Accounting Classes in Ahmedabad Archives

Posted on July 22, 2021June 19, 2023 by admin-s20

Role Of Technology In Accounting

Every modern-day activity that we can think of right now, is either directly or…

Every modern-day activity that we can think of right now, is either directly or indirectly dependent on technology. Starting from electric toothbrushes to Electric cars with autopilot mode, humans have made extensive use of technology in various fields.

Just like every other field, business is also one of the most important fields of all time and the language required to understand this important field is accounting. Technology also plays a huge role in accounting. Let’s learn more about this amazing connection.

What Is The Relationship Between Accounting And Technology?

Accounting is the language of business. It has been through many changes and modifications throughout the years. But, technology has always been a very important part of accounting and it makes the accountant’s job a little easier. Technology has helped increase the efficiency and ability of an accountant to assess statistical values.

It has also enhanced the ability of an accountant to interpret the language of businesses with such ease and that has made the accountant a corporation’s most trusted business advisor. One should consider an account taxation course in Ahmedabad to learn more about it.

What Is The Role And Impact Of Technology On The Accounting Process?

Accounting was once done by hand but now technology has made it possible and also very easy to record information in real-time, collect and compile information from various sources and also automate repetitive tasks.

This allows the professionals to focus more on other important tasks like giving financial advice and monitoring the performance. IT has also helped industries and companies reduce errors and make better financial decisions.

Technology has impacted the accounting field in more than one ways-

Accessibility Of Accounting Data Has Improved A Lot
With the use of technologies like cloud accounting services, any authorised user can access the information required from anywhere they have internet. This saves the time of an accountant physically downloading files and sharing it with other users.

These services can also be accessed from the mobile device of the user. This has improved the efficiency of the work done a lot.

Automated Data Entry
There are many popular accounting software nowadays that can integrate with invoicing, payment and payroll services as well as full enterprise systems. So that accounting records can be automatically be updated as transactions happen, this gives the software access to real-time information.

Altogether, these technologies reduce the need for manual entry and save the accountants crucial time that they can use for other tasks. This has brought changes to the role of an accountant today. Now, the accountant can spend more time analysing financial data and advising management.

Accounting Data Is More Accurate
The most obvious impact of technology in accounting is the reduction of errors. Accountants can now easily rectify the mistakes and also provide companies with more useful financial information.

Automation of the recording processes has reduced human errors to a huge level. It also checks for common errors and notifies the accountants instantly so they can address the issue without wasting any time.

Better Decision Making
Apart from various other features, technology also helps accountants search for numerous financial documents for all types of important information and even assess the impact of certain financial decisions. Account taxation course in Ahmedabad is the best choice to learn more.

What Are The 5 Roles Of Accounting?

Accounting serves the purpose of providing financial information to the stakeholders of the business: management, investors and creditors. The measure and summarization of the activities of the company are seen by the accounting department. After the evaluation, the results are communicated to the management or the specific party.

5 functions of Accounting are-

Forming A Plan And Controlling Financial Policy
Several financial information is proposed before the management so that they can control the financial policies and formulate plans concerning the future activities and course of action.

Preparing A Budget
An estimation of the income and expenditure is prepared based on future activities. This is also one of the most important roles of accounting. It also provides all the necessary information required for preparing this budget. Later on, carried out expenditures are compared with budgetary elements.

Cost Control
A standard cost is estimated ahead of every cost. The necessary information for estimation of the cost is available from the past accounting records. The actual cost and the standard one are compared for calculating the efficiency of work.

Evaluation Of Employees’ Performance
Information required for evaluating the assigned task of employees of every department is provided by the accounting department.

Prevention Of Mistakes And Deceit
The accounting system helps check the activities of the employees to prevent errors and fraud.

6 Reasons Why Tech Is Important For Your Accountancy Practice

The language of business needs to be updated with the technological advances so that they can respond to the market conditions and clients’ needs properly.

Digital resources and online tools have increased productivity a lot and also helps the organization. Electronic accounting has absolutely replaced manual accounting. It has not only reduced errors to a large extent but also saved a lot of time, increased accuracy and other advantages.

Therefore, the accounts should always be updated and aware of all the technological advances. You can learn more about it in the accounting training in Ahmedabad.

Out of all the numerous, here are 6 reasons why tech is important for accountancy practice –

Digitization Of Documents
Maintaining manual paper records is very costly and time-consuming task. Hardly anyone believes otherwise. Apart from that physical space is also an issue that needs to be considered.

Physical storage is being slowly replaced by digitized documents. Ease of access is one of the major factors to be considered. Anyone with proper authorization can easily gain access to them.
Elimination Of Bureaucracy
Online accounting systems are platforms that are simple and intuitive and provide direct channels to clients as well as conduits for various information, documents and other items that can be digitized.

This saves time and also eliminates layers of bureaucracy. These platforms also provide various online management tools that help reach goals and complete tasks.
Virtual Calendars And Task Management
The cornerstone of today’s running of the office is the online diary. Calendar management tools that help in setting alerts for meeting deadlines and avoiding fines are offered by various digital platforms.

