S20

Knowledge Series For Commerce Students: Know Your Home Loan

Home Loans cater to your needs or possibly a renovation, construction, or additional repairs…

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Home Loans cater to your needs or possibly a renovation, construction, or additional repairs to your humble abode. It is affiliated with a plethora of facets that the borrower needs to take into consideration before he/she can finally attempt to avail of such a loan.

How Much Of A Loan Amount Are You Eligible To Avail?
The predominant requirement is the eligibility of the borrower in the repayment of the loan that would determine the tenure, interest rates, and down payments attached to the loan amount. Your surplus income will drive the lender to figure out the actual amount of loan that you are eligible for.

So, your total assets, total liabilities, and the apparent stability of income play a pivotal role in gaining the lender’s trust. At the end of the day, a bank needs to ensure that your financial stability will not pose any problem for them in the repayment of the loan amount.

Additional Charges And Figures That You Need To Be Aware Of
Statistically, the bank assumes that as much as 50% of your income would suffice for your loan repayment, furthermore, the desired tenure, as well as pegged interest rate, will also impact the decision of assessing the amount of loan.

The majority of lenders expect around 10 to 20 per cent of the amount of home’s purchase in the form of a down payment on your part, and the remaining portion of the loan is eventually financed by the lender.

Now, this aggregate amount of loan encompasses certain charges, for instance, registration, transfer, stamp duty etc. You may be eligible for a larger amount but it does not necessarily mean that you have to get that much amount financed, even a significantly smaller amount can also be availed which directly relies on your requirement.

It is advisable, however, that keeping the ratio of down payment relatively higher than the ratio of loan amount so that the ultimate cost of interest payable can be mitigated and be kept at the desired level.

The Necessity Of A Co-Applicant
Additionally, having a co-applicant is an indispensable requirement to fulfil, so if you are the only owner of the property under scrutiny, then, in this case, an immediate sibling or any other family member can be anointed as a co-applicant.

What Specific Documents You Will Require For The Loan?
The documentation process is another integral and intrinsic phase where a checklist of specified documents is handed out by the bank which is to be filled accurately to steer clear of future ramifications.

Your unique identity proof, proof of residence, form 16/Income tax returns and recent salary slips which has to be decidedly authenticated by your employer and has to be self-attested.

But generally, in most cases, collateral security is also warranted such as insurance policies, units of mutual funds or any other significant investment. In most cases, the designated property is purposefully mortgaged in favour of the lender in the form of security until the loan has been repaid in its entirety.

Should You Secure Your Home Loan With An Insurance Policy?
It is vehemently advisable to secure insurance in favour of the home loan so that the liability does not fall on anyone else, but you alone will be secured enough to repay it. Now there are two prominent plans which are prevalent in today’s scenario, i.e. pure term insurance and the other one is a Mortgage insurance plan.

Now the loan amount should be equivalent to the insurance amount. As far as the premium is concerned, then a single premium, as well as regular premiums, will be the coveted choice. However, it is not mandatory to avail of insurance cover but a sense of self-assurance is generated by availing of such service.

Disbursement Of Loan
The documentation process is the precursor of the disbursement of the loan. The magnitude of the loan amount is solely scrutinised based on the documentary proof and that entails the procurement of a sanction letter from the bank which explicitly states the final amount of loan, duration, and applicable interest rate etc.

So in a nutshell, when the loan has finally been confirmed from the bank, it is commonly referred to as disbursement of the loan after getting through entire technical and legal or valuation activities and handover the cheque or demand draft in favour of seller after successful execution of sale deed and mortgage deed of the house.

Types Of Interest Rates
Rates of home loan can be distinct in the form of fixed or flexible. Calculation of EMI varies as per the various financial institutions/banks from where your loan has been sanctioned. Underlying additional charges also apply in tandem with the payment of the EMI such as processing fee which is generally about 0.5 to 1% of the loan amount. Now, repayment in the form of EMI begins right after the month when the loan has been disbursed.

Repayment Through ECS
Electronic Clearing System (ECS) is one of the avenues through which the repayment of the loan can be done, which involves direct payment of the loan amount from your salary account on a specific date of the repayment.

If you are eligible to pay higher EMI, then it will certainly benefit you since it acts as a long-term advance. Clearing the obligated amount faster will alleviate and relieve your mental stress easily.

Pre-Closure
The borrower always has this option at his disposal to pre-close his/her loan way ahead of the specified duration. However if the interest on your loan is of floating nature, then you will not be bound to pay additional charges, whereas if it is of a fixed nature, then certain charges may be applicable.

Every financer or lender should explicitly state in their statement the total interest as well as the principal amount payable at the very beginning of the financial year. This will eventually serve as a propellent factor to the department of accounts regarding your proof of investment for necessary tax deductions.

