If Closing Stock appears inside the Trial Balance, it means it has already been adjusted against Purchases (Cost of Goods Sold). Therefore, it is not shown in the Trading Account but only appears as an Asset in the Balance Sheet.

Securities Premium is a capital receipt and is restricted for specific uses like bonus shares or writing off expenses. It cannot be treated as free reserves for distributing cash dividends.

Under the Banking Regulation Act, banks cannot hold immovable property (except for own use) for more than 7 years. Properties acquired from defaulters to recover loans are termed "Non-Banking Assets".

Depreciation is an accounting entry, not a cash outflow. Since it was deducted to arrive at Net Profit, it must be added back to find the actual "Cash Flow from Operations".

The liability of the shareholder is limited to the called-up amount. When forfeiting, we reverse the capital created so far, which is the Called-up Value (not necessarily the full Face Value if final call hasn't been made).

Unlike legacy systems where IBR was a huge manual task, CBS uses a central database. A debit in Branch A and credit in Branch B happens simultaneously in the central server, ensuring automatic real-time reconciliation.

These are off-balance sheet items where the bank has a potential liability (e.g., Letters of Credit, Guarantees) that will crystallize only if the customer defaults. They are reported in Schedule 12.

Section 68 of the Companies Act prohibits buyback using proceeds of an earlier issue of the *same kind* of shares. It allows using Free Reserves or Securities Premium.

Adjustments have a dual effect. 1. Create the expense (Debit P&L). 2. Reduce the asset value (Deduct from Sundry Debtors in Balance Sheet).

Financing activities relate to capital and debt structure. Paying dividends is a return on capital to owners, hence Financing. (Interest received is Investing; Payment to suppliers is Operating).

As per Table F of the Companies Act, 2013, the maximum interest rate chargeable on Calls in Arrears is 10% p.a. (For Calls in Advance, it is 12% p.a.).

In Form B (P&L Account of a Bank), there is a specific head called "Provisions and Contingencies" where provisions for NPAs, Tax, and Diminution in Investments are recorded.

Items inside the Trial Balance have already been journalized. Wages Outstanding in TB means the entry (Wages A/c Dr to Wages Outstanding A/c) is already passed. So, it only needs to go to the Balance Sheet as a Liability.

Section 53 prohibits the issue of shares at a discount, with the sole exception of "Sweat Equity Shares" issued to employees/directors for know-how or IP rights (Section 54).

AS 3 prescribes the format and requirements for the Cash Flow Statement. (Corresponding Ind AS is Ind AS 7).

Schedule 8 (Investments) includes investments in Government securities, Shares, Debentures, and Gold . It is not treated as Cash.

Pro-rata allotment involves allotting shares in a ratio (e.g., 2 shares for every 3 applied) when there is oversubscription, ensuring every applicant gets something.

Marshalling is the arrangement of assets and liabilities either in the order of Liquidity (most liquid first) or Permanence (most permanent first).

The End of Day (EOD) process validates transactions, checks GL balance, calculates interest if due, and logically moves the system date forward.

The loss on reissue (discount) cannot exceed the amount already collected (gain on forfeiture) for those specific shares. This ensures capital is kept intact.

Unlike Gold (which is an Investment), Silver is typically classified under Schedule 11: "Other Assets" in the banking balance sheet format.

Redemption means repaying the debt. It involves cash going out (Outflow) and relates to the capital structure (Financing).

Accrued Income is income earned but not yet received. It is a receivable, hence a Current Asset.

In Cumulative Preference Shares, unpaid dividends accumulate and must be paid before any dividend is paid to equity shareholders.

CRAR measures a bank's capital against its risk. The denominator is Risk Weighted Assets (RWA), not Total Assets.

CBS is driven by parameters. New products are created by defining parameters (rules) in the system master, without changing the core software code.

Cash Equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value (typically < 3 months maturity).

Income Tax of the proprietor is a personal expense, not a business expense. Hence, it is treated as Drawings and deducted from Capital in the Balance Sheet.

Authorized (Registered) Capital is the ceiling limit mentioned in the MOA. The company cannot issue shares beyond this without amending the MOA.

Bills for Collection is a service where the bank acts as an agent. It is neither an asset nor a liability of the bank until realized. It is shown as a footnote.

Bonus shares must be issued out of free reserves, securities premium, or capital redemption reserve. Revaluation Reserve is created by revaluing assets (unrealized gain) and cannot be used for issuing bonus shares as per the Companies Act.

