Kenya Coconut Production Presentation by Dr. Lalith Perera
Financial accounting mgt101 power point slides lecture 38
1. Financial Accounting
1
Lecture – 38
Statement of Changes In Equity
• Statement of changes in equity shows the movement in:
Share Capital (issued share capital)
Share Premium
Nature of Reserves created
Un-appropriated Profit / Loss
Dividend Distributed
Note: Show all points simultaneously.
2. Financial Accounting
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Lecture – 38
Statement of Changes In Equity
• Capital Reserve and Fixed Asset Replacement Reserve are
used for specific purpose. These are not distributed among
share holders.
• General Reserve and undistributed profit` can be distributed
among share holders.
3. Financial Accounting
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Lecture – 38
Share Premium
• Share Premium – Amount received in excess of the face
value of the share. Example: if a Rs. 10 share is sold for Rs,
12 then Rs. 2 is share premium.
• Share Premium can not be distributed among the share
holders.
• It can be utilized for:
To issue Bonus Shares
To write off Preliminary Expenses
To meet the difference of face value and cash received in
case of shares issued at discount
To meet the expenses of issue of shares
For payment of premium on redemption of debentures
4. Financial Accounting
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Lecture – 38
Revaluation Reserve
• Revaluation Reserve – is created when an asset is re-
valued from cost to market value.
• Revaluation Reserve can not be distributed among the
share holders.
• It can be utilized for:
Setting off any loss on revaluation
At the time of disposal of asset, the reserve relating to
that asset is transferred to profit & loss account.
5. Financial Accounting
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Lecture – 38
Cash Flow Statement
• Cash Flow Statement – shows the movement of cash
resources during the year.
• It is an integral part of Financial statements.
Note: Show all points simultaneously.
6. Financial Accounting
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Lecture – 38
Notes to the Accounts
• Notes to the Accounts – are the explanatory notes of all the
items shown in the profit and loss account and the balance
sheet.
• It is the requirement of the Companies Ordinance and the
International Accounting Standards.
7. Financial Accounting
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Lecture – 38
Contents of Notes to the Accounts
• Following are explained in Notes to the accounts:
Nature of business of the company
Accounting Policies of the company
Details and explanation of items given in the Profit and
Loss Account and Balance Sheet.
8. Financial Accounting
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Lecture – 38
Debentures
• Debenture is an instrument for obtaining loan from general
public.
• Mark up is paid on Debentures which is generally equal to
the market rate.
9. Financial Accounting
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Lecture – 38
Debentures
• Debentures are acknowledgement of debt, owed by the
company to the public at large for a defined period of time,
and has a mark up (profit) rate attached to it.
10. Financial Accounting
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Lecture – 38
Term Finance Certificate
• Term Finance Certificate are issued for a defined period.
• These are also issued to obtain loan from public at large.
12. Financial Accounting
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Lecture – 38
Question
• Beta (Private) Limited is a manufacturing company.
• Following list of balances has been extracted from its books
as on June 30, 2002.
13. Financial Accounting
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Lecture – 38
Particulars Amount Rs.
Authorized Capital (face value Rs. 10 each) 500,000
Paid up / issued Capital 300,000
Debentures 240,000
Land 120,000
Building 315,000
Motor Vehicles 187,500
Furniture 34,500
Accumulated Profit and Loss Account 29,489
Stock in Trade 48,630
14. Financial Accounting
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Lecture – 38
Particulars Amount Rs.
Debtors 42,525
General Reserve 28,000
Creditors 27,360
Proposed Dividend 15,000
Bank Balance ?
Accumulated Depreciation
Motor Vehicles 46,050
Building 66,000
Fixtures 11,250
15. Financial Accounting
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Lecture – 38
Note:
• All items of profit and loss have been accounted for in
calculating the balance of accumulated profit and loss
account, except for Depreciation which is to be charged at
10% on WDV on all depreciable assets.
Required
• Prepare the balance sheet of Beta (Private) Limited As on
June 30, 2002
16. Financial Accounting
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Lecture – 38
Beta (Private) Limited
Trial Balance As At June 30, 2002
Debit Rs. Credit Rs.
Paid up Capital 300,000
Debentures 240,000
Accumulated Profit and Loss Account 49,489
General Reserve 8,000
Creditors 27,360
Accumulated Depreciation
Motor Vehicles 46,050
Building 66,000
Furniture and Fixtures 11,250
Solution
17. Financial Accounting
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Lecture – 38
Debit Rs. Credit Rs.
Proposed Dividend 15,000
Land 120,000
Building 315,000
Motor Vehicles 187,500
Furniture and Fixture 34,500
Stock in Trade 48,630
Debtors 42,525
Bank Balance
TOTAL
Double
Under
line
748,155 763,149
14,994
763,149 763,149
Note: See Animation
18. Financial Accounting
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Lecture – 38
Beta (Private) Limited
Balance Sheet As At June 30, 2002
Particulars Note Amount Rs.
Fixed Assets at WDV 1
Current Assets
Debtors
Stock in Trade
Bank Balance
Total Current Assets
Current Liabilities
Creditors
Proposed Dividend
Total Current Liabilities
Working Capital
Net Assets Employed
Financed By:
Authorized Capital
50,000 Shares of Rs. 10 each
Paid Up Capital
30,000 shares of Rs. 10 each
General Reserve
Accumulated Profit and Loss Account 2
Debentures
Total
Double
Under
line
19. Financial Accounting
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Lecture – 38
Beta (Private) Limited
Balance Sheet As At June 30, 2002
Particulars Note Amount Rs.
Fixed Assets at WDV 1
Current Assets
Debtors
Stock in Trade
Bank Balance
Total Current Assets
Current Liabilities
Creditors
Proposed Dividend
Total Current Liabilities
Working Capital
Net Assets Employed
Double
Under
line
20. Financial Accounting
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Lecture – 38
Note 1 – Fixed Assets at WDV
Particulars Cost Rate Acc. Dep. WDV
As At
1-7-01
Addition/
Deletion
As At
30-6-02
As At
1-7-01
For The
Year
As At
30-6-02
As At
30-6-02
Land
Building
Furniture &
Fixtures
Vehicles
TOTAL