This phenomenon will serve you to reap tax benefits at the end of the year. It is prudent to pick the lender that renders the lowest EMIs option which can mean that you are paying a significantly lesser amount of money in the form of repayments as compared to other applicants from any other financial institution.

How Your Grievances Can Be Addressed
There may be incidences that a borrower may not be satisfied with the services rendered by the bank or some other pertaining relevant problem might occur.

So in that case, you can mention your grievance specifically in writing delineating the factors that displeased you, which needs to be addressed at the concerned branch and if however, the bank does not resolve or overlooks your concern then you have the option at your disposal to lodge your complaint with the ombudsman.

Income Tax Benefit of Housing Loan
Interest payment for housing loan is deductible under the head income from house property. The maximum limit is Rs. 2 Lacs p.a. u/s. 24(b). Moreover, we can also get benefit u/s. 80C of income tax for the principal repayment of housing loan with maximum limit of Rs. 1.50 Lacs. The stamp duty and registration charges paid at the time of registration of sale deed is also deductible u/s 80C of Income Tax Act, 1961.

Accounting Software For Small Business

Advanced Enterprise Resource Planning(ERP) systems can transform the way you run your business. No…

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Advanced Enterprise Resource Planning(ERP) systems can transform the way you run your business. No matter what service you provide or whatever industry you might be in, proper software can help you manage your processes, help you with communication and also enhance the flexibility you provide to your customers.

ERP is a system that takes care of every possible aspect of your business be it assessing, reviewing, or improving any aspect of your business. ERP keeps you as informed as possible about your business.

So, where do you start?
Considering factors like cost, advancement, elaborate features isn’t unusual while choosing an EPR ERP system. However, you have to be careful so that you don’t end up with a system that has a lot of fancy functionalities but of no use to your business.

You can consider enrolling in a tally institute in Ahmedabad to learn more about accounting processes. It offers classes on various aspects of accounting including accounting software.

A Business Management Software, What Is That?
An application or a set of programs that help businesses support, improve and automate their processes is called a business management software by definition. It is a tool that is built to meet all the requirements of business processes in the most effective way possible.

Features
General features to look for in a business management system:

  • Project & task management
  • Time management & calendar management 
  • Document sharing & collaborating with various other organisations 
  • Sales & CRM
  • Budget management, invoice, and expense management
  • Business intelligence 
  • Accounting and financial reporting
  • Resource management

What Is Accounting Software?
Accounting is a solution to process accounting transactions and manage accounts mainly used by business owners, accounting professionals.

The process of recording, analysing, and interpreting financial transactions and information is called business accounting. In this way, a business keeps tracks of its operations which can become very difficult sometimes and that is where accounting software steps in.

Tally training in Ahmedabad is offered in a lot of different institutes there and it will surely help you know more about these software and accounting processes in details.

Accounting software helps simplify the processes, giving business owners more time to focus on the administration and execution of their strategies.

  • Task Automation
    Entering data manually can be tedious and also keeps a lot of space for errors. Accounting software helps you keep manual entry to a minimum and thus increases efficiency. Good software requires you to enter the data just once and extracts that data every time required in the future. 
  • Taxes Made Simpler
    Manually keeping track of all your transactions, calculating all your dues and filling all the returns can be very tedious and painful. Accounting software makes everything a lot easier. Return reports are automatically created and you can file them directly via a third-party app.
  • Easily Accessible Data
    Accessing your financial data anywhere and at any time is even easier now. Cloud accounting software helps you access your data whenever you wish. A suitable device, internet and a browser are all you need. 
  • Data Loss Is Reduced
    Backing up data is very essential especially for important documents. Without a proper back up you could easily lose them but doing it manually is not feasible. Accounting software takes care of that too. They organise and store the data in a way so that you can retrieve them whenever you wish to. Cloud accounting systems back up your data regularly to prevent data loss.

Why Choose Accounting Software?
Being the business owner of a small business, it can be very hectic and stressful to manage a lot of things together at one point in time. It is a huge challenge for a business owner.

Business software is essential in the journey of business growth. It helps you manage complexities and also improves the performance hugely.

A lot of choices may be available at the market but small business accounting software will be the most recommended considering all the needs and requirements along with the business. This software come with a complete solution that manages every aspect of the business like billing, GST, inventory etc in one single software.

This avoids situations of buying separate software and wasting time and resources on maintaining each one separately. It gives you a complete view of the business which in turn helps you make smart business decisions.

A Few Tips To Keep In Mind While Picking The Right Accounting Software For Your Business 

  • The accounting software should have a free trial to allow you to see through all of the features before actually investing in it
  • Accounting itself is complicated and if the system that handles it is complicated too, it defeats the purpose. It should be easy to use
  • The system should have multi-user access
  • Sending out recurring invoices and payments reminders call for automation in the system
  • Online accounting systems also require data security. 
  • You should keep in mind to look for a system that provides you with the maximum features you need for your business at a reasonable price 
  • Your system should also be able to give you technical support in case you need some while working on something

Examples Of Accounting Softwares For Small Business
Accounting software is essential for small businesses. It not only helps in ease of managing an account but also helps in making decisions. At no cost, you can try them for free.

