DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name : B. VIJAYA KUMAR
Designation : Lecturer
Branch : Commercial & Computer
Practice (CCP)
Institute : GPW/Guntur
Year/Sem : III Sem (C-05)
Subject : ACCOUNTANCY-II
Sub-Code : CCP-302
Topic : ACCOUNT CURRENT
Duration : 50 minutes
Sub Topic : EPOQUE METHOD
Teaching Aids : PPT ANIMATION

CCP302.18
1
 Objective
Account Current
At the end of this class you would be able to
know:
(5) EPOQUE Method of calculating interest

CCP302.18 2
Recap
In the earlier classes, YOU learnt that there are
FIVE methods for calculation of Interest, namely,

1. Interest Tables Method.

2. Product Method.
3. Interest Numbers Method.
4. Periodical Balance Method.
5. Epoque Method.

CCP302.18 3
METHODS OF CALCULATING INTEREST

INTEREST PRODUCT INTEREST PERIODICAL EPOQUE

TABLES METHOD NUMBERS BALANCE METHOD
METHOD METHOD METHOD
Recap contd.
4. Periodical Balance Method
 This method is followed by Banks to calculate
interest on OVERDRAFTS and Savings Bank a/cs

 Savings Bank a/c shows Customer’s deposits and

withdrawals

CCP302.18 5
Recap contd.
4. Periodical Balance Method
 Every time a customer deposits or withdraws money,
Bank calculates balance in the account

 This account balance is MULTIPLIED by no. of days

for which it remains UNCHANGED and PRODUCT
for each balance is ascertained

CCP302.18 6
Recap contd.
4. Periodical Balance Method
 Product can be a debit or credit depending on nature
of balance

 Banks charge HIGHER rate of INTEREST on DEBIT

balances and allows LOWER INTEREST on CREDIT
balances

CCP302.18 7
Recap contd.
4. Periodical Balance Method

 DEBIT and CREDIT balances are totaled separately

 If Interest on credit balances > Interest on debit

balances, balance of Interest CREDITED to
Customer’s a/c and vice versa

CCP302.18 8
Recap contd.
4. Periodical Balance Method

 If there are more than ONE transactions on any

DATE, Bank allows INTEREST on the minimum of
balances arising out of such transactions

CCP302.18 9
5. Epoque Method
 This method is just REVERSE of Product Method

 Interest calculation from COMMENCEMENT of

Account Current period to EACH ITEM’S DATE.

CCP302.18 10
5. Epoque Method
 For INTEREST CALCULATION, both extreme
dates, i.e., Opening Day of Account Current and
DATE of each item, are taken into account

 This is what we did for Opening Balance in

PRODUCT method

CCP302.18 11
5. Epoque Method
 No. of DAYS are MULTIPLIED by each
transaction amount to get PRODUCTS

 NO INTEREST charged/credited on Opening

Balance

CCP302.18 12
5. Epoque Method
 NO INTEREST on OPENING BALANCE because
No. of DAYS against this item is always ZERO

 But, there will be INTEREST on CLOSING

BALANCE

CCP302.18 13
5. Epoque Method

 INTEREST on CLOSING BALANCE (before

calculating interest) is CHARGED for WHOLE
PERIOD of Account Current.

 Afterwards, INTEREST is calculated for ONE

DAY at an AGREED RATE.

CCP302.18 14
5. Epoque Method
 INTEREST at AGREED RATE for ONE DAY is
calculated for BALANCE of PRODUCTS

This INTEREST is entered on DEBIT or

CREDIT side of PRODUCTS column,
whichever side the balance is SHORTER

CCP302.18 15
5. Epoque Method
Eg 1: Surekha had the following transactions with Anu:
2005 Rs.
Jan 1 Balance due from Anu .. 1,000
Feb 16 Purchased goods from Anu .. 6,000
Feb 28 Sold goods to anu .. 10,000
Mar 16 Received a cheque .. 3,000
Apr 20 Sold him goods (Invoice on May 3) .. 10,000
Jun 16 Purchased goods from Anu
(received on July 16) .. 15,000
Sep 23 Paid Anu cash .. 3,000
Oct 24 Accepted Anu’s bill for 3 months .. 5,000
Nov 26 Received Anu’s acceptance for
2 months .. 8,000
Interest 5%. Prepare A/c Current up to Dec 31, 2005.
CCP302.18 16
 5. Epoque Method
Vishnu in Account Current with Surekha as on 31st DEC 2005
Dr.
Due Due Cr.
Date Date Particulars Amount Days Products Date Date Particulars Amount Days Products
2005 2005 Rs. Rs. 2005 2005 Rs. Rs.
By
Jan-01 Jan-01To balance b/d 1000 0 0 Feb-16 Feb-16 Purchases 6000 47 282000
Feb-28 Feb-28To Sales 10000 59 590000 Mar-16 Mar-16By Bank 3000 75 225000
By
Apr-20 May-03To Sales 10000 123 1230000 Jun-16 Jul-16 Purchases 15000 197 2955000
Sep-23 Sep-23To Cash 3000 266 798000 2006
2006 Nov-26 Jan-29By B/R 8000 394 3152000
Oct-24 Jan-27To B/P 5000 392 1960000
2005
To Products for
Dec-31 Dec-31 balance
Rs.3000 365 1095000
To balance of
Dec-31 Dec-31 Products 941000
Dec-31 Dec-31To Interest 129
941000 X 5 / 365 X 100
Dec-31To balance c/d 2871
32000 6614000 32000 6614000
2006
By balance
Jan-01 b/d 2871

CCP302.18 17
Summary

 This method is just the reverse of Product Method.

Interest is calculated from starting date of Account
Current to the date of each transaction

 While calculating Interest, both extreme dates are

taken Into consideration

 No interest is charged/credited on Opening balance

Because it shows ZERO number of days

CCP302.18 18
Quiz
1) Epoque Method of Interest is simply the reverse of:

a) Interest Numbers Method

b) Product Method
c) Periodical Balance Method
d) None of the above

CCP302.18 19
Frequently Asked Questions:
1. Briefly explain the Epoque Method of calculating Interest.

2. List out the different methods of calculating Interest.

CCP302.18 20
Assignment
Eg 1: P had the following transactions with Q:
2007 Rs.
Jan 1 Balance due from Q .. 1,000
Feb 13 Purchased goods from Q .. 6,000
Feb 22 Sold goods to Q .. 10,000
Mar 10 Received a cheque .. 3,000
Apr 26 Sold Q goods (Invoice on May 1) .. 10,000
Jun 12 Purchased goods from Q
(received on July 14) .. 15,000
Sep 20 Paid Q cash .. 3,000
Oct 11 Accepted Q’s bill for 3 months .. 5,000
Nov 2 Received Q’s acceptance for
1 month .. 8,000
Interest 5%. Prepare A/c Current up to Dec 31, 2007.
CCP302.18 21
Assignment
2) For more information on this topic, please refer to:
a) “Introduction to Accountancy” by T.S. Grewal
b) “Advanced Accountancy” by Jain & Narang
c) “Introduction to Accountancy” by S.N. Maheswari
d) “Advanced Accountancy” by Shukla & Grewal
e) “Advanced Accountancy” by Gupta & Radhaswamy
f) “Principles & Practice of Book-Keeping” by
Ch. Shanmukhaswamy
g) Any other text book suggested by your teacher
h) Previous years’ exam question papers of SBTET

CCP302.18 22