Monday, January 30, 2012

Competency Frameworks - Observations by Hema Ravichandar


A note in published in Mint of 30.1.2012

The definition for competency by the Society of Actuaries was given in the  note

"...the synthesis of the skills, knowledge, behaviours, attitudes and attributes that contribute to outstanding job performance."

Four aspects highlighted with reference to the competency framework of the organization.

Is the framework the set of competencies defined for each job and thus for the aggregate organization relevant for the business purpose?

Is it comprehensive? Does it cover the entire gamut of activities to be performed by the organization?

Is it integrated? Is the competency framework used by all the HR subactivities?

Is it implemented appropriately on the IT system of the company?

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Saturday, January 28, 2012

Manual of Cost Accounting in the Ordnance And Ordnance Equipment Factories


Objects of Cost Accounting in the Ordnance And Ordnance Equipment Factories

1. The objects of the Cost Accounting system are¬-
(i) to exercise control over expenditure incurred in Factory for  
           production and
(ii) to ascertain the cost of manufacture of each article produced in
           the Factory.

Read the full document in

pcafys.nic.in/resource/Blue-Book.doc
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Journalising a Business Transaction

Accounting System of a Business Firm

Accounting system of a business is maintained to ascertain the profit made by the company at periodic intervals, and to know the details of assets and liabilities. Debtors who have to pay money to the business firms need details of the transactions and payments made by them for making further payments. Similarly creditors, who gave money, goods or services to  business firms also need details to confirm payments made to them. The accounts of debtors are a part of asset accounts and accounts of creditors are a part of liability accounts of a business firm.
Accounts for each of the items of significance like each and every debtor and creditor, cash, bank balances etc. are kept in register called ledger. Every business transaction is first entered into a register called journal in serial order on a day-to-day basis and from journal, entries are posted in the individual accounts maintained in the ledger. From the accounts and account balances in the ledger various accounting reports are prepared by the accountants. Profit and loss account and balance sheet are important accounting statements prepared using the ledger.

 

Journal

Every business transaction that changes a liability account or an asset account is entered into an accounting book called journal.
The entry is based on a document which is documentary proof that the transaction has occurred. In accounting terminology it is called a voucher. But in popular terms, a purchase invoice, a sales invoice, a cash bill, payment made to employees on their expense vouchers and a loan instalment payment receipt from bank ect. are documentary proof for a business transaction that has implication for asset and liability accounts and therefore has accounting implications.
The entries in accounts follow accounting terminology of debit and credit.
 
Accounting in a Business Firm
 
•Account books are kept for a business firm.
•The firm owns assets.
•For example buildings, furniture, machinery etc.
•The firm will have liabilities.
•Liabilities are classified into two categories
 
•Liabilities to the owner.
•Liabilities to others
 
Accounting basis
•Assets = Liabilities at any instant for a business firm
 
Account
•Account is kept for every rupee of revenue, expenditure, asset acquired and liability incurred.
•For this purpose certain account heads are identified which capture the financial transactions made by the firm.

 
Assets – Account Heads
•Land
•Building
•Plant & Machinery
•Furniture
•Office Equipment
•Cash
•Stock of Materials
 
Liabilities – Account Heads
•Capital
•Bank Loans
•Other Loans
•Deposits
•Sundry Creditors
 
Revenues – Account Heads
•Sales
•Interest on investments
•Sale of scrap
•Sale of capital equipment
 
Expenses – Account Heads
•Rent
•Wages
•Electricity
•Telephone expenses
•Traveling expenses
•Interest
•Depreciation
 
Accounting language
•Debiting an account.
•Crediting an account
 
Classification of accounts
•Real accounts – building, material, office equipment
•Personal accounts – suppliers, customers, employees, government, banks
•Nominal accounts – sales, interest, wages
Meaning of debit & credit
Different for different for categories of accounts.
 •   Meaning of debit & credit for real accounts: 
•Debiting an account means there is an increase under the asset head.
•The firm has acquired more of an asset category.
 
•Crediting an account means there is a decrease under the asset head.
•The firm has disposed off some portion of the asset in that category.
 