TallyPrime is a complete business management software for small businesses like yours. It provides a complete solution from accounting, banking to payroll in a single software. Institutes provide tally ERP course in Ahmedabad. Enrolling on the same will give you detailed knowledge about these.

The following are the few benefits of trying accounting software for free.

  • Easy accounting and managing of books
  • Printing professional-looking invoices in a jiffy
  • Better control and easy track of payables
  • Business information available easily since the reports are auto-generated
  • Books are accurate and complete
  • Easy management of tax compliance
  • Accurate returns in the preferred format
  • Optimum inventory and stock level
  • Better control of cash flow and the like.

Some examples of free accounting software:

  1. Wave
  2. ZipBooks
  3. Akaunting
  4. SlickPie
  5. GnuCash
  6. CloudBooks
  7. Zoho Invoice
  8. NCH Express Accounts

Conclusion
Now that you have a basic idea about accounting software, it’s time to try out these free software and see which one suits your purpose the best. If you want to go for the paid ones make sure you know what you are investing in because a waste of money is not something you would want, right?

Proper software can lift a heavy burden off of your shoulder and help you in a lot of ways so that you can focus on other important aspects of your business.

Accounting For Reserves And Surplus

Just the way we categorize our expenditures at the end of every month, various…

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Just the way we categorize our expenditures at the end of every month, various business organisations include Reserves and Surplus in their balance sheet keeping their future needs as an organisation in the picture. In simple words, they are the savings of big corporates which can be used as assets during a crisis.

What Do Reserves And Surplus Mean?
Reserves
A financial accounting Reserve is a part of the shareholder’s equity except for basic share capital. A Reserve is profits that have been appropriated for a particular purpose. In accounting terminology, reserve implies the amount set aside for future activities which include buying assets, paying for bonuses or even legal settlements.

Surplus
Surplus describes the amount of an asset or resource that exceeds the portion that is actively utilised. In the budgetary context, a Surplus occurs when income earned exceeds expenses paid.
Reserves and Surplus, as the name suggests, are the accumulated profits that a company has earned and retained over time. Retained profits are the profits that are left after repaying the shareholders. General Reserves are created out of profits and kept aside for the financial strengthening of the company in bad years.

Difference Between Reserves And Surplus
Reserves are the primary amounts that are earmarked by the organisation for specific purposes. Whereas Surplus is where all the profits of the company reside.

Types Of Reserves And Surplus
Depending on their purpose there are various types of Reserves used in a balance sheet.

Capital Reserve
A Capital Reserve is the type of Reserve that is created from capital profits. Capital Reserve is maintained to prepare the company for sudden hazards like inflation, business expansion and funds for new ventures.

  • Cash received by selling current assets
  • Excess on revaluation of liabilities and assets

are a few examples of Capital Reserves.

Capital Redemption Reserve (CRR) 
Capital Redemption Reserve is created when the preference shares or the capital is redeemed. It is a statutory Reserve. When a company wishes to redeem shares a Capital Redemption Reserve account is created to benefit both the creditors and employees.

A Capital Redemption Reserve comes in handy for the company on a rainy day. Several litigations are attached to this reserve such that the company can open this reserve only under certain circumstances.

Security Premium Reserve
It is the additional amount charged on the face value of any share when the shares are issued, redeemed and forfeited. Security premium account is a part of the Shareholders Fund, it refers to the difference between market value and the face value of a share.

Debenture Redemption Reserve
A Debenture is a debt security that lets the investors borrow money at a fixed rate. A Debenture Redemption Reserve must be created to protect investors from the possibility of a company defaulting.

Debentures are not backed by any kind of asset, lien or collateral. Free Reserves are those Reserves upon which the company can freely draw, Debenture Redemption Fund is one such Reserve.

Revaluation Reserve
Organisations have the freedom to construct line items for assets on the balance sheet when they believe it is a necessity for correct accounting to be presented. Revaluation Reserves are not inherently normal, but they can be used when a business assumes that the value of their assets will fluctuate after a certain time frame.

Other Reserves: Specifying Nature And Purpose

Surplus
Surplus i.e balance in statement of profit and loss disclosing allocations and appropriation such as dividend, bonus, shares and transfer to/from Reserve etc.

Accounting is a part of our daily chores, let it be a multi-crore business or the expenses of a middle-class family accounts play a vital role, here is a link to a certified accounting course in Ahmedabad that will make you a pro at finance and accounting.

Why Are Reserves And Surplus Called Liabilities?
Aren’t Reserves supposed to be good? They are money set aside for future endeavours and hazards, How is being financially safe considered a liability? Isn’t having surplus money a boon?

