Departmental Accounting

What are departmental accounts? What are its objectives? Discuss the methods of departmental accounts. ( December 2023 )

Meaning of Department

A department is a separate, identifiable division or section of a business that performs specific functions and carries out a particular type of activity. departmental accounting
Each department operates as a distinct unit within the organization—such as Sales Department, Production Department, Clothing Department, Electronics Department, etc.—and its performance can be measured separately.

1. Meaning of Departmental Accounts

Departmental Accounts refer to the system of maintaining separate accounts for each department of a business (such as the Clothing Department, Electronics Department, Grocery Department, etc.). departmental accounting
This helps the business to ascertain the profit or loss of each department individually.

In large organizations like departmental stores, hotels, or companies with multiple product groups, departmental accounts help in comparing performance and controlling costs.

Characteristics of Departmental Accounts

Separate Accounting for Each Department
Each department (e.g., clothing, electronics, footwear) is treated as a distinct unit, and separate results are prepared.departmental accounting
Common Set of Books
Usually, one set of books is maintained, but the final accounts are prepared in columnar form, with a separate column for each department.
Separate Profit Determination
The main aim is to find department-wise gross profit and net profit.
Allocation and Apportionment of Expenses
Direct expenses are charged to respective departments, and indirect expenses are apportioned on logical bases (sales, area, time, etc.).
Helps in Comparison
Enables comparison of performance between departments or across different periods.departmental accounting
Helps in Cost Control
By knowing departmental results, management can identify inefficient areas and control costs.
Managerial Responsibility
Each department’s performance can be monitored, and accountability of departmental managers can be fixed.
Preparation of Consolidated Final Accounts
After finding department-wise profit, a combined Trading and P&L Account is prepared for the whole business.

2. Objectives of Departmental Accounting

To ascertain profit or loss of each department
Separate records help determine which department is performing better.
To compare the performance of different departments
Helps in identifying efficient and inefficient departments.departmental accounting
To help in control and cost reduction
Department-wise records reveal wastage, high expenses, or low sales.
To assist in managerial decisions
Helps decide expansion, closure, transfer of goods, pricing policies, etc.
To fix responsibility of departmental managers
Performance can be judged, and incentives or corrective actions can be given.departmental accounting
To determine commission or bonus
If departmental managers receive incentive based on departmental profit.
To prepare consolidated final accounts
After departmental results are known, the total business profit/loss can be calculated. departmental accounting

3. Methods of Departmental Accounting

There are two main methods:

Method 1: Separate Set of Books for Each Department

Explanation:

Each department maintains its own journals, ledgers, cash book, and trial balance.
Independent trading and profit & loss accounts are prepared for each department.
A final consolidated Profit & Loss Account is prepared for the whole business.

Suitable for:

Very large organizations with semi-autonomous departments.

Advantages:

Highly detailed and accurate
Better control and responsibility assignment

Disadvantages:

Very costly and time-consuming
Requires more staff and more records

Method 2: Single Set of Books with Columnar Format

Explanation:

One common set of books is maintained.
The Trading and Profit & Loss Account is prepared in columnar form, with a separate column for each department.
Expenses are allocated or apportioned to the respective departments based on a suitable basis.

Steps Followed:

Record direct expenses directly in respective department columns (e.g., wages, purchases).
Allocate indirect expenses (e.g., rent, salary, advertising) on reasonable bases:
- Rent → floor area
- Salary → time spent
- Advertising → sales
- Electricity → machine hours
Find departmental gross profit.
Deduct departmental indirect expenses.
Obtain net profit of each department.
Prepare consolidated final accounts.

Suitable for:

Medium or small businesses.
Most departmental stores use this method.

Conclusion

Departmental accounts involve preparing separate profit results for each department to control performance and help management in decision-making. Its objectives include measuring departmental profitability, comparing results, controlling expenses, and fixing responsibility. Departmental accounts may be kept either by maintaining separate books for each department or by using a columnar departmental Trading and Profit & Loss Account under a single set of books. departmental accounting.

If you want to know the Syllabus of Financial Accounting, You must visit the official website of Gndu.