If the net balance of Inter-Office Adjustments is a Debit, it represents an asset (receivable) and is shown under Schedule 11. If it is a Credit, it is shown under Schedule 5 (Liabilities).

This is a significant non-cash transaction (Investigative/Financing) where no cash enters or leaves the entity. It should be disclosed in notes but not in the body of the Cash Flow Statement.

This module allows the bank to parameterize new schemes. Interest rates or charges defined here are automatically applied to all accounts linked to that product code.

The Minimum Subscription clause ensures that the company raises enough funds to carry out its project. If 90% of the issue is not subscribed, the entire amount collected must be refunded.

This is distinct from companies. For partnerships, tax is a personal liability of the firm/partners, often treated as Drawings in accounting questions, or appropriation. However, technically, tax on firm's profit is an appropriation, but tax paid on behalf of partners is Drawings.

Schedule 6 specifically covers Cash in hand and Balances with the Reserve Bank of India. Schedule 7 covers balances with OTHER banks.

Ind AS 7 states that tax cash flows should be operating unless they can be specifically identified with financing or investing activities (e.g., tax on capital gains from selling an asset is Investing).

As per recent MCA amendments, Banking Companies, All India Financial Institutions (AIFIs), and NBFCs registered with RBI are EXEMPT from creating DRR for privately placed debentures. For other listed companies, it is also nil. DRR is mainly for unlisted non-NBFC companies (10%).

Run-to-run totals involve checking that control totals (like total batch value) match from one processing stage to another, ensuring data completeness and accuracy.

When a bank discounts a bill, it deducts interest for the full period upfront. If the bill matures in the *next* accounting year, the portion of interest relating to the next year is "Income Received in Advance" and is shown as a liability (Rebate on Bills Discounted).

Interest on Capital is an appropriation of profit among partners, not a charge against profit. Hence, it appears in the P&L Appropriation A/c, not the main P&L A/c.

As per the Companies Act, 2013, the maximum underwriting commission on shares is 5% of the issue price (or the rate authorized by Articles, whichever is less). For Debentures, it is 2.5%.

Investing activities involve the acquisition and disposal of long-term assets and other investments not included in cash equivalents.

RBI mandates disclosure of divergence if the additional provisioning required exceeds 10% of reported net profit OR if the additional Gross NPA exceeds 10% (was 15% earlier) of reported Gross NPA.

Since rules are defined centrally in the Data Center, any change (like a rate cut) is applied instantly and uniformly to all accounts across all branches, eliminating local errors.

Shares issued as Sweat Equity are non-transferable for a period of 3 years from the date of allotment.

A Provision (e.g., for Tax) must be made even if there is a loss. A Reserve (e.g., General Reserve) is created only if there is profit.

For a financial enterprise (Bank), lending money is the main business. Hence, interest received on loans is an Operating Cash Inflow. (For a non-financial firm, it would be Investing).

The statutory format requires classification by nature of facility: A. Bills Purchased and Discounted, B. Cash Credits, Overdrafts and Loans repayable on demand, C. Term Loans.

Vesting is the process of earning the right to the shares. The employee must serve the company during this period to get the right to buy shares.

The DR Site is a replica of the Primary Data Center located in a different seismic zone. It takes over operations if the PDC goes down to ensure business continuity.

Assets like a building under construction or machinery being installed are shown as CWIP in the Balance Sheet until they are capitalized (ready for use). Depreciation is NOT charged on CWIP.

Schedule III provides the general instructions and format (Part I for BS, Part II for P&L) for preparation of financial statements of companies.

The schedules are fixed: 1-Capital, 2-Reserves, 3-Deposits, 4-Borrowings, 5-Other Liabilities. On Asset side: 6-Cash, 7-Balances with Banks, 8-Investments, 9-Advances.

Bank overdrafts which are repayable on demand and form an integral part of an enterprise's cash management are included as a component of cash and cash equivalents (negative cash).

Interest on debentures is a debt obligation. It is a "Charge against profit", meaning it must be paid regardless of whether the company makes a profit or loss.

Once written off, the debtor's account is closed. Any subsequent recovery is a gain/income and is credited to "Bad Debts Recovered A/c", which goes to the Credit side of P&L.