Well here are the answers to all your queries,

Reserves are considered on the liabilities side of a balance sheet because they are sums of money that have been set aside to be paid out on a future date. To be more precise Reserves are considered a liability keeping the peasant scenarios in mind. Reserve is considered a liability keeping all the future requirements in mind.

Reserves also represent the obligations that the form has, which makes Reserves a liability item. Reserves can be future or potential obligations to various stakeholders or future use of funds to benefit various stakeholders.

For a better understanding, we can compare Reserves to a bank, though the bank is always expected to have money, yet it is considered a liability keeping in mind that money is not for the bank but to meet up with the financial needs of their account holders.

What Is Meant By A Negative Reserve?
Negative Reserves are considered as assets, for example, the money which is due to the policyholders i.e debtors. But these are assets which may be realised or forgetting that the policyholders may withdraw, leading to a policy lapse.

To conclude, accounting at the end of the day is an asset to our lives, it is a massive ocean of its own, here is the address of an Accounting institute in Ahmedabad, they offer various  Accounting Training in Ahmedabad that will turn you from a liability to an asset.

Fixed Asset Accounting

Accounting involves keeping and maintaining the record of a corporation’s financial transactions in a…

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Accounting involves keeping and maintaining the record of a corporation’s financial transactions in a given year. The annals are further used for analysis by the stakeholders, agencies, and tax collection bodies making accountants a crucial wedge in the company’s innards.

Of the concepts an accountant should be well-versed with, the ones of assets and liabilities are the most basal yet indispensable. Here we introduce you to the fundamentals of fixed assets and their accounting.

What Are Fixed Assets?

Fixed assets are the non-liquid physical possessions an organization holds to generate income over the long haul. They are also referred to as capital assets or property, plant, and equipment (PP&Es). 

Fixed assets are not to be done away with in the same accounting year. The list comprehensively includes land, vehicles, office spaces, computers and software licensing, buildings, etc.

The principal criterion for anything to identify as a fixed asset is that it should be held by the company for more than one accounting year. Also, they are tangible and intangible. Long-term bonds and securities don’t make it to the list.

An esoteric aspect of fixed assets is that their book values usually exceed the capitalization limit as set by the organization. However, a company must be careful while setting a cap limit. A too higher or lower value can have far-reaching impacts on its balance sheet.

How? That requires us to delve deeper into the topic. Here is a verified Accounting Certificate Course in Ahmedabad you can take.

Initial Asset Inclusion

It is done at the time of purchase of an asset. 

Now, before adding to its capital stock, a corporation makes the requisite assessments. It compares the total cost incurred on the asset with the gross amount of cash flow it leads to. If the deal seems profitable, it is sealed. 

The initial recordation incorporates the cost of the assets, their transportation and installation amount, testing and preparation fees, taxes, and other such expenditures. Meanwhile, administrative charges, general overhead costs, and expenses not directly enhancing its utility are not recorded here.

When an asset is purchased at its market value, we note its fair value. On the other hand, the interest amount has to be mentioned while documenting for an asset bought on credit. 

The case of an asset being exchanged for another one calls for recording the fair value of the new body. While if it is not possible to assess its cost, the price of the one given up is considered.

Depreciation of Assets

Assets start losing their productivity or we say, they get used up with time. We need to make allowances for this downturn. In accounting, depreciation is apportioning the cost of an asset over its useful life.

Of all the techniques to account for the depreciation of assets, the written down value method is extensively used. As it shows the fair value of the asset at every end of the year. In this method, depreciation is more in the initial year compares to subsequent years. Another method of depreciation is the straight-line method. Here, the accountants are required to subtract the salvage value of the asset from its cost. The resulting difference is then divided by the number of years the company intends to hold the asset for. The figure they arrive at is the yearly monthly depreciation of the asset. In this method, the Depreciation of asset is uniform during the life of the asset.

Companies can choose their modus operandi. However, as per the caveats of the IAS (International Accounting Standards), they are allowed to change it only once. To know more about the IAS and their impact in the field, you can go for this Accounting Course in Ahmedabad as recommended by our experts.

Disposal Of Assets

After a certain point, when assets cease to be profitable, they are to be exscinded. It is usually done when their useful lives come to an end. Sometimes, an unforeseen circumstance (for instance, unexpected obsolescence) forces the company to discard an asset. 

It is however not necessary to throw a valuable possession away when it can be liquidated. The company can exchange the asset for newer ones. Also, they may sell it off. A price higher than the then book value of the asset marks a profit and a lower one points towards a loss.

Whatever the case may be, the loss of a company’s asset shows on its balance sheet. Fresh investments need to be undertaken.

Asset Impairment

Impairment of an asset is where its current carrying value exceeds the gross profits it is estimated to bring in. It is usually the result of unexpected predicaments. 

