INTERMEDIA INTERMEDIATETE · project and terminates at the completion of the project. This is a very short lived business and does not follow the going concern concept. During dewali

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E- BULLETINE-E- E- BULLETIN

VOL: 3, No.: 1VOL: 3, No.: 1January, 2018 ISSUEJanuary, 2018 ISSUE

INTERMEDIATEINTERMEDIATE

Behind every successful business decision, there is always a CMA

ContentsContents

Knowledge Update -

Message from the Chairman -

Group : I Paper 5: Financial Accounting (FAC) -

Group: I Paper 6: Laws & Ethics (LNE) -

Group: I Paper 7: Direct Taxation (DTX) -

Group: I Paper 8: - Cost Accounting (CAC)-

Group: II Paper: 9, Part - i: Operations Management & Strategic Management - Operations Management (OMSM)-

Group: II Paper: 9, Part - ii: Operations Management & Strategic Management - Strategic Management (OMSM) -

Group: II Paper: 10: Cost & Management Accounting and Financial Management (CMFM) -

Group: II Paper 11: Indirect Taxation (ITX) -

Group: II Paper 12: Company Accounts & Audit (CAA) -

Submissions -

Practical Advice -

Message from the Directorate of Studies -

Photo Gallery -

Model Career Planer -

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STUDENTS’ E-bulletin JANUARY 2018, ISSUE Intermediate

VOL: 3, No.: 1

i

Message from theMessage from theMessage from the ChairmanChairmanChairman


CMA Manas Kumar ThakurCMA Manas Kumar ThakurCMA Manas Kumar Thakur

Be a CMA, be a Proud IndianBe a CMA, be a Proud Indian

Chairman,Chairman,Chairman,Training & Education Facilities (T& EF) CommitteeTraining & Education Facilities (T& EF) CommitteeTraining & Education Facilities (T& EF) Committee

Dear Students,

A very Happy, Healthy & Prosperous New Year. Believe in yourself and

hope you achieve everything in this year.

“Excellence is not a skill, it is an attitude”. Education provides knowledge,

knowledge gives power, power gives respect and finally, respect provides the ultimate

happiness. So, all the qualities are bonded in chain and until and unless you are

acquiring real knowledge, you are not been able to reach to your destination and cannot enjoy your life fully.

There might be mistakes but I believe in that mistakes are proof that you are trying. Do it now, sometimes later

becomes never. 'Minds are like parachutes they only function when they are open'.

“Learning is not child's play; we cannot learn without pain” as told by Aristotle.” You are

receiving your study related input on each subject and these are given by academicians of repute. My suggestion

to all of you is; be serious and read all the topics meticulously. Mock Test Papers (MTPs) are also uploaded by the

Directorate of Studies to help you to get acquainted with the pattern of questions you may face in your

examination. I believe that all of you are equally capable to get success in the examination provided you prepare

sincerely and pay needed attention towards the resources being provided by the Directorate of Studies. “The

future belongs to those who believe in the beauty of their dreams”.

May this year illuminate your life in your own ways and being an optimist take the resolution of delivering your

best and put your mark in the 'Make in India' movement.

Wishing you Goodluck and Happiness,

i


VOL: 3, No.: 1

!! Happy New Year !!!! Happy New Year !!




VOL: 3, No.: 1


upDAtE

upDAtE

upDAtEKNOWLEDGEKNOWLEDGEKNOWLEDGE


VOL: 3, No.: 1

In this section of e-bulletin we shall have a series of discussion on each of these chapters to provide a meaningful assistance to the students in preparing themselves for the examination at the short end and equip them with sufficient knowledge to deal with real life complications at the long end.

1

YourPreparationQuickTakes




VOL: 3, No.: 1

Financial Accounting (FAC)

Group - IPaper - 5Group - IPaper - 5Financial Accounting (FAC)

CMA (Dr.) Nibir GoswamiAssociate Professor in CommerceVidyasagar Mahavidyalaya, W.B.He can be reached at:[email protected]

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VOL: 3, No.: 1

JOINT VENTURE A/CJOINT VENTURE A/C

ACCOUNTING FOR SPECIAL TRANSACTIONJOINT VENTURE

INTRODUCTION

Venture or to be more specific terminable venture is a kind of business which is formed to perform a specific

project and terminates at the completion of the project. This is a very short lived business and does not follow

the going concern concept. During dewali road side shops are opened for selling crackers and wrapped up

after dewali may be a good example of very small venture. A joint venture is a venture formed with more than

one person like partnership business. The business is dissolved after the termination of the venture. The

parties involved are Co Venturers.

ACCOUNTING SYSTEM

1. WHEN A SEPARATE SET OF BOOKS IS KEPT

2. WHEN NO SEPARATE SET OF BOOKS IS KEPT

In this issue we will discuss the first method. In the next issue we will discuss the next method along with the illustrations of both

the methods.

Generally when the size of the business is large a separate set of books is maintained by opening the following accounts :

a. Joint Bank account

b. Joint Venture account and

c. Co venturers account

Follow the following format to understand how the accounts are maintained :

JOINT VENTURE A/C

TO JOINT BANK ACCOUNT- PURCHASE BY JOINT BANK ACCOUNT –SALES

TO CO VENTURERS A/C – GOODS SUPPLIED BY

CO VENTURERS

BY CO VENTURERS A/C – GOODS TAKEN

OVER BY CO VENTURERS

TO JOINT BANK ACCOUNT- EXPENSES

TO CRDITORS – CREDIT PURCHASE

TO CO VENTURERS A/C – PROFIT ON VENTURE

TOTAL

BY DEBTORS A/C- CREDIT SALE

TOTAL

Learning Objective:

· Students will demonstrate their knowledge of the fundamental and technical concepts of

accounting.

· Students will reveal critical-thinking and problem-solving skills.

· Students will exhibit the ability to recognize when change is appropriate, to adapt to

change as it occurs, and to take the lead in creating change.

· Students will display a sense of responsibility and a capacity for the subject after learning

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VOL: 3, No.: 1

JOINT BANK A/CJOINT BANK A/C

CO VENTURERS A/CCO VENTURERS A/C

JOINT BANK A/C

CO VENTURERS A/C

1. in this account in the debit side all expenses(paid personally by the co venturers or out of JOINT VENTURE ACCOUNT :

join bank) irrespective of its nature (i.e capital or revenue) are recorded. In the credit side all sales (to outsiders as well a to the

co venturers ) are recorded. I n this way the difference is considered as profit / Loss on venture transferred to co venturers

account in their pfofit sharing ratio.

2. This is basically the cash book of the business. All cash inflows are recorded in the debit side and JOINT BANK ACCOUNT :

the outflows are recorded in the credit side. Final settlement of the co venturers are lastly put into this account so that it tallies.

3. It is like the capital account in the partnership business and is opened in multicolumnar CO VENTURERS ACCOUNT :

form to record the transaction of individual venture. Balance in this account refer to the claim of a co venture to / from the

business and is settled through the joint bank account.

NOTE :

1. SINCE THE TYPE OF BUSINESS IS VERY SHORT LIVED NORMALLY A FIRM NAME IS NOT USED IN THIS KIND OF

BUSINESS.

2. AS A BASIC FEATURE OF ACCOUNTING FOR SPECIAL TRANSACTION ALL TRANSACTIONS ARE RECORDED IN THE

NAME OF JOINT VENTURE. YOU MUST REFER TO CONSIGNMENT ACCOUNTS WHERE ALL EXPENSES AND

INCOMES WERE CHARGED TO A SINGLE CONSIGNMENT ACCOUNT. SIMILARLY HERE ALL EXPENSES AND

INCOMES OF THE BUSINESS ARE RECORDED IN THE NAME OF JLOINT VENTURE ACCOUNT SO THAT THE

TRANSACTIONS OF THE MAIN BUSINESS ARE NOT MISED WITH THIS KIND OF TERMINABLE BUSINESS.

BILL OF EXCHANGE:-

ANOTHER IMPORTANT AREA OF SPECIAL BUSINESS IS BILLS OF EXCHANGE. THIS IS ALSO INCLUDED

IN THE FOUNDATION SYLLABUS. HOWEVER THIS IS ALSO DISCUSSED HERE FOR YOUR REFERENCE.

TO CO VENTURERS ACCOUNT – CASH

INTRODUCED BY CO VENTURERS

BY CREDITORS – PAYMENT TO

CREDITORS

TO DEBTORS – COLLECTION FROM

DEBTORS

BY JOINT VENTURE - PURCHASE

BY JOINT VENTURE - EXPENSES

TO JOINT VENTURE – SALES BY CO VENTURERS – FINAL PAYMENT

TOTAL TOTAL

TO JOINT VENTURE – GOODS TAKEN OVER BY JOINT BANK ACCOUNT – CASH

INTRODUCED

BY CO VENTURERS – GOODS SUPPLIED

TO JOINT BANK – FINAL PAYMENT

TOTAL TOTAL

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VOL: 3, No.: 1

INTRODUCTION:

Bill of exchange is a negotiable instrument and transactions are dealt with the provisions of Negotiable

Instruments Act. Section 5 of this act defines Bill of exchange as “ A bill of exchange is an instrument in writing

containing an unconditional order signed by the maker directing a certain person to pay a certain sum of

money only to or to the order of a certain person or to the bearer of the instrument”

In simple terms it is actually a written commitment by the buyer to the seller to pay the amount due at a

particular due date. Therefore the features of Bills of exchange are:

1. It must be in writing

2. It must be signed by the maker(buyer)

3. It must be an unconditional order to pay

4. The maker must direct a certain person to pay a certain sum of money.

The parties involved to a bill of exchange are

1. The drawer – the seller

2. The drawee – the maker of the bill who commits payment by accepting (signing on bill)

3. The endorsee – to whom the bill is endorsed to settle his dues

4. The holder – any person who holds the bill for the time being with the entitlement of such possession (generally the

drawer)

5. The payee – who finally receives the sum of money.(generally the drawer)

PROCESS OF DRAWING THE BILL:

Say Mr A sold goods to Mr B. in credit for Rs. 50000. Now A draws the bill on B and B accepts and signs on it to commit such

obligation or liability to pay Rs.50000 on the due date. Now A is the holder of the bill till due date and he is the payee at the due

date if the bill is honoured.

