NET, IAS, State-SET (KSET, WBSET, MPSET, etc.), GATE, CUET, Olympiads etc. Commerce Study Material: Amalgamation of Firms
Get top class preparation for competitive exams right from your home: get questions, notes, tests, video lectures and more- for all subjects of your exam.
Amalgamation of Firms
When two or more firms merge into one firm and makes a new firm, then this is called amalgamation of firms. For accounting point of view this definition is so important because if one firm purchases other firm, then this is not called amalgamation but if both firms decide to join or integrate then this is called amalgamation.
For Example, Suppose A and B firm decide to close their business and start the business with the name of AB firm after joining with each other then this is called amalgamation of A and B firm.
Steps for closing the accounts of old firm at the time of amalgamation of firms
When two firm amalgamate with each other, at this time we treat following accounting in the books of old firms so that all doubt solves.
1st: Revaluation of Assets and Liabilities
All entries same as at the time of admission and retirement
2nd: Transferring reserve to old partners capital account into their old ratio
3rd: Treatment of Goodwill
We evaluate the goodwill according to the condition of agreement and then goodwill will open with agreed value int the books
4th: Treatment of Assets and liabilities not taken by new firm
If assets and liabilities are not taken by new firm, then these item will transfer to the capital accounts of partners of old firm and we close these accounts
- Treatment of assets and liabilities taken by new firm In the books of old partners a For closing the account of assets New Firms Account Debit Assets Account Credit at revalued value b For closing the accounts of liabilities Liabilities Account Debit New Firm Account Credit 6th Closing the accounts of partners capital Partner՚s capital account Debit New Firms Account Credit
- In the books of new firm Assets Account Debit Liabilities Account Credit Partner՚s capital Account Credit
Accounting of Jewellery Business
There is boom in jewellery business. Due to increasing the value of gold jewellery business is giving high rate of return to business man. Because of my background is related to this business so, I am writing and telling you the technique of how to make and maintain the accounts of jewellery business. It is very simple to record of jewellery business but it is very harmful to make any mistake in these type of accounts.
Because 10 gram՚s quantity՚s value is approximately ₹ 10000 so be careful while doing the accounts of jewellery business.
When we purchase gold, it will our raw material. So it will deal as stock, it should valued on cost. Then you should regular passing the voucher entry of purchasing of gold. In cash book if you purchase on cash, if you purchase on credit, then your duty is also to maintain the accounts of your creditors also. Because this is our current liabilities, we should know how much amount, we will have to pay to our creditors. In manual accounting, we just make journal or day book, ledger after this we should find out our profit or loss from manufacturing, trading and profit and loss account after this we also must make balance sheet.
Steps for Maintaining Branch Accounting
1 In that type of branches, it is necessary to make bank account in the name of head office so that amount got from cash sale can be deposited in head office bank account.
2 All miscellaneous expenses is given by head office accountant to branch accountant on impress or advance system of cash book.
3 All salaries, rent, advertising and other expenses must be paid by head office.
4 Head office can send goods to branch on cost price or invoice price.
5 It is necessary for branch to make the list of debtors if branch has all to sell the goods on credit. It is duty of branch accountant to send branch debtors list to head office weekly or monthly.
6 These branches can make memorandums in different registers.
On these memorandums and registers head office can make branch account
For making branch account in head office, we open each branch account in head office with given branch name.
Accounting Treatment of Web-Publishing Profession
If you have your own website, web blog, or any blog and you are earning more than tax limit in India. I am providing you the full tutorial of accounting treatment of web publishing profession. For this I am making income and expenditure account In vertical form which is accepted by Income tax department.
Income and Expenditure Account of Swami Vivekanand Online Publishing Institute For Example As on 31st March 2009
Incomes
- Earning from web publishing there is no need to mention AdSense publishing or any other source XXXXX
- E-buy earning XXXXX
- Donation by youre online visitors XXXXX
- Earning from direct space give for advertisement XXXXX
- Link sharing Income XXXXX
- Earning from direct Sale on your website XXXXX
- Earning from selling the brand of blog or website XXXXX
- Earning from e-news letters XXXXX
- Earning from other printing newspaper or journal for publishing in their printing press XXXXX
- Earning from selling of Image of your site XXXXX
- Other earnings XXXXX ________ Total Earning from web publishing profession XXXXX
Less Expenses and Losses of Web Publishing
- Internet-broadband rent/Charges XXXXX
- Salaries of employees XXXXX
- Electricity bill XXXXX
- Depreciation of Computer/Laptop XXXXX
- Depreciation of your own building or rent of building XXXXX
- Repair of computer XXXXX
- Website domain hire charges XXXXX
- Web designing expenses XXXXX
- Image purchasing cost XXXXX
- Link sharing expenses XXXXX
- Advertisement of website XXXXX
- Bank Charges for transfer of your earning in your bank account XXXXX
- Travelling Expenses for getting latest news for your website XXXXX
- Hire expenses for getting news or article from others XXXXX
- Hire expenses of brand logo XXXX
- Cost of goods sold online XXXXX
- Stationery expenses XXXXX
- Office Expenses XXXXX
- Advertising Expenses XXXXX
- Other related expenses XXXXX
Net Income from web publishing XXXXX
taxable under the head of business and profession income
You must keep different proof, like photo copy of earning cheques, bill of Internet rent, or electricity and bank
statement when you have to return of income tax for web publishing work