Tier 1 is Presentation (Client), Tier 2 is Application (Logic/Calculation), and Tier 3 is Database (Storage). The Application Server executes the core banking rules.

PCR measures the cushion a bank has against its bad loans. It is calculated as (Total Provisions held for NPAs / Gross NPAs) * 100.

If CR > 1, reducing both Current Assets (Cash) and Current Liabilities (Creditors) by the same amount increases the ratio. E.g., (150-50)/(100-50) = 100/50 = 2:1 (Improved from 1.5:1).

Provisioning norms for Secured Doubtful Assets: D1 (up to 1 year) = 25%; D2 (1-3 years) = 40%; D3 (>3 years) = 100%.

For non-financial enterprises, interest and dividends received are returns on investments made, hence classified as Investing Activities.

Under Section 54, the limit is 15% of the existing paid-up equity share capital in a year or shares of the issue value of ?5 crores, whichever is higher.

Proprietary Ratio = Shareholders' Funds / Total Assets. A high ratio means a larger portion of assets is funded by owners' equity, providing a greater safety margin for creditors.

This is a fundamental internal control mechanism to prevent fraud and error. No single employee should be able to complete a critical financial transaction from start to end.

These are potential obligations that may arise depending on the outcome of a future event (e.g., a court case). They are disclosed in the footnotes.

Section 62 of the Companies Act requires new shares to be offered first to existing shareholders to protect them from dilution of ownership.

SLR assets include Cash, Gold, and Unencumbered Approved Securities. Balances with other banks are NOT eligible for SLR (only excess balance with RBI is).

A change in useful life is a Change in Accounting Estimate (AS 10). The effect is prospective, spreading the remaining book value over the new remaining life.

Quick Ratio = (Current Assets - Inventory - Prepaid Expenses) / Current Liabilities. Inventory is considered less liquid because it takes time to sell.

Increase in Current Liabilities (Creditors) means cash is retained (not paid out). It is a source of working capital funding, so it is Added back to Net Profit to find Cash from Operations.

Repairs that only maintain the asset are revenue expenses. Only those that enhance capacity, efficiency, or life are capitalized.

While the actual appointment letter is issued by the Bank, the selection is strictly regulated by norms set by RBI and the Comptroller & Auditor General (C&AG).

Discounting a bill is effectively lending money to the customer against the security of the bill. Hence, it is an Advance (Loan).

Dividends represent a distribution of earnings. They cannot be paid out of capital reserves (like Securities Premium or CRR) or unrealized gains (Revaluation Reserve).

DSCR measures the ability to pay debt obligations. The numerator represents operating cash flow available for debt service (Profit + Non-cash exp + Interest), and the denominator is the debt obligation.

Sales Return has a Debit balance. Overcast means the debit total is too high. To reduce it, we must Credit Sales Return. The corresponding debit goes to Suspense.

The fundamental accounting equation is Assets = Liabilities + Capital. Therefore, A+L=C is mathematically incorrect.

Non-repudiation ensures that a user cannot deny having performed an action. If IDs are shared, accountability is lost, and the specific user cannot be pinpointed.

Payment reduces the bank balance. Since it's not recorded in the Cash Book yet, the Cash Book balance remains higher.

Discount is offered only to good debtors. Therefore, we first remove bad debts and doubtful debts (Provision) before calculating the provision for discount.

Securities Premium can be used for: Bonus shares, Writing off preliminary expenses, Writing off issue expenses/commission, Providing for premium on redemption, and Buyback of shares.

Schedule 7 covers "Balances with Banks and Money at Call and Short Notice".

Earnings Before Interest and Tax (EBIT) represents the profit available to service debt. Dividing this by Interest expense shows how easily a company can pay interest.

Since the loss of stock relates to operations, the insurance recovery is also an Operating Cash Flow but should be disclosed separately as an extraordinary item.

Depreciation = (Cost - Scrap) * (Units produced in the year / Total estimated life units). It links expense to actual usage.

The RBI mandates that the LFAR should be submitted by 30th June every year for the year ending 31st March.

It is a capital reserve and is grouped under "Reserves and Surplus" in the Equity and Liabilities part.

RBI mandates 0.25% provision for standard assets in Agriculture and SME sectors. For commercial real estate, it is higher (1% or 0.75%). For general advances, it is 0.40%.