To A it is Bills Receivable and to B it is Bills Payable. Between the dates of drawing and maturity A may do the following things

1. May go to bank and get the bill discounted i.e exchange the bill in terms of cash before due date. In that case bank is the

holder now and bank will be payee in due date.

2. May settle his dues to his creditor by giving this bill. Say A gives this bill to Mr C. In that case C is the holder now. He is

called endorsee and C will be payee in due date

COMPUTATION OF DUE DATE:

Due date is the date when the bill is supposed to be paid on presentation for payment. It is customary to allow some days of grace

(normally 3 days) to the drawee. Therefore while calculating the date of maturity three more days are added. For example if a bill

is drawn on 1.1.2018 for 3 months the due date will be 4.4.2018. If the bill is 'after sight' bill the date of maturity will be calculated

from the date of acceptance and if the bill is 'after date' the due date will be calculated from the date of drawing.

ILLUSTRATION :

On 1.4.2017 A draws a bill on B for Rs.100000 3 months after date. B accepts the bills signs on it and returns to A. Pass necessary

journal entries in the books of A and B in each of the following cases:

1. The bill is hold by A till maturity

2. The bill is discounted with bank on 4.4.2017 at a discount of 6 % p.a

3. The bill is endorsed to C to make a final settlement of a due of Rs.105000 on 1.4.2017

SOLUTION :

Working notes :

1. The bill is discounted with bank for 6% p.a . so the amount of discount will be

5



VOL: 3, No.: 1

100000 x 6/100 x 3/12 = 6000 x 3/12 = 1500.

Calculation is made for 3 months because the bill is for three months and is discounted with the bank exactly before three months

before maturity.

2. Amount due to C was for Rs. 105000. However the bill is given for Rs.100000 to make full and final settlement.

� Therefore Mr. A has received Rs.5000 as discount.

Important: Students must not confuse with discount received and discount on bills.

JOURNAL

BOOKS OF A BOOKS OF B

DATE PARTICULARS DEBIT CREDIT DATE PARTICULARS DEBIT CREDIT

1.4.2017 Billls Receivable 100000 1.4.2017 A 100000

To B 100000 To Bills Payable 100000

(for the bill drawn) (for the bill drawn)

Situation 1 Situation 1

4.7.2017 Cash 100000 4.7.2017 Bills payable 100000

To Billls Receivable 100000 To Cash 100000

Amount received at

maturity

Amount received at

maturity


4.4.2017 Bank 98500

NO ENTRY IS REQUIRED

Discount on bill 1500

To Bills receivable 100000

Bill discounted with

bank


1.4.2017 C 105000

NO ENTRY IS REQUIRED

T0 Bills Receivable 100000

To Discount received 5000

The bill is endorsed

to C

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VOL: 3, No.: 1

AT MATURITY


4.7.2017 NO ENTRY 4.7.2017 Bills payable 100000

To bank 100000

Amount paid at

maturity


NO ENTRY 4.7.2017 Bills payable 100000

To bank 100000

Amount paid at maturity


7





VOL: 3, No.: 1

Laws & Ethics (LNE)

Group - IPaper - 6Group - IPaper - 6Laws & Ethics (LNE)

CA Partha Ray He can be reached at:[email protected]

Syllabus StructureA Commercial Laws 30%B Industrial Laws 25%C Corporate Law 35%D Ethics 10%

A 30%

C 35%D 10%

B 25%

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VOL: 3, No.: 1

Learning Objectives:

Prior to start discussing on the Paper, we need to understand few basic points about the paper. Unlike other papers, this particular may turn to be very interesting and scoring as well, provided you pay attention to the points discussed below:

Read the Act carefully and try to know the meaning of the contents in it,

All the Acts are having practical implications in the real life world and it will help you to solve

the problems in your real life situations once you join in the industry and / or practicing field,

Answers should be specific and to the point,

Please don't try to elaborate your answers adding irrelevant terms and items ; it may penalise

you With the Tips given here, please follow the Suggested Answers and Mock Test Papers of

the Institute to have a fair idea about writing the paper in the examination.

In continuation to the points covered in the earlier issues of the E-Bulletin, we are now discussing certain points on The Indian Contract Act,1872 , with a totally new approach.

With Mission CMA in mind, the students are advised to study this paper with a practical approach, as if the points concern you and you are given to deal with it as a professional. As a CMA in the making whether you decide to get employed or be self-employed and employ people, you will have to deal with Offers and Acceptances legally and establish Legal relationship for lawful consideration and perform your professional duties. Keeping that in mind, you have to study this subject seriously.

The first TIP is that you must start thinking like A Teacher. You must read the Bear Act and the Sections and start asking questions to yourself and find your own answers.

In every contract, there has to be two or more persons. One party will offer/propose to do something and the other party will agree/accept the offer /proposal. However, a party may even offer not to do something and the other party may agree/accept that.

The question arises – Will all agreements be contracts ? The answer is – No, only those agreements that can be enforced in the court of law are contracts. For example , an agreement to play chess or sing a song just for fun.

Read Sec.2(g) and you will know that an agreement not enforceable by law is said to be void. Here, the question arises – What are void agreements ? The answer is – a) An agreement made by a minor (b) an agreement made without consideration (with certain exceptions);(c) certain agreements with unlawful object ; (d) agreement in restraint of marriage (except marriage of a minor); (e)agreement in restraint of trade (with exceptions); (f)agreement in restraint of legal proceedings ; (g)agreements where the meaning contained therein is not certain or cannot be made certain (h) agreement where the money payable depends on the

happening or non-happening of a future or uncertain event (example –gambling etc.) ;(i) agreement that cannot be enforced due to change of law ;and (j) agreement to do an impossible act. Please remember that a void agreement is not necessarily illegal but an illegal agreement is always void.

There is something which is called Voidable Contracts, let us understand that with a simple example. Suppose Mr.A enters into an agreement at Gunpoint with Mr.Z to sell his Stationery Shop. Mr. Z can avoid the agreement and Mr.A cannot enforce it. However, if Mr.Z desires , he can enforce it against Mr. A . Avoidable Contracts can be due to Coercion, Undue Influence, etc. The example above is a case of coercive threat to cause injury. So, now ask yourself – What is an Offer ? The Answer is simple. An offer is just an act of making a Proposal. Read Sec.2(a) and understand that. The person making the Offer is the Offeror /Proposer/Promisee and the person to whom you propose is the Offeree. The offer has to be for a Consideration and when that is accepted by the other party, the other party becomes the Acceptor and there is a contract. Well, ask yourself -

How do I make an offer ? The answer is that that are certain Rules regarding Offer which are :

1.(i) . An offer can be in words spoken or written and (ii). An offer can be implied by conduct. For example : X tells Y by word of mouth or in writing that he wants to sell his Mobile Phone for Rs.5000 that is an offer when Y accepts it , there is a contract.

The State Transport Corporation runs a Bus from Location A to location B along a fixed route. Here it is implied by conduct that the bus is offering to carry passengers against a specific fare structure. When a passenger boards the bus it is implied that he accepts to offer and wants to become a passenger. Here too, there is a implied contract.

2. The terms of offer must be certain. Example :When the passenger boards the bus, he accepts to pay the specific fare and follow certain terms offered.

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Laws & Ethics



VOL: 3, No.: 1

3. A simple intention to sell is not an offer or an advertisement is an invitation to make an offer but is not an offer. For example : A told C that his old mobile phone was fetching him Rs.5000 but he did not say that he was willing to sell at that price. Here there is no contract between A and C .

4. An offer must be communicated and the offeree must be aware of such offer. 5. If an offer is conditional, such conditions must be clearly communicated to the offeree.

So, we arrive at the obvious question - How should I communicate the offer to other person /s ?

As said above, an offer can be in words spoken or written and (ii). An offer can be implied by conduct. The offer by the bus to move along a specified route and carry passengers is a clear example of an offer by conduct.

A this point let us know that is a Quasi-contract is also an implied contract.A Quasi-contract can be best understood with the help of an example. Mr.X placed an order for home delivery of certain foods on a local Restaurant for dinner at fixed rates, terms and condition, payable on delivery. The delivery person arrives with the dinner packets along with 2 Cups of Ice cream. You accept everything and sign the Proof of Delivery (POD) Slip and pay to the delivery person. In this case you did not ask for the ice creams, you accepted those and did not pay for those. So here, your acceptance is implied and you make a Quasi-contract. The restaurant could have asked for payment but it did not.

Section 2(b) states that a proposal when accepted becomes a promise. So, the question arises – What are the Rules regarding Acceptance ?

The answer is that –1. Sec.7(1) lays that an acceptance must be absolute and unqualified. Even, if a insignificant point of variation between the terms of offer and the terms of acceptance is found, there is no contract. For example : You offer to sell your Office Premises to Y for Rs.5,00,000 and no payment term was laid.Y sends you a bank draft for Rs.1,00,000 and promises to pay the balance Rs,4,00,000 after 2 months. So, here the acceptance is conditional and so there is no contract. 2. An acceptance must be expressed in a usual or reasonable manner. (Refer Sec,7(2).Such acceptance can be by word of mouth, in writing or by post or even by conduct, but the offeree must do what the offeror wants him to do. (Refer Sec.8) . 3. A mental acceptance is not a contract. Moreover, an acceptance which is not communicated is not a contract. For example : You write to your friend X that you want to sell your Motorcycle for Rs.10,000 . Your friend mentally decides to buy the motorcycle and even writes a letter addressed to you, but forgets to post the letter to you or verbally inform you. This does not result in a contract. 4. If the Offeror prescribes a specific mode of acceptance,

the Offeree must follow that particular mode unless the offeror waives it. (Read Sec.7(2), 5. Both the Communication of the Offer and he communication of the Acceptance must be complete. Another point is that the acceptance must be made till the offer is in force. For example : A desires to sell his

stMotor Car for Rs.50,000 before 31 January,2018 ,such an stoffer is not valid after 31 January,2018.

So, now you have a fair idea about – Offer, Acceptance and a Contract. The obvious question that will come to mind is – What are the Essentials of a Contract ? Just remember the following:

OAL3 – where O is Offer, A is Acceptance , first L is Legal Relat ionship a n d s e c o n d L is Lawful Consideration and the third L is Legally Capable . Next remember

CFL –where C is Capacity, F is Free Consent , L is Legality Next remember

WNP – where W is Written and Registered , N is Not Vague and P is Possibility of Performance.