👉 Note:- Important Questions of Financial Accounting

Departmental Accounting

Financial Accounting

Process of preparing voyage account

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What is a Voyage Account? Explain the procedure of preparing voyage accounts. ( December- 2023 ) Process of preparing voyage account

1. Meaning of Voyage Account

A Voyage Account is a special nominal account prepared by shipping companies to ascertain the profit or loss on a particular voyage of a ship.

It is prepared separately for each voyage (e.g., Voyage No. 1 from Mumbai to Dubai).
All incomes of that voyage (freight, passage money, primage, etc.) and all expenses of that voyage (bunker/fuel, wages, port charges, insurance, etc.) are collected in this account.
The balance of the Voyage Account shows profit (if credit > debit) or loss (if debit > credit) on that voyage.

2. Standard Format of Voyage Account

Heading:

Voyage Account of S.S. ______
Voyage No. ___ from ___ to ___

You can show it like a normal ledger account:

Voyage Account of S.S. Himalaya

Voyage No. 1 – From Mumbai to Dubai

Dr. Cr.

————————————————————-

Date Particulars Amt. Date Particulars Amt.

————————————————————-

To Bunkers (coal/oil) xxxx

By Freight on Cargo xxxx

To Wages & Salaries xxxx

By Passage Money xxxx

To Port Charges xxxx

By Primage xxxx

To Loading/Unloading xxxx

By Demurrage (if any) xxxx

To Stores Consumed xxxx

By Other Incomes xxxx

To Insurance – Ship xxxx

To Insurance – Freight xxxx

To Depreciation on Ship xxxx

To Address Commission xxxx

To Other Voyage Expenses xxxx

To Profit transferred to (if credit > debit)

General P&L A/c xxxx

—–

xxxx xxxx

————————————————————-

Or

By Loss transferred to

General P&L (if any)

3. Process of Preparing Voyage Account

Step 1: Identify the Voyage

Decide which voyage you are preparing the account for.
- Example: Voyage No. 5 – S.S. Himalaya from Kolkata to London and back.
All incomes and expenses relating to that voyage only will be recorded.Process of preparing voyage account

Step 2: Open the Voyage Account

Open a Voyage Account in the ledger headed with:
- Name of the ship
- Voyage number
- Route (From…To…)

Step 3: Record All Voyage Expenses on the Debit Side

All direct expenses incurred for that voyage are debited to Voyage Account. Common items:

Bunkers / Fuel / Coal / Oil
- Cost of fuel consumed on that voyage.
- Entry:
  - Voyage A/c Dr. To Cash/Bank/Creditors
Wages and Salaries of Crew
- Salaries of captain, engineers, sailors, stewards, etc. for that voyage. Process of preparing voyage account
Port Charges / Harbour Dues
- Paid at ports for using port facilities.
Stores Consumed
- Food, beverages, medicines and other consumable stores used for crew and passengers.
Loading and Unloading Charges
- Stevedoring and handling expenses for cargo.
Insurance – Ship & Freight
- Marine insurance premium of the ship and freight for that voyage. Process of preparing voyage account
Depreciation on Ship
- Depreciation on the ship for the period used in that voyage.
Address Commission
- Commission payable to the agents on freight collected.
Other Voyage Expenses
- Pilotage, towage, canal dues, repairs for voyage, etc.

👉 Rule:

All expenses specially incurred for that voyage are debited to the Voyage Account.

Step 4: Record All Voyage Incomes on the Credit Side

All incomes earned from that voyage are credited to the Voyage Account. Main items:

Freight on Cargo
- Amount received (or receivable) from shippers for carrying goods.
Passage Money
- Fares received from passengers.
Primage
- Extra charge (usually a % on freight) payable to shipowner.
Demurrage (if any)
- Amount received when charterer takes extra time beyond lay days for loading/unloading.
Other Receipts
- Any other income related to that voyage.

👉 Rule:

All incomes earned from that voyage are credited to the Voyage Account.

