The Digital Transformation and Benefits of Online Lending

FinTech

Ahuja Sahil

-

July 1, 2021

Traditional lending is generally a long and drawn-out process, as most borrowers can relate to. Completing all required documentation and going through approval processes within a financial institution could take weeks or even months. The stringent requirements often leave out small borrowers who don’t have collateral, a good credit score, or the income stream required by these large institutions. As a result, they often ended up going to loan sharks who are not licensed or registered, putting them at risk of predatory interest rates and even harassment.

From Traditional to Digital Lending

Digitalization, or the use of digital technologies to change a business model, has spawned a whole new wave of lending options in recent times. With the exponential growth of financial activities in the digital space, many financial transactions that used to require a visit to a financial institution and submission of pages of documentation are now being conducted over the internet.

Potential borrowers were able to browse the websites of different financial institutions, compare their rates, and fill in an application form from the comfort of their homes. As the popularity of apps arose, Silicon Valley, and online technology companies in other countries, began developing lending apps that further added to the convenience of a loan application.

Benefits

Online lending brings several benefits for an individual needing emergency funding or an entrepreneur seeking finance for business expansion.

Increased financial inclusion

While there are still many underbanked and unbanked individuals, the growth of mobile use has allowed these people to go online, download lending apps, and apply for credit.

Faster processing time

A Federal Reserve Bank survey conducted in 2019 found that 46% of respondents found the waiting period for their credit application too long while only 12% of those who used online lending platforms complained.

It is not only the application process that is sped up, but also the payment of loan proceeds. In traditional lending, a loan check could go through several signatories before it can be released to the bank account of the borrower. Then the check has to be cleared before the borrower could get the money. With online lending, the loan can be approved as soon as 24 hours and the borrower’s bank account is immediately credited.

Easier comparison across lending companies

With many lending companies accessible through their websites and/or apps, it is so much easier for borrowers to compare interest rates and other information such as fees, penalties, and documentation required. Quick loans that do not require collateral have much higher interest rates than secured loans so comparing across different companies can get one the best terms.

Greater chance of loan approval

There are now licensed and registered online lending companies that cater to the borrowing sector that often has no collateral and poor credit scores. Traditional lending would likely reject these people. However, they have a greater chance of getting a personal loan when applying with an online lending company. It’s important to check that the lending company is duly registered, but there is now an opportunity for this sector to readily borrow online.

As new technologies expand what can be done online, it is also expected that online lending platforms will likewise grow. If we are to go by the current trends and as we see a digital transformation happening in many companies, there is more to look forward to with online lending platforms.

Adjustments in Final Accounts

India

Akriti

-

March 7, 2021

0

What are adjustments in accounting? It all starts mainly with the accrual concept of accounting, which says that all incomes earned and expenses incurred during an accounting period should be recorded whether or not money has exchanged hands or not. This is the primary reason for the need for adjustments in final accounts.

Why are adjustments important in final accounts? If such adjustments in preparation of financial statements are missed then the numbers shown by the business in their final accounts will not be accurate and true. Journal entries are posted to reflect any necessary adjusting entries.

Table of Contents

List of Adjustments in Final Accounts

Adjustments in final accounts refer to changes made to certain financial entries at the end of an accounting period. These adjustments are crucial for presenting a true and fair view of a company’s financial status. In this article, we have covered the following list:

Closing Stock
Outstanding Expenses
Prepaid or Unexpired Expenses
Accrued or Outstanding Income
Income Received In Advance or Unearned Income
Depreciation
Bad Debts
Provision for Doubtful Debts
Provision for Discount on Debtors
Manager’s Commission
Interest on Capital
Goods Distributed among Staff Members for Staff Welfare
Drawing of Goods for Personal Use
Abnormal or Accidental Losses

Remember: Adjustments would appear outside the trial balance.

Adjustment of Closing Stock

Whatever stock of goods is remaining at the end of an accounting year is known as ‘closing stock’. This becomes the opening stock of the very next period. Oftentimes closing stock is not shown in the trial balance.

Journal Entry for Adjustment of Closing Stock in Final Accounts

Closing Stock A/C	Debit
To Trading A/C	Credit

(Recording ending inventory)

Closing stock is valued at cost or market value (aka net realizable value), whichever is less.

Treatment of Closing Stock Adjustment in Financial Statements

Trading Account: Show on the credit side
Profit & Loss Account: No effect
Balance Sheet: Show on the assets side (usually under the head current assets)

Example

A company evaluates its closing stock at Rs 25,000, show the adjustment of closing stock in final accounts at the end of the year.

Adjustment of Closing Stock in Final Accounts

Adjustment of Outstanding Expenses

Expenses incurred but not paid yet are called outstanding expenses. In order to avoid overstating profits adjustments in final accounts are recorded. Examples: Outstanding Rent, Salary, Wages, Interest, etc.

Journal Entry for Adjustment of Outstanding Expenses in Final Accounts

Expense A/C	Debit
Input CGST A/C	Debit
Input SGST A/C	Debit
To Outstanding Expense A/C	Credit

(Recording unpaid expenses)

Treatment of Outstanding Expenses Adjustment in Financial Statements

Trading Account: Show on the debit side (add to respective direct expense)
Profit & Loss Account: Show the debit side (add to respective indirect expense)
Balance Sheet: Show on the liability side (usually under the head current liabilities)

Example

Suppose a company paid Rs 10,000 in salaries during the year and evaluates outstanding salaries at Rs 2,000 at the end, showing the adjustment of outstanding expenses in final accounts.

Adjustment of Outstanding Expenses in Final Accounts

Adjustment of Prepaid Expenses or Unexpired Expenses

Such expenses are also called expenses paid in advance. Prepaid expenses are expenses that are paid in advance for a benefit that is not received yet.

