𝑜 𝑜𝑓 𝑖𝑠𝑠𝑢𝑒𝑑 𝑠ℎ𝑎𝑟𝑒𝑠
= Rs. ….
8. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
DEMAT:
Companies have started keeping their shares in electronic form
instead of paper share certificates that is associated with
share transfer. These are known as DEMAT or dematerialized
(converted from physical to electronic) shares. Thus making
share trading easy for the users during online trading.
9. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
6. Book Value Per Share (BVPS)=
𝑇𝑜𝑡𝑎𝑙 𝐵𝑜𝑜𝑘 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑐𝑜𝑚𝑚𝑜𝑛 𝑒𝑞𝑢𝑖𝑡𝑦
𝑁
or BVPS =
𝑇𝑜𝑡𝑎𝑙 𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠′𝐸𝑞𝑢𝑖𝑡𝑦−𝑃𝑟𝑒𝑓. 𝑠ℎ𝑎𝑟𝑒 𝑐𝑎𝑝𝑖𝑡𝑎𝑙
𝑁
= Rs ….
7. Market value per share (MVPS or MPS or P0): MPS is determined from the interaction between
demand and supply of the share in the share market. It is currently trading/selling price.
8. Return on Assets (ROA)=
𝑁𝑃𝐴𝑇+𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
x 100=…… %
9. Return on Common Equity (ROCE)=
𝐸𝐴𝐶𝑆
𝐶𝑜𝑚𝑚𝑜𝑛 𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠′𝑒𝑞𝑢𝑖𝑡𝑦
x 100 = ……%
or, ROCE =
𝑁𝑃𝐴𝑇 −𝑃𝑑
𝑇𝑆𝐸−𝑃𝑆𝐸
x 100 = ……%
And, Return on Equity (ROE) =
𝑁𝑃𝐴𝑇
𝑇𝑆𝐸
x 100 = ……%
10. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
10. Preference dividend (Pd)=Preference share capital x given preference dividend rate.
11. Earning per share (EPS)=
𝐸𝐴𝑆𝐶
𝑁
= Rs….
or, EPS =
𝑁𝑃𝐴𝑇 −𝑃𝑑
𝑁𝑜 𝑜𝑓𝑐𝑜𝑚𝑚𝑜𝑛 𝑠ℎ𝑎𝑟𝑒 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔
= Rs….
12. Earning available to common shareholders (EASC) = Net Income (NI) = NPAT-Pd = Rs…
13. Dividend Per Share (DPS) =
𝑇𝑜𝑡𝑎𝑙 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠 𝑜𝑓 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠
𝑁𝑜 𝑜𝑓𝑐𝑜𝑚𝑚𝑜𝑛 𝑠ℎ𝑎𝑟𝑒 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔
= Rs….
or DPS =
𝑇𝐷
𝑁
= Rs….
14. Dividend Payout Ratio( D/P or D/E ratio or DPR) =
𝐷𝑃𝑆
𝐸𝑃𝑆
x 100= …. % or,
𝑇𝐷
𝑁𝐼
x 100= …. %
15. Price Earning Ratio (P/E Ratio) =
𝑀𝑃𝑆
𝐸𝑃𝑆
= … times or ……. X 100= ….%
11. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Source: Kriti Publication:
12. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Source: Asmita Publication:
13. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
14. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Accounting entries for issuance of shares/stock (Journal Entries)
1. Share /stock issued for cash:
a. If issued at Par:
Bank a/c …….. Dr. xxx
To Common/Preferred stock a/c xxx
(No of issued shares x Par per share)
(Being …. common / preference shares issued at Rs…. each)
b. If issuance of no par stock or issuance of stated value stock or issued at no par price:
Bank a/c …….. Dr. xxx
To Common/Preferred stock a/c xxx
(No of issued shares x issued price per share)
(Being …. common / preference shares issued at Rs…. each)
15. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
c. If issued at Premium/APC or issue price is more than par:
Bank a/c (No of issued shares x Issue price per share) …….. Dr. xxx
To Common/Preferred stock a/c (…..shares x Par each) xxx
To Additional Paid in Capital a/c – CS or PS (….shares x prem. each) xxx
(Being …. common / preference shares issued at Rs…. each)
d. If issued at discount or issue price is less than par:
Bank a/c (No of issued shares x Issue price per share) …….. Dr. xxx
Discount on issue of ….. Stock a/c(…Share x dis. Rs.. each …. Dr. xxx
To Common/Preferred stock a/c (No of shares x Par per share) xxx
(Being …. common / preference shares issued at Rs…. each)
16. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
2. Share /stock issued for non cash consideration (other than cash):
Building (Assets individually) a/c Dr. xxx
Discount on issue a/c (if) Dr. xxx
To Common stock a/c (…. Share x Par each) xxx
To Preferred stock a/c (…. Share x Par each) xxx
To APC – CS a/c (…issued shares x prem--CS) (if) xxx
To APC – PS a/c (…issued shares x prem--PS) (if) xxx
(Being issuance of common / preference stock for purchase of building….)
17. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
2. Share /stock issued on subscription basis or contract basis purchase:
When an investor purchases share on a subscription basis
prior to incorporation of the business entity, a partial payment
is received and the share is not issued until the final payment
is made. The offer specify the part of the share price payable
at the time of buying for share and require that the balanced
amount be paid when share are issued whether it is on
contract basis or subscription basis.
18. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
On agreement/signing date:
Cash or Bank a/c (Partial amt. if) Dr. xxx
Subscription Receivable a/c Dr xxx
To Common stock subscribed a/c (…. Share x Par each) xxx
To APC – CS a/c (..issued shares x prem. - CS) (if) xxx
(Being issuance of common stock on subscription basis)
On amount receiving date:
Cash or Bank a/c Dr. xxx
To Subscription Receivable a/c xxx
(Being subscription receivable amount received)
19. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Source: Asmita Publication
20. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
21. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
22. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
23. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
24. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Source: Kriti Publication: IIlustration 9:
On Feb. 1, Help corporation signs a contract with an investor to issue 100 shares of stock with a
par value of Rs. 10 for Rs. 80 per share in one month. The buyer has to make a down payment of
Rs. 800 at the signing date. And subscription balance was paid on march 1.
Required: Journal Entries with effect on balance sheet.
Solution: On Feb 1: Bank a/c Dr 800
Subscription Receivable a/c Dr 7200
To Common stock subscribed a/c (100 Share x Rs. 10 each) 1000
To APC – CS a/c (100 shares x 70) 7000
(Being issuance of common stock on subscription basis)
On March 1: Bank a/c Dr 7200
To Subscription Receivable a/c 7200
(Being subscription receivable amount received)
25. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Accounting entries for treasury share/stock (Journal Entries)
1. Purchase of treasury share /stock:
Treasury Stock a/c Dr xxx
To Cash or bank a/c xxx
(Being purchase of …. shares of treasury stock at Rs…. each)
2. Re sale or Release or Re issue of treasury share / stock:
a. Sale / re issue of treasury stock at cost
Cash or Bank a/c Dr xxx
To Treasury stock a/c xxx
(Being sale of …. Shares of TS at cost of Rs….each)
26. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
b. Sale / re issue of treasury stock above cost
Cash or Bank a/c (No of TS x Re issue price) Dr xxx
To Treasury stock a/c (No of TS x Cost price) xxx
To APC a/c – TS (No of TS x above price) xxx
(Being sale of …. Shares of TS at above cost of Rs….each)
c. Sale / re issue of treasury stock below cost
Cash or Bank a/c (No of TS x Re issue price) Dr xxx
Retained Earning or APC-TS a/c (No of TS x below price) Dr xxx
To Treasury stock a/c (No of TS x Cost price) xxx
(Being sale of …. Shares of TS at below cost of Rs….each)
27. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
3. Retirement of treasury share / stock:
i. On cost method:
a. Retirement of treasury stock at cost equal to originally issued at par:
Common stock a/c Dr xxx
To Treasury stock a/c xxx
(Being retirement of …. shares of TS)
b. Retirement of treasury stock at cost above than par:
Common stock a/c (No of TS x par) Dr xxx
Retained Earning or APC-TS a/c (No of TS x above price) Dr xxx
To Treasury stock a/c (No of TS x cost price) xxx
(Being retirement of …. Shares of TS )
28. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
c. Retirement of treasury stock at cost below than par:
Common stock a/c (No of TS x par) Dr xxx
To Treasury stock a/c (No of TS x cost price) xxx
To Retained Earning or APC-TS a/c (No of TS x below price) xxx
(Being retirement of …. Shares of TS)
ii. On par value method:
Common stock a/c Dr xxx
To Treasury stock a/c xxx
(Being retirement of …. shares of TS)
29. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Source: Asmita Publication
30. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
31. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
32. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Source: accountingformanagement.org
The American company issued 5,000 shares of its Rs. 5 par value
common stock at Rs. 8 per share. Later, the company bought back
1,000 shares at Rs. 12 per share and immediately retired them.
