Financial Accounting-II

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Dr. Narendra S. Bagde, Dr. Ghanshyam B. Bagde & Dr. Parag M. Joshi

ISBN - 9789386488459

B.Com, Third Semester – According to the new Syllabus of ‘Rashtrasant Tukadoji Maharaj Nagpur University’

Syllabus

Unit 1: Consignment Accounts
1.1. Consignment Accounts	15
1.1.1. Meaning of Consignment Accounts	15
1.1.2. Features of Consignment	16
1.1.3. Terms Used in Consignment	16
1.1.4. Needs of Consignment	19
1.1.5. Advantages of Consignment	19
1.1.6. Formalities/Steps in Consignment	21
1.1.7. Difference between Consignment andSale	22
1.1.8. Proforma Invoice	23
1.1.9. Account Sales	23
1.1.10. Differences between Proforma Invoice and Account Sales	24
1.2. Accounting Procedure/ Entries of Consignment	25
1.2.1. Accounting Procedure/Entries in the Books of Consignor	25
1.2.1.1. Consigning Goods at Cost	26
1.2.1.2. Consigning Goods at Value Higher then Cost or Invoice Price	29
1.2.1.3. Format of Consignment Account	30
1.2.2. Accounting Procedure/Entries in the Books of Consignee	35
1.2.3. Valuation of Consignment Stock	40
1.2.4. Loss of Goods on Consignment	43
1.2.4.1. Normal Loss	43
1.2.4.2. Abnormal Loss	44
1.3. Miscellaneous Problems	49
1.4. Exercise	63

Unit 2: Branch Accounts
2.1. Branch Accounts	68
2.1.1. Introduction	68
2.1.2. Meaning of Branch	68
2.1.3. Meaning of Branch Accounting	69
2.1.4. Objectives of Branch Accounting	69
2.1.5. Difference between Branch Accounts and Departmental Accounts	69
2.1.6. Types of Branches	70
2.2. Dependent Branches	71
2.2.1. Meaning of Dependent Branch	71
2.2.2. Features of Dependent Branches	72
2.2.3. Maintenance of Accounting Records	72
2.2.4. Debtors Method	72
2.2.4.1. Accounting Treatment in Debtors Method	73
2.2.4.2. Supply of Goods at Cost Price	73
2.2.4.3. Supply of Goods at Invoice Price	83
2.2.5. Stock and Debtors Method	103
2.2.5.1. Transactions/Accounting Procedure of Stock and Debtors Method in Dependant Branch	106
2.2.5.2. Treatment of Some Typical Items	108
2.2.5.3. Saleof Goods Above/Below Invoice Price	113
2.2.6. Final Accounts Method	113
2.2.7. Wholesale Branch Method	118
2.3. Independent Branch	119
2.3.1. Meaning of Independent Branch	119
2.3.2. Features of Independent Branch	119
2.3.3. Transactions/Accounting Procedure of Reconciliation Entries in Independent Branch	120
2.3.4. Transactions/Accounting Procedure of Incorporation of Branch Trial Balance in Head Office Books under Independent Branch	121
2.3.5. Adjustment Entries	123
2.3.6. Difference between Dependant and Independent Branch	126
2.4. Exercise	127