Step 5: Adjustments for Outstanding / Prepaid Items

At the end of the accounting period, adjustments are made:

Outstanding Expenses
- If some voyage expenses are incurred but not yet paid:
  - Add them to the debit side of Voyage Account.
  - Show them as liability in the Balance Sheet.
Prepaid Expenses
- If any voyage expense paid in advance for next voyage:
  - Deduct/transfer the prepaid part from Voyage Account.
  - Show it as a prepaid expense (asset).
Closing Stock of Stores / Bunkers
- If some stores or fuel are left unused at the end of voyage:
  - Deduct the closing stock from total stores/fuel expense.
  - Or credit Voyage Account with “By Closing Stock of Stores/Bunkers” and show stock as an asset.

Step 6: Treatment When Voyage is Completed within the Year

If the voyage is fully completed within the same accounting year:

Total the debit and credit sides of Voyage Account.
Compare:
- If Credit > Debit → Profit on voyage
  - Show on debit side as:
    
    To Profit & Loss A/c
- If Debit > Credit → Loss on voyage
  - Show on credit side as:
    
    By Profit & Loss A/c
Transfer the profit or loss to the General Profit & Loss Account.

Step 7: Treatment When Voyage is Incomplete (Voyage in Progress)

If, on the date of final accounts, the voyage is not fully completed:

Calculate the proportion of income and expenses that relate to the completed part of the voyage.
- Basis may be:
  - Distance completed vs total distance, or
  - Days completed vs total days, or
  - Freight earned vs total freight expected.
For completed part:
- Show related income and expenses in the Voyage Account and find profit/loss.
For incomplete part (Voyage in Progress):
- The balance of expenses (and sometimes related income) is carried forward as “Voyage in Progress” or “Voyage Work-in-Progress”.
- This is shown as an asset in the Balance Sheet. Process of preparing voyage account

Step 8: Closing the Voyage Account

After recording all incomes, expenses, and adjustments, and transferring profit/loss to General P&L, the Voyage Account is balanced and closed. Process of preparing voyage account
Now that voyage is fully accounted for.

Short Summary

Voyage Account is prepared for each voyage separately to find out profit or loss on that voyage.
All voyage expenses (fuel, wages, port charges, insurance, depreciation, etc.) are debited, and all voyage incomes (freight, passage money, primage, demurrage, etc.) are credited.
When the voyage is completed, the balance is transferred to the General Profit & Loss Account; if incomplete, the unexpired portion is shown as Voyage in Progress (asset). Process of preparing voyage account

You can check the Syllabus of Financial Accounting on the official website of Gndu.

👉 Note ):- Important questions of Financial Accounting

Financial Accounting

deferred revenue expenditure

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What is capital expenditure, revenue expenditure and deferred revenue expenditure? Give characteristics of each. When are revenue expenses treated as capital expenses. ( December- 2023 )

1. Capital Expenditure

Meaning:

Capital expenditure is the money spent on acquiring, improving, or extending the life of fixed assets that give benefit for many years. It means which expense gives benefit long term is called Capital Expenditure.

Examples:

Purchase of machinery, building, furniture
Cost of installation of machinery
Major repairs that increase life of an asset

Characteristics of Capital Expenditure:

Provides benefits for more than one accounting year.
Increases earning capacity or life of an asset.
Incurred to acquire or improve fixed assets.
Recorded in Balance Sheet (added to the asset value).
Not charged fully to Profit & Loss A/c in the same year (depreciation charged every year).

2. Revenue Expenditure

Meaning:

Revenue expenditure is money spent for the day-to-day running of a business and benefits only the current accounting year.

Examples:

Salary, rent, stationery
Repairs and maintenance
Electricity expenses
Cost of goods sold

Characteristics of Revenue Expenditure:

Benefits are short-term (within one year).
Helps in maintenance of assets, not in creating or improving them.
Charged fully to the Profit & Loss Account in the same year.
Necessary for daily operations.
Does not generate future economic benefits beyond the current year.