In order to avoid understating profits, it is crucial to record them towards the end of an accounting year. Examples: Prepaid rent, prepaid interest, prepaid insurance, etc.

Journal Entry for Adjustment of Prepaid Expenses in Final Accounts

Prepaid Expense A/C	Debit
To Expense A/C	Credit

(Recording expenses paid in advance, GST paid is not transferred in Prepaid Expense A/C)

Treatment of Prepaid Expenses Adjustment in Financial Statements

Trading Account: Show on the debit side (subtract from the respective direct expense)
Profit & Loss Account: Show the debit side (subtract from the respective indirect expense)
Balance Sheet: Show on the assets side (usually under the head current assets)

Example

A company paid Rs 10,000 in rent during the year and evaluates prepaid rent at Rs 3,000 at the end, show the adjustment of prepaid expense in final accounts.

Adjustment of Prepaid Expense in Final Accounts

Adjustment of Accrued Income or Outstanding Income

Such expenses are also called income earned but not yet received. Accrued income is the income that the business has already earned, however, it has not been received yet. Examples: accrued rent, commission due but not received, etc.

Journal Entry for Adjustment of Accrued Income in Final Accounts

Accrued Income A/C	Debit
To Income A/C	Credit
To Output CGST A/C	Credit
To Output SGST A/C	Credit
To Output IGST A/C	Credit

(Recording income earned but not received)

Treatment of Accrued Income Adjustment in Financial Statements

Trading Account: No effect
Profit & Loss Account: Show on the credit side (Add to respective income)
Balance Sheet: Show on the assets side (usually under the head current assets)

Example

A firm received Rs 10,000 in rent during the year and estimates rent due but not received at Rs 5,000 at the period close, show the adjustment of accrued income in final accounts.

Adjustment of Accrued Income in Final Accounts

Adjustment of Income Received in Advance

It is also called unearned income. Income received in advance is the income that the business has already received, however, it has not been earned yet. Examples: Rent received in advance, Commission received in advance, etc.

Journal Entry for Adjustment of Income Received in Advance in Final Accounts

Income A/C	Debit
To Income Received in Advance A/C	Credit
To Output CGST A/C	Credit
To Output SGST A/C	Credit

(Recording income received but not earned)

Treatment of Income Received in Advance in Financial Statements

Trading Account: No effect
Profit & Loss Account: Show on the credit side (Subtract from the respective income)
Balance Sheet: Show on the liability side (usually under the head current liabilities)

Example

A firm received Rs 10,000 in rent during the year and estimates rent received but not due Rs 6,000 at the period close, show the adjustment of income received in advance in final accounts.

Adjustment of Income Received in Advance in Final Accounts

Adjustment of Depreciation

It is a non-cash expense i.e. it is not paid in form of cash or a cash equivalent. Depreciation is the allocation of the cost of a fixed asset over its estimated useful life. Since fixed assets are utilized to earn revenue, a decrease in their value is treated as an expense incurred to earn the said revenue.

When Provision for Depreciation is Not Maintained

Journal Entry When Provision is Not Maintained

Depreciation A/C	Debit
To Asset A/C	Credit

(Charging depreciation on fixed asset)

Profit and Loss A/C	Debit
To Depreciation A/C	Credit

(Depreciation charged transferred to Profit & Loss A/C)

Treatment of Depreciation in Financial Statements (No Provision)

Trading Account: No effect
Profit & Loss Account: Show on the debit side (calculate as per % & method given)
Balance Sheet: Show on the asset side (subtract depreciation from the fixed asset)

Example

The trial balance of a business shows furniture at Rs 10,000.

Additional Information: Depreciation of 10% p.a. is charged using the straight-line method. Show the adjustment of depreciation in final accounts when provision for depreciation not maintained.

Adjustment of Depreciation in Final Accounts or Financial Statements (Without Provision)

When Provision for Depreciation is Maintained

Journal Entry When Provision is Maintained

Depreciation A/C	Debit
To Provision for Depreciation A/C	Credit

(Being provision for depreciation made)

Step 2

Profit and Loss A/C	Debit
To Depreciation A/C	Credit

(Depreciation charged transferred to Profit & Loss A/C)

Treatment of Depreciation in Financial Statements (Provision for Depreciation is Maintained)

Trading Account: No effect
Profit & Loss Account: Show on the debit side (calculate as below)
- Calculation: % of Depreciation * (Fixed Asset – Provision for Fixed Asset)
Balance Sheet: Show on the asset side (subtract total accumulated depreciation from the fixed asset)

New accumulated depreciation = Original provision for depreciation + new depreciation amount

Note – Provision for depreciation is the same as accumulated depreciation and the terms may be used synonymously.

Example

The trial balance of a business shows furniture at Rs 10,000 and provision for depreciation on furniture at 2,000.

Additional Information: Depreciation of 20% p.a. is charged using the straight-line method. Show the adjustment of depreciation in final accounts when provision for depreciation is maintained.

Adjustment of Depreciation in Final Accounts or Financial Statements (When Provision Maintained)

Adjustment of Bad Debts

Not all the debtors of a business may be able to pay 100% of their debts at all the time. This may lead to a loss to the receiving business and is termed as bad debts.

Journal Entry for Adjustment of Bad Debts in Final Accounts

Bad Debts A/C	Debit
To Debtor’s A/C	Credit

(Recording bad debts)

Step 2

Profit and Loss A/C	Debit
To Bad Debts A/C	Credit

(Bad debts transferred to Profit & Loss A/C)

Treatment of Bad Debts in Financial Statements

Situation 1 – When bad debts are given inside the trial balance – No Adjustment, only show in P&L

Situation 2 – When bad debts are given outside the trial balance as an adjustment – They are called further bad debts and adjustments in final accounts are posted.

