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...]

The most common requirement of the majority of employees is security and maintenance for the later life. This can only be possible when the person gets financial assistance, for his/her survival. Gratuity is one of the old-age retiral benefits, in which an employee gets one-shot payment, from the employer, for the services rendered by him/her to the enterprise. Likewise, there is another retirement plan called as pension, which guarantees continuous payment of fixed sum to the person or his … [Read more...]

The term financial management is a part of accounting that deals with the management of finances of a business organisation, so as to meet the financial objectives. It is not exactly same as treasury management, which is all about the management of cash and funds of the firm. The main difference between treasury management and financial management lies in their level of activity. The financial management focuses on the long-term and strategic investments, but when it comes to treasury … [Read more...]

To determine the prices of products produced by the company, it is worthwhile for one to know the difference between cost sheet and production account. Cost sheet is a statement in which the details of expenses incurred on a particular product or job, during a specific period are presented. It is not exactly same as production account, which is nothing but an extended version of the statement of cost. When the cost sheet is presented in the form of account, it is known as Production account, … [Read more...]

Departmentalization can be understood as a process of creating departments such as machining, personnel, fabrication, maintenance, stores, accounts, etc., in an organization, for the purpose of allocation and apportionment of overheads in a convenient way. The term allocation of cost is concerned with the complete cost items, whereas the apportionment of the cost is all about the proportion of cost items. Based on the relation of the cost item with the cost center or unit, to which it is … [Read more...]