3. Deferred Revenue Expenditure

Meaning:

These are expenses that are revenue in nature but the benefit lasts for several years, so they are not charged completely in one year.
Earlier they were shown in the Balance Sheet, but now as per Accounting Standards most are written off within a short period. deferred revenue expenditure

Examples:

Heavy advertisement expenditure for launching a product
Major repairs for temporary benefit
Discount on issue of shares/debentures (old concept) deferred revenue expenditure

Characteristics:

Revenue nature but benefit spreads over multiple years. deferred revenue expenditure
Partly charged to Profit & Loss A/c every year. deferred revenue expenditure
Remaining balance shown as a fictitious asset (older practice).
Helps in increasing sales or achieving long-term advantages. deferred revenue expenditure

4. When Are Revenue Expenses Treated as Capital Expenses?

Revenue expenses are treated as capital when:

(i) They are incurred to acquire a fixed asset

Example:

Wages paid for installation of machinery
Transport charges for new furniture

Though wages/transport are revenue normally, here they are added to asset cost → capital expenditure.

(ii) They increase the efficiency or life of an existing asset

Example:

Major overhaul of a machine
Spending on rebuilding a building

Since it improves the asset, it becomes capital.

(iii) They bring a new advantage or long-term benefit

Example:

Special repairs that increase productivity
Expenses that create new capacity

(iv) They are necessary to bring the new asset to working condition

Example:

Trial run expenses
Testing expenses
Consultancy fees for asset purchase

These are added to the asset cost.

Conclusion

In conclusion, capital expenditure creates or improves long-term assets, revenue expenditure supports the day-to-day operations of the business, and deferred revenue expenditure gives benefits over several years though revenue in nature. When a revenue expense helps in acquiring or enhancing a fixed asset, or provides long-term benefit, it is treated as capital expenditure. Together, these expenditures help in correctly determining profit and presenting a true financial position of the business. deferred revenue expenditure

If you want to know the Syllabus of Financial Accounting you must visit on Gndu

👉 Note:- Important questions are following

What are Consignment Accounts? Explain accounting treatment of consignment transactions in the books of consignor and consignee.

Financial Accounting

Objective of branch Accounting

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What is the objective of Branch Accounting? Explain Debtor’s system and Stock and Debtors System of keeping books of dependent branches.

Meaning of Branch Account

A Branch Account is an account opened in the Head Office books to record all transactions relating to a particular branch of the business. Objective of branch Accounting

It is maintained to ascertain the profit or loss made by that branch and to keep proper control over its operations. Objective of branch Accounting

Key Points:

Maintained by Head Office:

The Head Office keeps the Branch Account to record all incomes, expenses, assets, and liabilities of the branch.
Purpose:

To find out how much profit or loss each branch makes during a particular period.Objective of branch Accounting
Type of Branches:

Usually maintained for dependent branches, which do not keep full sets of books.
Nature:
- If the branch makes a profit → Branch Account shows a credit balance.
- If the branch makes a loss → Branch Account shows a debit balance. Objective of branch Accounting

Example:

If the Head Office sends goods worth ₹50,000 and cash ₹10,000 to a branch, and the branch sends back ₹70,000 as sales proceeds, the Head Office records these in the Branch Account to determine the branch’s profit (₹10,000 in this case).

In short:

A Branch Account is a summary account prepared by the Head Office to record and monitor the financial results of each branch.

Objectives of Branch Accounting

Branch Accounting refers to the system of maintaining accounts for different branches of the same business to know their financial performance and position. Objective of branch Accounting

The main objectives of Branch Accounting are:

To ascertain profit or loss of each branch:

Helps the head office determine how much profit or loss each branch has made.
To measure branch performance:

Enables comparison of efficiency and profitability among different branches.
To control branch operations:

Helps in monitoring stock, cash, and other assets to prevent misuse or fraud.
To determine branch financial position:

Shows assets and liabilities of each branch separately. Objective of branch Accounting
To assist in decision-making:

Helps management decide about branch expansion, closure, or improvement.
To ensure uniform policies:

Maintains consistency in accounting and control across all branches.