Trading Account: No effect
Profit & Loss Account: Show on the debit side (add to bad debts already written off)
Balance Sheet: Show on the asset side (subtract from sundry debtors)

Journal Entry for Adjustment of Further Bad Debts in Final Accounts

Bad Debts A/C	Debit
To Debtor’s A/C	Credit

(Recording further bad debts)

Example

The trial balance of a business shows bad debts at Rs 5,000 & debtors at 10,000.

Additional Information: Written off 2,000 as further bad debts. Show the adjustment of further bad debts in final accounts

Adjustment of Bad Debts in Final Accounts or Financial Statements

Adjustment of Provision for Doubtful Debts

The accounting concept of prudence and conservatism cautions that each business should be ready to absorb all anticipated losses. Due to this, all businesses provide for possible bad debts arising due to non-payment by creditors in form of provision for doubtful debts.

When Provision for Doubtful Debts does not Appear in Trial Balance

Journal Entry for Adjustment of Provision for Doubtful Debts in Final Accounts

Profit and Loss A/C	Debit
To Provision for Doubtful Debts A/C	Credit

(Recording provision for doubtful debts)

Treatment of Provision for Doubtful Debts in Financial Statements

Trading Account: No effect
Profit & Loss Account: Show on the debit side (calculate as % on Debtors)
Balance Sheet: Show on the asset side (subtract from sundry debtors)

Note: Provisions do not reduce the amount due from debtors.

Example

The trial balance of a business shows sundry debtors at Rs 10,000.

Additional Information: Create a provision for 5% on Debtors. Show the adjustment of provision for doubtful debts in final accounts.

Adjustment of Provision for Doubtful Debts in Final Accounts or Financial Statements

Adjustment of Provision for Discount on Debtors

A cash discount is provided to debtors as an encouragement for early payments. In some cases the payment may be received in the next accounting year this means that as per the accrual concept of accounting such discounts should be treated as an expense in the current year. When such a provision is created it is called a provision for discount on debtors.

Journal Entry for Adjustment of Provision for Discount on Debtors in Final Accounts

Profit and Loss A/C	Debit
To Provision for Discount on Debtors A/C	Credit

(Recording provision for discount on debtors)

Treatment of Provision for Discount on Debtors in Financial Statements

Trading Account: No effect
Profit & Loss Account: Show on the debit side (calculate on good debtors i.e. after adjusting bad debts & provision for doubtful debts)
Balance Sheet: Show on the asset side (subtract from sundry debtors)

Example

The trial balance of a business shows sundry debtors at Rs 10,000.

Additional Information: Assume nil bad debts and provision for bad debts. Create a provision for a discount of 10% on debtors. Show the adjustment of provision for discount on debtors in final accounts.

Adjustment of Provision for Discount on Debtors in Final Accounts or Financial Statements

Adjustment of Manager’s Commission

A business may decide to share a fixed percentage of profits with the managers in the form of a commission. It is called a manager’s commission and it may be calculated on profits before or after charging such commission.

Manager’s Commission Payable Before Charging the Commission

In this situation, the calculation is simply done by multiplying the rate of commission with the amount of net profit earned by the business.

Formula to calculate:

Formula to calculate Manager's Commission before charging the commission

Journal Entry for Adjustment of Manager’s Commission in Final Accounts

Profit and Loss A/C	Debit
To Manager’s Commission Payable	Credit

(Recording outstanding commission payable to managers)

Treatment of Manager’s Commission in Financial Statements

Trading Account: No effect
Profit & Loss Account: Show on the debit side as an expense
Balance Sheet: Show on the liability side (usually under the head current liabilities)

Manager’s Commission Payable After Charging the Commission

In this situation, the calculation is done on the net profit remaining after such a commission is charged.

Formula to calculate:

Treatment in the final account remains the same in both cases.

Example

Net profit shown in the income statement is Rs 31,000.

Additional Information: The manager is entitled to a commission of 10% after charging such a commission. Show adjustment of the manager’s commission in final accounts.

Adjustment of Manager's Commission in Final Accounts or Financial Statements

Working Note

Net Profit = Rs 31,000

Formula (shown above) = (Manager’s Commission Rate % / 100 + Manager’s Commission Rate) * Net Profit

(10% / 100 + 10%) * 31,000 = 2,818 Rs

Adjustment of Interest on Capital

When the owner of a business invests money in a business it is termed as capital. It is a common practice for the business to pay some form of (pre-decided) interest on capital. Such an interest paid is treated as an expense and is charged before determining the net profit or net loss of a business.

Journal Entry for Adjustment of Interest on Capital in Final Accounts

Interest on Capital A/C	Debit
To Capital A/C	Credit

(Recording interest on capital)

Step 2

Profit and Loss A/C	Debit
To Interest on Capital A/C	Credit

(Interest charged on capital transferred to Profit & Loss A/C)

Treatment of Interest on Capital Adjustment in Financial Statements

Trading Account: No effect
Profit & Loss Account: Show the debit side
Balance Sheet: Show on the liability side (Add to owner’s capital)

Note: If interest on capital is given in the trial balance then it will be shown only in the Profit and Loss account as the credit entry has already been passed.

Example

Capital is Rs 10,000 for the business.

Additional Information: The owner is entitled to 5% interest on capital. Show adjustment of interest on capital in final accounts.

Adjustment of Interest on Capital in Final Accounts or Financial Statements

Adjustment of Goods Distributed among Staff Members for Staff Welfare

Employees may receive goods as a part of staff welfare, this transaction should be adjusted in monetary terms to determine the accurate net profit or net loss to the business. Adjustments in final accounts are passed to record this expense, usually against purchases.