Please Note :Oral contract is legal but not always valid , for example – Sale of House Property has to be written and registered.

If you revise and recapitulate what you have read above, you can now raise the following question – On what grounds can you revoke an offer ? The answer is given in Sec.6 and those are :

1. When the offer is expressly revoked ;2. When the proposer prescribes a time for acceptance of

the offer, that proposal expires as soon as the time expires.

3. If there is no prescribed time, in that case the offer expires after a reasonable time depending on the circumstances of the case ,

4. If the proposer lays some conditions and the acceptor fails to fulfill any condition ; and

5. An offer lapses on the death or insanity of the proposer provided the acceptor gets to know about the death or insanity before acceptance.

So, two questions immediately arises - regarding Communication of Revocation (please read Sec.3 of the Contract Act,1872) and regarding Revocation of Acceptance please read Section 5 of the Contract Act,1872Under essential elements of Contract, we read that there must be a Lawful Consideration. So, what is consideration ?

Section 2(d) of the Contracts Act 1872 defines consideration. All past, present and future promise, desire to do or abstain from doing something is a consideration for the promise . For example : A agrees to sell his Motorcycle to B for Rs.15,000. For A the consideration is Rs.15,000 for the promise and for B the consideration is the Motorcycle.

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VOL: 3, No.: 1

The question arises – What is past consideration ?This can be explained with an example : X is asked by Z to do certain special extra work which X performs in the month of December,2017. In January,2018 X is paid Rs.5000 by Z to compensate for the work done in December,2017. In this case, the consideration of X is past consideration.

Almost all contracts require consideration, so the question is - what agreements are valid without consideration ? Please read Sec.25(1), Sec.25(3) and Sec 25(explanation 2)

Section 25(1) specifies those cases where agreement without consideration is valid and those are :

1. The agreement is freely made in writing2. The written document is registered with the Appropriate Authority3. The agreement is made on account of natural love and affection ; 4. The parties to the agreement stand in near relation to one another.

At this point ,an interesting question comes to mind – Can a stranger to a contract sue on a contract ? A stranger to a contract is a person who is not a party to the contract and so he cannot go to court to enforce it. However, if a stranger is a party to the contract, he can sue to enforce it. For example : There is an agreement between Anil, Billu and Chand , where Anil pays money to Billu to deliver to Chand. In this case, Chand can enforce the agreement even though he did not pay any part of the consideration.

Therefore, the next question is - What are the exceptions to the rule that a stranger to the contract cannot sue upon it ?

The exceptions are as follows :1. An agreement to create a trust can be enforced by the beneficiary;2. A party to a contract can transfer his rights under the contract to third parties. For example : A bearer cheque drawn on an

individual can be transferred to any person he wishes.3. In case of family disputes settled by mutual agreement , where the terms of settlement are written down in a document, such

Family Settlements can be enforced by those persons who were not original parties to the settlement.

It may be noted that except for the three exceptions mentioned above, a contract does not give any right upon a person who is not a party to the contract.

Now, let us appreciate that we are all in the Computerized Environment. Therefore, Offers, Acceptances and Contracts can be electronically performed. Such e-contracts are paperless in the electronic form -made , communicated, executed ,deployed through software systems. All the essential elements of contract are satisfied but in order to give it the legal validity, The Information Technology Act,2000 has laid regulations for such e-contracts. It requires the parties to the contract to obtain Digital Signatures from the Competent Authority and affix the digital signature instead of the conventional manual signature. Digital Signatures are legally valid and cannot be denied as the signature is in digital form and delivered electronically. In this case, the lawful process of negotiation, acceptance of the terms and the final Contract is through E-mails which are valid in law. The question that comes to mind is what are the Constraints to enforce Contractual Obligations ? Please read the bear act. It states that some persons are not competent to contract. The are : 1. A person who is a minor, since any contract with him is void ab-initio ; 2. A person of unsound mind as he will not be capable of understanding or judging the effects of what is being offered or agreed upon. ; and 3. A person who is disqualified by law to enter into a contract. Such persons are – Alien enemy, a foreigner from another country (they can sue an Indian but an Indian citizen cannot sue them, as they enjoy certain immunity), a person who is in prison, an insolvent person, and a Corporate and/or a Statutory Body as it can enter into a contract only if that is permitted by its Memorandum of Association.


11





VOL: 3, No.: 1

A Income Tax Act Basics 10%B Heads of Income and Computation of Total Income and Tax Liability 70%C Administrative Procedures and ICDS 20%

Direct Taxation (DTX)

Group - IPaper - 7Group - IPaper - 7Direct Taxation (DTX)

CA Vikash Mundhra He can be reached at:[email protected]

12



Identify the key concepts and functions of direct tax.

Know how to calculate income tax provision's.

Describe how uncertain tax positions are accounted for under the rules.

Gradually you will come to know how to prepare and file tax returns.


VOL: 3, No.: 1

Income from Other Sources

Gift [Sec. 56(2)(x)]

Following receipts by any person shall be considered as his income:

Category Nature of Receipt

Conditions to be satisfied for considering income

Extent of Income

Remarks

A Any sum of money

a. During the previous year, such person has received any sum of money (cash, cheque, draft, etc.) from one or more persons

b. Such sum is received without consideration C. The aggregate value of such receipt during

the previous year exceeds � 50,000

The whole of the aggregate value of such sum shall be considered as income of that previous year.

Aggregate amount of cash gift received during the period shall be considered.

B Any immovable property

a. During the previous year, such person has received immovable property

b. Such immovable property is received without consideration.

c. The stamp duty value of such property exceeds � 50,000

d. Such asset is a capital asset in hands of recipient.

The stamp duty value of such property shall be considered as income of that previous year.

The limit of �

50,000/- is applicable per incidence

C Any immovable property

a. During the previous year, such person has received immovable property

b. Such immovable property is received for a consideration

c. Such consideration is less than the stamp duty value of the property by an amount exceeding � 50,000.

Note: Where the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken. This benefit is available only in a case where the amount of consideration or a part thereof, has been paid by of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account, on or before the date of the agreement for the transfer of such immovable property.

The stamp duty value of such property Less consideration paid, shall be considered as income of the previous year.

The limit of �

50,000/- is applicable per incidence.

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VOL: 3, No.: 1

D Any movable property

a. During the previous year, such person has received movable property from one or more persons

b. Such movable property is received without consideration

c. The aggregate fair market value of such receipts during the previous year exceeds � 50,000


The whole of the aggregate fair market value of such property shall be considered as income of the previous year.

Aggregate amount of gift received during the period shall be considered.

E Any movable property

a. During the previous year, such person has received movable property from one or more persons

b. Such movable property is received for a consideration.

c. Such consideration is less than the aggregate fair market value of the property by an amount exceeding � 50,000


The aggregate fair market value of such property Less consideration paid, shall be considered as income of the previous year.

Aggregate amount of gift received during the period shall be considered.

Taxpoint: The limit of � 50,000/- is also for per category. In other words, one may receive cash gift of � 35,000 and gift in kind of � 36,000 without attracting any tax.

Exceptions�This section shall not apply to any sum of money or any property received

1. from any relative#.

2. on the occasion of the marriage of the individual (whether gift is received from relative or outsiders).

3. under a will or by way of inheritance.

4. in contemplation of death of the payer or donor.

5. from local authority

6. from or by any fund or foundation or university or other educational institutions or hospital or other medical institutions or

any trust or institution referred u/s 10(23C).

7. from or by any trust or institution registered u/s 12A or 12AA.

8. from an individual by a trust created or established solely for the benefit of relative of the individual.

9. by way of distribution at the time of total or partial partition covered u/s 47(i)

10. by way of transactions in the nature of amalgamation or demerger covered u/s 47(vi) or (via) or (viaa) or (vib) or (vic) or (vica)

or (vicb) or (vid) or (vii).

11. Exemption of Compensation on account of Disaster [Sec. 10(10BC)]: Any amount received or receivable from the Central

Government or a State Government or a local authority by an individual or his legal heir by way of compensation on account

of any disaster, except the amount received or receivable to the extent such individual or his legal heir has been allowed a

# Relative here means -In case of an individual

i. Spouse of the individual;ii. brother or sister of the individual;iii. brother of sister of the spouse of the individual;iv. brother of sister of either of the parents of the individual;v. any lineal ascendant or descendant of the individual;vi. any lineal ascendant or descendant of the spouse of the individual;vii. spouse of the person referred to in clauses (ii) to (vi)

14



VOL: 3, No.: 1

deduction under this Act on account of any loss or damage caused by such disaster.

Other Points

1. Fair market value of a property, other than an immovable property, means the value determined in accordance with the

method as may be prescribed;

2. Property means the following capital asset of the assessee, namely

Taxpoint:

Property does not include furniture, clothes, etc. (provided it does not fall in the definition of Jewellery).

If an assessee receives aforesaid assets without consideration (or against inadequate consideration in some cases) as stock

in trade, the provision of this section shall not apply.

3. Stamp duty value means the value adopted or assessed or assessable by any authority of the Central Government or a State

Government for the purpose of payment of stamp duty in respect of an immovable property.

a. Immovable property being land or building or both

b. Shares & securities

c. Archaeological collections

d. Paintings

e. Jewellery

f. Drawings

g. Sculptures

h. Any work of art

I Bullion


15





VOL: 3, No.: 1

Cost Accounting (CAC)

Group - IPaper - 8Group - IPaper - 8Cost Accounting (CAC)

A Introduction to Cost Accounting 40%B Methods of Costing 30%

C Cost Accounting Techniques 30%

CMA (Dr.) Subir Kr. DattaPrincipal, Kshudiram Bose Central College, He can be reached at: [email protected]

16



Before taking the examination, it is necessary to read thoroughly the study material first.

After that select the suitable text book or reference books available in the market for your further

study and follow them.

Next, follow the question papers of previous years and you will be able to get a general idea about the

trend or pattern of questions generally set for this type of examination.

So, if you want to score high marks then along with practical problems you have to answer properly

the theoretical part.