In simpler words, asset impairment has to do with the chance that fixed capital may not be as economically viable as it is computed to be. Impairment leads to a radical slump in a business’ profits. Asset impairment on the balance sheet is associated with a corresponding loss in the income statement. 

Intangible holdings such as copyrights and trademarks stand higher chances to get impaired. However, under circumstances like unexpected obsolescence, natural calamities, adverse market fluctuations, judgment failures or may be due to some unaccountable reason, fixed assets may undergo the same fate. 

Accountants are supposed to be on the lookout for such incidents. They must warn the stakeholders and the decision-makers of the company’s state of affairs.

Disclosure Of Assets

A corporation does not want every confidential detail to be presented on its annual financial statements. However, certain norms formulated by the national and international bodies need to be followed. An organization has to make the following disclosures about its fixed assets.

  • The carrying value of the assets at the beginning and the end of each accounting year
  • The useful life of the assets
  • Rate of depreciation and the method used to calculate it
  • The effects of acquisitions, disposals, and net foreign exchange on the value of the assets
  • Impacts of revaluation 

To learn about other disclosures, go to the link for this certified Accounting Training in Ahmedabad and stake in your growing accounting expertise.

The Strict Don’ts

While accounting for fixed assets, you need to eliminate the three commonly made mistakes. 

  • Not considering expense costs transportation charges, taxes, and installation amount while recording the purchase of a new asset
  • Disregarding the alteration in the assets’ use while maintaining them
  • Ignoring record-keeping demands relating to insurance

 

Accounting Coaching Classes for Upskilling and Training Employees

Today, most businesses will agree that employees are their biggest assets. Companies invest a…

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Today, most businesses will agree that employees are their biggest assets. Companies invest a lot in terms of hiring the right candidates and then retaining them too. At the same time, employees are also very passionate about their careers. They don’t shy to move on if there is stagnancy in terms of career growth or learning new skills of accounting training. Therefore, to align the interests of both, it is essential for businesses to make significant efforts towards constant development of the employees.

What Do You Coach About?
Businesses usually provide training to impart skills that are essential / required to perform existing jobs. Obviously, this is given; considering you would like to ensure that the employee can perform in the best possible manner in his/her current role.

However, organizations today also invest in ‘Upskilling’. Upskilling refers to the process of teaching new skills to existing employees through academies like Super 20 Training Institute. Such upskilling could also be essential, or in other cases, desirable for employees; which are discussed below.

Is Upskilling Required In Accounting?
Absolutely! In this constantly evolving business environment, accounting concepts and methods are being updated too. Entire accounting framework is being rejigged and new accounting standards are becoming applicable to the business. Fo example, accounting software (like Tally) is being updated to incorporate changes in laws like GST and so on. In such a scenario, providing training to employees is definitely the need of the hour! Training academies offers excellent accounting coaching classes in Ahmedabad, suitable to different coaching needs.

Whom To Upskill In Accounting?
Upskilling could be classified into two categories. One, teaching those skills which are essential to the changing work environment. For instance, training the existing accounting personnel about the new accounting standards applicable to the organization would be absolutely essential.

Second category could be teaching those skills that may not appear exactly essential to the existing role at hand, but could go a long way in improving efficiencies. For example, familiarizing tax team about the new accounting concepts, accounting software offering Tally courses, would help them in gaining a better understanding. And this will eventually reduce their dependence on accounting team. Sometimes, it could be essential too, say when the tax team needs to understand the applicability of ICDS and how they diverge from accounting standards that the organization follows. In either case, it improves employee morale as he feels he is learning something new and challenging.

A lot of corporates have in-house L&D (Learning & Development) team. Others may tie up with a dedicated accounting academy for this purpose. In either case, the importance of upskilling employees cannot be emphasized enough.

Adjustment entries in Tally for accruals and advances

As most of us would be aware, matching principle is one of the most…

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Adjustment entries in Tally for accruals and advances

As most of us would be aware, matching principle is one of the most important principles of accounting. In simple words, it prescribes that all expenses and revenues related to the accounting period should be mapped / accounted for in that accounting period itself. (You could learn in more detail in accounting classes at S20). 

Having said that, there are times when expenses may be paid in advance or revenues may not have been booked. This calls for adjusting the books of accounts with appropriate accounting entries to reflect the true picture that pertains to that particular accounting period. It is here that the adjustment entries come into play. 

Adjustment entries could be on account of two factors: Accruals and Advances. These instances are explained below, alongwith accounting entries to be passed for the same in Tally. These adjustment entries are passed as Journal Vouchers in Tally.