Journal Entry for Goods Distributed among Staff Members for Staff Welfare in Final Accounts

Staff Welfare Expense A/C	Debit
To Purchases A/C	Credit
To Input CGST A/C	Credit
To Input SGST A/C	Credit

(Recording staff welfare expenses for goods distributed)

Note: GST (CGST, SGST, IGST, etc. is reversed as tax paid on these goods can not be setoff against tax collected)

Treatment of Goods Distributed among Staff Members for Staff Welfare in Financial Statements

Trading Account: Debit Side (Subtract from purchases) or Show on Credit Side
Profit & Loss Account: Debit side (Shown as ‘Staff Welfare Expense’)
Balance Sheet: Show on the liability side (Add to owner’s capital)

Example

Net purchases are Rs 5,000 for the business.

Additional Information: The company distributed goods among staff members for staff welfare worth Rs 1,000. Show the adjustment of goods distributed among staff members for staff welfare in final accounts.

Adjustment of Goods Distributed among Staff Members for Staff Welfare in Final Accounts or Financial Statements

Adjustment of Drawings of Goods for Personal Use

The owner of a business may choose to withdraw cash or goods from their own business this is not an uncommon practice. It is called drawings and it reduces the total purchases of a company.

GST is reversed on these goods as tax paid on them cannot be set off against tax collected. The entry is made at the cost price because no profit is earned.

Journal Entry for Drawings of Goods for Personal Use in Final Accounts

Drawings A/C	Debit
To Purchases A/C	Credit
To Input CGST A/C	Credit
To Input SGST A/C	Credit

(Recording drawings in form of goods for personal use)

Treatment of Goods Taken for Personal Use in Financial Statements

Trading Account: Debit Side (Subtract from purchases)
Profit & Loss Account: No effect
Balance Sheet: Show on the liability side (Subtract from owner’s capital)

Example

Net purchases are Rs 7,000 for the business and Capital is Rs 10,000.

Additional Information: The owner took goods from the business for personal use worth Rs 2,000. Show the adjustment of drawings of goods for personal use in final accounts.

Adjustment of Drawings of Goods for Personal Use in Final Accounts or Financial Statements

Adjustment of Abnormal or Accidental Loss

Accidental losses or abnormal losses are incurred when a business suffers any type of loss due to a fire, an accident, an earthquake, or some other natural calamity.

The loss is booked in the profit and loss account and the asset account is credited. The stock of goods may be destroyed which leads to a decrease in gross and net profit of the firm. GST is reversed on these goods as tax paid on them cannot be set off against tax collected.

If Goods are Not Insured

Journal Entry for Abnormal or Accidental Loss in Final Accounts (Goods Not Insured)

Profit and Loss A/C	Debit
To Trading A/C	Credit
To Input CGST A/C	Credit
To Input SGST A/C	Credit

(Recording total value of abnormal loss)

Treatment of Abnormal or Accidental Loss in Financial Statements (Goods Not Insured)

Trading Account: Show on the credit side (with the cost of goods destroyed)
Profit & Loss Account: Show on the debit side (with the cost of goods destroyed)
Balance Sheet: No effect

If Goods are Insured

Journal Entry for Abnormal or Accidental Loss in Final Accounts (Goods Insured)

Accidental Loss A/C	Debit
To Trading A/C	Credit
To Input CGST A/C	Credit
To Input SGST A/C	Credit

(Recording total value of abnormal loss)

Step 2

1	Insurance Claim A/C	Debit
2	Profit and Loss A/C	Debit
3	To Accidental Loss A/C	Credit

(Adjusting the insurance claim received)

Amount of insurance claim
Amount of irrecoverable loss
Total abnormal loss

Treatment of Abnormal or Accidental Loss in Financial Statements (Goods Insured)

Trading Account: Show on the credit side (with the cost of goods destroyed)
Profit & Loss Account: Show on the debit side (with the cost of goods destroyed)
Balance Sheet: No effect

Example

Due to a fire in the storehouse, a business lost goods costing Rs 9,000 which were purchased at 5% GST. As the goods were insured the insurance company paid Rs 8000 lump sum to settle the claim. Show the adjustment of abnormal or accidental loss in final accounts.

Adjustment of Abnormal or Accidental Loss in Final Accounts or Financial Statements

>Read Journal Entry for Amortization

Key Emerging Digital Payment Trends

General Business

Ahuja Sahil

-

October 27, 2020

0

In recent years, there has been a shift when it comes to the use of digital payments. Reuters highlights how the use of digital wallets and payments has been steadily rising since 2017. Today, these alternative payment options are now being used by billions of consumers from all over the globe. Because of its success, more and more companies have developed a number of alternative options for consumers within these channels.

Increasing adoption of cryptocurrency and digital currency

Cryptocurrency has slowly become part of everyday life. So much so that we even listed cryptocurrency as one of our ‘Hot Stocks to Watch in 2019’. This is promising as there are several reasons why cryptocurrency, particularly Bitcoin, can be a game-changer. Firstly, cryptocurrency appeals to the younger generation while providing greater security. Cryptocurrency can also largely reduce and potentially eliminate any additional transfer costs, leading to savings for consumers. In addition to all of this, they also benefit those in third-world countries who don’t have access to traditional bank accounts. These factors have to a more mainstream acceptance of cryptocurrency. In fact, the Supreme Court has even lifted The Reserve Bank of India’s ban on dealing with cryptocurrency.

