04023682572 Legal and regulatory

1. Cash discount: A cash discount is a deduction allowed by the seller of goods or

by the provider of services in order to motivate the customer to pay within a specified
time. The seller or provider often refers to the cash discountas a sales discount.
The buyer often refers to the same discount as a purchase discount. The cash
discount is also known as an early payment discount.
Bond: In finance, a bond is an instrument of indebtedness of the bond issuer to the holders.
It is a debt security, under which the issuer owes the holders a debt and, depending on the
terms of the bond, is obliged to pay them interest (the coupon) and/or to repay the principal at
a later date, termed the maturity date. The indebted entity (issuer) issues a bond that
contractually states the interest rate (coupon) that will be paid and the time at which the
loaned funds (bond principal) must be returned (maturity date). The issuance price of a bond
is typically set at par, usually $100 or $1,000 face value per individual bond. The
actual market price of a bond depends on a number of factors including the credit quality of
the issuer, the length of time until expiration, and the coupon rate compared to the general
interest rate environment at the time.
Characteristics of Bonds

Most bonds share some common basic characteristics including:

Face value is the money amount the bond will be worth at its maturity, and is also the
reference amount the bond issuer uses when calculating interest payments.

Coupon rate is the rate of interest the bond issuer will pay on the face value of the
bond, expressed as a percentage.

Coupon dates are the dates on which the bond issuer will make interest payments.
Typical intervals are annual or semi-annual coupon paymets.

Maturity date is the date on which the bond will mature and the bond issuer will pay
the bond holder the face value of the bond.

Issue price is the price at which the bond issuer originally sells the bonds.

Two features of a bond credit quality and duration are the principal determinants of a
bond's interest rate. If the issuer has a poor credit rating, the risk of default is greater and
these bonds will tend to trade a discount. Credit ratings are calculated and issued by credit
rating agencies. Bond maturities can range from a day or less to more than 30 years. The
longer the bond maturity, or duration, the greater the chances of adverse effects. Longerdated bonds also tend to have lower liquidity. Because of these attributes, bonds with a longer
time to maturity typically command a higher interest rate.
When considering the riskiness of bond portfolios, investors typically consider
the duration (price sensitivity to changes in interest rates) and convexity (curvature of
duration).

Bond Issuers
There are three main categories of bonds.

Corporate bonds are issued by companies.

Municipal bonds are issued by states and municipalities. Municipal bonds can offer
tax-free coupon income for residents of those municipalities.

U.S. Treasury bonds (more than 10 years to maturity), notes (1-10 years maturity)
and bills (less than one year to maturity) are collectively referred to as simply
"Treasuries."

Varieties of Bonds

Zero-coupon bonds do not pay out regular coupon payments, and instead are issued
at a discount and their market price eventually converges to face value upon maturity.
The discount a zero-coupon bond sells for will be equivalent to the yield of a
similar coupon bond.

Convertible bonds are debt instruments with an embedded call option that allows
bondholders to convert their debt into stock (equity) at some point if the share price
rises to a sufficiently high level to make such a conversion attractive.

Some corporate bonds are callable, meaning that the company can call back the
bonds from debt holders if interest rates drop sufficiently. These bonds typically
trade at a premium to non-callable debt due to the risk of being called away and also
due to their relative scarcity in today's bond market. Other bonds are putable,
meaning that creditors can put the bond back to the issuer if interest rates rise
sufficiently.

The majority of corporate bonds in today's market are so-called bullet bonds, with
no embedded options whose entire face value is paid at once on the maturity date.

3) perpetual bonds: With perpetual bonds, the agreed-upon period over which interest will be
paid is forever", as perpetual bonds live up to their name and pay interest in perpetuity. In this
respect, perpetual bonds function much like dividend-paying stocks or certain preferred
securities.

4) residual value: In accounting, residual value is another name for salvage value, the
remaining value of an asset after it has been fully depreciated. Theresidual value derives its
calculation from a base price, calculated after depreciation.
Debit balance as per cashbook is a credit balance as per passbook. As stated earlier
overdraft is a kind of loan taken by the customer from the bank. So overdraft will be a liability
for the customer and an asset for the bank. So overdraft in cash book will be a credit
balance. Similarly overdraft is an asset for the bank and will show a debit balance.
What is 'Consignment'
Consignment is an arrangement whereby goods are left in the possession of another party to
sell. Typically, the consignor receives a percentage of the sale (sometimes a very large
percentage). Consignment deals are made on a variety of products - from artwork, to clothing,
to books. In recent years, consignment shops have become rather trendy, especially those
offering specialty products, infant wear and high-end fashion items.

A special journal is any accounting journal in the general journal that is used to record and
post transactions of similar types. In other words, it's a place where similar transactions can
be recorded and organized, so bookkeepers and accountants can keep track of different
business activities.

Sales Book
Sales book records all credit sales made by a business. It is one of the secondary
book of accounts and unlike cash sales which are recorded in cash book, sales
book is only to record credit sales. The amount entered in the sales book is on
behalf of invoices supplied to purchasers, however a copy remains with the firm.
Sales book is also called Sales Journal or Sales Day Book.
How to do Ledger Posting of Sales Book?
After all transactions are posted in the sales book the business needs to post them
to the related ledger accounts. Following are the steps that need to be followed to
post the amounts from sales book to the ledger,
1. Each entry is posted to the debit side of appropriate individual account in
the debtors ledger at the end of the day, this keeps the accounts up to date.
2. The column for Total is then summed at the end of each month & posted
to ledger.

Lets say total sundry debtors at the end of a month are 50,000 where credit sales
made from A is 30,000 & B is 20,000 during the period.
Here are the 4 ledger entries that will be recorded,

Sales Account
Date

Particulars

Currency

Date

Particulars

Currency

mm/dd

By Sundry Debtors per Sales Book

50,000

Sundry Debtors Account

Date

Particular Currenc Dat Particular Currenc

s
y
e
s
y

mm/d To Sales
d
A/C

50,000

As Account
Date

Particulars

Currency

mm/dd

To Sales A/C

30,000

Date

Particulars

Currency

Bs Account
Date

Particulars

Currency

mm/dd

To Sales A/C

20,000

Date

Particulars

Currency

Sundry can mean various, miscellaneous, or diverse. Sundry debtors might refer to a
company's customers who rarely make purchases on credit and the amounts they purchase
are not significant. When a business firm supplies the goods or provides the service to its
customer on credit basis then those customers are called as sundry debtors. These
customers are supposed to pay the outstanding amount on a particular date.
debit balances of these customers are shown as sundry debtors in asset side of balance
sheet since they owe certain amounts to the business unit. They are also referred to as
accounts receivable or trade debtors.

