1. What is perqusities and perks? It means any benefits attached to an office or position in addition to salary or wages. 2.

How to calculate income from salary ? Recei ed at the time of ser ice!basic pay"wages"#$" bonus ect% Recei ed at the time of retirement or aft retirement !lea e salary"pension"pf"gratuity% &ross salary 'ess deduction u(s 1) *et salary. +. ,nder what section capital gain on transfer of residential house property will comes? It comes u(s -.. .. What are the deductions to gross up the salary into net salary !like /0 ccc% ? /0 ccc"/0ccd"/0cce ect -. What is /0g deduction for what it is use for? #eduction /0g is for donation ). What is the 1of salary if the employees rental house is in the metropolitian cities and non metropolitian cities? 2or metropolitian cities it is .01 2or non metropolitian cities it is -01 3. 4eaning of 5repaid 67penses? 67penses Which $re paid $d ance /. Which 8ide $ppear in outstanding 67penses ?

9. :alance 8heet? 10. ;a7 Rate? 2or 4en< 1" 90"000 67empted 2or Women< 2" 00"000 67empted 2or 8enior =iti>en 2" 1-"000 67empted

11. ?ournal 6ntry 2or #epreciation ? 12. ?ournal 6ntry 2or @utstanding 8alary ? 1+. What is &ross ;otal Income? 1.. What is general reser e? 1-. ;angible asset and intangible assets? 1). What is reser e and surplus? 13. What is re enue e7penditure? 1/. What is current assets? 19. What is capital e7penditure? 20. How to calculate indi idual income? 21. How to calculate house rental income? 22. What is prepaid e7p? 2+. What is retained earnings? 2.. What is contingent liability? 2-. What is outstanding e7pense and accrued income? 2). 4ethods of depreciation? 23. What is 6@A and :65? 2/. 8alary and Wages Bornal entry 29. Income ta7 ,nder the heads off ?

 Income 2rom 8alary Income 2orm house property Income 2rom profit and gain of business or profession Income 2rom =apital gain Income 2rom other 8ources

+0. $bout short term capital gain !8.;.=.&% ? 8hort ;erm =apital &ain < 2inancial C *on 2inancial 2inancial< less than 12 4onths *on financial< less than +) months

+1. &i e some 67ample 2rom @ther sources ? 'ottery tickets" &ambling D limit up to 10000 Horse Race limit up to -000 +2. Who is assessee ? $ person paying a ta7 is known as $ssessee. ++. What is assessment year and e7plain? ;he present assessment year is 201+D201. pre ious year is 2012D201+. +.. When the assessee paying the ta7 ,pto 1-th Buly

 ,pto1-th 8eptember ,pto1-th #ecember ,pto1-th march

+-. When we calculate the accounts 5eriod ? 2rom $pril ;o +1st 4arch +). Which 8ubBect #o u like 2inance @r ta7? Eou ha e to tell income ta7 or both finance and ta7 +3. #ifference between capital e7penditure and re enue e7penditure Its effect is long term i.e." it is not e7hausted within the current account year. Its benefit is enBoyed in future year or years also. In a word" its effect is reduces gradually. It does not occur again and again D it is nonDrecurring and irregular. It occurs repeatedly D It is recurring and regular. Its effect is temporary" i.e." it is e7hausted within the current accounting year.

+/. #ifference between long term and short term capital gains. 8hort term capital gains 2inancial< less than 12 4onths *on financial< less than +) months long term capital gains 2inancial< more than 12 4onths *on financial< more than +) months

+9. 67plain @utstanding e7penses? $t the end of the accounting period" there may be e7penses which ha e become due but ha e not yet been paid. .0. How to calculate gross profit? &ross profitF salesDcost of goods sold.

.1. What is outstanding wages and where it is come? .2. What will be do with trial balance? .+. Interest income comes under which head? ... How to calculate &ross ;otal Income? .-. *ame of the deduction and what is section /0? .). What is capital e7penses and re enue e7penses? .3. What is :rake 6 en 5oint !:65%? ./. What is I2H5?!Income from House property% .9. #uration of 'ong term capital"8hort term =apital -0. What is capital budgeting? -1. #i idend paid in India is ;a7able or 67cempt? -2. What is the section for #eduction? -+. What is =apital re enue? -.. Working =apital 4anagement in 2inance. --. 5roBects had done in &raduation.