The growing popularity of branded credit cards

With the rise of online shopping, customers are turning to credit cards as a popular payment option. A feature on how to build a good credit score by Petal explains how most major retailers often have their own store credit cards, which offer store-wide discounts at the cost of higher interest rates and lower credit limits. While they can promote greater brand loyalty, they offer limited benefits for consumers compared to regular credit cards due to their lack of flexibility. This is because they can only be used in certain locations and with certain brands. On the other hand, being co-branded does away with this problem. If the card is co-branded with Mastercard, Visa, or American Express, it can be more widely used. This is why co-branded credit cards are steadily growing in popularity, drawing in consumers with desirable reward options.

The rise of e-wallets and mobile payment apps

Unlike bulky physical wallets, e-wallets and apps can be electronically stored on your mobile phone making them much more convenient for travel. Entrepreneur summarizes the various benefits of digital wallets, noting how they are rapidly evolving to adapt to the needs and lifestyles of their consumers. Unlike card payments, they allow instantaneous payments online and make it easier to keep track of your spending. They also come with promotions, and cashback rewards, and enable you to avoid expensive transaction fees. One innovative feature of e-wallets is their seamless integration with fitness wearables, such as the Apple Watch and Garmin models that enable you to make payments with these devices as well. Something that users should be aware of is the possibility of cybersecurity threats when it comes to inadequate password protection or poorly encrypted payment channels.

When it comes to keeping yourself updated with the latest digital payment trends, it’s all about being careful with regard to any security threats and hidden fees that accompany these platforms. Being mindful of your spending habits and maintaining your safety and privacy are paramount to the convenience that these cashless methods provide.

How to save money on transferring your funds between countries?

How to

Ahuja Sahil

-

December 16, 2019

0

How to save money on transferring your funds between countries?

We store our funds in different places, whether it be banks, financial platforms, currency exchanges or stock markets. In today’s age of globalization, we can easily use platforms from other countries. Therefore, we start moving our money between different countries and make frequent international transactions. It generates high transaction fees, which can quickly affect our total gains.

Try online remittance platforms

Bank fees for international payments

First of all, it may be worth to research some remittance platforms. Regular international bank transfers are very expensive compared to other online alternatives. The same applies to receiving the funds, as for example some banks charge you just to get money from an overseas account. It may come in handy if you have bank accounts in few countries and want to move your money between them in a convenient and cheap way.

On average the banks charge their users $10-$25 for international SWIFT transfers. Now, sending let’s say 100 USD and exchanging it into EUR through one of the most popular online payment platforms – PayPal, costs around $4.99. The same transfer through other platform called TransferWise would cost only $1.71. At the same time, Lloyds Bank, which is one of the top British banks, charges around $12 for an international money transfer and an international wire from Australia’s ANZ bank costs around $16. You see that the difference is quite significant.

Which money transfer platform is the best?

But as you can see from our quick example, the prices can vary even between two randomly picked platforms. So, which company is the best to handle your money transfer? Well, there is no direct answer to this question. The final transaction cost depends on many factors, such as the currency, your and your recipient’s location, exchange rates, transfer method.

A good way to find out the final costs and choose platform with the best rates at given moment is to use a compare tool. For example Wirly.com, which specialize in gathering information about various remittance companies, created a neat calculator. All you have to do is type in how much money you need to transfer, in which currency and to what country and the platform will show you how much your transfer costs in all of the available money transfer companies. That way, you can either simply choose the top position, or research the lower entries if you are interested in other features.

Some companies may offer cheap transfers, but they might be very slow. In that case, you can simply sort the list depending on the estimated transaction times. If you are looking for the most trusted service for important payments, click on the safety and customer satisfaction categories.

It’s important to research some reviews and real user experience before giving your money to some company. Google Reviews or TrustPilot seem like the places to go. Learn about the advantages and disadvantages of particular platform.

Watch out for exchange rates

Be careful with “free” transfers

Some transfer companies, as well as banks trick their customers by providing “cheap” transaction fees. In the meantime, they provide unfavorable currency exchange rates. For example, if 1USD is equal to 0.9EUR, they may exchange your dollar for only 0.6EUR, eating that 0.3 as a hidden fee. Try to use currency conversion services, which offer rates the closets to mid-market rates (which are the rates that financial institutions use to trade currencies among themselves).

Try different currency pairs

When talking about transferring funds internationally and exchanging currencies, it’s worth noting that some currencies are cheaper to transfer than others. For example, transferring GBP to EUR might be simply cheaper than sending the same amount in USD. If you own a few currencies you can research some combinations to find the perfect configuration. When talking about these pairs, the next point is also important to have in mind…

Find local services

Some companies specialize in handling money in particular regions or countries. If you look for offers to transfer your funds between specific countries, you may find a great bargain. For example, TransferGo offers transfers between UK and Poland. Their rates in that case are significantly better than any other general remittance platform. There are many other similar examples. Remit2India, as the name indicates has a good connection with India.

To sum up, if you are handling all of your international transfers through your regular bank account, it may be worth checking some online alternatives. The remittance market has grown in recent years and these companies already process millions of transactions each day. If you have at least a few dollars on each transfer, it can add up to bigger amounts in the long term.

Types of Business Investors You Need to Know

General Business

Ahuja Sahil

-

December 5, 2019

0

Types of Business Investors You Need to Know

Different Types of Business Investors

The idea of being your own boss is so exciting, but the point where this idea seems like crashing is when you think about money to kick-start your startup.

Unless you are born into a millionaire family, or you have served on a higher post for a multinational company, it is difficult to imagine that you would have enough money to see the dawn of your entrepreneurship. That’s why most startups lookout for investors to fulfil their funding requirements.

But finding an investor is also not as easy as you imagine. You will not get an investor just by pitching your idea. Moreover, considering that there are so many types of investors, picking the right one for you is also so confusing.