What is Accounts Receivables? Accounts receivables mean the dues from the
customers. Accounts receivable is also known as Sundry Debtor Account of Customers
Account. Almost all business firms sell their goods on credit basis.
Subsidiary book is the sub division of Journal. These are known as books of prime entry
or books of original entry as all the transactions are recorded in their original form
A zero-coupon bond (also discount bond or deep discount bond) is a bond bought at a
price lower than its face value, with the face value repaid at the time of maturity. It doesn't pay
interest (a coupon) .
Section 45ZA in BANKING REGULATION ACT,1949
307

[45ZA. Nomination for payment of depositors money.

(1) Where a deposit is held by a banking company to the credit of one or more persons, the
depositor or, as the case may be, all the depositors together, may nominate, in the prescribed
manner, one person to whom in the event of the death of the sole depositor or the death of all
the depositors, the amount of deposit may be returned by the banking company.
(2) Notwithstanding anything contained in any other law for the time being in force or in any
disposition, whether testamentary or otherwise, in respect of such deposit, where a
nomination made in the prescribed manner purports to confer on any person the right to
receive the amount of deposit from the banking company, the nominee shall, on the death of
the sole depositor or, as the case may be, on the death of all the depositors, become entitled to
all the rights of the sole depositor or, as the case may be, of the depositors, in relation to such
deposit to the exclusion of all other persons, unless the nomination is varied or cancelled in
the prescribed manner.
(3) Where the nominee is a minor, it shall be lawful for the depositor making the nomination
to appoint in the prescribed manner any person to receive the amount of deposit in the event
of his death during the minority of the nominee.
(4) Payment by a banking company in accordance with the provisions of this section shall
constitute a full discharge to the banking company of its liability in respect of the deposit:
Provided that nothing contained in this sub-section shall affect the right or claim which any
person may have against the person to whom any payment is made under this section.]

DIFFERENT TYPE OF CHEQUES ISSUED IN INDIA

The biggest benefit of a cheque is that it allows high value transactions which
may become a bit cumbersome if hard cash was used instead.

The following details are necessary in a cheque

A cheque must be drawn upon a specified bank (Drawee).

A cheque must be signed by the person (Drawer) issuing the cheque.

A cheque must have the name of the recepient (Payee) of the cheque.

A cheque must mention the amount of money in words and figures.

A cheque must be dated.

Classification of Cheques:
A cheque is one of the safest modes of making payment as there is an entry
against the cheque honoured by the bank that can be traced back if needed.
Based on the location, cheques are classified as:
1.

Local cheques: If issued by a bank in the same city as the payee.

2.

Outstation cheques: If a given citys local cheque is presented

elsewhere it becomes an outstation cheque and may attract some
nominal but fixed banking charges.

3.

At par cheque: is a cheque which is accepted at par at all its

branches across the country. Unlike local cheque it can be present
across the country without attracting additional banking charges.

Based on its value, cheques are classified as:

1.

Normal Value cheques: Cheques below the amount of Rs. 1 lakh

are called normal value cheques.

2.

High Value cheques: Cheque bearing an amount higher than Rs. 1

lakh is a high value cheque.

3.

Gift cheques: Cheques used for gifting money to loved ones are
gift cheques. The value may vary from Rs. 100 to Rs. 10,000.

Cheques are mainly of four types:-

1) Open cheque: A cheque is called open when it is possible to get cash

over the counter at the bank. The holder of an open cheque can receive
payment over the counter at the bank, deposit the cheque in his own
account or pass it to someone else by signing on the back of a cheque.
2) Bearer cheque: A cheque which is payable to any person who presents it
for payment at the bank counter is called Bearer cheque. A bearer
cheque can be transferred by mere delivery and requires no
endorsement.
3) Order cheque: It is the one which is payable to a particular person. In
such a cheque the word bearer may be cut out or cancelled and the
word order may be written. The payee can transfer an order cheque to
someone else by signing his or her name on the back of it.
4) Crossed cheque: When a cheque is crossed, the holder cannot encash it
at the counter of the bank. The payment of such cheque is only credited
to the bank account of the payee. Crossed cheque is done by drawing
two parallel lines across top left corner of the cheque, with or without
writing Account payee in the space between the lines.
Banks also offer various cheques which guarantee payments.
A self cheque: is written by the account holder as pay self to receive money in
physical form from the branch where he holds his account. This can be alternated
by using an ATM card.
Post-dated cheque (PDC):
A PDC is a form of a crossed or account payee bearer cheque but post-dated to
meet the said financial payment at a future date. The cheque is valid from the
date of issue to three months.

A Bankers cheque: The problem with normal cheques is that they are not as secure as
cash. A cheque received in the post could be potentially worthless if there are insufficient
funds for the cheque to be honoured. In this instance, the clearance house or bank will return
the cheque to the creditor, who will receive no money. Therefore, any cheque carries the risk
that it might be returned unpaid (or "bounced", in the vernacular).
To reduce this risk, a person can request for a type of cheque where the funds are, in effect,
drawn directly against the bank's own funds, rather than that of one of their accounts. This is
less risky for a creditor, because the cheque will be honoured unless the cheque has been
forged or the issuing bank goes out of business before the draft is cashed.
In order that the issuing bank can be sure that its customer has sufficient funds to honour the
draft, the bank will withdraw the value of the draft (plus any charges) from the customer
account immediately.
A Travellers cheque: It is a printed open type cheque issued as an
alternate for carrying around cash while travelling abroad or on a
vacation to a foreign country as they come with a replacement
guarantee and lifelong validity. Travelers cheques are widely accepted
by merchants, restaurants and other recreational organizations. The
unused cheques from the recent trip can be used for your next trip.

Accounting system is followed majorly in two ways

1.Mercantile Accounting
2. Cash basis
In mercantile accounting system transactios are recorded accrual basis. Mercantile System of
Accounting is also Known as Accrual System of Accounting where all the transactions
are recorded irrespective of period of Amount recived or paid.In-other words it is a system of
Accounting where amount paid or payable is recorded. Presently every company is following
this. In this system, all the receipt and payments of a company are due for aparticular period.
The difference between the accrual and cash system is when a transaction is recognized: the
cash system recognizes (records) the transaction when the money is paid or received, while
the accrual system recognizes the transaction when it occurs, regardless of whether or not
the money is received.
For example, let's take a company that sold computers to another company, with payment to
be made in 30 days. Under the cash system, the revenue from this transaction is recorded in
30 days, while under the accrual system the revenue is recorded the day the computers were
transferred to the other company.