Due to lack of theoretical concepts they cannot score good marks not only in the theoretical part but

also in tricky problems.

Prepare notes on the theoretical part to improve your performance in the examination.


VOL: 3, No.: 1

Cost Accounting ( CAC)

Now days the value and importance of costing need hardly

be overemphasized. Although there is growing awareness

about the need for cost accounting among the businessmen,

there is also lack of appreciation as to how it can help them –

this is due to imperfect competition and imperfect

knowledge about costs vs benefits. It is hoped that with

increased competition and growing realization about its

need, cost accounting will increasingly find its place in the

industries and its field will get considerably widened.

Optimum utilization of resource is the urgent need of the

day. The role of Cost Accounting in this regard plays a vital

role all over the world. Hence, theory as well as solving of

practical problems is very much essential for successful

preparation of the subject. It is observed from the past

experience that 65% to 75% of the total questions are set

from practical problems and the balance is theoretical part.

Although only 25% questions are set from theoretical part,

but a great emphasis should be given on theoretical part as

most of the students are very much weak in theory. Always

try to remember that in professional examinations,

emphasis is given on testing comprehension, self

expression, understanding and ability to apply knowledge in

divergent situation. Success of these examinations mainly

depends on student's perseverance, seriousness of study,

regularity and through practice.

Some tips based on Experiences –

1. There should be a plane developed for completing

the whole syllabus within the scheduled time .

2. Try to go through your Study Note and know the

complete syllabus. Remember all chapters are

interlinked.

3. This paper is based on mainly practical problems.

4. Analyze the trends of setting questions by taking at

least ten terms.

5. Prepare yourself based on previous paper setting.

6. Clarity of concepts and self expression is essential

for success in life.

7. Time schedule with specified activities is very much

essential for time-management.

8. Write down all the important terms in your own

words and read them regularly.

9. Try to improve your speed by regular practice and

revision.

10. Always try to answer all objective type questions,

which carry 100% marks.

11. Finally, try to develop a habit of reading the

questions well, underlining and understanding the

specific requirements.

The study material of paper 8 divides the whole syllabus into

6 chapters. The first chapter is related to the basic concept of

cost accounting. The second chapter described the Elements

of cost in details. We know that the three major elements of

costs are – Material, Labour and Overheads. Here, the major

elements of cost are discussed elaborately with sufficient

number of examples. You should read the scope and

objectives of different Cost Accounting standards in details.

This will help to grasp the concept of cost accounting easily.

Try to solve the problems on earnings of workers under

d i f f e r e n t s c h e m e s . H e r e C o s t a l l o c a t i o n , C o s t

apportionment and Cost absorption should be understood

very clearly.

The third chapter is associated with Cost Book-Keeping,

which includes integrated accounting system also. This

chapter is very easy to understand but the process is lengthy.

In practice different accounts are to be opened, but it is not

17



VOL: 3, No.: 1

necessary to give much effort to complete it. Here Cost

Department maintains separate ledger quite distinct form

financial accounting, maintaining their books of accounts.

The next chapter Contract /Job/ Batch Costing is very

important for this type of examination. There are some

standard norms for computation and recognition of profit or

loss of incomplete contract. Students often face difficulty in

recommending the amount of profit to be taken into account

for incomplete contract. Make sure that you are familiar with

various methods/formulae for different stage of completion

and share of profit. Students are also advised to be through

on the topic “Profit on incomplete contracts based on SSAP –

9”. Various problems on 'exaltation clause' used to be set at

this level of examination. Generally full credit is expected by

solving the problem.

The next chapter, 'Operating Costing' relates to find out

operating cost per unit of output. Operating costing has

derived its name from cost ascertainment by each operation.

This chapter also includes 'Transport Costing' , 'Hospital

Costing', 'Power House Costing' , 'Hotel/ Hostel Costing' etc.

Composite unit finding is important for solving the problem.

The next chapter 'Marginal Costing' is very important from

the students' perspective. Marginal Costing is not a

particular method of cost ascertainment but a technique

dealing with the nature and behavior of cost and there effects

upon the profitability of an organization. It aims to find out

cost-volume-profit relationships of a product. Some times

more than one problem may be set from this chapter. The

main thrust should be to follow the working and determine

the desired impact on profitability. Break-even Analysis and

finding the B.E.P. is the basic part for solving problem. You

should also study the effect on profits due to various changes

in Fixed Cost/ variable cost / selling price/sales- mix.

The next chapter relates to 'Variance Analysis' which helps

the management to fix responsibility for each department

and to identify the activities or areas of exceptions. Standard

Costing , an accounting technique, came to be developed as a

systematic method of Comparing the actual cost with the

predetermined standard of cost and performance. Any

problem on standard cost for working out different

variances can be worked out by using a standard format

applicable to all variance analysis. The students are afraid of

this important chapter only because of different formulae

for different analysis. Only careful study and realization of

the requirement in the problem can eliminate such

difficulties. The main purpose of Variance analysis is to

enable the management to improve the operations for

effectives utilization of resources need to increase the

efficiency by reducing cost.

Budget is defined as a financial and /or quantitative

statement, prepared prior to a defined period of time , of

the policy to be pursued during that period for the

purpose of attaining a given objective. 'Budget and

Budgetary control', which requires preparation of

'Flexible Budget', 'Functional Budgets' and 'Cash

Budget' for taking necessary actions. Both theoretical

and problem oriented questions may be set from this

chapter. The students can easily understand the

problems, if theory remains clear. The students are also

suggested to go through the theoretical parts-like,

concept of Zero based Budgeting, behavior and

classification of budgets etc. very carefully. All

functional budget are summarized into master budget

consisting of a budgeted Profit and Loss account, a

Balance Sheet and Cash Flow Statement . A common

mistake is to incorrectly deduct closing stocks and

opening stocks when preparing production and material

purchase budget.

It is the main function of management to fix responsibilities

to each department in order to identify the activities or areas

of exceptions . For that presentation of variance analysis and

its result is very much essential for every organization. Here

we are going to solve a problem of this type –

The following information are supplied in respect of a manufacturing company operating under a standard costing system :

Standard details Departments

A B

Normally Capacity hours 4000 2000

Overhead rate per hour Rs. 10 Rs. 40

Allowed hours for actual production 4000 1600

18



VOL: 3, No.: 1

Present the variances to the management in analyzed form .

The solution can be made in following ways –

Here (A) →Adverse , F → Favorable

Note :_ This Format is offered for better presentation and appreciation in a simple style.

Actual details

Hours 4150 1550

Overheads Rs. 40400 Rs. 75000

Overhead Variance Analysis

Dept

.

Actual

C/H

Budgeted

O/H

Actual Std. Rate Amount

( in Rs. )

Actual Production Amount

( in Rs. )

(1)

Std Hrs x

Std Rate (2)

Hours

(3)

Std Hrs. Std. Rate

(4)

A . 40400 40000 4150 Rs. 10 41500 4000 Rs. 10 40000

B. 75000 80000 1550 Rs. 40 62000 1600 Rs. 40 64000

115400 120000 103500 64000

Variances

Dept. Total (in Rs.) Expenditure (in Rs.) Volume

(4) – (1) (2) – (1)

Capacity ( in Rs.)

(3) – (2)

Efficiency (in Rs. )

(4) – (3)

A. 400 (A) 400(A) 1500(F) 1500(A)

B. 11000 (A) 5000(F) 18000(A) 2000(F)

11400(A) 4500(F) 16500(A) 500(F)


19





VOL: 3, No.: 1

Operations Management & StrategicManagement (OMSM) - OperationManagement

Group - IIPaper - 9 , Part - iGroup - IIPaper - 9 , Part - iOperations Management & Strategic Management (OMSM) - Operation Management

CMA Ankan K BandyopadhyayaHe can be reached at:[email protected]

20



Operations Management develops skills in problem solving, project management,

communication, and managing effectively in team-based work environments.

Eventually, student's ability for leadership positions in the production and service industries

gets increased.

To solve business processes, it helps to apply knowledge of fundamental concepts of operations

management and helps to apply knowledge of approaches to operational performance

improvement.


VOL: 3, No.: 1

Operations Management

In this issue we will discuss on Facility Location.

Location of facilities for operation is a long term irrevocable (generally) commitment decision. Generally because it is not easy to

change the location of the operations base once it has been establishes. Recently Tata Motors Limited (TML) however, changed the

location of its facilities for manufacturing Nano motors and shifted it to Gujarat.

While selecting location the first step is

Which type of facility we want--- Is it a heavy manufacturing facility or a service facility or a warehouse facility

Factors considered for locating manufacturing facilities are different than that considered for locating service facilities.

Where to locate the Facilities for Operation is the Product of

Organisation's Strategies

Organisation's Objectives, Goals and Priorities

21



VOL: 3, No.: 1

The location decision needs to be taken under two different situations:

i) Location of facility by an establishment for the first time;

ii) Location of facility by an establishment having one or two facility already existing;

Location choice on the basis of Minimising cost criterionBut in all cases Profit maximization for economic activities will be

the main criterion while selecting the location of facility on the basis of different factors. Under this main Profit maximization

criterion the choices are:

Heavy Manufacturing Facilities are large plants that require

huge space, expensive to construct, difficult

to relocation etc.

Retail & Service Facilities are

groceries, departmental stores, restaurants, banks,

post office, hospitals etc.

Distribution Centers/Warehouse

Land CostsConstruction

CostsTransportation costs pre & post operation stage

Proximity to suppliers

Labour availability

Electricity/Utilities availability

Environmental & other Govt. Regulations

Land /Leasing Costs

Proximity to customers

No of customersEnvironmental &

other Govt. Regulations

Transportation costs

Proximity to market

General factors consideredFor selecting location are

General factors considered For selecting location are

General factors considered For selecting location are

22



VOL: 3, No.: 1

Location decisions are usually made more frequently by service providing organisations than that deal with manufacturing

facilities. But Both Manufacturing and service organisations consider many factors both tangible & intangible, short run & long

run while selecting location for facilities.