 
Popular rule for real accounts 
•Debit what comes in
•         Credit what goes out
  
Debit-Credit Meaning – Personal Accounts
•Debiting a personal account means that person has received a benefit from the firm.
•He has to pay the firm in future.
• 
•Crediting a personal account means that the person has given some benefit to the firm.
•The firm has to pay him in the future.

Popular rule for personal accounts
•Debit the receiver
•        Credit the giver
 
Debit-credit meaning for nominal accounts

•Crediting a nominal account means that revenue is earned by the firm under that account head.
•Debiting a nominal account means that an expenditure is incurred by the firm under that account head.
•Normally revenue accounts receive credit.
•Expenditure accounts receive debit
 
Popular rule for nominal accounts
•Debit expenses and losses
•        Credit incomes and profits

Some Important Practices  in Financial Accounting
Purchases of raw materials and components and finished goods for resale are recorded in purchases account. All purchases of goods, cash or credit are debited to the purchases account. In the case of cash purchases cash account is credited and purchases account is debited. In the case of credit purchases, supplier's account is credited and purchases account is debited.
All sales, cash as well as credit sales are credited to the sales account.

In the case of cash sales, cash account is debited and sales account is credited. In the case of credit sale, the customer account is debited and sales account is credited.

Popular Debit and Credit Rules at a Glance

Popular rule for real accounts
•Debit what comes in
•         Credit what goes out
Popular rule for personal accounts
•Debit the receiver
•        Credit the giver 
Popular rule for nominal accounts
•Debit expenses and losses
•        Credit incomes and profits

For Further Study
Exercise

Journal Entry – Exercise Problem  (Simple problem)

http://mbaofindia.blogspot.com/2012/01/journal-entry-exercise-problem-2.html

Articles explaining the basic accounting process in a simple way.









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Journal Entry – Exercise Problem

Problem

Mr Ashok commenced business on 1st January, 1992 with a capital of Rs.1,00,000 in cash. On the same date he opened the bank account and deposited Rs.20,000. He also purchased furniture Rs. 5000, building Rs.50,000 and machinery Rs.20,000. During the month of January 1992 the following transactions took place:
                                                                          Rs.
Jan       1 Paid rent by cheque                           1000
               Bought goods for cash                       2000
            2 Sold good to Rahul & Co.(Credit)   3800
            4 Paid for printing and Stationery            300
            7 Bought goods from Bhim  (Cr.)     17000
            11 Sold goods to Madan on credit        9000
            15 Sold goods for cash             9000
            20 Paid wages                                        500
            21 Rahul & co. paid                             3800
            23 Paid cheque to Ram Singh on a/c  8000
            24 Cash sales                                       7000
            25 Paid into bank                                 6000
            28 Paid for Advertisement by cheque 1000
            29 Paid for Building repairs                     700
            30 Madan paid                                     4500
            31 Withdrew cash personal use   500
Make journal entires for the transactions.
     
Date
Particulars
L.F.
Debit
Rs.
Credit
Rs.
 
1992 Jan 1
Cash A/c                        Dr.
    To Capital A/c
(Ashok brought in capital of Rs.1,00,000 in cash)
  
1,00,000
  
1,00,000
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 


Explanatory Article
Journalising a Business Transaction

Originally posted in
http://knol.google.com/k/narayana-rao/journal-entry-exercise-problem/   2utb2lsm2k7a/   452
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Journal Entry – Exercise Problem 2

Mr Ashok commenced business on 1st January, 1992 with a capital of Rs.1,00,000 in cash. On the same date he opened the bank account and deposited Rs.20,000. During the month of January 1992 the following transactions took place:
                                                                          Rs.
Jan       1 Bought goods for cash                      70,000
            2 Sold good to Rahul & Co.(Credit)   38,000
         
           15 Sold goods for cash                         9,000
           
            21 Rahul & co. paid by cheque          35,000
          
            31 Paid rent by cash                            2,000
                
                Paid wages by cash                          3,000
                Withdrew cash personal use            5,000
Make journal entries for the transactions.
Date
Particulars
L.F.
Debit
Rs.
Credit
Rs.
 
1992 Jan 1
Cash A/c                        Dr.
    To Capital A/c
(Ashok brought in capital of Rs.1,00,000 in cash)
 
1,00,000
 
1,00,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

For Further Study
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