-). Rent 2ree accommodation is perquisties !or% allowances?

It is perquisties.

-3. $ccounts payable and recei able?

$ccounts 5ayable< It is owed by a business to its supplier. 5C' a(c< #ebit side :alance 8heet< liability side.

$ccounts Recei able< It is owed to business by a clients. 5C' a(c< =redit side :alance 8heet< $sset side.

-/. =redit notes? #ebit notes? -9. What is capital gain? )0. What is Inde7ation in 'ong term capital gain? )1. =ompute &ratuity. )2. =ompute House property. )+. $fter :65 !:rake 6 en 5oint%" what happens ? ).. What is accounting? $ccounting is the art of recording "classifying "and summarising in a significant manner and in terms of money transactions and e ents in a systematic manner and interpreting the results theory.

)-. @utstanding salary for Bournal entry? salary account dr @utstanding salary a(c )). ?ournal entries of @utstanding salary paid for ne7t year? o(s salary a(c dr cash a(c )3. 8tandard deduction for house property +01 )/. What is #irect and Indirect ;a7es?with e7amples. )9. ;ypes of =apital &ain. 30. @utstanding salaries comes under? 31. $ccounts payable comes under?

Definition of 'Gross Income'

1. An individual's total personal income before taking taxes or deductions into account. 2. A company's revenue minus cost of goods sold. Also called "gross margin" and "gross profit." Capital Reserve: 1. It is created out of the profit earned not in the normal course of business. For example, to a bookseller, profit on sale of books is a regular profit. But profit earned on sale of something other than books is capital profit. 2. Capital employed in business is increased permanently. 3. It is usually not a ailable for the payment of di idends. !. "iability and loss of capital nature can only be met by it. General Reserve: 1. It is created 2. It

out of profit increases

earned in capital

the

normal course employed

of

business. temporarily.

3. It is a ailable for the !. It is a ailable for meeting any type of liability or loss.

payment

of

di idends.

In general reser es are for current and future expenses that cannot currently be deducted#ie reser e for bad debts, for reser e for litigation.the reser e must be factual and not a supposition. $eser es are charged against earnings

%urplus is retained earnings accumulated from current or prior period

capital and Revenue Expenditure

&xpenditure on fixed assets may be classified into Capital &xpenditure and $e enue &xpenditure. 'he distinction bet(een the nature of capital and re enue expenditure is important as only capital expenditure is included in the cost of fixed asset.

Capital Expenditure
Capital expenditure includes costs incurred on the ac)uisition of a fixed asset and any subse)uent expenditure that increases the earning capacity of an existing fixed asset. 'he cost of ac)uisition not only includes the cost of purchases but also any additional costs incurred in bringing the fixed asset into its present location and condition *e.g. deli ery costs+. Capital expenditure, as opposed to re enue expenditure, is generally of a one,off kind and its benefit is deri ed o er se eral accounting periods. Capital &xpenditure may include the follo(ing .urchase costs *less any discount recei ed+ /eli ery costs "egal charges Installation costs 0p gradation costs

$eplacement costs 1s capital expenditure results in increase in the fixed asset of the entity, the accounting entry is as follo(s/ebit Credit Fixed 1ssets Cash2.ayable

Revenue Expenditure
$e enue expenditure incurred on fixed assets include costs that are aimed at 3maintaining3 rather than enhancing the earning capacity of the assets. 'hese are costs that are incurred on a regular basis and the benefit from these costs is obtained o er a relati ely short period of time. For example, a company buys a machine for the production of biscuits. 4hereas the initial purchase and installation costs (ould be classified as capital expenditure, any subse)uent repair and maintenance charges incurred in the future (ill be classified as re enue expenditure. 'his is so because repair and maintenance costs do not increase the earning capacity of the machine but only maintains it *i.e. machine (ill produce the same )uantity of biscuits as it did (hen it (as first put to use+. $e enue costs therefore comprise of the follo(ing-