The cash method of accounting, also known as cash-basis accounting, cash receipts and
disbursements method of accountingor cash accounting (the EU VAT directive vocabulary
Article 226) records revenue when cash is received, and expenses when they are paid
in cash.

What is 'Cash Basis' : A major accounting method that recognizes revenues and expenses at
the time physical cash is actually received or paid out. This contrasts to the other major
accounting method, accrual accounting, which requires income to be recognized in a
company's books at the time the revenue is earned (but not necessarily received) and records
expenses when liabilities are incurred (but not necessarily paid for).

double-entry systems : Two notable characteristics of double-entry systems are that 1) each
transaction is recorded in two accounts, and 2) each account has two columns.
In a double-entry system, two entries are made for each transaction - one entry as a debit in
one account and the other entry as a credit in another account. The two entries keep
the accounting equation in balance so that:
Assets

Liabilities + Owners' Equity

To illustrate, consider a repair shop with a transaction involving repair service performed on
Jan 4 for a cash payment of $275.00. In a single-entry bookkeepingsystem, the transaction
would be recorded as follows:
Single Entry Example
Date

Description

Jan4

Performedrepairservice

Revenues

Expenses
275.00

In a double-entry system, the transaction would be recorded as follows:

Double Entry Example
Date

Accounts

Debit

Credit

Jan4

Cash

275.00

Revenue

275.00

A notation may be added to this journal entry to indicate that the revenue was from repair
services.
Note that two accounts (revenue and cash) are affected by the transaction. If the customer
did not pay cash but instead was extended credit, then "accounts receivable" would have
been used instead of "cash."
In this system, the double entries take the form of debits and credits, with debits in the left
column and credits in the right. For each debit there is an equal and opposite credit and the
sum of all debits therefore must equal the sum of all credits. This principle is useful for
identifying errors in the transaction recording process.
Double-entry accounting has the following advantages over single-entry:

Accurate calculation of profit and loss in complex organizations

Inclusion of assets and liabilities in the bookkeeping accounts.

Preparation of financial statements directly from the accounts

Easier detection of errors and fraud

Meaning of Rebate on Bills Discounted:

Rebate on Bills Discounted is also known as Discount Received in Advance, or, Unexpired
Discount or, Discount Received but not earned.

For example, a customer discounts a bill of Rs. 30,000 for 3 months at 12% on 1st
March 2000, it will be calculated as under:

Bank will earn discount @ 12% for 92 days i.e., = Rs. 30,000 x 12/100 x 92/365 = Rs. 907.

But this amount of discount is meant for March, April and May. As accounts are prepared on
31st March each year, discount received for 61 days (30 + 31) for April and May is not
actually earned. Thus, discount of 61 days i.e., Rs. 601 is called Rebate on Bill Discounted.
So, actual income is Rs. 306 (i.e., 907 Rs. 601).

what is Patents right account: Patent right is classified as intangible asset and appear on
balance sheet, that is why it is of nature of real account. The balances of real accounts are
not cancelled out at the end of an accounting period but are carried over to the next period.
Types of assets: Assets will be recorded on a companys balance sheet.
The two main types of assets are current assets and non-current assets. These
classifications are used to aggregate assets into different blocks on the balance
sheet, so that one can discern the relative liquidity of the assets of an
organization.
Current assets are expected to be consumed within one year, and commonly
include the following line items:

Cash and cash equivalents

Marketable securities

Prepaid expenses

Accounts receivable

Inventory
Non-current assets are also known as long-term assets, and are expected to
continue to be productive for a business for more than one year. The line items
usually included in this classification are:

Tangible fixed assets

Intangible fixed assets

Goodwill
The classifications used to define assets change when viewed from an investment
perspective. In this situation, there are growth assets and defensive assets.
These types are used to differentiate between the manner in which investment
income is generated from different types of assets.
Growth assets generate income for the holder from rents, appreciation in value,
or dividends. The values of these assets can rise in value to generate a return for
the holder, but there is a risk that their valuations can also decline. Examples of
growth assets are:

Equity securities

Rental property

Antiques
Defensive assets generate income for the holder primarily from interest. The
values of these assets tend to hold steady or can decline after the effects of
inflation are considered, and so tend to be a more conservative form of
investment. Examples of defensive assets are:

Debt securities

Savings accounts

Certificates of deposit
Assets may also be classified as tangible or intangible assets. Intangible assets
lack physical substance, while tangible assets have the reverse characteristic.
Most of an organization's assets are usually classified as tangible assets.
Examples of intangible assets are copyrights, patents, and trademarks. Examples
of tangible assets are vehicles, buildings, and inventory.

Share Classifications: The different types of company shares are usually defined
within the articles of association or by the lodgement of an appropriate statement,
resolution or agreement. Different share classifications will confer different rights
to the holder with regards to dividends, voting rights and winding up provisions.
Some example of well known share categories can be seen below:
Ordinary Shares : By far the most common type of share issued for limited
companies. An ordinary share will usually carry no additional rights other than
those prescribed in the Companies Act 2006. The vast majority of shares listed on
the London Stock Exchange are ordinary shares.
Preference Shares : Preference shares confer preferential rights often in respect of
dividends and/or repayment of capital on winding up. The dividends on preference
shares are usually cumulative which means that if they are unpaid the balance will
accumulate and must be paid before any dividend can be paid on the ordinary
shares.
Redeemable Shares: Redeemable shares serve to create a hybrid between equity
and debt security to enable shares to be issued on the basis that they may be
redeemed at an agreed date in the future. The redemption of shares would
normally involve a repayment of the initial capital subscribed for the shares, the
shares are then cancelled on repayment of the liability.
Convertible shares : Convertible shares are issued with the expressed agreement
that they will convert to a different class of share upon the occurrence of a certain
event. They can in affect be used to transfer rights between various shareholders.
Participating shares: These shares carry the right to a dividend if the company's
profits reach a certain level (or some other financial target is reached)
Deferred or founder's shares :These shares can only be subject to a distribution of
the companys profits or return of capital after a certain prescribed minimum has
been paid to every other class of shareholder. These shares are sometimes also
referred to as management shares.

