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Wednesday, September 30, 2015

Purpose of Accounting Information System

We all records lots of transactions in the computer's accounting software. Why? As accounting student or fresh accountant, you should know the purpose of accounting information system. Following are the main purpose of accounting information system.


1. Complete Record of Our Customers

With the help of accounting information system, we can keep complete record of our customer. For example, you have online big retail shop. One day, more than 1 lack customers buy from your online shop which buy on the basis of cash on delivery. With this record, you compare which customers' money you have obtained. If there is difference between paid amount and payable amount. It means, it is the balance which you have to get from your customer. You can also compare it on the basis of time. If your accounting data will upto date. You can capture any cheating in courier department. For example, on the past experience, you have estimated that you will get your customer's money after 15 days. But after one month, you did not get money nor you did not get your goods back as sales return. It means, it is clear, someone in the courier department is cheater. So, with good proof of your accounting reports with valid bill, you can file the case in the court. So, this is the great purpose of creating reports under great accounting information system.


2. Complete Record of Your Suppliers

For example, you get from lots of suppliers. You have paid them advance but your material is not coming. So, for investigation, you need the accounting information about which goods is not coming. Except this, good accounting information will tell which payments, you have to pay. For this, you can take the action in advance without any penalty.

3. Control of our Physical Stock

It is very serious issue, someone can steal our stock. If we maintain our complete inventory record in accounting system, we can stop this. So, this is important purpose of accounting information system.

4. Maintain Salaries Records

Whole salaries record can be done scientifically under accounting information system. We can get all the information of time cards. On this basis, we can issue the pay of employees. It is neither less nor more.

5. Complete the Sales

If you buy anything online. What you see. Your address is recorded. Why? Not just sending you the goods but it also records of sale and you will provide the sales invoice on your email. All is possible in accounting information system.

Thank You

Types of Financial Future

 There are lots of types of financial future which you should know as student of finance. We are explaining its detail in below lines.


1. Interest Rate Futures 
 You know that interest on different securities may increase or decrease due to changing business environment. If buyer and seller contract to buy or sell the debtsecurities at future date on the basis of current rate of interest. Then, it will be interest rate future.


 2. Forex Rate Futures 
  If foreign currencies are bought and sell at future date on the basis of current forex exchange rate, then it will be forex rate future. Buyer can buy us dollars, pounds and other foreign currencies through this type of future contract. Main aim is to minimize the loss due to changing of exchange rate.


3. Stock Market Index Future  
Every day, different stock exchanges show every company’s share’s different price through stock exchange index. So, there are big fluctuations in the price. If you have bought today at high price and tomorrow, if prices of shares will decrease, you will face losses because with this their capital will also decrease. So, it is very necessary to do future contract in the stock market index. Big mutual funds companies do same. They bought certain company’s shares at future date on current price. Now, whether price will increase or decrease, they have to pay same amount.

4. Bond Market Index Future 
Like share market future, bond market future contact can be done on the basis ofbond index trend. It is based on every day bond market prices. In this contract, fixed number of bonds are bought or sold at future date on current price.

 5. Consumer Market Index Future 
 This is the fifth type of future contract. Everyday, you read the prices of Gold and other consumer goods. If you will do its future contract, you may save from big losses. For example, A person bought Gold of 10 gram for future of end of six month at the current price of Rs. 27000. Current market price is Rs. 28000. Both are agree. Seller is agree because he think, prices will down up to Rs. 26000 and buy is also agree because he think price will reach Rs. 29000. So, if price will be Rs. 27500, then both parties will face minimum loss under this future contract. 
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19 Tips to Decrease Expenses

Today is Sunday and it is free time for me. So, I am reading the book "Complications of the world" which I started from last page, there is the list of 19 tips for decreasing the expenses but there is no explanation. So, I am trying to explain it in my own words.


1.Before Expense See Your Correct Monthly Incomes

Yes, it is very essential. Every-time, level of monthly revenue will not same. Source of revenue may decrease due to loss in company. If you will become habitual of doing expenses without seeing the income, you will capture in liability which will be so terrible. So, make a high-quality routine to work out your correct monthly income. On this basis, make the budget of your monthly operating cost.


2. Do not Copy for Doing Expenses

I think, author has written this enormous point. On my words, in no way do copy for doing expenses. Never see your fellow citizen has made big and decorated residence. Never attempt to buy AC automobile if your companion has bought it. If you want to copy, copy his way of earning big wealth. With this, you will get idea for earning great money. If you will just copy for doing expenses, one day, you will turn into bankrupt because your earnings level and other person's earnings level may be diverse. Without reaching level of income of other person, you cannot run like him for doing expenses.