These tools are easily accessible and useable even through mobile devices and any updates are shared immediately between the members.
Specific Tools For Accounting And Tax
The use of digital platforms that offer specific tools for accountants is a very important choice. A system that is fully compliant and updated regularly is what any accountant will want for better performance.

Along with all the basic features, if it offers any additional tools such as automation and reporting, the productivity is increased and so is the operational efficiency.
Regular Training
If the gains derived from technology are to be maximized, regular training of the employers is very essential. It is only through this training that accountants and other professionals will be able to deliver and fulfil the expectations of the management.

If the gains derived from technology are to be maximized, regular training of the employers is very essential. It is only through this training that accountants and other professionals will be able to deliver and fulfil the expectations of the management.

A trained professional will always be on the lookout for any sort of errors and thus avoid them. It also saves time for the business. technology comma inclusion of legal compliance and changes in legislation should be considered for the training. Accounting Training Course in Ahmedabad is something you could think about for a better understanding.
Connecting To Customers
Accounting professionals and customers have been brought closer with the help of technology. Communication is much easier and instant through many dedicated platforms that are present online nowadays.

It saves a lot of time for both the clients as well as the professionals and also increases efficiency. Technology also helps in easy tracking of customer services and helps in easy improvements, thus improving customer satisfaction.

Conclusion

What concerns accounting is mainly the quantitative expression of economic phenomena. The main functions of accounting are to measure the resources held by certain entities, to reflect the claims against and the interest in those entities, to measure the changes in those resources claims and interests, to assign the changes to a specific period, to express the preceding in terms of money as a common denominator.

Technology plays a huge role in modern-day accounting. Accountants keep themselves updated with the latest technological advances to improve their performance and efficiency. It is not just about flawless work or time management, it is also about many other factors such as customer satisfaction, meeting of deadlines, and proper utilization of physical space.

Posted on March 8, 2021June 19, 2023 by admin-s20

Accounting For Reserves And Surplus

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

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.

Posted on December 11, 2018 by admin-s20

Depreciation: Concept

As you are aware that during various accounting courses fixed asset accounting is highly…

depreciation - Best accounting class in ahmedabad

As you are aware that during various accounting courses fixed asset accounting is highly stressed upon. Fixed assets like plant and machinery are used in the business for the purpose of production of goods or for providing useful services in the course of production. Value of such fixed assets decreases with time and its utilization i.e. wear and tear. Vale of the portion of fixed assets utilized for generating revenue must be recovered during the particular accounting year to ascertain true income. This portion of the cost of fixed assets allocated to a particular accounting year is called Depreciation. Hence, all accounting courses state it imperative to understand how to calculate depreciation.

Depreciation means a diminution in the value of assets, due to natural wear and tear, exhaustion of subject-matter or similar causes.

The loss in the value of assets employed for carrying on the business being an essential element of business expenditure, it is necessary to calculate the amount of such loss, to get a stipulation, and hence, come at the amount of profit or loss obtained by the business.

Reasons for Depreciation:

Physical wear and tear resulting from the use
Tangible fixed assets like machinery, building, furniture, etc. can get exhausted or discarded on account of resistance, pressure, weathering, the power of use, chemical reaction, handling, etc.
Physical deterioration resulting in exposure to the element
Number of assets deteriorates with the mere passage of time, being continually exposed to forces of nature, like wind, weather, etc.
Disuse
A machine kept continuously idle become potentially less useful by the passage of time.
Depletion
Wasting assets such as mines and quarries lose their value because they get exhausted on account of continuous extraction.
Obsolescence
Some equipment will be rendered out of date by more efficient equipment, which reduces the usability of the original equipment.
Accident
If an asset meets an accident, the value of an asset may go down.

But now the question arises, why do we need to provide Depreciation? The following are the objectives for providing Depreciation.

Funds for replacement
Generation of adequate funds in the hand of business for replacement of the asset at the end of its useful life.
Correct income measurement
Depreciation must be charged for proper estimation of periodic profit or loss.
True position statement
Value of fixed assets should be adjusted for depreciation charged in order to depict the actual financial position.
Ascertainment of true cost of production
For ascertaining the true cost of production, it is necessary to charge depreciation as an item of cost of production.

Too much theory… Uh… Ok. So our institute runs various accounting courses in Ahmedabad and focuses on learning practical accounting. So, let us learn accounting entries related to depreciation.

When the depreciation is directly charged to an asset account, the entry to be made on writing off depreciation is:

s20 Depreciation concepts 3.21.30 PM

Alternatively, when the asset continues to be shown at its original cost till discarded or destroyed or sold the following entries may be passed:

s20 accounting classes in ahmedabad - Depreciation concepts

However, where the assets are sold or discarded or exchanged for the new asset. The total accumulated depreciation for the asset in the provision for depreciation account is transferred to the asset account by the following journal entry

s20 deprecation and accounting concept Screenshot 2018-12-11 at 3.21.46 PM

In the balance sheet, the asset account is shown at its original cost less accumulated balance in the provision for depreciation account.

To know more about such topics stay tuned to S20 or join our accounting courses.