But you can’t select an investor randomly because your selection of an investor determines whether your venture will be a hit or flop.

Here are some types of investment you need to consider for receiving your funding:

Personal Investors

Personal investors are people close to you, your friends, family members, or anyone in close acquaintances can turn into your personal investor. What can be better than getting a helping hand financially from your acquaintance? Most probably, all the policies and paperwork will be flexible here, but you need to consider a few things.

Personal investors might not be able to lend you a huge amount of money, and involving a personal relationship in the business can be risky. Consult a lawyer and go for detailed documentation of all matters to avoid the creation of any bad blood between you two.

Venture Capitalist

Venture capitalists are people who look out for startups for investment that seem to be promising and have the potential for tremendous growth. Usually, people with a lot of money, banks and other established financial institutes are venture capitalists.

They know their investment can be a risky affair which is why they only invest in startups that have different business pitches and look different from their competitors. So, to approach a venture capitalist, you really need to have a firm idea.

A VC invests in the early stage and remains in the loop throughout the process, unlike private equity – that’s the main difference between venture capital and private equity. The venture capitalist asks for equity in return for the investment and holds a say in the company.

Angel Investors

Angel investors are the most sought-after type of investors in the world of startups because they invest in startups and small businesses for the sake of giving them a boost. Due to their intention of wellness, they usually offer to fund on favourable terms and conditions. They are the best option for those who don’t want to see someone else dominating in their company, like in the case of the venture capitalist.

As you can see that there are diverse types of investors, you will encounter while looking out funding for your business. All these types have their own pros and cons. Make sure you consider all the dimensions before choosing your fighter because – the right selection of investor matters!

How to Put Your Business on Facebook

General Business

Ahuja Sahil

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December 2, 2019

0

Procedure to Put Your Business on Facebook

You know by now that Facebook is one of the most active social media platforms. With almost two billion active monthly users, it has great potential to turn into a jackpot platform for your business if you hit it right on point. Now, Facebook is no more an option for your business; it has become a necessity.

Despite the huge buzz surrounding the significance of Facebook, many businesses still consider it merely a fancy marketing tactic. But it is a lot more than that! If you are missing it from your marketing strategies, you are missing out on a big-time potential to capture a wide customer base.

Feeling motivated to land your business in the world of Facebook? Good, we are here to help you! The best thing is that putting your business on Facebook is also not rocket science. Here are given simple steps on how to create a business Facebook page without a personal account. It is just a matter of a few steps, and you will be closer to your customers – much closer.

Create a Page

The first step is to create your business page. Type facebook.com/business on the search bar and click on Create a Page written in the top right-hand corner of the page. Once you click it, several options will unfold, including the type of business options, services you are offering and cause, etc.

Select the required option for each category, and in case you think that your business type can be categorized in more than one mentioned option, then select the one through which you want to register your business among customers.

Fill in the Required Information

Once you select your business type, a box opens that requires you to mention the name of your business, your business address, and the category of your business page. These categories are sub-types of your main business category.

After mentioning all the further details, click on ‘Get Started’. You can also check out Facebook’s terms and conditions for running a business page before clicking Get Started because once you click on it, it means that you agree to them no matter what.

Nevertheless, after clicking on ‘Get Started’, you officially get your Business Facebook Page. After that, only a few steps are left.

Set Up a Profile Picture

Next, choose a profile and cover image for your page. Don’t forget that these pictures will be a visual representation of your brand, so you can’t go with random images. Choose the picture wisely, your brand’s logo can become a great profile picture and your products an amazing cover picture.

They will not only be relevant but also give details about your brand personality the moment your customer will land on your page.

Add Details for Users

Now, you already have the basic skeleton of your brand’s Facebook page. But what if your customers need to know more about you and your services? Obviously, merely your profile and cover picture can’t help them. For this, click on Add a Short Description and pitch your brand’s essential features to your customers in max. 155 characters.

Whereas, in the About section, at the top left corner, you can edit the starting date of the business, contact information, and details of other social media accounts if any. If you are running a restaurant business, you might also be able to add specific details like menu and prices.

After doing all this, you are all set to update your first post. And starting from here, you need to have a robust Facebook marketing strategy to ensure that your social media venture writes a success story for your business.

How to turn Money into Gold

Ahuja Sahil

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November 4, 2019

0

Turning money into Gold is pretty simple in this day and age. There are countless ways to buy gold coins and bullion online. However, when doing so, be sure you are buying from a highly rated website. Do your research on where are the best places and what are the best practices. Gold is not all the same, there are gold items that are made of different %’s. Gold comes in coins too and you need to understand what they are and their actual worth.

The most important thing you can take away from this is, do your research! Gold coins are all over. There are old coins that were found from the ruins of sea ships and coins that are produced in modern-day mints. The rarity of a coin, as well as other things, determine the worth of a coin. How much gold is in the coin is another factor, for example. So, coins are not just an investment, but they are more of a collectable as well. This is a fun hobby for some and also a great investment at the same time.

There are some gold coins that are much easier to buy and sell. This is an important aspect that should be understood if you plan to trade a lot of coins. Do your homework and find reputable dealers. Understand what the dealers charge to sell gold coins as well.

The Various Ways

There are many ways to turn your money into gold. We have been speaking about turning your money into physical gold, however, there are other ways as well. You can purchase gold certificates or ETFs (Exchange Traded Funds) for example. These are not the same as the physical gold option but they are essentially trading in your cash for gold.

It really depends on what you are trying to do when turning your money into gold. Are you looking to diversify your portfolio then paper gold such as the certificates and EFT may be what you need? If you are looking to protect yourself and your assets from a falling government or falling money value then you will want the actual gold coins and bullion.