3. To Increase Expenses is Easy but to Decrease Expenses is Difficult

It is simple saying. When you will do any expense. You are just doing the practice. It will create habit in you. When you have faced big loss in your business and your incomes came Rs. 10,000 from Rs. 50,000, you can not stop yourself from doing more expenses because you have the addiction of doing expenses. So, never make it as your addiction. Control on yourself even you are earning big income.

4. To buy only Good things 

You will see that excellence product will always expensive. But no one purchase it because it is costly. But if you think long run, it will be inexpensive. For example, we can take the old mobile or new mobile of reputed corporation. Old mobile or cheap mobile will have lots of defects and you will fix it. Restore cost will more than actual good mobile's cost. So, for decreasing the expenses, it is good tip to delay the buying but buy quality manufactured goods.

5. Create Space Before Buying Things

Sometime, you do not have the spare store. You buy lots of home devices and keep in open area where there is big chance of damage. So, remember fifth tip to decrease your expenses by creating space or store first before buying any new thing.


6. Use Email Instead of Phone

Email is better than phone. It will save your cost of talking. Sometime, you can not control on your paid expenses if you will talk on phone. Email account is so cheap. With any Internet plan of Rs. 200, you can email enough without more charges. But phone is more costly than this plan.


7. Eat the Fresh Fruits of Current Season

In every season, there are lots of cheap fresh fruit whose cost is very less than the fruits which are prepared through artificial environment. For example, this is time of apple whose cost is Rs. 50 per kg and same time, you can buy mango whose cost is Rs. 250 per kg which is off-season fruit. So, better is to buy apple instead of mango if you want to decrease your expenses and increase the level of your health.

8. Do not Use Electricity excessively 

If you are going outside and lights and fan are on, it will surely increase your electricity bill. So, if you want to decrease your electricity expenses, you should off the lights and fan when you go outside.


9. Less Use of Vehicles

Vehicles consume the petrol. Less, you will use the vehicles, less you will get petrol bill. If you want to decrease your expenses, never use vehicles when you go to exercise. If you have time, use your bicycle. It will keep you fit and save the cost of petrol and repair of vehicles. Sometime, you can use public vehicles which will be cheap than your private vehicle.


10. Pay Bills on the Time

If you will delay the payment of bill, you will have to pay penalty. So, save this penalty by pay bill on the time.


11. Less Talk on Mobile

Talk on mobile is the art. If you will learn, you can close the talk 5 times faster. So, you have to learn it. Talk to the point. Never carry it long. It is not free. Small cost will become big if you will waste your money energy in useless talking.


12. Celebrate the Festivals with Simple Ways

We all can celebrate the festivals with simple ways. All most all the religions, you see that people waste the money by exploiting the environment. On side, it will increase your expenses and second side, your health will not ok. So, leave the firework in festival times. It should simple and cheap.


13. Don't Create Relations in Hurry

Don't add friends and add friends in facebook. Sometime, facebook can ask the question, do you know him or her personally. By asking, he is giving warning to you, never waste your money. More friends will increase your responsibility. In this, yourfinancial responsibility will also increase. If you have not enough money to take this weight, then do not create relation in hurry. Take the test of other person before add in your friendship. It will surely decrease your expenses.

14. Do Work in Morning Time

In the morning time, you can go to natural light. You will well again. In the morning time, there will enough power in your brain. So, with this, you can save electrical energy. You can save your medicine bill. You can get more idea of earning cash which will cover up your partial expenses. 


15. Don't Work in Late Nights

After 10:00 p.m., if you do the work, it is serious wrong. Night is for sleep and day is for work. Rest your body. It is free charger which is more powerful than drinking of 5 kgs. milk. If you sleep good, it means, you have drink 5 kgs. milk. So, one side its cost will decrease and second side you enjoy this drink.


16. Save Yourselves from Drugs

Never drink alcohol. Never smoke. Never use any other drugs or addiction like gambling. All will increase your expenses. But, you are full determined. So, never use drugs because your soul is against this. Listen its voice.


17. Don't go to Court

It means, never quarrel. Live in the environment of peace. Never increase any issue which will help you to go to court. When two persons speak lie, they go to court. When two persons speak truth, no, one can go to court. All these places are full of lie where Witness, advocate and judge may take your hard earned money. Instead waste your money in court, just donate for helpless.

18. Never Quarrel in Distribution of Property

When we die, we need on six feet. So, never quarrel for demanding more land and property. With peace, you can earn more. With peace, you can decrease your expenses which you will spend on fighting. In end, you will end this fight with peace. So, it is better, in the time of beginning, you should follow peace.