Posted on October 10, 2018June 19, 2023 by admin-s20

IL&FS Fiasco and Accounting Statements

Recently, the entire nation has been shocked to see that the institution of the…

Recently, the entire nation has been shocked to see that the institution of the size, scale and reputation like IL&FS has defaulted on its interest obligations.

It is noteworthy that IL&FS was considered to be one of the most reputed borrowers in India and perceived to be a Government backed institution. We have to understand that what makes such a large institution fail. There may be many reasons, but in the context of this article let us look at the accounting statements only.

Following is a summarized consolidated financial statements highlights of IL&FS in recent past.

Now we have to understand the items line by line. Because, at Super 20 Training Institute, our aim is to understand these items from a practical perspective. And you are aware that it is the best accounting institute in Ahmedabad. Many accounting institutes in Ahmedabad focus on teaching books. Rather S20 as an Accounting Training Institute has set a benchmark by focussing on such case study based practical approach in learning accounting, taxation, tally, GST etc.

It is apparent that the company was the anyways troubled one looking at the above numbers. The company was borrowing at a fast pace and this has resulted into the highest ever interest expenses being borne by the company. The company’s operating profits are decreasing on one side and on the other side the company’s interest expenses shot up drastically by 21%. The sole reason for this difference was that the company continued to borrow funds from the markets and mostly they were short-term borrowings. As you may be aware that in recent past the short-term interest rates are much higher compared to long-term interest rates. Company’s projects were mostly long-term in nature so they had to ideally raise funds from longer term papers. But the company did the contrary.

So, net if you see revenues of the firm were up by 9% in last one year. That looks quite rosy. Now if we look at the operating profits we have a doubt. Operating profits were down by -13%. That means something is seriously wrong. On rising revenues, the company had negative operating profits.

The company’s depreciation was also not in line with the expectations. It was up about 20%. There also somebody needs to dig deeper. And ultimately that has resulted into the company making cash losses as well as accounting losses. This is very alarming and fishy and only some drastic or magical steps can save this company that we can infer.

Friends, we will examine this case from a financial and accounting ratio analysis perspective in my next article. But as of now what we have understood is that the company was troubled operationally as well as financially. If you do not understand any of this topic discussed above you can approach team S20 for more clarity and understanding. You can also write to us at [email protected]. We provide people of any background a simple, effective and practical training in Accounting, Taxation, GST, Tally. You can know more about our courses at www.s20.in/courses

Posted on October 8, 2018June 19, 2023 by admin-s20

IL&FS fiasco and accounting ratios

We have a space constraint, so let us not discuss what was discusses in…

We have a space constraint, so let us not discuss what was discusses in the previous article. But you can refer my article IL&FS fiasco and accounting statements for basic understanding.

Now let us straight away understand what are accounting ratios or financial ratios as they are famously referred to.

I have produced direct ratios as calculated by me in MS Excel. If you do not know how to calculate financial ratios or how to arrive at accounting ratios you can approach Super 20 Training Institute – Ahmedabad. We provide such case based, practical and detailed understanding of various topics in our Accounting Courses, Taxation Courses, GST Courses, Tally Courses etc. at our training institute in Ahmedabad.

Now let us look at Operating Profit Margin. In FY1617, Operating Profit Margin was 49%, whereas, in FY1718, Operating Profit Margin was 39%. Such a big erosion in margins is worrisome. That means the company has some serious operating issue which needs to be looked at. Or the figures may be misleading for the previous years.

The next important accounting ratio is EBIT margin. That is Earning Before Interest and Taxes Margin. In FY1617, EBIT Margin was 42%, whereas, in FY1718, EBIT Margin was 31%. This is the significant decline. That means the company has less amount of money to meet their interest expenses.

Finally, we are staring at Net Profit Margin. In FY1617, Net Profit Margin was 1%, whereas, in FY1718, Net Profit Margin was -10%. The company was barely profitable in the previous year. Hence, everything was not ok even in FY1617 also. It was not ignored by everyone concerned with the company. And now we are staring at a big loss in FY1718. Signals were there, but they were ignored.

How default is evident from the above analysis. It is from Interest Coverage Ratio. In FY1617, the company was barely able to meet its interest obligations. On the other side, in FY1718 the interest cover was less than 1.

That means that the company did not have sufficient funds to service their interest obligations. Still, the company kept raising funds from the markets. All these funds were short-term funds basically to see the day has gone off or passed. The management was doing time pass all these days. The regulators were sleeping. The Government thought that the investors like LIC, SBI are taking care of IL&FS. LIC, SBI and other foreign investors were thinking that the management was very much able and worthy. Credit rating agencies were giving AAA rating blindly. Lenders took money from public and loaned to IL&FS thinking it is backed by the Government and anyways AAA. But it was written on the wall that IL&FS is not functioning well. And the worst came true. The institution of this size, scale and reputation are staring at bankruptcy.

Friends, these are the easy tools to analyse the company’s accounting records. Anyone, who wants to understand such topics in detail may contact us at [email protected]. or visit our website. We are proud to be known as the best accounting training institute in Ahmedabad. All the best.

Posted on May 31, 2018 by admin-s20

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