Unit 3: Flotation of Joint Stock Companies
3.1. Joint Stock Company	131
3.1.1. Meaning of a Company	131
3.1.2. Characteristics of a Company	132
3.1.3. Meaning of Joint Stock Companies	133
3.1.4. Types of Joint Stock Companies	134
3.1.4.1. Chartered Companies	134
3.1.4.2. Statutory Companies	134
3.1.4.3. Registered Companies	135
3.1.5. Important Documents of Company	137
3.1.5.1. Memorandum of Association (MOA)	137
3.1.5.2. Articles of Association (AOA)	138
3.1.6. Stages in Formation of a Company	139
3.1.7. Promotion of a Company	140
3.1.7.1. Meaning and Definition of Promoters	140
3.1.7.2. Legal Position of Promoter	141
3.1.7.3. Duties of Promoter	141
3.1.7.4. Liability of Promoter	142
3.1.7.5. Pre-Incorporation Contracts	143
3.1.8. Incorporation of a Company	144
3.1.8.1. Mode of Forming Incorporated Company (Section 12)	144
3.1.8.2. Availability and Approval of the Name	144
3.1.8.3. Documents to be Filed with Registrar	145
3.1.8.4. Certificate of Incorporation	146
3.1.9. Floatation	146
3.1.9.1. Regulation of Public Issue	147
3.1.9.2. Eligibility Norms for IPO and FPO	148
3.1.9.3. Procedure for the Public Issue	149
3.1.10. Commencement of Business	151
3.1.10.1. Documents to be Filed	151
3.1.10.2. Certificate of Commencement of Business	152
3.2. Joint Stock Companies and their Capital Structure	153
3.2.1. Meaning and Definition of Capital Structure	153
3.2.2. Components of Capital Structure	153
3.3. Accounting for Share Capital	154
3.3.1. Meaning and Definition of Shares	154
3.3.2. Types of Shares	155
3.3.3. Meaning of Share Capital	156
3.3.4. Types of Share Capital	156
3.4. Issue of Shares	157
3.4.1. Methods of Issue of Shares	157
3.4.2. Accounting for Issue of Share for Cash	157
3.4.2.1. Issue of Share Payable at Lump Sum	159
3.4.2.2. Issue of Share Payable by Installments	160
3.4.3. Terms of Issue of Shares	162
3.4.3.1. Issue of Shares at Par	162
3.4.3.2. Issue of Shares at Premium	163
3.4.3.3. Issue of Shares at Discount	165
3.4.4. Under-Subscription and Over-Subscription	167
3.4.5. Calls in Arrears	171
3.4.6. Calls in Advance	172
3.4.7. Accounting for Issue of Shares for Consideration other than Cash	174
3.4.7.1. Issue of Share to the Vendors	174
3.4.7.2. Issue of Shares to Promoters	177
3.5. Forfeiture of Shares & Re-Issue of Forfeited Shares	179
3.5.1. Meaning of Forfeiture of Shares	179
3.5.2. Procedure for Forfeiture of Shares	180
3.5.3. Accounting Entries of Forfeiture	180
3.5.3.1. Forfeiture of Shares – Issued at Par	181
3.5.3.2. Forfeiture of Shares – Issued at Premium	181
3.5.3.3. Forfeiture of Shares – Issued at Discount	183
3.5.4. Re-Issue of Forfeited Shares	184
3.6. Exercise	192

Unit 4: Final Accounts of Joint Stock Companies
4.1. Final Accounts of Joint Stock Companies	195
4.1.1. Introduction	195
4.1.2. Statutory Provisions Regarding Preparation of Companies Final Accounts	196
4.1.3. Preparation of Companies Final Acounts	197
4.2. Manufacturing Account	197
4.2.1. Introduction	197
4.2.2. Preparation of Manufacturing Account	198
4.2.3. Contents/Items Under Manufacturing Account	198
4.3. Trading Account	199
4.3.1. Introduction	199
4.3.2. Preparation of Trading Account	199
4.3.3. Contents/Items under Trading Account	200
4.4. Statement of Profit and Loss	202
4.4.1. Introduction	202
4.4.2. Preparation of Statement of Profit and Loss as per Schedule III	203
4.4.3. Contents/Items under Statement of Profit and Loss	204
4.5. Profit and Loss Appropriation Account	207
4.5.1. Introduction	207
4.6. Balance Sheet	208
4.6.1. Introduction	208
4.6.2. Preparation of Balance Sheet of Joint Stock Company as Per Schedule III	208
4.6.3. Contents/Items Under Balance Sheet	209
4.6.3.1. Equity and Liabilities	209
4.6.3.2. Assets	213
4.7. Adjustments as per Schedule III of the COMPANIES ACT - 2013	222
4.7.1. Provision for Interest on Debentures	223
4.7.2. Managerial Remuneration	223
4.7.3. Divisible Profit	232
4.7.3.1. Payment of Dividend	232
4.7.3.2. Interim Dividend	235
4.7.3.3. Dividend on Preference Shares	235
4.7.3.4. Dividend on Partly Paid Shares	235
4.7.3.5. Dividends and Reserves	236
4.7.4. Appropriation Items	237
4.7.4.1. Proposed Dividend	237
4.7.4.2. Dividend Distribution Tax (DDT)	237
4.7.4.3. Transfer to Reserve	238
4.7.5. Depreciation	238
4.7.6. Discount on Issue of Shares	241
4.7.7. Issue of Bonus Shares (Section 63 of the Companies Act, 2013)	241
4.7.8. Calls in Arrears (Section 16)	242
4.7.9. Calls in Advance (Section 18)	242
4.8. Exercise	259

Solved Paper (2015)	264
Solved Paper (2016)	270
Model Papers	276