Factors which are to be considered in location selection must fulfill at least one of the two conditions:

Location choice for an established organisations i.e. organisations having already existing facilities is taken on its multi-plant

operations strategies. The different strategies could be:

Prices of products are uniform in all probable locations

Prices of products vary in different probable locations but

costs of different inputs are same everywhere

Prices and Costs are independent of location

Location choice on the

basis of Minimising

cost criterion

Location choice on the

basis of Maximisation

of Revenue

Proximity to potential

customers will be the

criterion

Factors must be sensitive to

Location

Factors must have high influence on

organisations ability to fulfill its goals

Distinguished products different locations. Like in Indian Railways

Same products different locations. Like in case of ACC cement

23



VOL: 3, No.: 1

Location choice for the first time is not covered by any prevailing strategy. So in this case before deciding upon the location,

organizational strategies to achieve organizational goals and objectives are to be decided.

Location of facilities can be On-shore or Off-shore.

On shore factors are generally:

� Labour –availability, education, costs, attitudes, union etc;

� Proximity to customers;

�Number of Customers;

� Land/construction/leasing/rental costs;

� Modes and quality of transportation;

� Community;

� Government regulations;

� Local business regulations;

� Government services;

� Business Climate;

� Community services;

� Incentive packages;

� Environmental regulations;

� Raw material availability;

� Weather/climate;

� Infrastructure/Availability of logistics;

� Quality of life;

� Tax environment;

� Banking systems;

� Availability of financial services/securities;

� Proximity of suppliers;

� Education system;

� Availability of utilities

� Quality of services of utilities;

Off-shore factors are generally:

� Government stability;

� Government regulations;

� Political and economic environment;

� Relation with home country;

� Prospect of foreign market and its growth;

� Foreign exchange rates;

� Culture;

Multiple products in same location. Like in MarutiUdyog

Products of one plant feed into the othe plant. Like in ordnance Factories of India

24



VOL: 3, No.: 1

� Weather/Climate;

� Export/Import regulation, duties, tariffs;

� Raw material availability;

� Number and proximity of suppliers;

� Transportation and distribution systems;

� Labour –availability, education, costs, attitudes, union etc.

� Availability of technology;

� Technical expertise;

� Cross border trade regulations;

� Group trade agreements;

In location of facilities problem few important points to remember are:

►inany facility location problem the central objective is to assess whether the location helps the establishment to remain

competitive for a long time;

► to an established organization capacity can be increased either by expansion of the facilities at the existing site/sites or by

relocation of the facilities (closing down the existing ones), other than opening up of new facility;

► location decisions for service facilities are taken more frequently than manufacturing facilities;

► although the primary location criteria for a service related business isusually access to customers but it will not only be the only

criteria. Other factors mainly financial considerations also be factors;

► good infrastructure always attracts more new business facilities;

► besides physical and social characteristics, local incentives are also important factors in attracting new business facilities.

Incentives include cash and relaxed government regulations;

► favourable labour climate is the most important factor for location decision of a labour intensive firms;

► favourable labour climate applies not only to the workforce already on site but also to the employees that a firm hopes will

transfer to or will be attracted to the new site;

► if minimization of costs is the criteria for location decision then considerations be made not only for today's costs but for long

run costs also to be included;

► tangible as well as intangible factors affecting future costs are to be considered in location decision problem;

► for manufacturing plants locating near markets is particularly important when the final goods are bulky or heavy and outbound

transportation costs are high;

► firms dependent on inputs of bulky , perishable or heavy raw materials always prefer location near suppliers to reduce inbound

transportation costs;

► in case of service facilities, customer proximity is not an enough consideration for facility location problem- the key is proximity

to customers who will patronize the facility and seek its services;

► for warehousing and distribution facilities transportation costs and proximity to markets are two most important factors in

facility location problem;

► in facility location problem management considers not only the present location of its competitors but also assess the reaction of

competitors to firm's new location;

► critical mass strategy whereby facilities are located near competitors is usually adopted by some firms in industries like new-car

sale, fast food centers;

Choose the correct answer:

Q 1.

In an off shore facility location problem the choice of a particularcountry depends onfew factors. Which one of

the following is not a factor in such decision problem?

i) political stability; ii) export and import quotas; iii) currency and exchange rates; iv)proximity to domestic utility service

providers;

25



VOL: 3, No.: 1

Q2.

In facility location problem nearness to raw material suppliers offers certain advantages. Which one of the

following is not an advantage in this respect?

i) reduced cost of transportation; ii) possibility of heavy discount on bulk purchase; iii) reduced cost of storage; iv)regular & proper

supply;

Q 3.

In facility location problem minimization of costs is one of the criteria. Here cost means

i) only short term costs; ii) both cost of today and tomorrow in the long run; iii) long term costs affecting profits; iv) variable costs;

Q 4.

The increased ability to adjust the production programme to suit the likes and dislikes of consumers is the

resultant advantage if the facility is located i) near to market; ii) near to ports; iii) near to suppliers; iii) near to labour

community;

Q 5.

When final goods are heavy and bulky location of the manufacturing plant should be near to i) consumers to reduce

cost of after sales service; ii) suppliers to reduce inbound transportation costs; iii) remote places to reduce cost to maintain

environmental regulations;iv) market to reduce outbound transportation costs;

Q 6.

In and around esplanade area of Kolkata there are show rooms of dealers from various car manufacturers. The

strategy adopted by such dealers is called i) critical mass; ii) competitors sensitivity; iii) equity perception; iv) impact

balancing;

Q 7.

Location choice for the first time is based primarily on i) reaction of the competitors in the same industry ; ii) prevailing

strategy in locational problems; iii) organizational strategy for achieving its goal; iv) strategies taken by peer groups in the same

industry;

Q 8.

Maximisation of revenue will be the criteria in location selection when i) prices and costs of inputs are independent of

location; ii) prices of products are independent but costs of inputs are dependent on location; iii) prices and costs of inputs both

are dependent on location; iv) prices dependent on location but costs of inputs are independent;

Q 9.

The objective of location decision is to assess i) whether the location helps in generation of enough revenues for the

establishment; ii) whether the location helps establishments to remain competitive for a long time; iii) whether the location helps

in generation of enough revenues for the establishment and its ancillaries; iv) whether the location patronises the overall

development of the surrounding area;

Q 10.

Which of the following establishment is not following “Same product different location” strategy:

i) ACC; ii) NTPC; iii) AMUL; iv) SAIL;

26



VOL: 3, No.: 1


Ans:Ans:

Q1/iv; Q2/ii; Q3/ii; Q4/i; Q5/iv; Q6/i; Q7/iii; Q8/iv; Q9/ii; Q10/iv;Q1/iv; Q2/ii; Q3/ii; Q4/i; Q5/iv; Q6/i; Q7/iii; Q8/iv; Q9/ii; Q10/iv;

Ans:

Q1/iv; Q2/ii; Q3/ii; Q4/i; Q5/iv; Q6/i; Q7/iii; Q8/iv; Q9/ii; Q10/iv;

Suggestions:

This study notes need to be read thoroughly. Supplementary readings could be made from other resources. This issue is based on Modern Production/Operations Management by Buffa and Sarin.Production and Operations Management by SN Cherry, Operations Management by R.S Russell & BW Taylor, Operations Management Processes and Supply Chains by Lee J Krajewski, Ritzman, Malhotra, Srivastava.Discussions are made here as an extension & supplementary to the knowledge shared on the topic in study guide. This is for updating of knowledge and could be used as an aid to the study guide. FewMCQ type examples on this portion are also placed here for clear understanding. This writing will maximize benefit once Guide book on the paper 9- Operations Management & Strategic Management written and issued by Institute on Syllabus -16is thoroughly consulted.

27





VOL: 3, No.: 1

Operations Management & StrategicManagement (OMSM) - StrategicManagement

Group - IIPaper - 9 , Part - iiGroup - IIPaper - 9 , Part - iiOperations Management & Strategic Management (OMSM) - Strategic Management

CMA (Dr.) Sumita ChakrabortyJt. Director, StudiesShe can be reached at:[email protected]

28



The course will follow in general terms the strategy development process from audit to

formulation of strategic plans, their implementation and evaluation.

Students will be introduced to strategic management in a way so that their understanding

can be better.

The ultimate aim of the course is to develop students as future managers who will add value

by 'strategically managing' the organisation's resources and capabilities.


VOL: 3, No.: 1

STRATEGIC MANAGEMENT

In this issue we are discussing with Strategy Formulation

and Implementation. According to Steiner and Miner,

Strategy Implementation is -“The implementation of

policies and strategies is concerned with the design and

management of systems to achieve the best integration of

people, structures, processes and resources in reaching

organisational purposes.”

Strategy Formulation follows:

(i) Develop and evaluate strategic alternatives,(ii) select appropriate strategies for all levels in the

organisation that provide relative advantage over competitors,

(iii) Match organizational strengths to environmental opportunities,

(iv) Correct weaknesses and guard against threats.

Once the strategy is formulated, then the process of its implementation starts.

Implementation of strategy:

(i) Effectively fitting organizational structure and activities to the environment

(ii) The environment dictates the chosen strategy; effective strategy implementation requires an organisational structure matched to its requirements. evaluating results

(iii) How effective have strategies been?(iv) What adjustments, if any, are necessary.

Need for a Production Strategy:

The key to successful survival of an enterprise as an independent unit is how

efficiently production activity is managed. the two major factors that contribute to business failures are obsolescence of the product line and excessive production costs. these factors themselves have been the outcome of ineffective production planning.

Within the corporate structure, production strategy helps in maintaining full co-ordination with marketing and engineering functions to formulate plans to improve products and services. it calls upon management to keep in constant touch with finance and personnel to achieve the optimal use of assets, cost control, recruitment of suitable production personnel and management of labour disputes and negotiations.

Formulating Production Strategy:

The following steps are involved in the formulation of production strategy:

(i) Study the overall corporate plan and define the objectives.

(ii) analyse the present production operations and the present and future environment.

(iii) review sales- forecast and marketing.(iv) make strategic decisions for production.

Strategy Business Unit (SBU):

SBU groups similar divisions into “Strategic Business Units” and then delegate's authority and responsibility of each unit to a senior executive who is normally identified as CEO or MD of that SBU. It is an extension of Divisional structure.

SBU Structure:

Big organisation like Unilever, etc have many SBUs for their different categories of products like Cosmetics, Food products and Beverages, etc, and each is managed through separate unit head.

