Accounting Equation and Impact of various adjustement on Accounting equation

You can also visit our website, www.iedubook.com to watch many more videos on Accountancy prepared by CA. Arinjay Kumar Jain. Have a happy learning.

Accounting equation forms the basis or the foundation for the double entry bokk-keeping system. According to this equation, for each and  transaction, the total debits equal the total credits.

It is also represented as under : -

Assets = Liabilities + Capital

Impact on Accounting Equation - Introduction of Capital  in business

When capital is introduced in Business, Cash available with the business increases. An increase in asset is debited and added to the asset side. Similarly, the business owes the same amount to owners for capital and this amount is credited, and hence shown on other side of Accounting equation.

Impact on Accounting Equation for Salary payments

Payment of Salary in cash reduces the Asset side of the Accounting Equation. Similarly, given that Salary is an expenditure, on a standalone basis without any income it would increase the loss of the Business and reduce the Capital of owners.

Impact on Accounting Equation - Purchased Plant and Machinery  in Cash Credit

Purchase of Plant and Machinery  in Cash or Credit would increase the Asset available in Business, namely Plant and Machinery and hence be Increased in the asset side by that Amount. When its purchased in cash, it would reduce cash balance on Asset side. On the other hand, when purchased on credit, it would increase the liability to the Supplier of Plant and Machinery

Impact on Accounting Equation -  Capital withdrawn by owners

When the owners of business withdraw capital, Cash is reduced from the Asset side to that extent since its paid to the owners. At the same time, since amount due to owners from Business is reduced, capital account of the owners is also reduced by an equal amount

FDI – Permissible Capital Instruments for Investing in India under FEMA

Under the existing FDI policy, the following Capital  Instruments for permissible for Investing in India under FEMA

·         Equity Shares

·         Fully, Compulsorily  and Mandatorily Convertible Preference Shares

·         Fully, Compulsorily  and Mandatorily Convertible Debentures

·         FCCB’s

·         Subscription to American / Global Depository Receipts of an Indian Company

Interest on Other type of Preference Shares/Debentures, would be denominated in Rupees and hence interest thereon has to be based on swap equivalent of LIBOR + permissible spread for corresponding maturity External Commercial Borrowings.

The Law is based on Consolidated FDI Policy Circular No.1 of 2012. Prepared by Mr. Arinjay Kumar Jain

Foreign Direct Investment - Permitted and Prohibited Sectors

 The Law is based on Consolidated FDI Policy Circular No.1 of 2012 

1.    Permitted Sectors – Investment in Permitted Sectors can be made under the following two routes : -

a.    Automatic Route

No  prior approval  required from the RBI or the GOI.  Only Reserve Bank of India needs to be informed within specified period. 

b.    Government Approval Route (‘FIPB’)

Proposals falling outside the prohibited Sectors and not falling under automatic route require prior approval of Foreign Investment Promotion Board (‘FIPB’) 

2.    Prohibited Sectors

Foreign investment is not permitted in companies engaged in prohibited sectors – Refer Para 6.1 of the Policy.

 

Physics - Concepts relating to Laws of Reflection from Plane Mirros

Incident ray : -   The ray of light which strikes the Plane mirror, or any other surface is known as incident ray. 

Point of incidence : - It is the point at which the ray of Light hits the Mirror.

Reflected ray – All reflected ray correspond to a particular incident ray. A reflected ray, as it corresponds to a given incident ray, represents the light which is reflected by the surface, as an incident ray falls on it.

Normal Ray – It is a light ray which is perpendicular to a surface, i.e it hits the surface at 90 degrees.

Angle of Reflection - The angle formed between the surface, normal and the reflected ray is known as angle of reflection.

Angle of Incidence  -   The angle between Incident ray and the normal to the surface is known as the angle of incidence. 

Laws of reflection – This law states that when a ray of light hits a surface, angle of Incidence is always equal to angle of reflection. Further all of the following, namely, an incident ray, Reflected ray and Normal ray, all lie on the same Plane.

Watch this and many more Videos on Physics at http://www.iedubook.com/tutorial/su/33/CBSE,-ICSE/Class-X/Physics.html

Accountancy - Matching Concept for Revenue

According to the Matching Concept for Revenue, cost incurred to earn revenue is recognized  as an expenditure only during the period when the revenue is recognized as having been earned, i.e , we match the expenditure to the related revenue. This has three aspects : -

• As revenue is recognized as income, related expenditure is considered as an expense in the profit and loss account;
• Expenses pertaining to revenue, which are to be earned in next accounting period are carried forward as deferred expense in Balance Sheet and treated as an expense only in next year;
• Advance revenue received is to be treated as income in the year when the corresponding services are provided or property in goods is transferred.