$epair costs 5aintenance charges $epainting costs

$ene(al expenses 1s re enue costs do not form part of the fixed asset cost, they are expensed in the income statement in the period in (hich they are incurred. 'he accounting entry to record re enue expenditure is therefore as follo(s/ebit Credit $e enue &xpense *Income %tatement+ Cash2.ayable

repaid expense is expense paid in ad ance but (hich has not yet been incurred. &xpense must be recorded in the accounting period in (hich it is incurred. 'herefore, prepaid expense must be not be sho(n as expense in the accounting period in (hich it is paid but instead it must be presented as such in the subse)uent accounting periods in (hich the ser ices in respect of the prepaid expense ha e been performed. &ntity should therefore recogni6e an asset in respect of expense it has paid in ad ance until such time as the ser ices that are due in relation to the prepaid expense ha e been performed by the suppliers2contractors. Follo(ing accounting entry is re)uired to account for the prepaid expense/ebit Credit .repaid &xpense *1sset+ Cash

Definition of 'Economic Order Quantity - EOQ'

An inventory-related equation that determines the optimum order quantity that a company should hold in its inventory given a set cost of production demand rate and other variables. !his is done to minimi"e variable inventory costs. !he full equation is as follo#s$

(ages a2c dr to (ages payable a2c Being 1mount of 4ages payable for the 5onth as per details 1ttahced+
'rial Balance is a list of closing balances of ledger accounts on a certain date and is the first step to(ards the preparation of financial statements. It is usually prepared at the end of an accounting period to assist in the drafting of financial statements. "edger balances are segregated into debit balances and credit balances. 1sset and expense accounts appear on the debit side of the trial balance (hereas liabilities, capital and income accounts appear on the credit side. If all accounting entries are recorded correctly and

all the ledger balances are accurately extracted, the total of all debit balances appearing in the trial balance must e)ual to the sum of all credit balances.

Purpose of a Trial Balance

'rial Balance acts as the first step in the preparation of financial statements. It is a (orking paper that accountants use as a basis (hile preparing financial statements. 'rial balance ensures that for e ery debit entry recorded, a corresponding credit entry has been recorded in the books in accordance (ith the double entry concept of accounting. If the totals of the trial balance do not agree, the differences may be in estigated and resol ed before financial statements are prepared. $ectifying basic accounting errors can be a much lengthy task after the financial statements ha e been prepared because of the changes that (ould be re)uired to correct the financial statements. 'rial balance ensures that the account balances are accurately extracted from accounting ledgers. 'rail balance assists in the identification and rectification of errors.

Example
Follo(ing is an example of (hat a simple 'rial Balance looks likeABC LTD Trial Balance as at 31 December 2011 Acc unt Title %hare Capital Furniture 9 Fixture Building Creditor /ebtors Cash %ales Cost of sales ;eneral and 1dministration &xpense T tal 1. 2. 3. !. :,888 2,888 30"000 30"000 3,888 2,888 18,888 7,888 18,888 7,888 Debit ! Credit ! 17,888

'itle pro ided at the top sho(s the name of the entity and accounting period end for (hich the trial balance has been prepared. 1ccount 'itle sho(s the name of the accounting ledgers from (hich the balances ha e been extracted. Balances relating to assets and expenses are presented in the left column *debit side+ (hereas those relating to liabilities, income and e)uity are sho(n on the right column *credit side+. 'he sum of all debit and credit balances are sho(n at the bottom of their respecti e columns.

Limitations of a trial balance

'rial Balance only confirms that the total of all debit balances match the total of all credit balances. 'rial balance totals may agree in spite of errors. 1n example (ould be an incorrect debit entry being offset by

an e)ual credit entry. "ike(ise, a trial balance gi es no proof that certain transactions ha e not been recorded at all because in such case, both debit and credit sides of a transaction (ould be omitted causing the trial balance totals to still agree. 'ypes of accounting errors and their effect on trial balance are more fully discussed in the section on %uspense 1ccounts.

efinition of 'Capital Budgeting'

!he process in #hich a business determines #hether pro%ects such as building a ne# plant or investing in a long-term venture are #orth pursuing. &ftentimes a prospective pro%ect's lifetime cash inflo#s and outflo#s are assessed in order to determine #hether the returns generated meet a sufficient target benchmark

Definition of 'Working Capital Management'