1.
Common shares
With common shares, all the shareholders are equal with no privilege. According
to Article 52 of Company Law shares, classified as common shares, provide the
following rights to the owners:
1.
To be able to attend and cast votes in the General Meeting of Shareholders
(GMS);
2.
Receive payment of dividends and the remainder of assets after
liquidation;
3.
Excercise other rights as stated under Company Law.
2.

Preferred sharesor commonly called priority shares.

If there are any shares that have privileged rights besides the rights which arise
from Article 52 Company Law.

What is a 'Dividend'
A dividend is a distribution of a portion of a company's earnings, decided by the board of
directors, to a class of its shareholders. Dividends can be issued as cash payments, as
shares of stock, or other property.
Purchase Book : The book which is used for recording goods return to the seller is called
Purchase ReturnBook. The transactions relating to return of goods to the supplier which
were purchasedon credit are recorded in Purchase ReturnBook.
Special journals:

are designed as a simple way to record a single type of

frequently occurring transaction. The types of special journals depends on the

nature of the business, but a few types are frequently seen in businesses that rely
on manual accounting procedures:

Sales Journal

Cash Receipts Journal

Purchases Journal

Cash Payments Journal

Purchases Journal: The Purchases journal is used for recording credit purchases
such as merchandise for resale to customers, business supplies, equipment, and
other such purchases. (Cash purchases are not recorded here, they belong in
the cash payments journal.)
Purchases Returns and Allowances:When merchandise purchased is subsequently
returned, or the seller grants an adjustment to price, this entry is recorded in
the general journal.
(Remember, the purchases journal is used for recording credit purchases only.
Purchases returns are not credit purchases, and do not fit into any of the special
journals, so they go in the general journal.)

What is a bank reconciliation: A bank reconciliation is a process performed by a

company to ensure that the company's records (check register,general
ledger account, balance sheet, etc.) are correct and that the bank's
records are also correct.

What is a 'Balance Sheet'

A balance sheet is a financial statement that summarizes a company's assets, liabilities and
shareholders' equity at a specific point in time. These three balance sheet segments give
investors an idea as to what the company owns and owes, as well as the amount invested by
shareholders.
What is 'Call Money'
Call money is money loaned by a bank that must be repaid on demand. Unlike a term loan,
which has a set maturity and payment schedule, call money does not have to follow a fixed
schedule. Brokerages use call money as a short-term source of funding to cover margin
accounts or the purchase of securities. The funds can be obtained quickly.

What is an 'Employee Stock Purchase Plan - ESPP'

An employee stock purchase plan (ESPP) is a company-run program in which participating
employees can purchase company shares at a discounted price. Employees contribute to the
plan through payroll deductions, which build up between the offering date and the purchase
date.

What is a 'Forfeited Share'

A forfeited share is a share in a company that the owner loses (forfeits) by failing to meet the
purchase requirements. Requirements may include paying any allotment or call money owed,
or avoiding selling or transferring shares during a restricted period. When a share is forfeited,
the shareholder no longer owes any remaining balance, surrenders any potential capital
gain on the shares and the shares become the property of the issuing company. The issuing
company can re-issue forfeited shares at par, a premium or a discount as determined by
the board of directors.
BREAKING DOWN 'Forfeited Share'

In certain cases, companies allow executives and employees to receive a portion of their cash
compensation to purchase shares in the company at a discount. This is commonly referred to
as an employee stock purchase plan. Typically, there will be restrictions on the purchase (i.e.
stock cannot be sold or transferred within a set period of time after the initial purchase). If an
employee remains with the company and meets the qualifications, he or she becomes fully
vested in those shares on the stated date. If the employee leaves the company and/or violates
the terms of the initial purchase he or she will most likely forfeit those shares.

Ledgers include:
Sales ledger, records accounts receivable. ...

Purchase ledger records money spent for purchasing by the company.

General ledger representing the 5 main account types: assets, liabilities, income,
expenses, and Capital. It is the book (or set of books) in which all other accounts are kept.

What is a sole proprietorship: A sole proprietorship is a

form of business organization that is owned by one
person. The owner is referred to as a sole
proprietor.
In accounting, the balance sheet of the sole
proprietorship reflects the accounting equation:
Assets = Liabilities + Owner's Equity. Owner's
Equity consists of the owner's capital account and
also a drawing account. The drawing account is
a temporary account in which the owner's current
year draws or withdrawals are recorded. (The sole
proprietor has draws because he or she does not
receive a salary or wages. Hence, the income
statement will not report an expense for the
owner's work. This means that the net
income reflects the total return for the owner's
work and investment.)

A sole proprietorship is not legally separate from its

owner (as would be the case with a corporation).
However, a sole proprietor may be able to register

as a limited liability company in order to limit his or

her personal liability.

What's the difference between the current account and the

capital account: The current account records exports and imports of
goods and services as well as unilateral transfers whereas the capital
account records transactions of purchase and sale of foreign assets and
liabilities during a particular year. The capital account is concerned with
payments of debts and claims, regardless of the time period.

The balance of payments contains two accounts: current and capital. The current
account deals with short-term transactions known as actual transactions, as they
have a real impact on income, output and employment levels of a country through
the movement of goods and services in the economy. It is comprised of visible
trade (export and import of goods), invisible trade (export and import of services),
unilateral transfers and investment income (income from factors such as land or
foreign shares). The resulting balance of the current account is approximated as
the sum total of balance of trade.
The capital account is a record of the inflows and outflows of capital that directly
affect a countrys foreign assets and liabilities. It is concerned with all international
trade transactions between citizens of a given country and citizens in other
countries. The components of the capital account include foreign investment and
loans, banking capital and other forms of capital, as well as monetary movements
or changes in foreign exchange reserve. The capital account flow reflects factors
such as commercial borrowings, banking, investments, loans and capital.
In economic terms, the current account deals with receipt and payment in cash as
well as non-capital items, and the capital account reflects sources and utilization
of capital. The sum of the current account and capital account as reflected in the
balance of payments will always be zero; any surplus or deficit in the current
account is matched and cancelled out by an equal surplus or deficit in the capital
account.