Systems of Keeping Books of Dependent Branches

Dependent branches do not maintain complete books of accounts. Their accounts are maintained by the Head Office. Two common systems are:

1. Debtors System

Under this system:

The Head Office opens one account for each branch, called Branch Account.
All transactions related to the branch are recorded in this account.
This system treats the branch as a debtor of the Head Office. Objective of branch Accounting

Steps / Features:

Goods sent to branch → Debited to Branch Account.
Cash sent to branch for expenses → Debited to Branch Account.
Cash received from branch (sales, remittances) → Credited to Branch Account.
Closing stock, furniture, etc. → Credited to Branch Account.

Profit or Loss Calculation:

If the Branch Account shows a credit balance, the branch has earned a profit.

If it shows a debit balance, the branch has incurred a loss. Objective of branch Accounting

2. Stock and Debtors System

This system is a more detailed and accurate method of recording branch transactions.

It is generally used when goods are sent at invoice price (cost + profit).

Accounts Maintained by Head Office:

Branch Stock Account – to record movement of goods.
Branch Debtors Account – to record credit sales and collections.
Branch Expenses Account – for expenses of the branch.
Branch Adjustment Account – to find out gross profit or loss.
Branch Profit & Loss Account – to ascertain net profit or loss. Objective of branch Accounting

Features:

It provides detailed control over stock and debtors.
Detects stock losses, surpluses, or thefts easily.
Suitable for businesses with large or multiple branches. Objective of branch Accounting

Difference between the Two Systems

Basis	Debtors System	Stock and Debtors System
Detail	Simple and less detailed	More detailed and accurate
Number of Accounts	Only one Branch Account	Several branch-related accounts
Goods sent at	Usually at cost	Often at invoice price
Control over stock	Limited	Strong and detailed
Usefulness	For small branches	For large branches

Conclusion:

Branch Accounting helps the Head Office evaluate each branch’s performance and maintain effective control.Objective of branch Accounting

The Debtors System is simple and suitable for small branches, while the Stock and Debtors System offers a complete and detailed picture for large or busy branches.

Note- Important questions of Financial Accounting

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Banking and Insurance

Basel Norms of Banking in India

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What are Basel Norms? Explain the developments in these norms over the years.

Meaning of Basel Norms

Basel Norms are international banking regulations issued by the Basel Committee on Banking Supervision (BCBS) to ensure that banks across the world maintain minimum capital, proper risk management, and financial stability. They protect depositors and reduce the chances of bank failures.

What are Basel Norms?

Basel Norms are international banking regulations issued by the Basel Committee on Banking Supervision (BCBS).
They aim to strengthen the banking system by ensuring banks maintain adequate capital, risk management practices, and supervision standards. Basel norms of Banking in India.

In simple words:
👉 Basel norms help banks stay safe, avoid failures, and protect depositors by maintaining minimum capital and managing risks properly.

Developments in Basel Norms Over the Years

Basel norms evolved in three major phases:

Basel I,

Basel II,

Basel III,

and an upcoming framework called

Basel IV (informal name).

1. Basel I (1988) – First Stage of Global Banking Regulation

Objective:
To create a simple and uniform capital adequacy standard for banks.

Key Features:

Introduced the concept of Capital Adequacy Ratio (CAR) – minimum 8% capital. Basel norms of Banking in India.
Classified assets according to risk weights (0%, 20%, 50%, 100%).
Focused mainly on credit risk.
Simple structure, easy to implement.

Limitations:

Ignored other risks like market risk and operational risk.
Too simple for modern banking complexities.

2. Basel II (2004) – Improved Risk Sensitivity

Objective:
To make capital requirements more risk-sensitive and strengthen supervision.

Three Pillars of Basel II:

Pillar 1: Minimum Capital Requirements

Covers Credit Risk, Market Risk, and Operational Risk.
Offers advanced approaches like IRB (Internal Rating Based) methods.

Pillar 2: Supervisory Review

Regulators review banks’ internal assessment of risks. Basel norms of Banking in India

Pillar 3: Market Discipline

Requires banks to disclose financial information to ensure transparency.

Advancements over Basel I:
✔ Included operational risk
✔ More accurate risk measurement
✔ Better supervision and transparency

Limitations:

Failed during the 2008 Global Financial Crisis because it underestimated risks.
Over-reliance on credit rating agencies.