29



VOL: 3, No.: 1

See the diagrammatic structure of a Typical Strategic Business Unit:

Advantages:

(i) Promotes accountability since units' heads are responsible for individual SBU profitability(ii) Career development opportunities are further higher in this structure(iii) Allow better control of categories of products manufacturing, marketing and distributions(iv) Helps to expand in different related and unrelated businesses

Disadvantages:

(i) May provide inconsistent approach to tackle customers, etc, because each unit may work in it's own way to handle situations

(ii) High cost approach.

President

CorporateR & D

CorporateFiinance

StrategicPlanning

CorporateMarketing

CorporateHuman

Resource

Strategic Business

Unit A

Strategic Business

Unit B

Strategic Business

Unit C

Strategic Business

Unit D

Division Division Division Division Division Division


30



VOL: 3, No.: 1



A 50%

B 50%

Cost & Management Accounting and Financial Management (CMFM)

Group - IIPaper - 10Group - IIPaper - 10Cost & Management Accounting andFinancial Management (CMFM)

Dr. Swapan Sarkar, Assistant Professor Department of Commerce,University of CalcuttaHe can be reached at: [email protected]

31



The paper Cost & Management Accounting and Financial Management (Group II; Paper 10) is a unique blend of theoretical elaborations and practical illustrations. The aim of this paper is to equip the students with a working level knowledge regarding the two disciplines and prepare a ground for a few advanced level papers like Strategic Financial Management (Final Group 3: Paper 14), Strategic Cost Management decision Making (Final Group 3:Paper 15) and Strategic Performance Management and Business Valuation (Final Group 4: Paper 20) in the CMA Final Course. The entire syllabus of the paper is segregated into two segments namely Cost & Management Accounting (Section A: Full Marks 50) and Financial Management (Section B: Full Marks 50). Each of the individual sections has further been divided into five chapters each highlighting a specific aspect of the subject concerned. In this section of e- bulletin we shall have a series of discussion on each of these chapters to provide a meaningful assistance to the students in preparing themselves for the examination at the short end and equip them with sufficient knowledge to deal with real life complications at the long end.


VOL: 3, No.: 1

Cost & Management Accounting and Financial ManagementSection B

Chapter 10: Capital Structure Theories:

Capital Structure and Trading on Equity:

One of the most important concepts associated with capital structure is trading on equity. Trading on equity is defined as a process

which helps a firm to improve its return to shareholders through the use of fixed charge capital i.e. debt capital and preference

share capital. In other words, through trading on equity, a firm can considerably increase its EPS and ROE by increasing the

percentage of debt capital and preference share capital in its total capital. However, this is possible only when -

(i) Rate of return on assets > Cost of debt capital, and

(ii) Rate of return on shareholders' fund > Cost of preference share capital.

The above two conditions are known as the limiting conditions to trading on equity.

Consider the following two examples.

Case 1: Rate of return on assets > cost of debt capital.

X Ltd currently has total assets of Rs. 400000 financed by Equity Share Capital of Rs.200000 of face value of Rs. 10 and 8% Debt of

Rs. 200000. It is now planning to raise its debt capital to Rs. 240000 keeping the total capital unchanged. Calculate EPS of the firm

both under existing and proposed situation assuming the rate of return on assets to be (i) 10% and (ii) 7%. Tax rate is 50%. Comment

on the trading on equity.

Results:

Calculation for EPS

Particulars

ROA> Kd ROA< Kd

Existing Plan Proposed Plan Existing Plan Proposed Plan

1. Rate of return on Assets 10% 10% 7% 7%

2. Cost of Debt 8% 8% 8% 8%

3. EPS(Rs.) 0.60 0.65 0.30 0.275

32



VOL: 3, No.: 1

It can be seen that X Ltd has been successful in increasing its EPS by employing additional debt capital when the return on assets is

higher than the cost of debt. This has been possible because of trading on equity. However, when the return on assets is lower than

the cost of debt, the firm has ended up with a decline in EPS while employing additional debt.

This proves the assertion that trading on equity is possible when Rate of return on assets is higher than cost of debt capital.

Case 2: Rate of return on shareholders' fund > Cost of preference share capital.

Y Ltd has total assets of Rs. 1000000 financed by Rs. 500000 Equity Share Capital (Rs. 10) and Rs.500000, 10% Preference Share

Capital. It is now planning to raise its preference share capital to Rs. 600000 keeping the total capital unchanged. Calculate EPS of

the firm both under existing and proposed situation assuming rate of return on assets to be (i) 22% and (ii) 18% with tax rate 50%.

Comment on the trading on equity.

Results: Calculation for EPS

From the above statement it can be seen that Y Ltd has been successful in increasing its EPS by employing additional preference

share capital when the return on shareholders' fund (i.e. EAT/Shareholders' Fund) (11%) is higher than the cost of preference share

capital. This has been possible because of trading on equity. However, when the return on shareholders' fund (9%) is lower than the

cost of preference share capital, the firm has ended up with a decline in EPS while employing additional preference share capital.

This proves the assertion that trading on equity is possible when Rate of return on shareholders' fund is higher than cost of

preference share capital.

Trading on Equity; Classification:

Based on the relative dominance of equity shareholders' fund and fixed charge bearing capital, trading on equity is said to have

two variants– Trading on thin equity and Trading on thick equity. A comparison between the two can be made as follows.

Particulars

RSHF> Kp RSHF< Kp

Existing

Plan

Proposed

Plan

Existing

Plan

Proposed

Plan

1. Rate of return on Assets 22% 22% 18% 18%

2. Rate of return on shareholders' fund (RSHF) 11% 11% 9% 9%

3. Cost of preference share capital 10% 10% 10% 10%

4. EPS (Rs.) 1.20 1.25 0.80 0.75

Trading on Thin Equity Trading on Thick Equity

1. Fixed charge bearing capital is

predominant.

2. Capital gearing ratio is more than one.

3. It involves high level of risk.

4. Rate of growth of EPS is more.

5. It is suitable for established firms.

1 . E q u i t y s h a r e h o l d e r s ' f u n d i s

predominant.

2. Capital gearing ratio is less than one.

3. It involves low level of risk.

4. Rate of growth of EPS is less.

5. It is suitable for new firms.

33



VOL: 3, No.: 1

Advantages and Disadvantages of Trading on Equity:

The concept of trading on equity is related to the value of the firm also. A favourable trading on equity increases the ROE of the firm

and simultaneously reduces the weighted average cost of capital. This may have some impact on the share price and value of the

firm. Consequently a pertinent question that arises is 'how far a change in the capital structure of the firm can impact the value of the

firm'.

Advantages Disadvantages

1. It increases EPS and ROE of the firm.

2. It increases MPS by increasing EPS.

3. Preservation of control by promoters

is possible as participation of retail

outside shareholders is low.

4. It helps in building good image of the

firm.

5. It injects more flexibility in the

capital structure as debt capital can

be redeemed easily.

1. It increases the financial risk

substantially.

2. Its benefit is conditional i.e. ROA> K d

and Return on Shareholders' fund>

Kp.

3. Increasing fixed charge capital may

not be easy always. Many a times

additional loan comes at the cost of

independence in decision making.

4. Suitable only when operating risk is

low.


34



A Canons of Taxation - Indirect Tax & Central Excise 35%B Customs Law 15%



VOL: 3, No.: 1

Indirect Taxation (ITX)

Group - IIPaper - 11Group - IIPaper - 11Indirect Taxation (ITX)

Ms. Poushali DasAsstt. Professor, Scottish Church CollegeShe can be reached at:[email protected]

35


Learning objectives:

The concept of tax and the objective for its levy

The concept of direct and indirect tax and the differences between the two

The basic features of indirect taxes

What are the principal indirect taxes

As to how the indirect taxes are administered in the country


VOL: 3, No.: 1

Classification of Goods for Customs Duty Introduction:

Import and export of goods are required to be assessed to duty

which may include an assessment of nil duty. For this purpose,

it is necessary to determine the classification of the goods,

which basically means the categorization of the goods in a

specific heading of the Schedules to the Customs Tariff Act,

1975.

Classification of imported/export goods is governed by the

Customs Tariff Act, 1975 which contains two Schedules. The

First Schedule specifies the nomenclature that is based on the

Harmonized Commodity Description and Coding System

generally referred to as “Harmonized System” or simply "HS”,

developed by the World Customs Organization (WCO) which

is applied uniformly by more than 137 countries the world

over. The Second Schedule contains description of goods

chargeable to export duty. As the nomenclature also specifies

the Customs duty rates (Tariff), it is called the Indian Customs

Tariff or Tariff Schedule.

Methodology of classification:

In the Tariff Schedule, commodities are arranged in a fixed

pattern with the duty rates specified against each of them. The

pattern of arrangement of goods in the Tariff is in increasing

degree of manufacture of commodities in the sequence of

natural products, raw materials; semi finished goods and fully

finished goods. The Indian Customs Tariff has 21 Sections

and 98 Chapters. Section is a group consisting of a number of

Chapters which codify a particular class of goods. The Section

notes explain the scope of chapters. The Chapters consist of

chapter notes, brief description of commodities arranged at

four digit, six digit and eight digit levels. Every four-digit code

is called a heading and every six digit code is called a

subheading and 8-digit code is called a, Tariff Item.

The Harmonized System (HS) provides commodity codes and

description up to 4-digit (Heading) and 6-digit (Sub-heading)

levels only and member countries of WCO are allowed to

extend the codes up to any level subject to the condition that

nothing changes at the 4-digit or 6-digit levels. India has

developed 8-digit level classification to indicate specific

statistical codes for indigenous products and also to monitor

the trade volumes.

The HS is amended periodically in a review cycle of 4-6 years,

taking note of the trade flow, technological progress, etc. After

the HS came into effect on 1.1.1988, it was amended in 1992,

1996, 2002, 2007 and 2012. Member countries including

India are under obligation in terms of International

Convention on Harmonized System to amend their Tariff

Schedules in alignment with HS. Therefore, the classification

of some commodities/products may change over a period of

time. Those involved in the negotiation of international

commercial arrangements, multilateral tariff agreements etc.

should refer to correlation tables showing the transposition of

sub-headings from older version to the newer and the newer to

the older version of the HS.

For purposes of uniform interpretation of the HS, the WCO

has published detailed Explanatory Notes to various headings

or subheadings. This forms the basis for interpreting the HS.