Distinguishing Real and Nominal Business

Accounts: A real account in a business is a record of the
amount of asset, liability, or owners equity at a precise moment
in time. Nominal accounts summarize a businesss revenue and
expenses over a period of time, such as a year.
Businesses keep two types of accounts:

Real accounts are those reported in the balance sheet, which

is the summary of the assets, liabilities, and owners equities of a
business.
The label real refers to the continuous, permanent nature of this
type of account. Real accounts are active from the first day of
business to the last day. (A real account could have a temporary
zero balance, in which case its not reported in the balance
sheet.)
Real accounts contain the balances of assets, liabilities, and
owners equities at a specific point in time, such as at the close of
business on the last day of the year. The balance in a real
account is the net amount after subtracting decreases from
increases in the account.

Nominal accounts are those reported in the income

statement, which is the summary of the revenue and expenses of
a business for a period of time.
Balances in nominal accounts are cumulative over a period of
time. Take the balance in the sales revenue account at the end of
the year, for example. This balance is the total amount of sales
over the entire year.

Nominal (revenue and expense) accounts are closed at the end of

the year. Their balances are reset to zero to start the new year.

What is the 'Intrinsic Value'

In finance, intrinsic value refers to the value of a company, stock, currency or product
determined through fundamental analysis without reference to its market value.[1] It is
also frequently called fundamental value.

What is the 'Payback Period'

The payback period is the length of time required to recover the cost of an
investment. The payback period of a given investment or project is an
important determinant of whether to undertake the position or project, as
longer payback periods are typically not desirable for investment positions.
Payback Period = Cost of Project / Annual Cash Inflows

What is 'Cash Flow'

Cash flow is the net amount of cash and cash-equivalents moving into and
out of a business. Positive cash flow indicates that a company's liquid
assets are increasing, enabling it to settle debts, reinvest in its business,
return money to shareholders, pay expenses and provide a buffer against
future financial challenges. Negative cash flow indicates that a company's
liquid assets are decreasing.

What is a 'Risk-Adjusted Return'

A concept that refines an investment's return by measuring how much risk
is involved in producing that return, which is generally expressed as a
number or rating.
Stale Cheque: Check presented at the paying bank after a certain
period (typically six months) of its payment date. A stale check is not
an invalid check, but it may be deemed an irregular bill of exchange.
A bank may refuse to honor it unless its drawer reconfirms it payment
either by inserting a new payment date or by issuing a new check. Also
called stale dated check.

Multilated Cheque:If a cheque is torn into two or more pieces such

cheque is Mutilated Cheque. If it

presented for payment, such a

cheque the bank will not make payment against such a cheque without
getting confirmation of the drawer.
Outstanding cheque: A cheque which has been written and therefore
has been entered in the companys ledgers, but which has not been
presented for payment and so has not been debited from the
companys bank account

What is 'Net Present Value - NPV'

Net Present Value (NPV) is the difference between the present value of
cash inflows and the present value of cash outflows. NPV is used in capital
budgeting to analyze the profitability of a projected investment or project.

What is 'Internal Rate Of Return - IRR'

Internal rate of return (IRR) is a metric used in capital budgeting measuring
the profitability of potential investments. Internal rate of return is a discount
rate that makes the net present value (NPV) of all cash flows from a
particular project equal to zero. IRR calculations rely on the same formula
as NPV does.

Ct = net cash inflow during the period t

Co= total initial investment costs
r = discount rate, and
t = number of time periods

BREAKING DOWN 'Trial Balance'

Preparing a trial balance for a company serves to detect any mathematical
errors that have occurred in the double-entry accounting system. Provided
the total debts equal the total credits, the trial balance is considered to be
balanced, and there should be no mathematical errors in the ledgers.
However, this does not mean there are no errors in a company's
accounting system. For example, transactions classified improperly or
those simply missing from the system could still be material accounting
errors that would not be detected by the trial balance procedure.

What is an 'Outlay Cost'

Any concrete business expenses that can be identified in the past, present
or future. Outlay costs are easy to recognize and measure because they
have actually been incurred. For corporations, outlay costs for new projects
include start-up, production and hiring costs. Outlay costs for ongoing
projects include rent, salaries and equipment maintenance.
Also referred to as "explicit costs."

What balance sheet formats

are available?
The balance sheet is part of the financial statements issued by a business,
informing the reader of the amounts of assets, liabilities, and equity held by the
entity as of the balance sheet date. There are several balance sheet formats
available. The more common are the classified, common size, comparative, and
vertical balance sheets. They are explained as follows:

Classified balance sheet. This format presents information about an

entity's assets, liabilities, and shareholders' equity that is aggregated (or
"classified") into subcategories of accounts. It is the most common type of
balance sheet presentation, and does a good job of consolidating a large number
of individual accounts into a format that is eminently readable. Accountants
should present balance sheet information in the same classification structure over
multiple periods, to make the information in the periods more comparable.

Common size balance sheet. This format presents not only the standard
information contained in a balance sheet, but also a column that notes the
same information as a percentage of the total assets (for asset line
items) or as a percentage of total liabilities and shareholders' equity (for
liability or shareholders' equity line items). It is useful for constructing trend
lines to examine the relative changes in the size of different accounts.

Comparative balance sheet. This format presents side-by-side information

about an entity's assets, liabilities, and shareholders' equity as of multiple points
in time. For example, a comparative balance sheet could present the balance
sheet as of the end of each year for the past three years. It is useful for
highlighting changes over time.

Vertical balance sheet. This format is one in which the balance

sheet presentation format is a single column of numbers, beginning
with asset line items, followed by liability line items, and ending with
shareholders' equity line items. Within each of these categories, line items are
presented in decreasing order of liquidity.

What is a 'Suspense Account'

A suspense account, in accounting, is the section of a company's books

where unclassified debits and credits are recorded. The suspense account
temporarily holds unclassified transactions while a decision is being made
as to their classification. Transactions in the suspense account will still
appear in the general ledger, giving the company an accurate indication of
how much money it has.

Sundry Accounts : Sundry Accounts are used for miscellaneous

purposes - Eg - To park admin related costs, additional charges not finalized
etc. They used for recording miscellaneous items for which an appropriate
account has not yet been established.
Sundry accounts are usually temporary or in-process accounts, meaning they
must be cleared to a zero balance (total debits must equal total credits) at the
end of each accounting period.