  1. Accruals
    • Expense Accruals
      This represents expenses incurred (say on account of goods purchased or services availed), however not yet accounted for (maybe because invoice has not been received). For example, accounting period is April – March. Electricity bill for March is received in April of the following year. Since electricity has been consumed and expenses have been incurred in the true sense, the same should be accounted for in that year ending 31 March as well. When accruing expenses, the expense account would be debited and instead of sundry creditors, credit is taken to provision for expense account / expense payable account. Thus, accounting entry in Tally would be:
    • Income Accruals
      This represents income accrued/ earned but not recorded, mostly because it is not due.For example, billing cycle agreed with the customer is 3-monthly beginning February. Therefore, while services would have been rendered for February and March, but invoice cannot be raised until April as the right to collect arises only then. As per matching principle, revenue corresponding to the months of February and March should be accounted for. When accruing income, the income account would be credited and instead of sundry debtors, asset account namely income accrued but nor due is created. Thus, accounting entry in Tally would be:

      Having passed afore-said entries, the profit and loss account would now truly reflect the revenue and expense for the accounting period.

  2. Advances
    • Expenses Paid In Advance
      When expenses are paid for a period falling outside the accounting period, books should be adjusted to capture only the amount that pertains to the accounting period for which books are being prepared.For example, annual insurance of Rs. 12,000 is paid in December while the accounting period followed is April – March. In that case, Rs. 8,000 pertaining to April – November of the following year should be excluded from the profit and loss account. This could be done as under:

      Thus, net insurance debited to P/L for the year would be Rs. 4,000 only, pertaining to the period December – April.

    • Incomes Received In Advance
      Contractual terms may require the customer to pay advances upfront. In case where such advances do not get settled within the accounting period under consideration, they should appear as liability account. For example, for a contract signed in March, advance received from customer for the quarter is Rs. 30,000. Assuming April – March year is followed, once services are rendered in March, proportionate part would go to revenues. However, remaining advance should continue to stand as a liability in the books. Entries would be as under:

      Thus, at year-end, only revenue of Rs. 10,000 would go to P/L while net advance of Rs. 20,000 would appear as a liability in the Balance Sheet.

      While this is the gist of the journal entries, a more step by step approach for accounting in Tally can be learnt at accounting classes at Super 20 Training Institute in Ahmedabad.

All About Deferred Tax – What You Need To Know

Contrary to its name, deferred tax is actually an accounting concept. It is governed…

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deferred tax simplfied - what you need to know

Contrary to its name, deferred tax is actually an accounting concept. It is governed by Accounting Standard 22, which is studied as part of course curriculum of most accounting classes.

In reality, deferred tax is not any form of tax expense paid/payable to the government. It represents accounting for difference between tax expense as per books and as per tax return filed by a taxpayer entity.

Differences in tax expense as per books and as per tax return could occur on account of various reasons, for example the rate at which depreciation on certain asset is accounted for in books may be higher/lower than what is permitted as per income tax law. Another example could be donations made by the company – while they are recorded as expense in profit and loss account, they are not an allowable deduction while computing taxable income.

All such differences are to be classified as either timing difference or permanent difference. Timing differences are those which will get reversed in the future. However, permanent differences are those which, as the name suggests, are permanent in nature and will not be reversed in the future. In the above example, while the book depreciation rate may be different than tax depreciation rate, the cost of asset would eventually be depreciated in entirety in both books and tax records. It is merely that the period over which it is depreciated will differ. Hence, it would qualify as timing difference. On the other hand, donation is never allowed as an expense and therefore qualifies as a permanent difference.

Deferred tax is recognised only on timing differences. Depending upon the nature of timing difference, either a deferred tax asset is created or a deferred tax liability is recognized in a financial year. Every year, the position is revisited and the deferred tax asset or deferred tax liability may be reversed depending upon the calculations made.

When there is a disallowance / addition to Profit before tax in tax return, deferred tax asset is created. When additional deduction / allowance is claimed from Profit before tax in tax return, deferred tax liability is created. Instead of mugging it up, whether an asset is to be created or liability, can be understood in logical terms as under:

  • When a disallowance / addition is made in tax return vis-a-vis the expense booked in books, it implies that taxable income is higher in current year, i.e. tax paid is higher now, thus lower tax would need to be paid in future, hence recognize an asset now.

  • Conversely, when higher deduction is claimed in tax return vis-a-vis the expense booked in books, it implies that taxable income is lower in current year, tax paid is lower now, thus higher tax would need to be paid in future, hence recognize a liability now.

Accounting Standard 22 provides for various other aspects related to deferred tax recognition as well, such as:

  • deferred tax is to be recognized at enacted or substantively enacted rate as on balance sheet date
  • deferred tax asset is recognized when there is ‘virtual certainty’ that the asset can be reversed in the future
  • deferred tax getting reversed within the tax holiday period should not be recognized

This might sound like too complicated and confusing, but if one were to think logically, the concept of deferred tax is pretty simple. Accounting classes at Super 20 Training Institute can help you learn complex accounting concepts such as these with ease.

