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Thread: CPT Notes - Accounts - Fundamenal of Accounting.

  1. #21
    deepika
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    Thumbs up Fundamenal of Accounting - Issue of Debentures.

    Issue of Debentures

    Debentures- It is a tool used by a company for a long term borrowing. It is actually a certificate for a fixed deposit. It is an acknowledgement of a debt of a uniform rate.

    Types of Debentures


    1. Mortgage Debenture- It is issued mortgaging some assets. These debentures have charge on assets.
    2. Naked Debentures- These debentures have no charge on assets.
    3. Redeemable Debentures- These debentures are repayable within specified time. Debentures are issued for a maximum period of 20 years.
    4. Irredeemable Debenture- There is no specified time for redemption of debentures. These are repayable only at the time of liquidation of company. In India irredeemable debentures are not issued.
    5. Unregistered or Bearer Debentures- These debentures are transferable on mere delivery. It bears no name or address of the holder.
    6. Registered Debentures- The name and address of the holder are inserted in the register of the company. So transfer of these debentures requires inclusion of the new holder’s details in the register of the company removing the details of the existing holder’s details.
    7. First Debentures- These debentures are considered first for repayment.
    8. Second Debentures- After repayment of the first debentures, these debentures are repaid.
    9. Convertible Debentures- The whole or part of the debentures are converted into equity shares after a stipulated time.
    10. Non-convertible Debentures- These debentures have no right to be converted into the shares.

    Difference Between a share and a debenture

    Share
    Debenture
    1. Share is the part of the capital of the
    company.
    1. Debenture is the part of the debt of the
    company.
    2. Share holders are the owners of the company. 2. Debenture holders are the creditors of the company.
    3. Dividend is paid on the shares. 3. Interest is paid on the debentures.
    4. Dividend is paid only if there is profit. 4. Interest is paid even if there is loss.
    5. Dividend is the appropriation of profit. 5. Interest is charge against profit.
    6. Share may be forfeited for non-payment of allotment or call money. 6. Debentures cannot be forfeited.
    7. Shares are not repayable except in special
    cases.
    7. Debentures are repayable after the expiry of the term.
    8. Share holders enjoy voting rights 8. Debenture holders enjoy no voting rights.
    9. In case of liquidation share holders get their
    money back if any surplus exists after
    payment of all debts including debentures.
    9. In case of liquidation amount due to
    debentures are paid first.

    Journal Entries

    1. For issue of debentures at par and repayable also at par
    Bank A\C - Dr.
    To Debentures A\C

    2. For issue of debentures at par but repayable at premium
    Bank A\C - Dr.
    Loss on Debentures A\C (amount of premium) - Dr.
    To Debentures A\C
    To Premium on Redemption of Debentures A\C

    3. For issue of Debentures at premium but repayable at par
    Bank A\C - Dr.
    To Debentures A\C
    To Securities Premium A\C

    4. For Issue of Debentures at premium and repayable also at premium
    Bank A\C - Dr.
    Loss on Debentures A\C - Dr.
    (Amount of premium payable on redemption)
    To Debentures A\C
    To Securities Premium A\C (Amount of premium received)
    To Premium on Redemption of Debentures

    5. For Issue of Debentures at discount but redeemable at par
    Bank A\C - Dr.
    Discount on Debentures A\C - Dr.
    To Debentures A\C

    6. For issue of Debentures at discount but redeemable at premium
    Bank A\C - Dr.
    Loss on Debentures A\C -- Dr.
    (Amount of discount+ Amount of premium)
    To Debentures A\C
    To Premium on Redemption of Debentures A\C.

  2. #22
    deepika
    Guest

    Thumbs up Fundamenal of Accounting - Redemption Of Preference Shares.

    Redemption Of Preference Shares

    It means paying back the amount of preference shares to the holders of such shares on a specified date or after the expiry of certain period of time.

    Important Points

    1. A company in India cannot issue irredeemable preference shares.2. Preference Shares are issued for a maximum period of 20 years.

    2. A share cannot be redeemed unless it is fully paid.

    3.The redemption may be out of any or both i) profit of the company available for dividend* ii) proceeds of fresh issue of shares**.

    4. Where shares are redeemed out of profit an equal amount must be transferred to Capital Redemption Reserve.

    5. Capital Redemption Reserve can be utilized only for issuing fully paid bonus shares.

    *Following profits are available for declaration of dividend:
    Profit & Loss A\c, General Reserve, Reserve Fund, Dividend Equalization Reserve, Workmen’s compensation fund etc.

    Following should not be used while creating CRR:
    Securities Premium( but it can be utilized for providing premium on redemption of shares, Capital Reserve, Forfeited Shares A\C, Pre-incorporation Profit and any specific reserve like Investment Allowance Reserve’ Development Rebate Reserve.

    ** The ‘term’ proceeds should not include any securities premium but if there is any discount on issue, the net proceeds (after deduction of discount) should be considered.

    Proceeds of debentures should not be considered for fresh issue.

    Journal Entries

    1. Amount payable on redemption
    Redeemable Preference Shares Capital A\C - Dr.
    Premium on Redemption of Pref. Shares A\C - Dr.

    To Preference Shares Holders A\C

    2. For providing premium on redemption
    Securities Prm.\ Profit & Loss A\C \ Other Reserves A\C - Dr.
    To Prm on Redemption Pref. Shares A\C

    3. For payment of redemption money
    Pref. Shares Holders A\C - Dr.
    To Bank A\C

    4. For creation of CRR
    P\L A\C Or, General Reserves A\C - Dr.
    Other Free Reserves A\C - Dr.
    To CRR A\C
    Last edited by deepika; 01-11-2011 at 03:44 PM.

  3. #23
    capardeep
    Guest

    Default

    nice materials to be very useful for CPT students! .get it list all the above contents!

  4. #24
    JANI HARDIK
    Guest

    Default

    How many chapters in fundamental accounting and what is their name?

  5. #25
    JANI HARDIK
    Guest

    Default

    FUNDAMENTAL ACCOUNT
    Introduction to Accounting
    Lesson 1: Meaning and scope of accounting
    Lesson 1: Meaning and scope of accounting
    Lesson 3: Accounting Principles
    Lesson 4: Accounting policies
    Lesson 5: Accounting as a measurement discipline
    Accounting Process
    Lesson 8: Preparation of Trail Balance
    Lesson 9: Subsidiary books
    Lesson 10: Cash Book
    Lesson 12: Contingent Assets and Liabilities
    Lesson 13: Errors And Their Rectification
    Lesson 14: Financial Statements (with Adjustments)
    Accounting for Special Transaction
    Lesson 15: Consignment Accounts
    Lesson 16: Joint Venture
    Lesson 17: Bills Of Exchange And Promissory Notes
    Bank Reconciliation Statement
    Lesson 18: Bank Reconciliation Statement
    Lesson 19: Depreciation Accounting
    Lesson 20: Inventories
    Partnership Accounts
    Lesson 21: Admission of Partner
    Lesson 22: Fundamentals of Partnership
    Lesson 23: Retirement and Death of Partner
    Introduction to company account
    Lesson 24: Share capital
    Lesson 25: Redemption of preference shares
    Lesson 26: Issue of Debentures

  6. #26
    daleollaneg
    Guest

    Default

    CPT symmetry is a fundamental symmetry of physical laws under the simultaneous transformations of charge conjugation.

    Training and Placements
    H1B Placements

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