Accounting & Economics For Business 5 November Ii

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

ACCOUNTING & ECONOMICS FOR BUSINESS AFTERSCHO☺OL – DEVELOPING CHANGE MAKERS

CENTRE FOR SOCIAL ENTREPRENEURSHIP PGPSE PROGRAMME –

World’ Most Comprehensive programme in social entrepreneurship & spiritual entrepreneurship

OPEN FOR ALL FREE FOR ALL


ACCOUNTING & ECONOMICS FOR BUSINESS

Dr. T.K. Jain.

AFTERSCHO☺OLCentre for social entrepreneurship

Bikaner M: 9414430763

[email protected]

www.afterschool.tk, www.afterschoool.tk

http://www.afterschool.tk/

http://www.afterschoool.tk/


What is contingent liability ?

• These are not liabilities, but may become liabilities in the near future due to some or other reason – for example a pending case against a company.


Where do you show contingent liabilities?

• As a footnote attached to balance sheet.


What do you understand from marshalling balance sheet?

• How do you arrange the items in balance sheet? It may be liquidity order (starting from the most liquid assets) or vice versa. This is called marshalling the balance sheet.


Solve the following:

• Arrange the following assets in order of their liquidity:

• Furniture, Goodwill, Stock in trade, Unexpired insurance, Cash in hand , Trade debtors, Readily saleable investments, Cash at bank, Land, Buildings, Machinery, Bills receivable.

• Solution: Cash in hand, Cash at bank, Saleable investments, Bills receivable, Trade debtors, Stock in trade, Prepaid insurance, Furniture, Machinery,Buildings, Land, Goodwill


Mention 5 differences in double entry system and incomplete record

system? • DOUBLE ENTRY • All the accounts are

maintained• It is maintained by all

business persons and is very systematic and popular method

• Chances of errors are much less (comparatively)

• SINGLE ENTRY • Only cash, and

personal accounts are maintained

• It is generally followed by small traders


How can you apportion indirect expenses?

• Salary, carriage outward, insurance, bad debts, depreciation, repairs etc. are indirect expenses. They can be apportioned on reasonable basis. For example, depreciation can be apportioned on the basis of value of assets. Bad debts can be apportioned on the basis of sales. Etc.


You have to appoint an underwriter, how much commission will you

give, what rules will you follow and (what will be the penalty in case of

default)?

• 5% commission in case of shares (max.) and 2.5% in case of debentures (max.) and provisions of Sec. 76 and articles have to be followed. Mention these in prospectus also. Penalty : Rs. 5000.


What is firm underwriting?

• The underwriter undertakes to buy some shares (in any case, he has to buy it).


What will be the closing stock?


Solution

• Nil


M/s ABC Brothers, which was registered in the year 2000, has been following

Straight Line Method (SLM) of depreciation. In the current year it changed its method fromStraight Line to Written Down Value (WDV) Method, since such change would result in

the additional depreciation of Rs. 200 Iakhs as a result of which the firm would qualify

to be declared as a sick industrial unit. The auditor raised objection to this change in

the method of depreciation.The objection of the auditor is justified because


Options

1. Change in the method of depreciation should be done only with the consent of the auditor

2. Depreciation method can be changed only from WDV to SLM and not vice versa

3. Change in the method of deprecation should be done only if it is required by some statute and change would result in appropriate presentation of financial statement.

Solution: 3.


Goti Ltd. has issued 14% Debentures of Rs.20,00,000 at a discount of 10% on April 01, 2004 and the company pays interest half-yearly on June 30, and December 31 every year. On

March 31, 2006, the amount shown as “interest accrued but not due” in the Balance Sheet will

be(a) Rs.70,000 shown along with Debentures

(b) Rs.2,10,000 under current liabilities(c) Rs.1 ,40,000 shown along with Debentures

(d) Rs.2,80,000 under current liabilities


Solution

• Interest for 3 months : 70,000 as outstanding


Solve it

• P Ltd. issued 5,000, 12% debentures of Rs.100 each at a premium of 10%, which are redeemable after 10 years at a premium of 20%. The amount of loss on redemption of debentures to be written off every year is

• (a) Rs.80,000

• (b) Rs.40,000• (c) Rs.10,000• (d) Rs. 8,000


What is perfect market?

• There are very large number of buyers and sellers

• Prices are determined purely based on demand and supply

• There is complete information

• Market has complete knowledge• Homogenous products• Free entry and free exit • No barriers.


How is price determined in perfect market?

• Purely based on market demand and supply

• No individual firm can influence the price• Prices are always fluctuating to reflect the

current demand and supply

• Firm is only a price taker – and not the price maker.


When does the firm reach equilibrium ?

• When MR = MC, the firm is in equilibrium• When the marginal cost is equal to

marginal price, the firm is in equilibrium• The firm may have profit or loss in the

short run, but in long run, it cannot have loss or abnormal profit (just economic profit – the minimum profit required to sustain the firm – which is when MR = MC).


How is perfect market different from imperfect market?

• There are three types of markets in imperfect markets:

• 1. monopoly (single seller)• 2. oligopoly (2 or a few sellers)

• 3. monopolistic competition (a few sellers)


How are prices determined in monopolistic competition?