19. Satisfy in Small things

If you have small cycle, be satisfy in it. If you will satisfy, God will think, you have eligible for clearing the next test of patience. With satisfaction and patience, you will get big reward. For eating fruits, you need to wait for 10 years. For increasing wealth and decreasing the expenses, you have to learn to satisfy in small things.

Thank You

Forfeiture and Reissue of Shares Journal Entries

Today, we are taking an important example for explaining the journal entries of forfeiture and reissue of shares. But before study this, you should study our pastcorporate Accounting study material which will clear you the fundamental of Forfeiture and Reissue of Shares accounting.


First read below and then use browser of web or mobile back button to reach here again.

  • Accounting Treatment of Forfeiture and reissue of share 
  • Why is Share Forfeiture Account Debited, When It is Reissued at Discount?

A Ltd. issued 100,000 shares  of Rs. 10 each payable as follows :

Applications were received for 160000 shares out of which letters of regret were issued for 30,000 shares. Full allotment was made to applicants for 40000 shares.Pro-rata allotment was made on the balance.

A shareholder holding 100 shares to whom full allotment was made, failed to pay allotment money. Another shareholder holding 200 shares to whom pro rata allotment was made also failed to pay allotment money. On first call, there was a further default on 300 shares. All these were forfeited. The first lot of 300 was reissued at the rate of Rs. 8 per share as fully paid up shares.

Pass necessary journal entries. 

In the books of A

Journal Entries

1. When application money received on 160000 @ Rs. 3 each.

Bank Account Debit 4,80,000

Share Application Account Credit 4,80,000

2.  When Application money transferred to capital account, returned money to applicants and balance transferred to share allotment account 

Share application account Debit 480,000

Share capital account Credit 3,00,000

Bank Account Credit 90,000

Share Allotment Account Credit 90,000

3. When allotment money is due on 100,000 shares @ Rs. 2 per share.

Share Allotment Account Debit  2,00,000

Share Capital Account Credit 2,00,000

4. When Allotment money has received except not failed ( See working notes)

Bank Account Debit 1,09,700

Share Allotment Account Credit 1,09,700

5. When First call's money due ( 1,00,000 shares @ RS. 3)

Share First Call Account Debit 3,00,000

Share Capital Account Credit 3,00,000

6. When First Call money received ( 100,000 -600) @ Rs. 3

Bank Account Debit 2,98,200

Share First Call Account Credit 2,98,200


7. When forfeiture of Shares of 600 due to non- payment of allotment money and call money

Share capital account Debit 4800 ( 600 shares X Rs. 8)

Share Allotment Account Credit 300 ( see working note 3)

Share First Call Account Credit 1800 ( 600 X Rs. 3)

Share Forfeiture Account Credit 2700 ( Balance)

8. When Forfeiture Share Re-issued

Bank Account Debit 2400 ( 300 X Rs. 8)

Share Forfeiture Account Debit 600 ( Discount on re-issue of shares 300 X RS. 2 ( Rs. 10 -Rs. 8)

Share Capital Account Credit 3000

9. Transfer of Net Balance of Forfeiture Account to Capital Reserve ( See Working Note ) 

Share Forfeiture Account Debit 600

Capital Reserve Account Credit 600

 10. When Final call's money due ( 99,400 shares @ RS. 2)

Share First Call Account Debit 1,98,800

Share Capital Account Credit 1,98,800

11. When First Call money received ( 99,400) @ Rs. 2

Bank Account Debit 1,98,800

Share First Call Account Credit 1,98,800


Working Notes 

First of all you need to make the pro-rata table


1. Advance received of allotment money at the time of application. 

If there are alloted Rs. 180,000 shares , application received = Rs. 270,000
If there is alloted 1 share, then application received = 270,000/180,000
If there is alloted 200 share (failed allotment money), then application received for ths = 9/6 X 200 = 3/2 X 200 = Rs. 300

2. Calculation of amount received on allotment 

Amount Due on allotment = Rs. 2,00,000
Less : Received on application =  90,000
-------------------------------------------------
Balance __________________1,10,000
Less allotment money 
on 100 shares full allotment is 
made ( Failure to pay allotment
money)  ( 100 X 2 ) _________  200
--------------------------------------------------
Balance__________________1,09,800
Less Allotment money on _____      100
200 shares alloted on pro-rata
basis
{200 X 2 - RS. 300 (Already received at the time application) }              
----------------------------------------------------------------
Amount received at the time of allotment = 1,09,700
==========================================                      