Fixed Capital Method: Under this method two accounts are maintained for
each partner, 1. Capital Account and 2. Current Account. The capitals of the
partners shall remain fixed unless additional capital is introduced or a part of
the capital is withdrawn. All items like share of profit or loss, interest on
capital, drawings, interest on drawings, etc. are recorded in Partners Current
Account.
Fluctuating Capital Method: Under this method, only one account, i.e.
capital account is maintained for each partner. All the adjustments relating
to Introduction or withdrawal of capital, share of profit and loss, interest on
capital, drawings, interest on drawings, salary or commission to partners, etc
are recorded in the capital accounts of the partners.

What is a 'Debenture'
A debenture is a type of debt instrument that is not secured by physical
assets or collateral. Debentures are backed only by the general
creditworthiness and reputation of the issuer. Both corporations and

governments frequently issue this type of bond to secure capital. Like other
types of bonds, debentures are documented in an indenture. An example
of a government debenture would be any government-issued Treasury
bond (T-bond) or Treasury bill (T-bill).
There are two types of debentures as of 2016: convertible and nonconvertible. Convertible debentures are bonds that can convert into equity
shares of the issuing corporation after a specific period of time. These
types of bonds are the most attractive to investors because of the ability to
convert, and they are most attractive to companies because of the low
interest rate.
Non-convertible debentures are regular debentures that cannot be
converted into equity of the issuing corporation. To compensate, investors
are rewarded with a higher interest rate when compared to convertible
debentures.

What is an 'Indenture'
An indenture is a legal and binding contract between a bond issuer and
the bondholders. The indenture specifies all the important features of a
bond, such as its maturity date, timing of interest payments, method of
interest calculation, callable/convertible features if applicable and so on.
The indenture also contains all the terms and conditions applicable to the
bond issue.

What is an annuity?
An annuity is a contract between you and an insurance company
in which you make a lump sum payment or series of payments
and in return obtain regular disbursements beginning either
immediately or at some point in the future.

The goal of annuities is to provide a steady stream of income

during retirement.

Types/Kinds of Accounts

Personal Accounts
The elements or accounts which represent persons and
organisations.

Real Accounts
The elements or accounts which represent tangible
aspects.
Cash a/c - representing cash which is tangible.
Goods/Stock a/c - representing Stock which is
tangible.
Furniture a/c - representing Furniture which is
tangible.
Eg : Goodwill of an organisation is an intangible asset.

Nominal Accounts
The elements or accounts which represent expenses,
losses, incomes, gains.
Salaries a/c - representing expenditure on account
of salaries, an expense.
Interest received a/c - representing income on
account of interest, an income.

 Loss on sale of Asset a/c - representing the loss

incurred on sale of assets, a loss.
Profit on sale of Asset a/c - representing the profit
made on sale of assets, a gain.

Every Account head belongs to one of

the three types : It should be either a personal
account or real account or a nominal account. No
element can fall under two types.
Nominal accounts are accounts other than Personal
and Real accounts
Real accounts are accounts other than Personal and
Nominal accounts
Personal accounts are accounts other than Real and
Nominal accounts

What is 'Goodwill'
Goodwill is an intangible asset that arises as a result of the acquisition of
one company by another for a premium value. The value of a companys
brand name, solid customer base, good customer relations, good
employee relations and any patents or proprietary technology represent
goodwill. Goodwill is considered an intangible asset because it is not a
physical asset like buildings or equipment. The goodwill account can be
found in the assets portion of a company's balance sheet.

Goodwill represents assets that are not separately identifiable.

Dissolution:
Dissolution of firm means complete breakdown of the relation
of partnership among all the partners. When all the partners
resolve to dissolve the partnership, the dissolution of firm
occurs, i.e. the firm is wound up.

Trading account assets : Trading account assets refer to a

separate account managed by banks that buy (underwriting) U.S.
government securities and other securities for their own trading
account or for resale at a profit to other banks and to the public,
rather than for investment in the bank's own investment portfolio.

What is a 'Trading Account'

A trading account is an account similar to a traditional bank account,
holding cash and securities, and is administered by an investment dealer.

WHAT IS THE DIFFERENCE BETWEEN DEMAT AND TRADING ACCOUNTS?

Yes. A trading account is used to place buy or sell orders in the stock market. The demat
account is used as a bank where shares bought are deposited in, and where shares sold are
taken from.

Lets use an example.

You have Rs.100 in your wallet. You go to a shop and tell the seller that you want a packet of
chips, you check the price, and finalize the transaction. Then, you take the money out of your
wallet and give it to the seller. In this case, the wallet acts as the demat account, while you act
as the trading account.

What is a 'Yield'

The income return on an investment. This refers to the interest or dividends

received from a security and is usually expressed annually as a percentage
based on the investment's cost, its current market value or its face value.
There are two stock dividend yields. If you buy a stock for $30 (cost basis)
and its current price and annual dividend is $33 and $1, respectively, the
"cost yield" will be 3.3% ($1/$30) and the "current yield" will be 3%
($1/$33).

What is 'Depreciation'
Depreciation is a method of allocating the cost of a tangible asset over its
useful life. Businesses depreciate long-term assets for both tax and
accounting purposes.
2. A decrease in an asset's value caused by unfavorable market
conditions.
1. For accounting purposes, depreciation indicates how much of an asset's
value has been used up. Depreciation is used in accounting to try to match
the expense of an asset to the income that the asset helps the company
earn.

Written Down Value Method. Under this method, depreciation is

charged on the book value of the asset. As the book value keeps on
reducing by the annual charge of depreciation, it is also known as
reducing balance method.

Table A : Table A in UK company law is the old name for the Model Articles or
default form of articles of association for companies limited by shares
incorporated either in England and Wales or in Scotland before 1 October 2009
Revaluation : Revaluation account is prepared at the time of admission of a new
partner to record any increase/decrease in the value of assets and liabilities. The
value of some assets may increase with time and some may show a decrease.

What is a 'Share Premium Account'

A share premium account is usually found on the balance sheet, this is the
account to which the amount of money paid (or promised to be paid) by a
shareholder for a share is credited to, only if the shareholder paid more
than the cost of the share.

'Share Premium : Excess amount received by a firm over the par

value of its shares. This amount forms a part of the non-distributable reserves of
the firm which usually can be used only for purposes specified under corporate
legislation. Also called paid-in surplus.