DuPont Analysis breaks ROE down into: 1. Net Profit Margin (Profitability), 2. Asset Turnover (Efficiency), and 3. Financial Leverage (Equity Multiplier). Current Ratio is a liquidity ratio, not part of the DuPont identity.

LFAR is a comprehensive report that goes beyond financial numbers to comment on the efficacy of internal controls, asset quality, housekeeping, and MIS at the branch level.

Unrealized forex gains/losses do not involve actual cash movement. However, to match the opening and closing cash equivalents (held in foreign currency), the effect of exchange rate changes is reported separately at the bottom of the statement.

Section 55 of the Companies Act states that redemption must happen either out of distributable profits (creating CRR) or out of the proceeds of a fresh issue of shares made for the purpose of redemption.

The CIA triad of security stands for Confidentiality, Integrity, and Availability. Confidentiality specifically deals with restricting access to authorized personnel only.

Profit/Loss = Net Sale Proceeds - Book Value on date of sale. Comparing with Original Cost is incorrect because depreciation has reduced the asset's value over time.

Since the nominal accounts of the previous year are closed, any adjustment affecting profit must be routed through the Profit & Loss Adjustment Account (or shown as Prior Period Items) to avoid distorting current year's operating profit.

Banks collect discount upfront. If a bill matures next year, the portion of discount relating to next year is "Income Received in Advance," which is a liability as per the Accrual Concept.

Interest Coverage Ratio = EBIT / Interest. A ratio of 8 means the company earns 8 times the amount needed to pay interest, showing high solvency and safety.

Section 52 of Companies Act, 2013 specifically lists "writing off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures" as a permitted use of Securities Premium.

Interest is the cost of servicing debt (Capital). Since Loans are Financing activities, the interest paid on them is also a Financing outflow.

Concurrent means "happening at the same time". It is an internal control process for real-time checking. Statutory audit is a legal requirement conducted after the financial year ends to certify financial statements.

Data mining involves analyzing large datasets to discover patterns and relationships. Banks use it for credit scoring, fraud detection, and targeted marketing (CRM).

DSCR < 1 is a danger signal. It means Operating Cash Flow is insufficient to cover Interest + Principal repayments. The firm may default unless it borrows more or sells assets.

Sum of digits = 1+2+3+4+5 = 15. For Year 1, remaining life is 5. Fraction = 5/15 = 1/3. Depreciation = 15,000 * 1/3 = ?5,000.

Deposits are actual liabilities (Schedule 3). Guarantees become liabilities ONLY if the customer defaults. Hence, they are Contingent Liabilities (Schedule 12).

Section 68 restricts buyback to 25% of the aggregate of paid-up capital and free reserves.

RPO defines how much data you can afford to lose. If RPO is 15 mins, backups must be frequent enough so that in a crash, you lose no more than 15 mins of data. (RTO is Recovery Time Objective - how fast you are back up).

This ratio measures how many times a company sells and replaces its stock of goods during a period. Ideally, COGS is used; if unavailable, Sales can be used.

Regardless of the period for which the asset has remained doubtful (D1, D2, or D3), the unsecured portion (not covered by realizable value of security) must be fully provided for (100%).

Buying assets is an outflow (Application) of cash and falls under Investing Activities.

Any issue of shares at a discount (except sweat equity) is void, and the company/officers are liable for penalties.

Since data is central, the customer belongs to the bank, not just the branch. They can access services from any location.

Operating Profit (EBIT) measures profit from core business operations, excluding non-operating items like interest and tax. The ratio expresses this as a percentage of sales.

RBI tightened the norms (previously 15%, now 10%) to ensure banks report bad loans accurately. If RBI inspection finds NPAs are under-reported by >10%, disclosure is mandatory.

Undrawn limits are commitments. They do not appear on the BS as assets or liabilities until the customer actually draws the money. However, they represent a potential liquidity demand.

As per Table F of Companies Act 2013, interest on Calls in Advance is max 12% p.a., while interest on Calls in Arrears is max 10% p.a.

SOA allows different applications (like Loans, Deposits, Payments) to communicate with each other as distinct services, making the system modular and flexible.

CA/CL = 2/1. So CA = 2CL. Working Capital = CA - CL = 2CL - CL = CL. Given Working Capital = 60,000, so CL = 60,000. CA = 2 * CL = 1,20,000.

As per the Banking Regulation Act format, Silver is not considered an approved security for investment purposes in the same way as Gold. It is classified under Schedule 11 (Other Assets).