ACCOUNTS BY SONIA SETIA

  DIFFERENCE BETWEEN PARTNERSHIP AND COMPANY   Key Difference between Company and Partnership Firm A company and a partnership firm are both business structures but have several key differences. Some of the main differences between a company and a partnership firm are: Legal entity:  A company is a separate legal entity, meaning it can enter into contracts, own property, and assets, and be held liable for its actions. A partnership firm, on the other hand, does not have a separate legal identity, and partners are personally liable for the debts and obligations of the partnership. Liability:  Shareholders in a company have limited liability, meaning their financial liability is limited to the amount of capital they have invested. In a partnership firm, partners have unlimited personal liability, meaning they can be held responsible for the entire amount of the partnership's debts and liabilities. Management:  A company is usually managed by a board of directors, ...

  COMPANY ACCOUNTS--ACCOUNTING FOR SHARE CAPITAL INDEX 1. Meaning and Features of a company 2. Difference between Partnership & Company 3. Kinds of Companies 4. Difference among one person company, private and public company 5.Incorporation of Company 6. Meaning of Share Capital 7. Kinds of Shares 8. Difference between Preference Shares and Equity Shares 9. Accounting Treatment of Issue of Shares for cash at par and at a premium 10. Oversubscription of Shares 11. Under subscription of Shares 12. Accounting Treatment of Calls-in-Arrear 13. Accounting Treatment of Calls-in-Advance 14. Accounting Treatment of Shares issued for consideration other than cash 15. Accounting Treatment of Forfeiture and Reissue of Shares 16. Concept of Preferential Allotment 17. Private Placement of Shares 18. Employee Stock Option Plan (ESOP)       MEANING & FEATURES OF A COMPANY “Company means a Company incorporated under this Act or ...

  Few examples of operating Activities  1.Cash Sales.  2. Cash Purchases.  3. Rent paid.  4. Income Tax Paid.  5. Office Expenses.  6. Sale of Machines by a Machine Dealer.  7. Cash Paid to Trade Payables.  8. Income Tax Refund Received.  9. Cash Received From Debtors.  10. Commission  Paid

 Principal Revenue Producing Activities  Principal Revenue Producing Activities Business activities being carried by the enterprise to earn profit.   Examples of Principal Revenue Producing Activities. 1 For a Computer Manufacturing Company, Manufacturing and selling of computers is its Principal Revenue Producing Activities .   2. For a Trading Company, Purchase and sale of goods is its Principal Revenue Producing Activities.  3. For a Finance Company, Giving and Taking Loans, Purchase and Sale of Securities is its Principal Revenue Producing Activities. Few examples of operating Activities

 Cash flow arising from operating activities is a key indicator of the extent to which the business operations of the enterprise have generated cash. It indicates whether adequate cash is generated to maintain the Business Operations, Pay dividends, repay loans and make new investments. It is also helpful in forecasting future cash flow from operations. Operating Activities are the Principal Revenue Producing Activities of the Enterprise and other activities that are not INVESTING or FINANCING activities. Thus, cash flow from Operating Activities arises from Principal Revenue Producing Activities of the Enterprise that determine the net profit or loss. Principal Revenue Producing Activities Principal Revenue Producing Activities Business activities being carried by the enterprise to earn profit. Examples of Principal Revenue Producing Activities For a Computer Manufacturing Company, Manufacturing and selling of computers is its Principal Revenue Producing Activities . 1. 2. For a T...

  When Adjustment entries are passed instead of one adjustment Entry. In this situation, Analytical table to determine the net effect of all the adjustments is not prepared instead journal entries are passed for each error or omission by debiting or crediting the Profit and Loss Adjustment Account. After passing the entries for adjustment of errors and omissions, Profit and Loss Adjustment Account is closed by debiting or crediting (as the situation is) with the corresponding credit or debit to the partner’s Current accounts, if Fixed Capital Account Method is followed or Partner’s Capital Accounts , if Fluctuating Capital Account Method is followed. ACCOUNTING ENTRIES 1.       ADJUSTMENT ENTRIES FOR THE ITEMS TO BE CREDITED TO THE PARTNER’S CAPITAL/CURRENT ACCOUNTS. Profit & loss Adjustment a/c     Dr.        To partner’s capital/current a/c (Adjustment made for previously omitted, now recorded)...

  GUARANTEE OF PROFIT New partner (or partners) may be admitted in the firm with minimum guaranteed profit from the business. The profit may be guaranteed to an existing or incoming(new) partner by: 1.All the remaining partners in an agreed ratio or 2. One or more of the existing or old partners. When the guaranteed partner’s or new partner’s share of profit (actual) is more than the guaranteed amount then his Actual share of profit is given to him instead of the guaranteed amount of profit.     1.     GUARANTEE OF PROFIT BY ALL THE REMAINING PARTNERS.   When all the remaining partners (other than the Guaranteed) guarantee that the guaranteed partner shall be given a minimum amount of profit.   Journal entries   1.       On Distributing the profit as if there is no Guarantee Agreement.   Profit and Loss Appropriation a/c     Dr.        T...