Face value of a share is its value that is printed on the share certificate. For
example, face value of a $1 share is one dollar. But just because the value of
share is printed $1 does not necessarily mean that the share is worth only one
dollar. If a company has a history of good financial performance, it can sell its
shares at a price higher than the face value of the shares. This difference
between the selling price and the face value of a share is known as share
premium.
It is important to note that share premium arises only when the company sells
the shares. It arises only when a company issues new equity shares. It does not
arise when the investor sells shares at a price greater than face value. If a
company sells a share whose face value is $1 at a price of $2, the company
earns a share premium of $1. But subsequently if the investor sells the same
share to someone else at a price of $4, no share premium will be gained by the
company. The investor will benefit from this gain.

Basis of Difference
Sacrificing ratio
Gaining Ratio
1. Meaning
It is the ratio in which old partners agree to sacrifice their share of
profit in favour of new partners/partner

It is the ratio in which continuing partner acquires the share of profit

from outgoing partner/partner
2. Calculation
Sacrificing Ratio = Old Ratio New Ratio
Gaining Ratio = New Ratio Old Ratio
3. Time
It is calculated at the time of admission of new partners/partner.
It is calculated at the time of retirement/death of old partners/partner.
4. Objective
It is calculated to ascertain the share of profit and loss given up by
the existing partners in favour of new partners/partner.
It is calculated to ascertain the share of profit and loss acquired by
the remaining partners (of the new firm in case of retirement) from
the retiring or deceased partner.
5. Effect
It reduces the profit share of the existing partners.
It increases the profit share of the remaining partners.

What is the 'Tier 1 Capital Ratio'

The Tier 1 capital ratio is the comparison between a banking firm's core
equity capital and total risk-weighted assets. A firm's core equity capital is
known as its Tier 1 capital and is the measure of a bank's financial strength
based on the sum of its equity capital and disclosed reserves. A firm must
have a Tier 1 capital ratio of 6% or greater, and not pay any dividends or
distributions that would affect its capital, to be classified as well-capitalized.

A by-law (more properly spelled bylaw, and sometimes also spelled bye-law) is
a rule or law established by an organization or community to regulate itself, as
allowed or provided for by some higher authority.

Recurring Deposit Interest

When you create a RD for Rs. 10,000 for 2 years, what youre doing is depositing
Rs. 10,000 with the bank every month for 24 months, and the bank pays you
interest on Rs. 10,000 for 2 years compounding it quarterly, then for the next Rs.
10,000 it pays you interest for 23 months, and so on and so forth.
Banks usually compound interest quarterly, so the first thing is to look at
the formula for compound interest.
That formula is as follows:

Where,

A = final amount

P = principal amount (initial investment)

r = annual nominal interest rate (as a decimal, not in percentage)

n = number of times the interest is compounded per year

t = number of years

Minimum subscription is the term which is used to represent the amount of

the issue which has to be subscribed or else the shares can't be issued if it
is not being subscribed. Company which is offering the shares to the public
then they set a specific amount for the subscription which can be taken by
the public in order to issue the shares.

What is a 'Contingent Liability'

A contingent liability is a potential obligation that may be incurred
depending on the outcome of a future event.

What is 'Depletion'
Depletion is an accrual accounting method that companies use to allocate the
cost of extracting natural resources such as timber, minerals and oil from the
earth. Depletion is calculated for tax-deduction and bookkeeping purposes.
Unlike depreciation and amortization, which mainly describe the deduction of
expenses due to the aging of equipment and property, depletion is the actual
physical depletion of natural resources by companies.

There are two types of depletion: percentage depletion and cost depletion. The
IRS requires the cost method to be used with timber.

is used with natural

resources.

What is 'Amortization'
Amortization is the paying off of debt with a fixed repayment schedule in
regular installments over a period of time. Consumers are most likely to
encounter amortization with a mortgage or car loan.

Marine insurance covers the loss or damage of ships, cargo, terminals, and any
transport or cargo by which property is transferred, acquired, or held between the
points of origin and final destination.

What is 'Paid-Up Capital'

Paid-up capital is the amount of a company's capital that has been funded
by shareholders. Paid-up capital can be less than a company's total capital
because a company may not issue all of the shares that it has been
authorized to sell. Paid-up capital can also reflect how a company depends
on equity financing.
Paid-up capital is money that a company has received from the sale of its
shares, and represents money that is not borrowed. A company that is fully
paid-up has sold all available shares, and thus cannot increase its capital

unless it borrows money through debt or is authorized to sell more shares.

hat is 'Solvency' (sampannata)

Solvency is the ability of a company to meet its long-term financial
obligations. Solvency is essential to staying in business, but a company
also needs liquidity to thrive. Liquidity is a company's ability to meet its
short-term obligations

UNDERWRITING(ECONOMICAL SUPPORT) OF SHARES AND

DEBENTURES
Underwriting is an agreement where by the underwriters ensure the company
that in case the shares and debentures offered to the public, are not subscribed
by the public to the extent, the balance of shares and debentures will be taken up
by the underwriters.
The firms or persons who are engaged in underwriting are called underwriters.
The commission payable to underwriters for underwriting is known
as underwriting commission.
Advantages of Underwriting
1. The company is sure of getting the value of shares issued
2. It enhances goodwill of the company
3. It facilitates wide distribution of securities
4. The company gets expert advice from underwriters in the matter of marketing
securities
5. It fulfills requirement of minimum subscription
Types of Underwriting
1. Open Underwriting (Conditional Underwriting)
Under this type of underwriting, the underwriter agrees to take up shares or
debentures only when the issue is not subscribed by the public in full.
2. Firm Underwriting
When an underwriter agrees to buy a definite number of shares or debentures in
addition to the shares or debentures he has to take under the underwriting
agreement, it is called firm underwriting. Even if the issue is over subscribed,
underwriters are liable to take up the agreed number of shares in case of firm
underwriting.

What is a 'Contra Account'

A contra account is an account found in an account ledger that is used to
reduce the value of a related account. Items recorded in the contra account
are specifically designed to offset other transactions, and are recorded as
the opposite type of entry. If a debit is recorded in a related account, the
contra account record will be a credit.
If a transaction requires entries on both the debit and the credit sides
simultaneously, it is called 'Contra entry'.

Three column cash book : A three column cash book or treble

column cash book is one in which there are three columns on
each side - debit and credit side. One is used to record cash
transactions, the second is used to record bank transactions and
third is used to record discount received and paid.
column :

a) Discount Column b) Cash Column c) Bank Column

What is 'Consignment'
Consignment is an arrangement whereby goods are left in the possession
of another party to sell. Typically, the consignor receives a percentage of
the sale (sometimes a very large percentage).
What is the difference between the Cash Flow and Funds Flow
statements?: The cash flow statement, known formally as the Statement
of Cash Flows, reports a company's change in cash and cash
equivalents from one balance sheet date to another.
Generally, the funds flow statement reported on thechange in working
capital from one balance sheet date to another.