These will need to be stored properly in your safe or bank to ensure you have access to it at all times. Most like to store it in their own safety so that they feel safer and can access it should there be any sort of a crash in the market.

Today you have a couple of options for money. You can use the typical currency issued by banks or you have hard assets like gold. Having all your wealth in currency leaves you vulnerable to attacks. As the governments become unstable or they borrow and make even more debt it makes the value of money very unstable. To help with the stability of wealth, it is important to diversify your funds into assets such as gold.

As with any investment, be sure that you do your homework and research. Ensure you know and understand what it is you want to achieve and how to possibly achieve it. As with any investment, there is some risk. However, without risk, there is no reward.

What to do when another business is interfering with yours?

General Business

Ahuja Sahil

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September 9, 2019

0

What to do when another business is interfering with yours?

Steps You Can Take When Another Business Interferes With Your Business

In today’s competitive business market, businesses are vying for lucrative contracts. What happens when another business interferes with your lucrative contract? You may hire a business lawyer and sue them for interfering with economic prospective.

You can sue them for intentional interference with your prospective business advantage if the other business – let’s call it BAD CORP – disrupts or diverts the business relationship by improper methods which fall outside the boundaries of fair competition.

What are the elements of Intentional Interference With Prospective Economic Advantage?

A cause of action exists for intentional interference with another’s prospective business advantage if the defendant disrupts or diverts the business relationship of another by improper methods which fall outside the boundaries of fair competition.

Existing Prospective Business Relationship

You must show an existing business relationship or the existence of a “prospective business relationship.”

Examples:

In attempting to prove a prospective business relationship, the “interference with the market” theory is speculative and insufficient as a matter of law.

A podiatrist failed to allege an existing business relationship and, thus, stated no cause of action against the operator of a medical building who induced others not to lease space to the podiatrist.

An expectancy in obtaining a government license to do business was not sufficient because it was not a commercial dealing.

Prospective Business Advantage

You must show a “reasonable expectation of economic advantage which would otherwise have accrued to you. There must have been a “probability of future economic benefit” from a business relationship, which means more than a mere “hope” or “desire.”

It must have been “reasonably probable” that the economic advantage would have been realized but for the interference. If a compelling public policy is at stake, the court may permit a greater degree of speculative advantage.

Injurious Interference

Injurious interference occurs through an intentional disruption or diversion of the business relationship of another. The loss of potential future referrals and contacts was not sufficient to constitute injurious interference.

Wrongful Conduct

You must show that injurious interference did, in fact, occur. As a safeguard against intruding on lawful competition, the act or conduct must be wrongful by some measure beyond the fact of the interference itself. BAD CORP must have engaged in wrongful conduct, separate from the interference itself, that falls outside the boundaries of fair competition.

The conduct must violate a statute or other regulation or a recognized rule of common law or an established standard of a trade or profession. The plaintiff has the burden of pleading and proving that the defendant’s conduct was independently wrongful and not privileged; the defendant no longer has the burden of proving in an affirmative defense that his conduct was privileged.

Wrongful conduct may be the use of unlawful means or means otherwise lawful but without justification. Transactions creating security interests in tort claims are not unlawful per se and not “wrongful” for purposes of the tort of interference with prospective economic advantage.

Knowledge and Intent

Bad CORP must have known of and intended to interfere with another’s prospective business advantage. You must show that the interfering business conduct was designed to disrupt the business relationship. The court may infer the intent to interfere from a defendant’s intentional performance of an act substantially certain to result in interference.

Money Damages

You must show that BAD CORP caused your business to sustain money damages. Damages must not be speculative; there must be a foreseeable harm to the plaintiff caused or to be caused by the interference.

What is the Difference Between Discount and Rebate?

Differences

Ahuja Sahil

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September 7, 2019

0

Discount vs Rebate

Discount and rebate are commonly used terms in today’s dynamic markets, especially in the e-commerce world. Rebates and discounts are distinct forms of price cuts that directly or indirectly promote the overall sales of a business. Both the terms may sound similar, however, there is some difference between discount and rebate. applied.

Rebate – It is provided by a seller to the buyer for reasons such as; inferior quality of goods, inaccurate quantity, missing buyer-specific features in the final product, delayed supply, etc. Unlike, a trade discount that is provided mainly for high quantity buying, a rebate is for reasons which help a supplier to provide healing touch in a situation that is unfavourable during the process of selling.

Example of Rebate – Goods worth 10,000 were sold by Unreal Corp. to ABC Corp. but some of the goods were of poor quality, therefore, after a mutual agreement Unreal Corp. allowed a rebate of 1,000 i.e. 10%.

Rebate vs Discount

Discount – A seller grants it to the buyer in two distinct forms; trade discount and cash discount. It may be allowed out of the selling price (also known as maximum retail price or catalogue price) or as a reduction from the net amount payable.

Trade Discount – It encourages large quantity buying and is mostly provided to resellers.

Cash Discount – it is provided to encourage early payment. This helps the seller to maintain cash flow and healthy working capital.

Example of Discount – Goods worth 10,000 were sold by Unreal Corp. to ABC Corp. @10% discount each. Cash discount allowed @5% if payment is made within 15 days. This means a trade discount of 10% and an additional 5% discount if the payment is made within 15 days of the sale.

