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Transfer of property deals under Transfer of property act,1882. The transfer of property act,1882 deals with all transfers except that of movable properties which are governed by the Sale of Goods Act. The property which is dealt by and large under this Act is immovable property. It doesn’t mean that movable property is not a subject matter of this Act. The general principles of Transfer of property act i.e. sections 5 – 37 of the act are equally applicable for both movable and immovable properties. Similarly, law relating to Gift of property is applicable for both properties.

DEFINATION OF TRANSFER OF PROPERTY (SEC – 5):

Transfer of property means “ an act by which a living person conveys property in present, or in future, to one or more other living persons, or to himself, and one or more other living persons”.

How can a transfer of property becomes valid?

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Introduction:

After commodity market, money market is the most infulencial in human economy. Investment generate here and loan originate from here. This is the backbone of a strong economy. It is a trading platform where securities of various forms are being traded. As the transaction can happen not over the counter and 100% on online, so there should not essentially a physical market place. Rather it is a platform for dealing with financial instrument. And it is always on, ie 24 x 7 . As a click of your mouse can make or break your fortune, so it is necessary for you know the ifs and buts and all the nuts of money market before you start your play.

Following are the terminology of Secondary Market :

     1. Primary Market:is the market where new securities and shares are through Companies.In this market, shares are sold first time in market directly from company to investors. In this market, there are lots of intermediary like Merchant Bankers, underwriters, etc. Primary market is regulated by SEBI.

     2. Secondary Market:is the market where existing shares are sold and bought by the investors.In this market,the exisitng shares are sold from one investors to other investors.In this market, only brokers and sub - broker are intermidiaries. Secondary Market is regulated by Securities Regulation Act, 1956.

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Introduction: Fixed expenses remains constant in an aggregate amount and do not vary at certain level of production. But variable cost increases or decreases to proportion to increase or decrease in output. Marginal costing is a costing method in which only variable costs are accumulated and cost per unit is ascertained only on the basis of variable costs. Marginal Costing method is used particularly for short-term decision-making.The short term objective is to maximize contribution per unit. If the existing resources is limited, then Marginal Cost analysis can be employed to maximize contribution per unit of the constrained resource.

Contribution : Contribution is the difference between the sales and the marginal cost of sales. It contributes towards fixed expenses and profit. Marginal costing assumes that the contribution provides a pool out of which fixed costs is met ; any surplus being the profit or net margin.

Marginal cost of sale means variable cost and selling and distribution cost and exclude fixed cost of an organization.

Definition of Marginal Costing:

Marginal Costing is defined as “ the accounting system in which variable costs are charged to cost units and fixed costs of the period are written off in full against the aggregate contribution. Its special value is in decision - making.

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Cash flow statement reports the cash receipts, cash payments, and net changes in cash resulting from operating, investing, and financing activities. This statement helps management to show the sources of cash and its uses during a particular period of time i.e. inflow and outflow of cash. This will help management to know the past experience and can do planning for future.

Terms to remember:

Cash: means cash on hand and demand deposits with banks. Demand deposit means those deposits which are repayable by bank on demand by depositors

Cash Equivalents: are short terms, highly liquid investments that are readily convertible into known amount of cash and which are subject to an insignificant risk of changes in value

Cash Flows: are inflows and outflows of cash and cash equivalent i.e. movement of cash in or out of the organization.

Classification of Cash Flows:

The cash flow of a organization is classified into 3 categories:

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In many cases, a new company is formed by acquiring an existing business unit. The existing business will be assumed as going concern. In such cases, the business unit is purchased first and the registration of the acquiring company takes place later. The duration of purchasing and incorporation of the company, the profit (or loss) earned is known as Profit or Loss prior to incorporation. For example, Shivam Pvt Ltd is incorporated on 1^st April, 1995 by acquiring running business ABC Pvt Ltd on 1^st Jan, 1995. From 1^st Jan, 1995 to 1st April, 1995 whatever profit or loss incurred is known as Profit or loss prior to incorporation.

NOTE: The profit earned prior to incorporation will not be distributed as dividend and kept as Capital profit.

The accounting treatment of profit or loss earned prior to incorporation is totally different from after incorporation.

Method of Computing Profit or Loss prior to incorporation:

To calculate profit or loss prior to incorporation, the following steps may be taken:

1. Prepare the trading account for the whole period i.e. from the date of purchase of business to the last date of accounts closing in order to calculate the gross profit. Date of incorporation will not affect the calculation of gross profit.

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A COMPREHENSIVE STUDY ON AS 30

“FINANCIAL INSTRUMENT: RECOGNITION & MEASUREMENT”

PART 02

Classification of FL

- Financial Liabilities (FL) at fair value through profit & loss

o FL held for trading

§ Derivative liabilities (which are not accounted for hedging instrument)

§ Obligation to deliver securities or other FA borrowed by a short seller

§ FL that are incurred with the intention to repurchase them in near future

§ Forms part of portfolio of identified financial instruments and on which there is a proof of recent actual short term profit.