The Benefits Of Learning Accounting Via An Institute

Accounting is no more simply limited to maintaining bookkeeping, profit and loss and balance…

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best accounting course in ahmedabad

Accounting is no more simply limited to maintaining bookkeeping, profit and loss and balance sheet. As many companies now turn global, the transactions get more complex. Therefore, an accountant is now expected to possess the knowledge of how to handle such intricate transactions. Even the local companies are now in a dilemma as to how to handle the accounts after the launch of GST.

Every now and then we hear of bankruptcy of highly reputed banks. The ability to detect such fraud at an early stage is also what one expects out of an accountant. Lot of job opportunities are out in the market and unfortunately very few are well qualified for it. 

Possessing a degree is one thing but to be able to practically handle the transactions is where the actual skill is. If you aspire to be one of those rare but an accountant with exceptional skills, one needs to know what is beyond the books. That is where the catch is! 

Super 20 is one such institute that offers accounting courses in Ahmedabad and other various courses for all who are eager to learn about accounting and related courses.

The following are the key features which are offered by S20-

  • Accounting 
  • GST
  • Taxation 
  • Tally
  • Banking and finance
  • Courses for basic learners, experienced and advance learners
  • Communication skills, personality development, computer skills

What are the benefits of enrolling yourself with for Super20 courses?

  • Expert faculties

They claim all their faculties are qualified Chartered Accountants with expert knowledge. Learning directly from the experts mouth eradicates the chances of errors and provides conceptual clarity on the fundamentals.

  • Step by step approach and customized courses

Super20 courses take you step by step from basic level of courses to advanced level. If someone wants to skip the basic level, he can directly take up the advanced level course to get updated with technical concepts after clearing some procedures.

  • Real life case studies

As discussed above, S20 aims at learning the practical way i.e., without the books. This helps the students to crack the real corporate world scenarios way before they enter the corporate world. This makes them confident when they join their job or speak to their clients.

  • Doubt solving

The faculties are completely dedicated to each and every student and take keen interest to solve their doubts whether small or big. The focus is on bringing conceptual clarity and confidence in each student.  

  • Reasonable fees

Their fees are reasonable compared to many other institutes. Also, one doesn’t need to pay again if at all he is unable to grasp the course in the given period. Super20 courses are supremely beneficial for slow learners.

  • Communication skills and personality development

S20 makes sure that when you leave their premise, you are fully prepared to enter the corporate world, which is why they offer special course on communication skills and personality development.

  • Confidence

The Super20 courses are a combination of such courses which guarantees confidence to the student. One is able to handle the complex transactions like Merger and Acquisitions, accounting of international businesses by Indian company, etc.

  • 100% placement assistance

They provide a 100% placement assistance to provide you with job once you finish the course.

  • Focus on developing practical sense and skills

By providing lectures on corporate banking, various businesses, structure of the economy and likewise, the student is carved for their entrepreneur drive.

  • Career guidance

After completing the course, one may be confused whether to opt for a banking job or work with a manufacturing company or start his own business. S20 provides counseling laying down the pros and cons in each of them.

  • Learning made enjoyable for youngsters

The faculties try to make the lectures interactive and lively so that they don’t get bored. Also they are introduced with certain computer related skills.

  • Free demo

Don’t think much. Just go for a demo lecture before joining in. See if you are able to connect with the faculties’ way of teaching, and then decide to go for it or not.

Fundamentals of TDS

As most of us are aware, TDS actually stands for tax deduction at source.…

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As most of us are aware, TDS actually stands for tax deduction at source. While this is easily known to all, the concepts are not as easily understood, in fact dreaded at times too. As a subject, it is vast and you’ll need a good taxation course to become Mr./Ms. Know-it-all. Here, however, we have provided a brief outline so as to familiarize readers with the first principles.

TDS is not just an Indian tax concept. It is a global code applied everywhere in taxation. Internationally, it is usually referred to as withholding tax, i.e. tax withheld while making payments. 

The key reasons behind introduction/ existence/ levy of TDS are:

  • to provide an opportunity to the government to recover tax (or at least a part of it) upfront
  • to bring the transaction within tax ambit / network and ensuring that it gets reported eventually by the income recipient

Chapter XVII of the Indian income tax law (the Income Tax Act, 1961) deals with various provisions relating to TDS, such as:

  1. Authorizing deduction of tax at source from payments made (section 190)
  2. Specifying various types of payments to residents on which taxes have to be deducted, and rate of TDS, for example:
    • Tax on salaries to be fully deducted (section 192)
    • TDS on contractual payments @ 2% (section 194C)
    • TDS on professional payments @ 10% (section 194J), and so on.
  3. Providing the situation when taxes are required to be deducted from payments to non-residents (section 195 and others)
  4. Credit of TDS deducted by payer can be claimed by the payee against the tax liability determined on his total income (section 199)
  5. Duties of person deducting TDS, for example:
    • Requirement to obtain TAN (section 203A) and deposit TDS on time (section 200);
    • Payment of interest where TDS is not deducted on time, or after deducting is not deposited within the due date (section 201);
    • Obligation to file TDS returns (section 206) and issue TDS certificate to the payee (section 203);
    • Who is responsible for deducting tax – payer or principal officer of the company where the payer is a company (section 204); and so on.