A managerial accounting strategy focusing on maintaining efficient levels of both components of #orking capital current assets and current liabilities in respect to each other. 'orking capital management ensures a company has sufficient cash flo# in order to meet its short-term debt obligations and operating expenses
'hen the purchaser returns the goods to the seller the (urchaser sends a )ebit *ote to the seller +ie. the purchaser debits the seller in his books ie. (urchasers ,ooks- and the .eller sends a /redit *ote to the purchaser +ie. the seller credits the (urchaser in his ,ooks ie. .ellers ,ooks-. 0ollo#ing are the 12s to be passed$- .ales 3eturn in#ard A4c )r. !o )ebtor A4c +,eing goods returned by the customer- /reditor A4c )r. !o 5oods 3eturn A4c +,eing goods sent back to the seller-

Gratuit# Calculati n $ndia

Gratuity calculator to calculate the collectable amount for an employee when he/she works more than a minimum period of five years at an organization. Gratuity calculation in india is based on his/her average salary, dearness allowance and working years.

Definition of 'Capital Gain'

1. An increase in the value of a capital asset +investment or real estate- that gives it a higher #orth than the purchase price. !he gain is not reali"ed until the

asset is sold. A capital gain may be short term +one year or less- or long term +more than one year- and must be claimed on income taxes. A capital loss is incurred #hen there is a decrease in the capital asset value compared to an asset's purchase price
<.3 C=5.0'1'I=> =F I>C=5& F$=5 "&' =0' ?=0%& .$=.&$'@

Income from house property is determined as under-

;ross 1nnual Aalue xxxxxxx

"ess- 5unicipal 'axes xxxxxxx

>et 1nnual Aalue xxxxxxx

"ess- /eductions under %ection 2!

, %tatutory /eduction *38B of >1A+ xxxxxxx

, Interest on Borro(ed Capital xxxxxxx

Income From ?ouse .roperty xxxxxxx

:.3 C1.I'1" 1%%&'

1ny income profit or gains arising from the transfer of a capital asset is chargeable as capital gains. >o( let us understand the meaning of capital asset.

Capital 1sset means property of any kind, (hether fixed or circulating, mo able or immo able, tangible or intangible, held by the assesses, (hether or not connected (ith his business or profession, but does not include, i.e., Capital 1ssets exclude1. %tock in trade held for business 2. 1gricultural land in India not in urban area i.e., an area (ith population more than 18,888. 3. Items of personal effects, i.e., personal use excluding Ce(ellery, costly stones, sil er, gold !. %pecial bearer bonds 1DD1 7. <.7B, EB ;old bonds 9 >ational /efence Bonds 1D:8. <. ;old /eposit Bonds 1DDD.

:.3.1 '@.&% =F C1.I'1" 1%%&'

'here are t(o types of Capital 1ssets-

1. %hort 'erm Capital 1ssets *%'C1+- 1n asset, (hich is held by an assessee for less than 3< months, immediately before its transfer, is called %hort 'erm Capital 1ssets. In other (ords, an asset, (hich is transferred (ithin 3< months of its ac)uisition by assessee, is called %hort 'erm Capital 1ssets.

2. "ong 'erm Capital 1ssets *"'C1+- 1n asset, (hich is held by an assessee for 3< months or more, immediately before its transfer, is called "ong 'erm Capital 1ssets. In other (ords, an asset, (hich is transferred on or after 3< months of its ac)uisition by assessee, is called "ong 'erm Capital 1ssets.

'he period of 3< months is taken as 12 months under follo(ing cases-

F &)uity or .reference shares, F %ecurities like debentures, go ernment securities, (hich are listed in recognised stock exchange, F 0nits of 0'I F 0nits of 5utual Funds F Gero Coupon Bonds

:.3.2 '@.&% =F C1.I'1" ;1I>

'he profit on transfer of %'C1 is treated as %hort 'erm Capital ;ains *%'C;+ (hile that on "'C1 is kno(n as "ong 'erm Capital ;ains *"'C;+.

4hile calculating tax the %'C; is included in 'otal Income and taxed as per normal rates (hile "'C; is taxable at a flat rate H 28B.

'he taxability is discussed in details later in this lesson.