3. Basel III (2010) – Post-Crisis Strengthening of Banks

Objective:
To address the weaknesses exposed during the 2008 crisis and build a stronger, more resilient banking sector. Basel norms of Banking in India

Key Features:

(a) Higher Capital Requirements

Increased minimum capital ratios.
Emphasis on Common Equity Tier 1 (CET1).

(b) Capital Buffers

Capital Conservation Buffer – 2.5%
Counter-cyclical Buffer – 0–2.5%

(c) Liquidity Standards

Liquidity Coverage Ratio (LCR) – banks must hold enough liquid assets for a 30-day stress period.
Net Stable Funding Ratio (NSFR) – ensures long-term stable funding.

(d) Leverage Ratio

Non-risk-based measure to prevent excessive borrowing. Basel norms of Banking in India

(e) Systemically Important Banks (SIBs)

Extra capital for “too big to fail” banks.

Importance:
✔ Builds shock-absorbing capacity
✔ Improves liquidity
✔ Reduces chance of bank collapse

4. Basel IV (2023 onwards – Informal Term)

(Not an official name, but commonly used for the revised Basel III final reforms.)

Key Developments:

Revised credit risk framework with standardized approaches.
Limits the use of banks’ internal models.
Introduced Output Floor – ensures banks do not lower capital by using advanced models.
Further strengthens capital for market & operational risk. Basel norms of Banking in India

Objective:
To make capital requirements more consistent, transparent, and comparable across banks globally.

Summary of Evolution

Basel I → Introduced minimum capital adequacy (simple).
Basel II → Added risk-sensitive framework (credit, market, operational risk).
Basel III → Stronger capital, liquidity norms after 2008 crisis.
Basel IV → Refinements to standardize and strengthen Basel III.

Note:- Important questions of Banking and Insurance services

if you would like to check the Syllabus of Banking and Insurance concerning M.com of Gundu. You must click on the Gndu.

Basel norms of Banking in India

Corporate accounting

Methods of Issue of debenture

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Banking and Insurance

Methods of risk management

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Discuss the Types and Methods of Risk Management in detail.

Meaning of Risk Management

Risk Management refers to the process of identifying, assessing, and controlling threats that can negatively affect an organisation’s operations, finance, or reputation.
It aims to minimise losses and ensure smooth functioning of business activities.

TYPES OF RISK MANAGEMENT 1.(Based on Types of Risks)

Risk management deals with various kinds of risks commonly faced by businesses, especially financial institutions.

1. Financial Risk Management

Deals with risks related to money and financial markets.

Includes:

Credit Risk (risk of borrowers not repaying loans)
Market Risk (loss due to changes in market prices, interest rates, exchange rates)
Liquidity Risk (inability to meet short-term obligations) methods of risk management

2. Operational Risk Management

Risk arising from internal processes, human errors, frauds, system failures, or external events.

Examples:

IT failures
Employee mistakes
Process breakdown
Cyber-attacks

3. Strategic Risk Management

Risks arising due to wrong business decisions, poor planning, or changes in the external environment. methods of risk management

Examples:

Wrong product decisions
Mismanagement
Competition
Technological changes

4. Compliance / Legal Risk Management

Risk due to failure to comply with rules, laws, regulations, or contractual obligations.

Examples:

Penalties
Legal disputes
Violation of regulatory norms

5. Reputational Risk Management

Risk that harms the goodwill or public image of the organisation. methods of risk management

Causes:

Fraud in the company
Poor customer service
Negative media coverage

6. Environmental and Social Risk Management

Risks coming from natural disasters or social issues.

Examples:

Floods, earthquakes
Environmental pollution
Labour conflicts

METHODS OF RISK MANAGEMENT (Steps & Techniques)

Risk management uses systematic methods to control and reduce risks.