You can also visit our website, www.iedubook.com at the following link http://www.iedubook.com/tutorial/su/8/CBSE,-ICSE/Class-XI/Accountancy.html to watch many more videos on Accountancy. Have a happy learning.

Accountancy - Revenue Recognition Concept

According to the revenue recognition concept, in order to recognize revenue from a transaction, there are two things which should have occured, namely : -

• Transaction should have been entered into;
• Right to receive the payment must be established.

The revenue recognition event need not necessarily occur with the event of collection of cash. Once the above two factors are established, even if the cash is received at a later point in time, it does not make any difference to the recognition of revenue. The undermentioned video explains the concept of revenue recognition in detail. You can also visit our website, www.iedubook.com to watch many more videos on Accountancy. Have a happy learning.

Online education - Possible Solution to the dearth of Teachers in the Indian space ?

With the growing Population, comes the challenge for Governments of creating sufficient number of schools and an education system that can meet the challenges of providing sufficient avenues for future growth of the country. However, this is one challenge which is staring at the face of regulators. While there has been a lot efforts from Government, backed by considerable spend in sector, the concrete results are yet to figure out. While the basic education has been ensured in India under the Right to Education Act by the Indian Government, the level of education has remained BASIC, and considerable efforts need to be built in, if India has any chance to compete on the global landscape .

However, what is the reason for insufficient penetration of quality education across areas ? Is it money, is it lack of quality instructors.. If one were to consider the importance of education, obviously, every household in India today spends considerable piece of their overall spend on education. If one were to go by the long queues for tuitions outside the good teachers, one can easily estimate the premium that any good tutor demands in India. For these teachers, people are spending everything, even at times beyond there capacity. This is so for any and every area, be it Mathematics for CBSE Board, Mathematics for ICSE Board, English for ICSE or English for CBSE or MBA preparation for CAT, GMAT, MAT or  commerce courses like Chartered Accountancy, Company Secretary or ICWA. Well the list does not end here, entrance examination for professional course like IIT, JEE etc. are commanding better business valuation than the traditional brick and mortar companies, which have been here in India for generations.

The unfortunate part is that despite all these spends, we are SECOND ONLY TO ONE in the global arena, when it comes to quality of students.. The attached article sounds off the misery of a country, which is supposedly the Knowledge Super Power, which creates innumerable minds who have been instrumental in some of the best and biggest creations of this world http://timesofindia.indiatimes.com/home/education/news/Indian-students-rank-2nd-last-in-global-test/articleshow/11492508.cms. Fifteen-year-old Indians who were put, for the first time, on a global stage stood second to last, only beating Kyrgyzstan when tested on their reading, math and science abilities. India ranked second last among the 73 countries that participated in the Programme for International Student Assessment (PISA), conducted annually to evaluate education systems worldwide by the OECD (Organisation for Economic Co-operation and Development) Secretariat. The survey is based on two-hour tests that half a million students are put through.

Amidst all this, one area, that seems to be promising to address the big gap is the space of online education. With the advent and growth of internet and broadband, and its penetration in the country, which connects even the remotest regions, online education can help bridge this gap. There are various models which are currently in form of online education , namely online e-learning portals, satellite classes. These are cost effective, time saving and ensure quality teachers availability to the people at distant places. With the growth of the e-learning segments, lot of free educational resources are available on internet on channels like YouTube, which provide, ease and continuity of access and can be low cost and effective. However, the acceptability of online education, unlike countries like US, UK and some of the other parts of the world is relatively low, but these are growing at scorching pace.

At www.iedubook.com. we have made a small effort to partly address the issue and supplement the already prevalent efforts of the Government and various agencies operating in the space . Through the help of various people who accessed our resources and became our Brand ambassadors, we have been motivated to do more and more for the society. Through this, an effort is made to supplement otherwise available resources for free virtual online education on the internet, some of whom includes some of the Top Universities from USA, the Khan Academy, run by the famous Mr. Salman Khan from USA and others.

Whether these resources can address the problem would be clear only with the passage of time. But if one were to only look at the need of education, and success in some of the other countries which have implemented online education, the only impact that these can bring to the society is POSITIVE.