• Prices are determined purely based on demand and supply – but here each firm can decide its own price.

• Goods are differentiated• Every firm has its own pricing curve

• Every firm can change price to suit its revenue model .


How is prices determined in oligopoly?

• In oligopoly, the firms cannot change the price, - because – if they will reduce the price, the competitor will also reduce the price – thus the gain will be nill. If they increase the price - the competitor may not increase and as a result the customers will shift to competitor’s products.

• 2 or 3 companies are selling similar products / services in oligopoly


How is prices determined in monopoly

• Monopolist can earn extraordinary profit in long run.

• Prices are determined as per availability of supply.

• MR = MC is the point of equilibrium.

• Profit =Quantity *( AR – AC )or TR – TC

• Monopolist can earn super profit in short run and long run both.


ABOUT AFTERSCHO☺OL

Afterschoool conducts three year integrated PGPSE (after class 12th along with IAS / CA / CS) and 18 month PGPSE (Post Graduate Programme in Social Entrepreneurship) along with preparation for CS / CFP / CFA /CMA / FRM. This course is also available online also. It also conducts workshops on social entrepreneurship in schools and colleges all over India – start social entrepreneurship club in your institution today with the help from afterschoool and help us in developing society.


Why such a programme?

• To promote people to take up entrepreneurship and help develop the society

• To enable people to take up franchising and other such options to start a business / social development project

• To enable people to take up social development as their mission

• To enable people to promote spirituality and positive thinking in the world


Who are our supporters?

• Afterschoolians, our past beneficiaries, entrepreneurs and social entrepreneurs are supporting us.

• You can also support us – not necessarily by money – but by being promotor of our concept and our ideas.


About AFTERSCHO☺OL PGPSE – the best programme for developing great

entrepreneurs• Most flexible, adaptive but rigorous programme• Available in distance learning mode• Case study focused- latest cases

• Industry oriented practical curriculum• Designed to make you entrepreneurs – not just

an employee• Option to take up part time job – so earn while

you learn • The only absolutely free course on internet


Workshops from AFTERSCHO☺OL

• IIF, Delhi• CIPS, Jaipur• ICSI Hyderabad Branch• Gyan Vihar, Jaipur• Apex Institute of Management, Jaipur• Aravali Institute of Management, Jodhpur• Xavier Institute of Management, Bhubaneshwar • Pacific Institute, Udaipur• Engineering College, Hyderabad


Flexible Specialisations:

• Spiritualising business and society• Rural development and transformation• HRD and Education, Social Development• NGO and voluntary work• Investment analysis,microfinance and inclusion • Retail sector, BPO, KPO• Accounting & Information system (with CA / CS /CMA)• Hospital management and Health care• Hospitality sector and culture and heritage• Other sectors of high growth, high technology and social

relevance


Salient features:• The only programme of its kind (in the whole world)• No publicity and low profile course• For those who want to achieve success in life – not just a

degree• Flexible – you may stay for a month and continue the rest of

the education by distance mode. / you may attend weekend classes

• Scholarships for those from poor economic background• Latest and constantly changing curriculum – keeping pace

with the time• Placement for those who are interested• Admissions open throughout the year • Latest and most advanced technologies, books and study

material


Components • Pedagogy curriculum and approach based on IIM Ahmedabad and ISB

Hyderabad (the founder is alumnus from IIMA & ISB Hyderabad)• Meditation, spiritualisation, and self development • EsGotitial softwares for business• Business plan, Research projects• Participation in conferences / seminars• Workshops on leadership, team building etc. • Written submissions of research projects/articles / papers• Interview of entrepreneurs, writing biographies of entrepreneurs• Editing of journals / newsletters• Consultancy / research projects • Assignments, communication skill workshops• Participation in conferences and seminars• Group discussions, mock interviews, self development diaryng • Mind Power Training & writing workshop (by Dr. T.K.Jain)


Pedagogy

• Case analysis,• Articles from Harvard Business Review • Quiz, seminars, workshops, games, • Visits to entrepreneurs and industrial visits• PreGotitations, Latest audio-visuals• Group discussions and group projects• Periodic self assessment• Mentoring and counselling• Study exchange programme (with institutions out of

India)• Rural development / Social welfare projects


Branches

• AFTERSCHO☺OL will shortly open its branches in important cities in India including Delhi, Kota, Mumbai, Gurgaon and other important cities. Afterschooolians will be responsible for managing and developing these branches – and for promoting social entrepreneurs.


Case Studies

• We want to write case studies on social entrepreneurs, first generation entrepreneurs, ethical entrepreneurs. Please help us in this process. Help us to be in touch with entrepreneurs, so that we may develop entrepreneurs.


Basic values at AFTERSCHO☺OL

• Share to learn more• Interact to develop yourself• Fear is your worst enemy• Make mistakes to learn • Study & discuss in a group• Criticism is the healthy route to mutual support

and help • Ask fundamental questions : why, when, how &

where?• Embrace change – and compete with yourself

only


www.afterschoool.tk social entrepreneurship for better

society

http://www.afterschoool.tk/