    A lot of these sections in turn refer to Income Tax Rules where further details are provided, such as due dates, format of forms to be issued and return to be filed etc.

  6. Responsibility of payee to furnish his PAN, in absence of which payer may deduct tax at higher rate of 20% (section 206AA)
  7. Possibility of applying for a lower TDS certificate to the TDS officer where the applicable tax rate can cause hardship, for example, net income is lower, income recipient is in losses etc. (sections 195 and 197)
  8. Requirement to gross up income where TDS is to be borne by the payer (section 195A).

Hope you got a quick snapshot of TDS fundamentals from the above. For more detailed learning, you could subscribe to Super 20, a taxation coaching centre in Ahmedabad forming part of various commerce courses of varying levels – Jr. Executive, Executive, Advanced Executive.

TDS concepts may seem complex, but are very relevant for today’s business and taking up the best tax course for these would go a long way in staying tax-compliant, whether self or clients. 

The Accounting Skills You Need To Succeed

Every second person is now aspiring to be an accountant due to the unending…

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accounting skills you need to succeed

Every second person is now aspiring to be an accountant due to the unending demands for the same. But they can be categorized between mediocre, good and excellent. This transition will pave your way towards your goal to excel at accounting. This transition is utmost mandatory to grade up your job position or to attract more clients. If you are still wondering what skills you can work upon to get there, don’t worry. 

We shall discuss in this article the accounting skills which you must polish:

  • Knowledge

An accountant should possess thorough knowledge of how a particular transaction should be dealt with. If the company that he deals in wants to issue a Initial Public Offer and be listed with the National or Bombay Stock Exchange, the accountant should have in depth knowledge of how to proceed with that, what documents, bank requirements, the capital/sales requirements, etc. How is it going to affect the Balance sheet, Profit and loss and cash flows of the company? 

An accountant should be aware of the Indian Accounting Principles and Standards set by the Accounting Standard Boards and should also be able to apply them in the practical situation.

  • Analyze

An accountant should possess great analytical skills. He should be able to calculate the position of the company by having a glance at its Balance sheet, Cash flows and Profit and loss statements. This power of analyzing the opposite party can help the company to take their decision whether or not to deal with them. Like if their Debt to Equity ratio is more than 1, it implies the company has taken more debts than its capacity and hence riskier to work with it.

  • Audit

Brief knowledge on audit can save the company from complications later. A visionary accountant should foresee any difficulties approaching from the perspective of an auditor so that minimum issues are raised by the auditors after the balance sheet is finalized. Any extra ordinary case shall be looked into deeply as the auditor will not spare that. And its treatment should be convincing enough for the auditor.

  • Working on dead lines

Accountants should be able to work on deadlines as most of the work is associated with time lines. 

  • Vision

An accountant should be able to think strategically about a particular transaction and its affects if treated one way or the other in the long term. It most often affects the profitability of the company.

  • Adaptability

A lot of companies have gone global and multi-national. With that, accounting and taxation laws of the other countries are also taken into consideration. An accountant who is easily able to adapt to international laws and its treatment in India can go far in their career. Also, the local clients throw challenge with various fields they work in. Like Textiles, Pharmacy, Food, Construction, Jewelry, etc. The accountant should not be afraid but open to accepting challenges to work in different fields.

  • Good communication

Without good communication, one can literally land nowhere. Accountants should acquire the skill of being able to communicate verbally and non-verbally to attract, convince, interact with their clients or bosses. No one can work in isolation. Therefore, with great set of communication skills one can co-ordinate and be more organized in their field.

  • Organized

Since the accountant has lots to do and within set time limits, he will mess things up if his mind is not organized. He should be well aware of the dates and deadlines and should be able to prioritize work according to its urgency. 

  • Honesty and Integrity

An accountant is looked up to for his integrity. Even the Government hires accountants for special reports in case of fraud because they trust the accountants as their profession expects them to be honest and transparent.

  • Convincing power 

At times, deciding on how to treat a transaction may inflict a conflict within the organization or between two parties. An accountant possessing knowledge but no convincing power will be of a waste. Developing this skill will be an icing on the cake.

  • Accounting software

Along with Tally, a lot of new accounting software are launched for business automation and to reduce the clerical work of an accountant. Any small or large enterprise works on one or other accounting software like Zoho Books, Quickbooks, SAP, Saral, MProfit, etc. So, at least basic knowledge of the most used accounting software in the market should be gained to have an upper hand at any interview.

Your love for accountancy will enhance as and when you develop the above skills and for your career. Keep upgrading your knowledge as the past glory will just keep you where you are. You can join accounting coaching classes in Ahmedabad and attain the heights in the accounting profession.