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Auditing now a days fully guided by the standard set by Institute of Chartered Accountants of India. So, the other normal auditing practices that are being still used as process or custom is not encouraged. This article is primarily for students who are not persuing Chartered Accountancy course , ie persuing other courses related to finance to give a befit idea and grasp.

In many colleges and institutions where commerce subjects are being treated is found to use the old and traditional auditing practices for learning. But in real life everything is now to be done according to standard set by ICAI.

Standard 1 , is given to have a clear idea of basic principal which governs auditor’s professional responsibilities, and should be strictly followed whenever a audit is carried out.

Here are the principal in brief...

1. Integrity , objectivity, and independence :

Integrity: Straightforward, honest and sincere.

Objectivity: stick to the main objective, means he/she should know the scope and perform to achieve this.

Independence: Must be free of any interest in the auditing entity or if it has , it must be disclosed prior to audit.

2. Confidentiality : Otherwise than client’s permission or instruction from competent legal authorities , audition should not disclose any information he/she found in the course of audit regarding client and clients business. In the course of audit , auditor encounters sensitive information of clients, that privacy should be honored.

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SHARES AND SHARE CAPITAL

In the following article we are going to learn about shares , different types of shares and accounting of share capital.

Every business unit require capital to run it. The capital of a company known as share capital divided into different units with different value called shares.

Lets discuss about different types of Share Capital:

1. Authorised capital: is the capital required to registered the company or the total capital raised by the company. This is also known as nominal or registered capital.

2. Issued capital: is the part of authorised capital which is issued to general public subscription.

3. Subscribed capital: is the part of issued capital for which applications are received from public.

4. Called – up capital: is the amount of the shares which is actually offered by the company. 

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“FINANCIAL INSTRUMENT: RECOGNITION & MEASUREMENT”

PART 01

Introduction

AS 30 deals with the recognition & measurement of Financial Instrument. This AS prescribes the rule for recognition & measurement of Financial Instruments. It is applicable to all commercial, industrial & business entities except SMEs.

Definitions

Financial Instrument (FI): It is a legal agreement between two or more parties, having enforceable right of one sided party(ies) (called Financial Assets) & enforceable liability to another sided party(ies) (called Financial Liability). Thus it can be defined as follows:

Financial Instrument is outcome of a contract. The outcomes are

    - Financial Asset to one side party(ies), and

    - Financial Liability to another side party(ies).

Therefore Financial Asset is

    - Cash,

    - An equity investment in another entity,

    - A legal right through a contract

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TRANSACTIONS WITH DIRECTORS

Example

1.  We are three pvt. Ltd. Companies

2.  We also have a pertnership firm. 

3.   Directors                                               Partners

     Company 1                Sunil Khanna and Dinesh Kumar                                                               

     Company 2                Sunil Khanna and Jacob George 

     Company 3                Rashmi Khanna and Sumeet Saxena

Partnership Firm            Rashmi Khanna and Rishi Dayal

    ( Rashmi khanna is wife of Mr. Sunil Khanna )

All companies and firm are dealing in the business of stainless steel commercial food service equipments .

4.  Pvt. Ltd. companies have paid up capital less than Rs. one crore each.

Clarify if

a)  Company 1 can make sale to or purchase from partnership firm in a financial year for Rs. 50 lacks or more.

b)  Company 1, company 2 and company 3 can do transactions of purchase and sale for Rs. 50 lacks or more.

c)  Is there any formality required for above .

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In the last article we discussed about the basics of budget and budgetary control. In the following article we are going to discuss about the classification of budgets.

Budget is a statement expressed in monetary or physical units prepared for the implementation of policy formulated by the management.

It is prepared for the future period

Policy formulated with the objective before the budget is prepared. In tune of that a action plan is prepared. That is budget.

CLASSIFICATION OF BUDGETS:

Budgets are classified under different categories. They are discussed as follows:

1. Based on Scope

   (a) Functional Budget:

           i. Sales Budget

Budget is the statement of the financial and quantitative planning done by the management to follow in the immidiate next period. A budget is prepared to have effective utilisation of funds and for the realisation of objectives as efficiently as possible. A budget fixed a target in terms of rupees or quantities against which the actual performance is measured.

Budgetary Control is the planned system of management in the allocation of responsibility and authority to aid in making estimates and plans for future, to assist in analysis of variances between estimated and actual results and to devlop basis of measurement or standards with which to evaluate the efficiency of operations.

Forecast is an assessment of probable future events. For planning, it is necessary to prepare forecasts of probable course of action for business in future. Forecasts are made regarding sales, production, cost and financial requirement of the business.

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Scope of Sec.295 Loan to Directors

When a company provides

- Any Loan to,

- Any Security or Guarantee

o to a persons who provides loan to,

o for providing any loan to any other persons to,

the

- Director of the giving company or holding company of such giving company,

- Relative of the director,

- Partner of the director,

- Firm in which such director or relative is a partner,

- Private company in which such director is a director,

- Body corporate in which such director or directors holding 25% or more voting power at a general meeting.

then prior approval from Central Govt.(CG) is required.

Exceptions

- Giving Private company which is not a subsidiary of any Public company

- Banking company

- Holding company to Subsidiary company

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