Main difference between discount and rebate for reasons each of them is offered

Difference Between Discount and Rebate (Table Format)

	Discount	Rebate
Definition	Discount is the reduction offered by a seller to the buyer from the purchase price of goods or services.	Rebate is refund or return of currency value that a seller of goods provides to the buyer for various different reasons.
Reasons	To promote high quantity purchases, receive timely payments, and increased sales.	For various reasons which are unfavourable during the purchase cycle, such as; poor quality, delay in delivery, etc.
Type of Transaction	Trade discount is offered both on cash and credit sale, however, cash discount is only offered on a prompt payment.	Rebate is allowed on both cash and credit sales.
Impact on Invoice	Trade discount is reduced from the original value even before the invoice is generated. Cash discount, on the other hand, is reduced from the final invoice value.	The amount of rebate does not affect the original invoice as the adjustment is made post-sale. The effect is shown in trading account & the income statement.
Recording in book of accounts	In case of a trade discount, it is not shown in the books of accounts whereas a cash discount is recorded in the income statement as an expense.	It is shown separately in the financial statements as it is provided after the sale has already been recorded.
Timing	It is applied at the time of occurrence of an event i.e. before the sale or purchase has been completed.	It is used after an event has been recorded i.e. post the sale or purchase has been completed.
Consideration	Trade discount is provided considering the quantity bought. Cash discount is provided considering the time of payment.	Rebate is provided considering all the reasons for which a trade discount or cash discount is not offered.

Refund Vs Rebate: The terms ‘refund’ and ‘rebate’ are sometimes used synonymously. However, one important thing to keep in mind is the fact that where a refund is usually provided in full, a rebate is generally provided in part.

Examples of Rebate and Discount

Rebate

ABC brand has been in the mobile business for a few years. The company has come up with a new marketing strategy for a particular model X that is already popular in the market.

Reason for Rebate	Delayed deliveries of mobile sets of the X model
Price of 1 set	10,000
Refund offered	10% of the phone price
Eligible Customers	Each customer that has received the phone later than 1 month after ordering it
Required Steps	Register themselves on the company website, fill out a survey, and verify their purchase of the X model.
Additional offer	These customers can also qualify for 10% off on ABC earphones which are not that successful in the market.
Actual Cost to customers	9,000

The above strategy will be termed a rebate. This is a well-known sales promotion strategy and hits the demand side of any product. It is identifiable with characteristics like a refund of some amount, the transaction taking place after some time of the actual sale, and the customers required to do something extra in order to claim the rebate.

Discount

XYZ is a supermarket. It is facing low demand for breakfast items due to the pandemic situation. It comes up with a simple marketing strategy.

Discount Offers	10% off on all ready-to-eat breakfast items 5% off on all breakfast cereals
Eligible Customers	All customers who buy the qualifying items and the required quantity
Actual Cost to customers	The discount will be a reduction in the total bill amount and the buyer will have to pay less at the check-out
Example	A customer will pay 900 for an item worth 1,000 and 950 for a breakfast cereal priced at 1,000

The above strategy is a simple trade discount strategy. It is still better to clear the inventory at lower prices than to risk the quality of perishable goods. The identifiable features of a discount can be easily seen such as all customers equally qualify for it, benefits are received at the time of purchase, and the discount is reducing the bill amount.

Journal Entries & Accounting

Discount

A cash discount is recorded in the books of accounts while a trade discount is not. Since the discount allowed is a clear expense for a business in order to earn revenue, the journal entry for a discount is:

Cash A/c	Debit
Discount A/c	Debit
To Sales A/c	Credit

Journal entry for recording a discount of 10% on products worth 50,000:

Cash A/c	45,000
Discount A/c	5,000
To Sales A/c	50,000

Rebate

Rebate is also an expense for the business. But it is recorded in two stages.

At the initial stage:

Customer A/c	Debit
To Sales A/c	Credit

At the time of rebate allowed:

Rebate Allowed A/c	Debit
To Customer A/c	Credit

Journal entry for recording a rebate of 10% on the phone set worth 10,000 that was sold to X:

X A/c	10,000
To Sales A/c	10,000

Rebate Allowed A/c	100
To X A/c	100

Short Quiz for Self-Evaluation

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>Read Journal Entry for Salary Paid

Salary Account	Debit	Debit the increase in expense
Cash/Bank Account	Credit	Credit the decrease in asset

Salary Account	Debit	Debit all expenses – Nominal A/C
Cash/Bank Account	Credit	Credit what goes out – Real A/C

Salary A/C	Debit
To Cash/Bank A/C	Credit

Income Statement	Debit
To Salary A/C	Credit

Salary A/c	250,000
To Cash/Bank A/c	250,000

From Traditional to Digital Lending

Benefits

Increased financial inclusion

Faster processing time

Easier comparison across lending companies

Greater chance of loan approval

List of Adjustments in Final Accounts

Adjustment of Closing Stock

Adjustment of Outstanding Expenses

Adjustment of Prepaid Expenses or Unexpired Expenses

Adjustment of Accrued Income or Outstanding Income

Adjustment of Income Received in Advance

Adjustment of Depreciation

When Provision for Depreciation is Not Maintained

When Provision for Depreciation is Maintained

Adjustment of Bad Debts

Adjustment of Provision for Doubtful Debts

Adjustment of Provision for Discount on Debtors

Adjustment of Manager’s Commission

Manager’s Commission Payable Before Charging the Commission

Manager’s Commission Payable After Charging the Commission

Adjustment of Interest on Capital

Adjustment of Goods Distributed among Staff Members for Staff Welfare

Adjustment of Drawings of Goods for Personal Use

Adjustment of Abnormal or Accidental Loss

If Goods are Not Insured

If Goods are Insured

Journal Entry for Salary Paid

Accounting Treatment for Salary Payment

Example

Journal Entry for Salary Paid in Advance

Journal Entry for Salary to Partners

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Journal Entry for Rent Received

Accounting Treatment for Rent Received

Example of Receipt of Rent

Journal Entry for Rent received in Advance

Journal Entry for Rent received with TDS & GST

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