1. Risk Identification

The first step is to identify the possible risks that may affect the business. methods of risk management

Methods:

Brainstorming
Past experience
SWOT analysis
Audits and inspections

2. Risk Assessment / Risk Analysis

After identifying risks, they are evaluated in terms of: methods of risk management

Probability (likelihood of occurrence)
Impact (effect on business)

Tools:

Risk Matrix
Cost–Benefit Analysis

3. Risk Control / Risk Treatment Methods

There are four major methods of treating or handling risks:

A. Risk Avoidance

The risk is completely avoided by not engaging in the activity that causes risk. methods of risk management

Example:

A company avoids exporting to a politically unstable country.

B. Risk Reduction / Mitigation

Taking steps to reduce the frequency or severity of risks.

Examples:

Installing fire alarms
Staff training
Cybersecurity measures

C. Risk Transfer

Transferring the risk to another party, usually through:

Insurance
Outsourcing
Contractual agreements

Example: Buying insurance to cover fire loss.

D. Risk Retention / Acceptance

When the risk is small or unavoidable, the business decides to bear it.

Example:

A shopkeeper keeps a small portion of risk for loss of goods.

4. Implementation of Risk-Control Measures

The selected methods are put into action.

Examples:

Installing CCTV cameras
Purchasing insurance policies
Changing internal processes

5. Monitoring and Review

Regular review of risks and control measures to ensure effectiveness because risks change over time. methods of risk management

Conclusion

Risk management is essential for ensuring stability, preventing losses, and improving decision-making. It protects organisations from uncertainties and helps them grow sustainably. Effective risk management uses a combination of techniques such as identification, assessment, risk reduction, transfer, and monitoring. methods of risk management

Important question of Insurance and Banking as following.

Reforms in Indian Banking in India

If you would like to check the Syllabus of Insurance and Banking as Mcom 3rd sem you must visit at the Gndu.

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Meaning of Department

1. Meaning of Departmental Accounts

Characteristics of Departmental Accounts

2. Objectives of Departmental Accounting

3. Methods of Departmental Accounting

Method 1: Separate Set of Books for Each Department

Explanation:

Suitable for:

Advantages:

Disadvantages:

Method 2: Single Set of Books with Columnar Format

Explanation:

Steps Followed:

Suitable for:

Departmental Accounting

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1. Meaning of Voyage Account

2. Standard Format of Voyage Account

3. Process of Preparing Voyage Account

Step 1: Identify the Voyage

Step 2: Open the Voyage Account

Step 3: Record All Voyage Expenses on the Debit Side

Step 4: Record All Voyage Incomes on the Credit Side

Step 5: Adjustments for Outstanding / Prepaid Items

Step 6: Treatment When Voyage is Completed within the Year

Step 7: Treatment When Voyage is Incomplete (Voyage in Progress)

Step 8: Closing the Voyage Account

Short Summary

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1. Capital Expenditure

Meaning:

Examples:

Characteristics of Capital Expenditure:

2. Revenue Expenditure

Meaning:

Examples:

Characteristics of Revenue Expenditure:

3. Deferred Revenue Expenditure

Meaning:

Examples:

Characteristics:

4. When Are Revenue Expenses Treated as Capital Expenses?

(i) They are incurred to acquire a fixed asset

(ii) They increase the efficiency or life of an existing asset

(iii) They bring a new advantage or long-term benefit

(iv) They are necessary to bring the new asset to working condition

Conclusion

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Meaning of Branch Account

Key Points:

Example:

Objectives of Branch Accounting

Systems of Keeping Books of Dependent Branches

1. Debtors System

Steps / Features:

Profit or Loss Calculation:

2. Stock and Debtors System

Accounts Maintained by Head Office:

Features:

Difference between the Two Systems

Conclusion:

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What are Basel Norms?

Developments in Basel Norms Over the Years

1. Basel I (1988) – First Stage of Global Banking Regulation

2. Basel II (2004) – Improved Risk Sensitivity

Pillar 1: Minimum Capital Requirements

Pillar 2: Supervisory Review

Pillar 3: Market Discipline

3. Basel III (2010) – Post-Crisis Strengthening of Banks

(a) Higher Capital Requirements

(b) Capital Buffers

(c) Liquidity Standards

(d) Leverage Ratio

(e) Systemically Important Banks (SIBs)