What is a 'Reserve Currency'

A foreign currency held by central banks and other major financial

institutions as a means to pay off international debt obligations, or to
influence their domestic exchange rate.

WhatIstheDifferenceBetweenCapital&
Reserve?:Capital
Capital is often provided by lenders or investors in the form of cash for operating
expenses, the purchase of goods and the production of goods. Capital can be any
form of liquid medium that represents wealth.

Reserve
A reserve is a form of equity that is created via several different sources. When
reserves are created via shareholders' contributions, they are commonly in the form
of a legal reserve fund or a share premium.
Another difference between capital and reserve is that invested capital is
typically used during the startup phase of a company, while reserve refers to
wealth obtained through profitable operations after startup. Although both can
be saved and used when needed, reserves are frequently considered as funds
saved for the future. In other words, reserves are more commonly associated
with the concept of rainy day funds.

What is a 'Surplus' : A surplus is the amount of an asset or

resource that exceeds the portion that is utilized. A surplus is used to

describe many excess assets including income, profits, capital and goods.

Reversing Entries
Reversing entries are journal entries made at the beginning of
each accounting period. The sole purpose of a reversing entry is
to cancel out a specific adjusting entry made at the end of the
prior period, but they are optional and not every company uses
them.

How Reversing Entries Are Used

Reversing entries help prevent accountants and bookkeepers
from double recording revenues or expenses.

How a Reversing Entry Works

For example, when a company takes out a loan. If the loan is
issued on the sixteenth of month A with interest payable on the
fifteenth of the next month (month B), each month should
reflect only a portion of the interest expense. To get the expense
correct in the general ledger, an adjusting entry is made at the
end of the month A for half of the interest expense. This
adjusting entry records months A's portion of the interest
expense with a journal entry that debits interest expense and
credits interest payable. At the beginning of the month B that
expense is reversed via a reversing entry. The entry credits
interest expense and debits interest payable. When the full
amount of the interest is paid in month B, each month's books
will show the proper allocation of the interest expense.

What is the 'Debt-Service Coverage Ratio (DSCR)'

In corporate finance, the Debt-Service Coverage Ratio (DSCR) is a
measure of the cash flow available to pay current debt obligations. The
ratio states net operating income as a multiple of debt obligations due
within one year, including interest, principal, sinking-fund and lease
payments.

DSCR = Net Operating Income / Total Debt Service

What is 'Window Dressing'

Window dressing is a strategy used by mutual fund and portfolio

managers near the year or quarter end to improve the appearance of the
portfolio/fund performance before presenting it to clients or shareholders.
To window dress, the fund manager will sell stocks with large losses and
purchase high flying stocks near the end of the quarter. These securities
are then reported as part of the fund's holdings.

Weighted average cost of capital (WACC) is a calculation of a firm's cost of

capital in which each category of capital is proportionately weighted.

The weighted average cost of capital (WACC) is the rate that a

company is expected to pay on average to all its security holders to
finance its assets. The WACC is commonly referred to as the
firm's cost of capital.
Freight : Freight out is the transportation cost associated with the
delivery of goods from a supplier to its customers. This cost should
be charged to expense as incurred and recorded within the cost of
goods sold classification on the income statement.

What is the 'Breakeven Point - BEP'

The breakeven point (BEP), in general, the point at which gains equal
losses.
Also referred to as a "breakeven".

BREAKING DOWN 'Breakeven Point - BEP'

For businesses, reaching the break-even point is the first major step
towards profitability.

What is 'Petty Cash'

Petty cash is a small fund of cash kept on hand for purchases or

reimbursements too small to be worth submitting to the more rigorous
purchase and reimbursement procedures of a company or institution.

What is a 'Rebate'
A rebate, in a short-sale transaction, is the portion of interest or dividends earned
by the owner (lender) of shares that are paid to the short seller (borrower) of the
shares.

Acid-test : In finance, the Acid-test or quick ratio or liquidity ratio measures the
ability of a company to use its near cash or quick assets to extinguish or retire its
current liabilities immediately.

convention of conservatism : The convention of conservatism, also known as

the doctrine of prudence in accounting is a policy of anticipating possible future
losses but not future gains. This policy tends to understate rather than overstate net
assets and net income, and therefore lead companies to "play safe"

The last in, first out (LIFO) method is used to place an accounting value on
inventory. The LIFO method operates under the assumption that the last item of
inventory purchased is the first one sold.
FIFO gives us a better indication of the value of ending inventory (on the balance
sheet), but it also increases net income because inventory that might be several
years old is used to value the cost of goods sold.
The weighted average contribution margin is the average amount that a group of
products or services contribute to paying down the fixed costs of a business.

Called-Up Capital
Depending on the jurisdiction and the business in question, some companies may issue
shares to investors with the understanding they will be paid at a later date.

Uncalled Capital means any balance per share remaining uncalledupon the shares
issued from time to time by any Chargor

Calls in advance:
1. It is the amount which is received in advance before the amount is due
from shareholders. Interest on calls in advance is the expenses of
company. Maximum rate of interest is 6% p.a.

Calls In arrears:
1. It is the amount which defaulter shareholders have not paid on the
amount called up by company
2. Calls in arrears may be recovered in future or in the event not received
shares may be forfeited
3. Interest on calls in arrears is the income of company
4. It may lead to loosing the membership if calls in arrears are not cleared
5. Maximum rate of interest is 5% p.a.

What is an 'Endowment'
An endowment is a financial asset, in the form of a donation made to a non-profit group. Most
endowments are designed to keep the principal amount intact while using the investment
income from dividends for charitable efforts.

DEFINITION of 'Undercast'
A forecasting error that occurs when estimating items such as future cash flows, performance
levels or production. Undercasting produces an estimation that is below the realized value.
You may have expected sales to be $5 million and costs to be $3 million. This forecasts a net
income of $2 million. If actual net income was $2.5 million, you would have undercast the
income by $500,000.

The quick ratio is a financial ratio used to gauge a company's liquidity. The quick
ratio is also known as the acid test ratio. The quick ratio compares the total amount

of cash + marketable securities + accounts receivable to the amount of current

liabilities.