The WCO, in its various committees discusses the

classification of individual products and gives classification

opinion on them. Such information, though not binding in

nature provides a useful guideline for classifying goods.

The process of arriving at a particular heading or subheading

code, either at four digit, six digit or eight digit level for a

commodity in the Tariff Schedule is called „classification‟.

The titles of Sections, Chapters and Sub-chapters are provided

for ease of reference only. For legal purposes the texts of the

Section Notes, Chapter Notes, Subheading 38 Notes,

Supplementary Notes, Headings, Subheadings, and the

General Rules for Interpretation of Import Tariff (GIR) should

be relied upon to determine the classification of an item.

Classification helps in determining the rate of duty legible. The

Indian Customs Tariff provides specific headings for goods

imported under Project Import Scheme, goods imported by

post and goods imported as baggage in Chapter 98 under

which they will be classified straightaway even though they

36



VOL: 3, No.: 1

may be covered elsewhere.

The General Index Register (GIR) is a set of 6 rules for

classification of goods in the Tariff Schedule. These rules have

to be applied sequentially. Rule 1 gives precedence to the

Section notes or Chapter notes while classifying a product.

Rule 2(a) applies to goods imported in incomplete or finished

condition and assembled or unassembled condition. Rule 2(b)

is applicable to mixtures and composite goods. Goods which

cannot be classified by application of Rule 2(b), will be

classified by application of Rule 3 i.e. by application of most

specific description as per Rule 3(a) or by ascertaining the

essential character of the article as per Rule 3(b) or by taking

into consideration the heading that occurs last in the

numerical order as per Rule 3(c). Rule 4 states that goods

which cannot be classified by application of the preceding

rules may be classified under the heading appropriate to the

goods to which they are most akin. Rule 5 applies to packing

materials or articles in which the goods are carried. Rule 6 is

applied to arrive at the appropriate subheading within a

heading and for that purpose the provisions of Rules 1 to 5, on

the understanding that subheadings at the same levels are

comparable. For the purpose of Rule 6 the relative Section and

Chapter Notes also apply unless the context otherwise

requires.

While classifying goods, the foremost consideration is the

statutory definition and any guideline provided by HS

Explanatory Notes. In their absence, the cardinal principle

would be the way goods are known in common parlance. Many

times statutes contain definitions and meanings of only a

restricted number of words, expressions or phrases.

Therefore, while interpreting the common words used in the

statute, giving more than due importance to common

dictionary meanings may be misleading, as therein all shades

of meaning of a particular word are given. Similarly, meanings

assigned in technical dictionaries will have limited

application.

For purposes of classification the trade meaning is given due

importance unless the Tariff itself requires the terms to be

interpreted in a strict technical sense in which case technical

dictionaries should be used. If any scientific test is to be

performed, the same must be carried out as prescribed to

arrive at the classification of goods. The common dictionary

meaning of technical words should not be accepted in such

cases since normally, the common parlance understanding is

indicative of the functional character of the goods. Further, in

matters of classification the quality of goods, whether prime or

defective is not material. There is no prohibition on revising

the classification once decided. However revision should be

only done for good and sufficient reasons. In case of difficulty

in understanding the scope of the headings / subheadings,

reference should invariably be made to supplementary texts

like the Explanatory Notes to the HS.

The rate of duty specified in the Tariff Schedule is called Tariff

rate of duty. Goods which are not levied concessional rate of

duty or exempted from duty by an exemption notification

issued under the Customs Act, 1962 are levied the Tariff rate of

duty. The Export Tariff Schedule mentions only the

commodities on which export tariff is levied. Likewise the

Central Excise Tariff prescribed Excise duties against each

subheading, which is relevant for the purpose of computing

the Additional Duty of Customs. Goods which are prescribed

as nil rates of duty in the Tariff are those goods which are

levied to free rates of duty.

Board issues Tariff Advices in the form of circulars to ensure

uniformity in classification of goods at an All India level. Such

issues also get discussed and resolved in the periodic

Conferences of Chief Commissioners/Commissioners of

Customs on Tariffs and Allied Matters. An Advance Ruling

Authority gives binding tariff advice to applicants. 39 2.11

Permissibility of import and export of goods is governed by the

DGFT's ITC (HS) Classification of Import and Export Goods.

This nomenclature arranges goods as in the HS but codifies

them by ten digit numerical codes for precision in import /

export control.

37




A 50%

B 50%



VOL: 3, No.: 1

Company Accounts & Audit (CAA)

Group - IIPaper - 12Group - IIPaper - 12Company Accounts & Audit (CAA)

Dr. Malay Kr. NayakAssociate Professor, Dept. Of Commerce,M.B.B.College,TripuraHe can be reached at: [email protected]

38



Apply appropriate judgment derived from knowledge of accounting theory, to financial analysis

and decision making

Effectively define the needs of the various users of accounting data and demonstrate the ability to

communicate such data effectively, as well as the ability to provide knowledgeable

recommendations.

Prepare financial statements in accordance with Generally Accepted Accounting Principles.

Demonstrate an understanding of current auditing standards and acceptable practices, as well as

the impact of audit risk on the engagement.


VOL: 3, No.: 1

Let us discuss today about some basic concepts of cash flow

statement in question answer format.

What is cash flow statement?

Cash flow statement is the statement of cash flows that is

inflows and outflows of cash and cash equivalents.

What is cash?

Cash is anything which a banker can accept as a deposit at its

face value.

What is cash equivalents?

It is short term highly liquid investment which is readily

convertible into known amount of cash.

What is the importance of cash flow statement?

Cash flows are crucial to business decisions. Rationality of

investment is evaluated taking into account the future cash

flows expected to generate.

What is the format of cash flow statement as per AS

3?

AS 3 lays down a format which requires flows of three

different activities namely Operating Activities, Investing

Activities and Financing Activities.

What is cash flows from Operating Activities?

It is derived from the principal revenue producing activities

of the enterprise.

What is cash flow from Investing Activities?

It represents the extent of expenditure for resources

intended to generate future income and cash flows.

What is Financing Activities?

It represents the activities that result in changes in the size

and composition of owner's capital to predict claims on

future cash flows by providers of fund to the enterprise.

What are the elements of operating cash flow?

Elements of operating cash flows are:

1. Cash receipts from sale of goods and rendering services

2. Cash receipts from royalty, fees, commission and other

revenues

3. Cash payments to suppliers for goods and services

4. Cash payments to on behalf of employees

5. Cash receipts and cash payments of an insurance

enterprise for premiums and claims

6. Cash payments or refunds of income taxes

7. Cash receipts and payments relating to future

contracts, forward contracts etc.

What are the elements of cash flows from investing

activities?

Elements of investing activities are:

1. Cash payments for acquisition of fixed assets

2. Cash receipts on disposal of fixed assets

3. Cash payments to acquire shares, warrants and debt

instruments

4. Cash receipts from disposal of shares, warrants and

debt instruments

5. Cash advances and loans made to third parties

6. Cash receipts from repayments and advances made to

third parties

7. Cash payments for future, forward, option and swap

contracts

8. Cash receipts on future, forward, option and swap

contracts

What are the elements of financing activities?

39

Company Accounts & Audit



VOL: 3, No.: 1

Cash flow financing activities are:

1. Cash proceeds from issuing shares and equity instruments

2. Cash payments to acquire or redeem the shares

3. Cash proceeds from issuing debentures, loans etc

4. Cash repayments of amounts borrowed

5. Cash payments by lease for the reduction of outstanding liability

How to calculate for operating activities?

There are two methods which AS 3 allows.

1. Direct method- Major classes of cash receipts and payments are disclosed

2. Indirect method- Whereas the figure is calculated from profit and loss account and balance sheet

The SEBI requires computation of cash flows from indirect method. Net profit is adjusted from non cash items.

Today we are to close the discussion for the time being expecting to discuss more on practical aspects later on.

Students are to groom a fresh new year with certainty of actualisation of dreams in past and present. Enjoy Accounting.


40


Model Career PlanerModel Career PlanerModel Career Planer

(Here is a Model Career Planner that charts out the details of Mr. Anan, an illustrative character of Cost Manger. Adopt it for

yourself and Plan ahead.)

A. The Person

J. R. D. Tata was born on 29 July 1904. As his mother was French, he spent much of his childhood in France and as a

result French happened to be his first language.

He joined Tata Sons as an unpaid apprentice in 1925. In 1938, at the age of 34, JRD was elected Chairman of Tata Sons

making him the head of the largest industrial group in India. He founded India's first commercial airline, Tata Airlines in

1932, which became Air India in 1946, now India's national airline. Under his chairmanship, the assets of the Tata Group

grew from US$ 100 million to over US$ 5 billion. He started with 14 enterprises under his leadership and half a century

later on 26 July 1988, when he left, Tata Sons was a conglomerate of 95 enterprises.

JRD Tata firmly believed in employee welfare and espoused the principles of an eight-hour working day, free medical

aid, workers' provident scheme, and workmen's accident compensation schemes,which were later, adopted as statutory

requirements in India.

JRD Tata received a number of awards. In 1992, because of his selfless humanitarian endeavours, JRD Tata was

awarded India's highest civilian honour, the Bharat Ratna

1 Name Anan

2 Gender Male

3 Date of Birth 02.07.1990

4 Address Cost Bhavan Apartments, Pandey Layout,

Khamla, Nagpur – 440 025, India

5 Contact Number +91 (712) xxxx736

6 Email [email protected]

7 Marital Status

8 Domicile India

9 Language Skills

Can Speak

Can Write

Can Understand

Marathi, Hindi, English, French, Tamil

Marathi, Hindi, English, French

Marathi, Hindi, English, French, Tamil, Telugu

10 Role Model J R D Tata


VOL: 3, No.: 1

41


B. The Family

C. Qualification

D. Experience

1 Father Name

Occupation

Nayan

Farming

2 Mother Name

Occupation

Mahima

House Wife

1 Graduation

Year

Stream

Percentage

June 2007

Science

72

2 Post Graduation

Year

Stream

Percentage

June 2009

Management

85

3 Professional

Year

Course

Stream

Percentage

December 2009

ICMAI

Cost Management

68

1 Employer

Position

Job Description

Period

Earnings p.m. in Rs.

