Divestiture or commonly called as divestment is the process of selling off a part or division of the company to another company or creating a separate company. Divestiture can take the form of the spin-off, split-off, split-up, sell-off, equity carve-out, etc. Of these forms, the two commonly juxtaposed forms of divestiture are spin-off and split-off. Spin-off refers to the business division, which becomes an independent undertaking, after separation from the parent company. On the contrary, … [Read more...]

The stock market has two segments, i.e. primary market and secondary market. In the secondary market, buying and selling of originally issued securities take place. The participants of secondary market are classified as traders, investors and speculators.There is a thin line of demarcation between trading and investing which lies in the intention of the participant while spending money, i.e. an investor invest money with a certain view in mind regarding the return, or the output generated. On … [Read more...]

In accounting, the financial transactions are recorded, processed and presented to generate financial statements, that is useful to the readers, in making decisions. Traditionally, accounting is done manually, by a trained accountant, with the use of registers, account books, vouchers etc. But with the emerging technology, nowadays, computerized accounting is in vogue, due to its accuracy, convenience and speed. Both manual and computerized system is based on the same principles, conventions … [Read more...]

Accounting is a business language, which is used to communicate financial information to the company's stakeholders, regarding the performance, profitability and position of the enterprise and help them in rational decision making. The financial statement is based on various concepts and conventions. Accounting concepts are the fundamental accounting assumptions that act as a foundation for recording business transactions and preparation of final accounts. On the other extreme, accounting … [Read more...]

When there is a profit from the sale or transfer of a capital asset such as building, car, jewellery, shares, etc. it is known as capital gain, which is taxable under the Income Tax Act, as it is regarded as the income of the previous year in which the transfer occurs. It can be short-term capital gain or long-term capital gain. The short-term capital gain refers to the profit earned by an individual on account of the transfer of the short-term capital asset. On the other extreme, when a … [Read more...]

To invite general public, for subscribing the shares of a company, it makes a public issue, by way of an Initial Public Offering (IPO). However, when a company seeks to raise funds, without making a public issue, then it has the option of the private placement, wherein, the securities (shares and convertible debentures) are issued to private investors, not exceeding 200 members in a financial year. There are two kinds of the private placement, namely, preferential allotment and qualified … [Read more...]

The company's capital is divided into small shares of definite price; wherein each share is regarded as a unit of ownership, that is offered to the general public for sale, to raise funds from the market. It can be ordinary shares or preferred ones. The Companies Act provides that the subscribed capital of the companies can be increased, by issuing further shares to the existing shareholders at discounted prices, in the form of right shares. Contrary to this, when a company possess the huge … [Read more...]

Dividend connotes that portion of company's profit, which is not retained in the business but distributed by the company among its shareholders, as a return on their investments, based on the shares held by them. The dividend announced by the company at the end of the financial year, recommended by the board of directors, at the company's general meeting is known as a final dividend. Coming to the interim dividend which is declared by the company's board of directors between two general … [Read more...]

In India, the Securities and Exchange Board of India (SEBI) instituted Depository Services, called as Dematerialization of the listed securities with the aim of accelerating the share transfer function from sale, purchase and transmission. Dematerialization implies the activity of transforming the physical shares into electronic form. The shares are transferred to the investor's account, through the depository participant. After the  dematerialization of securities, the investor has the … [Read more...]

Accounting refers to an art of recording and compiling the financial transactions and events in a significant manner and interpreting the results. The term transaction is different from the event, in the sense that the former involves the exchange of values, but the latter may or may not involve the exchange of values. The term transaction can be understood as the business deal of buying and selling something for adequate consideration, carried out between two or more persons or entities. On … [Read more...]