3. Calculation of Not received allotment Money

1. Failure on Full allotment = Rs. 200
( Failure to pay allotment money)  ( 100 X 2 ) 

2. Failure of pro-rata payment = Rs. 100
{200 X 2 - RS. 300 (Already received at the time application) }         
-------------------------------------------------------------
Total not received allotment money = Rs. 300
=======================================

4. Calculation of amount transferred to capital reserve

Amount received on 100 shares full payment of application money =  Rs. 300
Amount received on 200 shares which is pro-rata
(It means, we have received 300 shares application money

200 X 90,000/60,000)       Now 300 X 3 Application money =  Rs. 900
--------------------------------------------------------------------------------
Total __________________________________________ Rs. 1200
Less discount allowed on reissue of shares )_____________ Rs. 600
-----------------------------------------------------------------------------
Transferred to Capital Reserve ______________________ Rs. 600
====================================================

How to Find Cost of eBook

If you have to set the sale price of your eBook, you have to find its cost. There are lots of factor which you have to check and which is the part of this digital asset. I have analyzed each factor. On this basis, I calculated its cost.


1. Writing Cost 

Writing Cost is the main factor for finding the total cost of any ebook. For writing any article in a ebook, writer may take from Rs. 500 to Rs. 50000 on the basis of his experience. Famous writer will take per content cost. If one content writing cost is Rs. 5000 ( on average). If there are are 20 content in eBook, its writing cost will be Rs. 1,00,000.


2. Website Hosting Cost 

Website Hosting cost is also a big factor. If you are showing your 10 eBook, you have to pay VPS Plan of Rs. 5000 per month, then one eBook's hosting cost per month will be Rs. 500. If you keep it one year and you get one customer at the end of year, its cost will be Rs. 6000 which will include in the total cost of eBook.

3.  Domain Cost 

Domain name cost will be Rs. 1500 to Rs. 2000 a year. So, it will less but you must include its cost  if you sell it in the end of year.

4. Internet Cost 

If you have good internet plan for checking the online order or website promotion, you need to pay Rs. 2000 per month and Rs. 24000 per year. If you have only 10 eBooks and if you will sell only one eBook at the end of year, your internet cost will be Rs. 200

5. Online Advertising Cost 

For example, in my site, I will sell small space of  300 X 250 size ads, I will get  $ 2000 for one month and $24000 per year. But if I will use it for advertising of my own ebook, I have to calculate its correct cost. If through this advertisement, I will sell at the end of year, I must include in its total cost. If I will convert it in Indian currency it will be Rs. 15,60,000 for one my eBook advertising on my this website.

6. Electricity Cost 

If you will live in India, your per month electricity cost may be Rs. 2500 and full year, its cost is 30,000. If you will sell single eBook, this cost will also include in it which will be Rs. 30,000

7. Sales Processing Cost 

For this, there is minimum one employee at minimum cost of Rs. 10,000 per month. If I will appoint him for one year and we have sold only one eBook, its cost Rs. 120,000 which  will include in total cost of eBook

8. Mobile Bill Cost 

For sale conversation, you need the mobile with per month charge of Rs. 600 and for Rs. 7200 for a year. It means, if you will sell only single eBook, its total cost will include in the cost of eBook.


9. Maintenance Cost 

There are lots of repairs of computer, electricity, and mobile. All's cost is the part of total cost of eBook. It will be Rs. 12,000

10.Store Cost

All digital asset in computer but we need space to keep this computer. If any single room is on the rent in any city, it may be Rs. 3000 per month. On this basis, cost of storage for one year will be Rs. 36000 which will be the part of total cost of eBook.

11. Back up Cost 

This is digital asset. So, if there is any virus or any other thing, you can face the loss of this digital asset. So, you require its backup. For backup cost, you have to pay  Rs. 1000 smallest amount if you have bought any pan drive  which will include in this eBook's total expenditure.

12. Business Email Hosting 


Google and other hosting company  is selling  business email hosting whose cost is Rs. 500 per month in India. One year cost will be Rs. 6000. It will include in the total cost of eBook. 

Now, we can calculate the eBook, if you will sell it in the end of year. 



I think, you can understand to estimate the production cost of any ebook which is not so easy. But still single eBook will be of Rs. 18,80,400. Recently, I have also launched my Journal Entry Made eBook whose price I set Rs. 1000 if I will sell only single copy in whole year, I will face the loss of Rs. 18,79,400. But, you can all can save me from this loss if 2000 copies will be sold through this website, I will earn Rs. 1,19,600 which will be 5.98% profit on the sale this whole year. So, help me for buying Journal Entries eBook  hard copy through our online shop. 