MA & Co, Cost Accountants

Trainee

Verification of Cost Accounts

Compilation of Cost Statements

Appraisal of Enterprise Performance

April 2010 to March 2012 (Two Years)

Rs.6,000/-

2 Employer

Position

Job Description

Period in Years

Earnings p.m. in Rs.

MA Limited; Manufacturers of ABC Power Cables;

Annual turn over: 750 crores

Performance Analyst

Compilation of Daily Performance Report

Analysis of Monthly Performance &

Financial Statements

Fund flow Reports

July 2012 onwards…. (Nearly 4 years)

Rs. 43,000/


VOL: 3, No.: 1

42


E. Perception

F. SWOT Matrix

1 Life Style Leads the life of a semi rich urban Hindu vegetarian; Intends to be richer

Lives in an air-conditioned bed room in a two-room rented apartment; Intends

to own an air conditioned three room apartment

Commutes by a two-wheeler; intends to own a four-wheeler

Works six days a week; Intends to have five days a week

. Goes for monthly outings; Intends to go for weekly outings

Observation: In order to catch up with my intended lifestyle, the current carrier path needs an upliftment.

2 (a) Likes Appreciation of my work by seniors

Ethical and supportive work culture

Exposure to new avenues

. Incentives and Promotions

2 (b) Dislikes Being bossed over

Interference from colleagues in my work

Working on holidays

. Monotonous work

Observation: The only limitation in my current job is that of 'Working on holidays'

3 Passion Acquiring additional professional knowledge

Reading and writing articles on professional matters

Training juniors

. Developing social contacts

Observation: All the items keep recurring in my present job.

4 Aspirations To be regarded as a Cost Manager of par excellence during the next ten years

To be a National Council Member of my profession during the next fifteen years

. To become a role model professional by the next twenty years

Strengths Professional Knowledge

Work acumen

Positive thinking

Local domicile

Courage & Discipline

. Proximity to the top management


VOL: 3, No.: 1

43


G. Self Evaluation

2 Weaknesses Goes too far for perfection

Short Temperament

Tends to conform to the wishes of seniors

Overconfidence at times

. Inadequate public speaking skills

3 Opportunities Increasing demand for cost managers

. Better Prospects within the organization

4

Threats . Aging parents

5 Observations To focus on improvement of soft skills and overcome

the weaknesses during the next two years

. To work out a solution for properrelocation of parents

as per their convenience

Serial Item Max. Score Assessed Score Rating

1 Looks

a Appearance 9 7 Fair

b Attire 8 6 Fair

c Confidence 8 6 Fair

d Sub Total 25 19 Fair


VOL: 3, No.: 1

2 Knowledge

a Subject 30 25 Good

b General 20 16 Good

c Sub Total 50 41 Good

44



VOL: 3, No.: 1

3 Maturity

a Thoughtfulness 5 4 Good

b Mental Balance 5 4 Good

c Flexibility 5 3 Average

d Temperament 5 3 Average

e Logic 5 4 Good

f Sub Total 25 18 Fair

4 Communication

a Body Stance 13 11 Good

b Words 12 10 Good

c Voice 12 10 Good

d Clarity 13 11 Good

e Sub Total 50 41 Good

5 Team Play

a Leadership 13 9 Fair

b Adaptability 6 5 Good

c Team Spirit 6 5 Good

d Sub Total 25 19 Fair

6 Skill Traits

a Language Proficiency 12 10 Good

b Special Skills 13 11 Good

c Sub Total 25 21 Good

7 Total 200 160 Good

Rating Parameters: 95% and above = Excellent; 90% to 94% = Very Good; 80% to 89% = Good; 65% to 79% =

Fair: 50% to 64% = Average

45


VOL: 3, No.: 1

H. Career Goals

I. PunchCaution


Observation: Needs to improve the total score to 170 within two years by focusing on all the areas falling below

80% of the maximum mark allotted

1 Ten Years hence

Position

Financial

Family

Social

General Manager (Cost Management)

Rs.25 lakhs per annum in Nagpur

One kid

Office Bearer of XXX Club

2 Five Years hence

Position

Financial

Family

Social

Manager (Cost Management)


Buying a four-wheeler

Active Member of XXX Club

3 Two Years hence

Position

Financial

Family

Social

Manager (Cost Management)


Buying three room apartment; Relocation of parents to

Nagpur

Member of XXX Club

4 One Year hence

Position

Financial

Family

Social

Dy. Manager (Cost Management)


Marry a working girl from Nagpur

Net working for more professional friends

Needs adequate care and caution about cunning peers in the accounts and production departments

Date:xx / xx / 2018 Signature: - - - -


46

PracticalADVICE

Prac�cal support, informa�on and advice to help youget the most out of your studies.

ABOUT YOUR STUDIES - INTERMEDIATE COURSEABOUT YOUR STUDIES - INTERMEDIATE COURSE


Assess Yourself

Appear For Examination

Solve Excercises given in Study Note

Read The Tips

Read Study Notes & MTPs

1

2

3

4

5


VOL: 3, No.: 1

47

I am CMA Vijay Pal Singh and I am a regular reader of e‐bulletin which is being published every I am CMA Vijay Pal Singh and I am a regular reader of e‐bulletin which is being published every month and uploaded in our Institutes website for students. During my studies I always studied month and uploaded in our Institutes website for students. During my studies I always studied and referred Students Newsletter that helped me a lot to update my self and keep on doing and referred Students Newsletter that helped me a lot to update my self and keep on doing value addition.value addition.

CMA Vijay Pal SinghCMA Vijay Pal Singh

[email protected]@gmail.com

Dear Students,

We are very much delighted to receive responses from all of you; for whom our effort is!We have noted your queries and your requests will definitely be carried out. Further, requesting you to go through the current edition of the bulletin. All the areas will be covered gradually. Expecting your responses further to serve you better as we believe that there is no end of excellence! One of the mails received is acknowledged below.

I am CMA Vijay Pal Singh and I am a regular reader of e‐bulletin which is being published every month and uploaded in our Institutes website for students. During my studies I always studied and referred Students Newsletter that helped me a lot to update my self and keep on doing value addition.

CMA Vijay Pal Singh

[email protected]

Updation of E-Mail Address/Mobile:Students are advised to update their E-Mail id and Mobile Numbers timely so that important communications are not missed as the same are sent through bulk mail/SMS nowadays. Student may update their E-Mail id/ Mobile Number instantly after logging into their account at www.icmai.in at request option.

Please put your opinions so that we can make your e-bulletin everything that you want it to be.

Send your Feedback to:e-mail: [email protected]

website: http://www.icmai.in

All rights reserved. No part of this Bulletin may be translated or copied in any form or by any means without the prior written permission of the Institute of Cost Accountants of India.


SubmissionSubmission


VOL: 3, No.: 1

48

Message from theMessage from theMessage from the Directorate of StudiesDirectorate of StudiesDirectorate of Studies



VOL: 3, No.: 1

Dear Students,

We have stepped into 2018 and with new enthusiasm for the future to come, it is also a time to reflect on the year

gone by and the beautiful moments shared with all. Express your gratitude and spare your thoughts for all who

have supported you and remember to make a new year resolution to do much better in every sphere of your life.

‘Learn from yesterday, Live for today, Hope for tomorrow’

For the smooth and flawless preparation. Directorate of Studies have provided meaningful tips which will help

you to gain sufficient knowledge about each subject.“Tips” are given in this E-bulletin by the knowledge experts

for the smooth encouragement in you preparation. We are sure that all students will definitely be benefitted by

those tips and that will help them to brush up their knowledge and also to swim across.

Take the course seriously from the very beginning but don’t be panicky. Please try to follow the general

guidelines, mentioned below; which may help you in your preparation.

Essentials for Preparation:

Conceptual understanding & Overall understanding of the subject both should be clear.

Candidates are advised to go through the study material provided by the Institute in an analytical

manner.

Students Should improve basic understanding of the subject with focus on core concepts.

The Candidates are expected to give to the point answer, which is a basic pre-requisite for any

professional examination.

To strengthen the answers candidates are advised to give answer precisely and in a structured manner.

In-depth knowledge about specific terms required.

Write question numbers correctly and prominently.

Proper time management is also important while answering.

Be Prepared and Get Success;

Disclaimer:Although due care and diligence have been taken in preparation and uploading this E-bulletin, the Institute shall not be responsible for any loss or damage, resulting from any action taken on the basis of the contents of this E-bulletin.

49

Photo GalleryPhoto GalleryPhoto Gallery


CMA Sanjay Gupta, President of the Institute

met Shri Piyush Goyal, Minister of Railways and

Coal and discussed the Railways Project and

Enhanced role of CMA's in Railways and Coal

Sector.

CMA Sanjay Gupta, President, The Institute of

Cost Accountants of India presenting Guidance

Note by the Institute on Anti Profiteering to Shri

Arun Jaitley, Hon'ble Minister of Finance and

Corporate Affairs.


Cost Accountants of India extending New Year

greetings with Shri Suresh Chandra, Secretary

to the Government of India, Ministry of Law &

Justice.


Cost Accountants of India extending New Year

greetings with Shri Injeti Srinivas, Secretary to

the Government of India, Ministry of Corporate

Affairs.

Glimpse of the meeting held on 14.01.2018 at the HQ in connection with the preparation of

work book for students’ ,by the Directorate of Studies.



VOL: 3, No.: 1

50

THE INSTITUTE OF COST ACCOUNTANTS OF INDIA(Statutory body under an Act of Parliament)

Headquarters: CMA Bhawan, 12, Sudder Street, Kolkata - 700 016Phone: +91-33-2252-1031/34/35/1602/1492/1619/7373/7143

Delhi office: CMA Bhawan, 3, Institutional Area, Lodhi Road, New Delhi - 110 003Phone: +91-11-2462-2156/2157/2158

Behind every successful business decision, there is always a CMABehind every successful business decision, there is always a CMA

TOLL FREE 18003450092 / 1800110910TOLL FREE 18003450092 / 1800110910TOLL FREE 18003450092 / 1800110910

www.icmai.in

Documents

INTERMEDIA INTERMEDIATETE · project and terminates at the completion of the project. This is a very short lived business and does not follow the going concern concept. During dewali