#8 TYBAF / TYBCOM | Investment Accounting Concept | Financial Accounts |sem 6 - sem 5| Siraj shaikh|
Siraj shaikh degree study・14 minutes read
The lecture covers the process of handling investments in Equity Shares Limited Dividend, including purchases, bonuses, rights issues, dividends, and final balancing in the books of Sundar, with specific calculations and adjustments. The total cost amounts to 264,444, and the process involves creating a single account for shares, simplifying the accounting process and ensuring clarity in entries and balances.
Insights
- The lecture emphasizes the meticulous process of investment accounting, covering various transactions like purchases, bonus issues, rights issues, sales, and balancing. Specific instructions are provided for recording these transactions in the books of Sundar, ensuring accuracy and clarity in financial records.
- Detailed calculations and adjustments are crucial in accurately reflecting the financial status of Equity Shares Limited Dividend. From recording purchases and sales to dealing with bonus and rights issues, each step involves precise calculations to determine costs, profits, and losses. The lecture underscores the importance of thorough record-keeping and balancing to maintain financial integrity in investments.
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Recent questions
How are bonus shares calculated?
Bonus shares are calculated based on a specific ratio determined by the company. The calculation involves multiplying the number of existing shares held by the shareholder by the bonus ratio. This results in the additional shares that the shareholder will receive as a bonus.
What is the significance of record dates in investments?
Record dates in investments are crucial as they determine which shareholders are eligible to receive dividends, bonus shares, or rights issues. Shareholders who are recorded on the specified date are entitled to these benefits, while those who buy shares after the record date will not receive them.
How are profits and losses calculated in share sales?
Profits and losses in share sales are calculated by subtracting the total cost of acquiring the shares from the total sales value. If the sales value is higher than the cost, it results in a profit, while a lower sales value leads to a loss. These calculations help determine the financial outcome of selling shares.
What is the purpose of adjusting dividends against costs?
Adjusting dividends against costs ensures that the financial records accurately reflect the impact of dividends received on the overall investment. By adjusting dividends against costs, the investor can track the actual profits or losses incurred from holding the shares, taking into account the dividends received.
How are final balances calculated in investment accounting?
Final balances in investment accounting are calculated by reconciling all transactions, including purchases, sales, dividends, and adjustments, to arrive at the total value of the investment portfolio. This calculation involves ensuring that all entries are accurately recorded and that the final balance reflects the true financial position of the investment.
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