Hi friends – Share with you the sentiment of this reader who wrote to me.
Share my thoughts with you. A practical accountant in a harsh business climate is very different from a academic accountant. I am very shocked to learn what is meant by a real life accountant from my own exposure. This is also confirmed by your article on the Auston’s case.
Their life is definitely not easy. I am beginning to re-define an accountant’s job. Now, I know that running a business and being an accountant is no difference. Think about this point and you will know that their stress level is no joke.
Dear students, past and present,
Need your help to contribute some advice to the new students coming in in next academic term.
Advice on the following:-
How to manage time between work, studies, family and bfs/gfs?
How many subjects should I take?
How should I study? Read textbook or not?
How to deal with lecturers to get them to help?
Given that you guys and gals have now got the experience of going through at least one exam, let me have your views.
No right or wrong view. It is your view. – So just type 🙂
For my students.
Many are unable to tell the difference between bonus issue and rights issue of shares. I wish to present my interpretation on bonus issue to shed some light on this front.
Is this a possible exam questions? Of course, my friends.
Essentially we are issuing new shares by capitalising the reserves ie.
DR Reserve account
CR Share capital account
Any cash flow from the issue?
No money exchanged.
The company will send notices to shareholders to inform on the number of shares allocated based on the approved ratio.
Example – You were holding 1,000 shares prior to bonus issue. The company has been approved to issue bonus shares on the basis of 1:4. You would be issued 250 bonus shares for a total holding of 1,250 shares.
Are you any richer given the higher number of shares you now have?
Theoretically no. Has the company make any monies from the exercise? The answer is no. It is merely a paper exercise. Every existing shareholder maintains status quo in terms of their percentage ownership of the company.
Then why would a company do a bonus issue?
The company has essentially issued more shares to increase liquidity of the counter by reducing the absolute dollar value of each share. For example, DBS Bank may issue enough bonus shares to reduce its current share price from an “expensive and prohibitive level” of $20 to a more affordable level of $8. Then more people can “afford” to buy the shares and participate in success of DBS Bank.
Trust this helps. 🙂
For my Students.
You may have noticed that the Closing Stock figure is usually placed outside the Trial Balance. You would then use the figure in computing Cost of Sales in the Profit and Loss (P&L) Account. The figure is then presented as part of Current Assets in the Balance Sheet.
Have you ever wonder where did the Closing Stock figure come from and how it enters the accounting system? Two questions on stock were asked for Jun 2006 ACCA Paper 1.1 Preparing Financial Statement.
Profit and Loss account is part of the double entry system.
Balance Sheet and Trial Balance are essentially just listing of account balances.
Closing stock balance is a factor of price and quantity.
- The quantity is tracked by the no. of deliveries in and out over the financial year and confirmed after a physical stock count after end of financial year.
- Price is determined after doing the FRS2’s lower-of-cost-and-NRV exercise.
To transfer the Opening Stock to P&L account,
DR P&L account
CR Stock account
To bring Closing Stock into the accounting system,
DR Stock account
CR P&L account
Not many lecturers can or bother to explain this nowadays.
Hope it helps. Cheers 🙂