( If you are publishing your own eBook and doubts regarding the calculation of its total cost or any other related problem with this content, you can ask question, post your question in the comment box below. We'll do our best to help you. )

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How to Quick Transfer in SBI Net Banking Account

Good news for all those who use the SBI Net Banking. Recently, SBI has announced to provide quick fund transfer facility in your SBI Net Banking Account. For this, you need not register beneficiary and weight for one hour for payment. Up-to Rs. 5000, you can transfer without beneficiary registration.


In SBI's Words


You can remit amount up to Rs 5000.00 per day (per user) to the beneficiaries maintaining account in SBI or other Bank without adding them as beneficiary under Profile section. To avail, please visit Quick Transfer link given under ‘Payment/Transfer’ tab.

Now, we are writing its Simple Steps

1. Login Your SBI Net Banking Account

Just login your SBI net banking account through your net banking username and profile password.

2. Go to Payment/Transfer Menu

Now, go to payment/transfer menu. You will see it in above left side if you are login first time from web browser.


3. Choose Quick Transfer Option

In this, there are lots of fund transfer option. Out of them, please use quick transfer option which have recently announced.


4. Fill the Detail of Beneficiary and other

Now, you have to give the name of beneficiary, its bank account and IFC code. Write also the amount which must be Rs. 5000 or below. Now Submit it.




6. Get High Security Password on Your Mobile

Now, it will ask high security password. Near of this box, you will see a small button which you have to click for demand it on your mobile. On your registered mobile, you will get this high security password.




7. Fill High Security Password and Submit 

Fill high security password and submit. Within few minutes, your fund will transfer to your beneficiary account. You can use this facility for payment towards loanrepayment, deposit/investment, gift to relatives/friends, donation and payment of education fee.

Thank You

Journal Entries of Paying Expenses on the behalf of Others

If you are accountant in any company or any other organisation, you will surely face this problem. You or your company pays the expenses but it is on the behalf of other person. You are just representative for other. For example, you can pay the expenses of your boss, your friend employee, your customer or your supplier. What will its journal entry?


Some will do the mistake by making it expense of business and debit the expense injournal entry which is totally wrong. Sometime, there may be lack of money in the pocket of your boss. He will say to you to pay his electricity bill or any other bill. It is the personal expense of that party not your business expense. So, expense accountnever debit.

So, how can you pass the journal entries, we will learn with two following examples.

Example of Transaction  No. 1

Generally we used to pay various taxes on behalf of our client through online and after that collect the cheque of that same amount so in this regard please advise the best journal entry for these type of payment of expenses. Ex Suppose we paid Rs. 100 of Mr. Ram as Income Tax Payment and subsequently takes a cheque of Rs. 100 from Mr. Ram so what type of entry has to passed. Please guide

Example of Transaction No. 2

Suppose I am an Accountant in a firm and our firm is dealing in Cars, (Sale Purchase) our creditor has told to me, you are publish my add in news paper for advertising the cars, i have done this job, then we want to received the funds from the Creditors, so what will be the entry pass, for both the entries.

Journal entries will be same of both type of examples

 In both examples, we are seeing that accountant is paying on the behalf of customer or creditor. It means, both expenses is not the business of accountant. So, income tax or advertising  expense is not the  business expense. So, we will never debit these expense account. We will pass the journal entry with following way

1. When you have paid Income Tax or advertisement on the behalf of your Client or creditor

Name of Your Client Creditor ( In this transaction, he is actually your borrower) Account Debit

Cash / Bank Account Credit

Logic : Now amount which you have to take from your client or creditor, will be your asset or increase in your total asset. Every increase in your business asset must be debited. Cash/ Bank is decrease of your asset, so we have credited it. If your client or creditor do not pay you this payment. You can help court to get this amount because this entry is the proof which you can show.


2. When You will get your payment back from your Client or creditor


Cash/ Bank account Debit

Name of Your Client or  Creditor ( In this transaction, he is actually your borrower) Account Credit

Logic : Because your cash or bank asset has increased, so it will debit. Other side your asset of investment in loan ( you have also right to take interest on this amount)  has decrease, so it will be credited.

Single Solution of All Your Journal Entries Problems


I got lots queries relating to journal entries on day basis. For providing you single solution of your all journal entries problems, I have written eBook and Printed Book whose name is Journal Entries Made Easy  whose cost is Rs. 1000 each. I recommend you to buy it from me. You can buy it from our online shop or you can buy it from me by sending email personally to me at my email vinod@svtuition.org

It will surely strong your basics of accounting and journal entries. With this, you can pass the journal entry of every type of transaction. If you will be interested to buy it please reply on same email. After payment, this E-book (in PDF form), you will get within few minutes and by reading it, you can solve your all queries relating to journal entries.

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