Welcome to my blog...
I have prepared these short notes for the purpose of the IA. There are are some key items that needs to be learnt before going to the examination hall because those are sometimes critical and may be forgotten. Let us begin...
MANUFACTURING ACCOUNT
Computing Provision for Unrealized Profit: Closing Inventory *Manufacturing Profit
Market Value
Converting from Mark up to Margin: a
100+a
For example if you are given 20% Markup and you are to convert to Margin: 20 = 20
100+20 120
Converting from Margin to Mark up: a
100-a
For example if you are given 20% Margin and you are to convert to Mark up: 20 = 20
100-20 80
And we need to study the conversion because of the following reasons:
1. Markup is calculated on COST
2. Margin is calculated on SELLING PRICE
NOTE: It can be noticed that often at the end of the Manufacturing Account preparation we will have COST OF PRODUCTION and not SELLING PRICE so if the question says "goods were transferred at a margin of say 20%", you do not have to calculate that on the cost of production because margin is not calculated on cost but rather selling price. So after you convert the given margin to markup, then you can go ahead and calculate for your manufacturing profit.
ISSUE OF SHARES
In the treatment of shares the following must be the first thing to look for in the given question:
1. The number of issued shares
2. The number of Applicants
3. The number of rejected Applicants
After you have been able to write down the above information, the next step is to compute the workings for the following:
1. On Application
2. On Allotment
3. On First Call
4. On Second Call
5. On Re- Issue
It must however be noted that the call can be made only once or it can be made thrice or more.
THE END...
PS: If there is any topic you would like me to make short notes on or if you have any suggestions and contributions, please leave a comment below.
Thank you.
I have prepared these short notes for the purpose of the IA. There are are some key items that needs to be learnt before going to the examination hall because those are sometimes critical and may be forgotten. Let us begin...
MANUFACTURING ACCOUNT
Computing Provision for Unrealized Profit: Closing Inventory *Manufacturing Profit
Market Value
Converting from Mark up to Margin: a
100+a
For example if you are given 20% Markup and you are to convert to Margin: 20 = 20
100+20 120
Converting from Margin to Mark up: a
100-a
For example if you are given 20% Margin and you are to convert to Mark up: 20 = 20
100-20 80
And we need to study the conversion because of the following reasons:
1. Markup is calculated on COST
2. Margin is calculated on SELLING PRICE
NOTE: It can be noticed that often at the end of the Manufacturing Account preparation we will have COST OF PRODUCTION and not SELLING PRICE so if the question says "goods were transferred at a margin of say 20%", you do not have to calculate that on the cost of production because margin is not calculated on cost but rather selling price. So after you convert the given margin to markup, then you can go ahead and calculate for your manufacturing profit.
ISSUE OF SHARES
In the treatment of shares the following must be the first thing to look for in the given question:
1. The number of issued shares
2. The number of Applicants
3. The number of rejected Applicants
After you have been able to write down the above information, the next step is to compute the workings for the following:
1. On Application
2. On Allotment
3. On First Call
4. On Second Call
5. On Re- Issue
It must however be noted that the call can be made only once or it can be made thrice or more.
THE END...
PS: If there is any topic you would like me to make short notes on or if you have any suggestions and contributions, please leave a comment below.
Thank you.
thank you
ReplyDeleteYou are welcome.
DeleteCan you add a short note on partnership accounting.
ReplyDeleteSure thing
Delete