Required: Prepare journal entries for retiring the shares
assuming the company accounts for treasury stock related
transactions using:
1. Cost method.
2. Par value method.
33. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Solution: 1. When 1,000 shares are retired – Under cost method:
Common Stock a/c (1000 x 5) Dr 5000
Additional Paid in Capital–TS a/c* Dr 3000
Retained earning a/c** Dr 4000
To Treasury stock a/c (1000 x 12) 12000
(Being retirement of 1000 shares of TS at cost)
*Additional paid in capital associated with 1,000 shares:
1,000 × (Rs. 8 – Rs. 5)= Rs. 3,000
**Retained earnings account has been debited with the remaining amount:
(Rs. 12,000 – Rs. 5,000 – Rs. 3,000= Rs. 4,000)
34. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Solution: 2. When 1,000 shares are retired
– Under Par value method:
Common Stock a/c (1000 x 5) Dr 5000
To Treasury stock a/c (1000 x 5) 12000
(Being retirement of 1000 shares of TS at par)
35. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Dividend / Distributed earning
It is the return on common stockholder after distribution to
bondholder and preferred stockholders. It is part of profit.
If a company has sufficient cash available and adequate
retained earning dividend may be declared. It is not
expenses, it is liabilities on the date of declaration.
Types:
1. Cash Dividend
2. Stock Dividend/Bonus share
36. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
1. Cash Dividend:
Cash dividend is cash distribution of accumulated earning by a
company to its shareholders. There are various types of cash
dividend payment policy. BOD may apply one policy to declare
dividend after approval of resolution.
Generally cash dividend amount can be calculated from the following:
Amount of cash dividend = Total par value of CS x Div. Rate
= N x Par per share x Div. Rate= Rs…
37. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Accounting Entries for Cash Dividend (Journal Entries):
1. At the time of dividend declaration:
Retained Earning a/c Dr xxx
To Cash dividend payable a/c xxx
(Being record for declaration of cash dividend)
2. At the time of dividend payment:
Cash dividend payable a/c Dr xxx
To cash or bank a/c xxx
(Being record the payment of cash dividend)
38. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Effect of cash dividend on shareholders equity and Balance Sheet
• Decrease the cash or bank (asset) equal by dividend amount
• Decrease the amount of retained earning equal by dividend
amount (ie, New RE= old RE – dividend)
• Decrease the Value of the firm equal by total dividend
• Decrease the MPS equal by DPS.
Where,
Adjusted price of a stock or MPS after cash dividend
= MPS before cash dividend - DPS
39. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
2. Stock Dividend / Bonus Share:
If the company distributes additional share rather than cash as
dividend to it’s existing shareholder with free of cost is called
stock dividend.
Company use stock dividend from the following reason:
• If the company has not sufficient cash available
• To reduce price at reasonable tradable range in the market
for small scale investors
• To make tax benefit for investors
40. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Accounting Entries for Stock Dividend (Journal Entries):
The journal entries for a stock dividend depends on whether the
company is involved in a small stock dividend or a large stock dividend.
The journal entries for both sizes are as follows:
1. Small size stock dividend (up to 25% or less than 25%)
A stock dividend is considered a small stock dividend if the number of
shares being issued is less than 25%. It will have little effect on the
market price and it to be recorded at fair market price.
41. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
1. At the time of stock dividend declaration:
Retained Earning (n x MPS) a/c Dr xxx
To CS dividend distributable (n x MPS) a/c xxx
(Being record for declaration of stock dividend)
2. At the time of distribution of stock dividend:
CS dividend distributable a/c (n x MPS) xxx
To Common stock a/c (n x par) xxx
To APC – CS a/c (n x Premium per share) xxx
(Being record the distribution of stock dividend)
42. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
2. Large size stock dividend (greater than 25%)
A stock dividend is considered a large stock dividend if the number
of shares being issued is greater than 25%. It will have more
effect on the market price and it to be recorded at par value.
1. At the time of stock dividend declaration:
Retained Earning a/c (n x Par) Dr xxx
To CS dividend distributable a/c (n x par) xxx
(Being record for declaration of stock dividend)
43. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
2. At the time of distribution of stock dividend:
CS dividend distributable (n x par) a/c xxx
To Common stock a/c xxx
(Being record the distribution of stock dividend)
Effect of stock dividend on shareholders equity:
Consider: N= no of old shares outstanding = ……. shares
SDR= Stock Dividend Rate (…% Given)
n (No of stock dividend) = N x SDR = …… shares
44. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Effect: 1. Increase the no. of Shares equal by n
:. Total no of shares after stock dividend= N + n = … Shares
or Nx(1+ SDR)=…. Shares
2. Decrease the amount of Retained Earning equal by (n x MPS)
:. New RE= old Retained Earning-(n x MPS) for Small size stock dividend
:. New RE= old Retained Earning-(n x Par) for large size stock dividend
3. Decreased the Retained Earning transferred to Common Stock at par
and Additional paid in Capital at premium.
45. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
:.Total amount of new common stock=old CS + n x par per share = Rs ….
or (N + n)x par per share = Rs …..
:. Total amount of New APC= old APC + (n x premium per share)
4. Total value of TS, PS, TSE unchanged.
Or, You can work at chart for small size stock dividend:
n = N x SDR =…….. shares
= Rs…… add in CS
= Rs…… add in APC
x MPS(Po)Rs ….= Rs…… Less from RE
46. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Or, You can work at chart for large size stock dividend:
n = N x SDR =…….. shares
= Rs…… add in CS
= Rs 0 add in APC
X par Rs…. = Rs…… Less from RE
5. MPS, EPS and DPS after stock dividend decreased
:. adjusted price (P1) will decreased
:. P1= Total Market Value of Equity / Total no of Share
=
P0 x N
N +n
or, P1 =
P0
1+ SDR
Where P0 =Currently selling price or existing MPS
47. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Stock Split:
It is the process of increasing the number of share and decreasing the par
and stock’s price in to reasonable tradable range for small scale investors.
The main objective of stock split is to reduce the market price in order to
make attractive to the investors.
Example:
Stock split (Given) Find: split ratio
2 for 1 stock split --- 2/1
3 for 2 stock split --- 3/2
5 for 2 stock split --- 5/2
48. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Effect and recording of stock split on shareholders equity:
• Increase the no. of share by split ratio.
:. Total no of share after split= N x split ratio= …….. Shares
• Decrease the par, MPS, EPS and DPS by split ratio
:. Par after split =
old par
𝑆𝑝𝑙𝑖𝑡 𝑟𝑎𝑡𝑖𝑜
= Rs….
:. MPS after split =
old MPS
𝑆𝑝𝑙𝑖𝑡 𝑟𝑎𝑡𝑖𝑜
= Rs…
• Total value of CS, APC, RE and TSE unchanged.
:. Common stock( …… share x par) = Rs. ……
# Accounting transaction is not recorded if company declares and executes a stock split.
49. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Source: Asmita Publication: QN 5: Do yourself
50. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Source: Asmita Publication: QN 11: Do yourself
51. Accounting for Shareholders’ Equity, Financial accounting and analysis, Prepared by Tr. Pralhad Sapkota, Sapkota Academy on you tube
Thank You