BCOC 137 Corporate Accounting Solved Assignment 2023 - 2024
IGNOU BCOM Solved Assignment 2023 - 24
Valid from 1st January 2024 to 31st December 2024
TUTOR MARKED ASSIGNMENT
COURSE TITLE: CORPORATE ACCOUNTING
ASSIGNMENT CODE: BCOC – 137/TMA/2023-24
FOURTH SEMESTER
COVERAGE: ALL BLOCKS
Maximum Marks: 100
Note: Attempt all the questions.
BCOC 137 Corporate Accounting Solved Assignment 2023 - 2024
Section – A
In this Post you will get BCOC 137 Corporate Accounting Solved Assignment 2023 - 2024 which is a very important subject in IGNOU BCOMG 2nd Semeter. In order to Secure Handsome Marks in IGNOU BCOMG Solved Assignment 2023 - 24 simply note down the solved assignment and submit it before 15th October 2024.
1. Distinguish between partnership and company forms of organizations. (10)
Ans: Difference Between Partnership and Company
| Basis | Partnership | Company |
| 1.Definition | Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. | A Company means a company formed and registered under this Act or an existing Company. |
| 2.A Legal Person | A firm is not a legal Entity. | A Company on the other hand, is a Legal Person. |
| 3. Liability | In a Partnership, the liability of partners is unlimited. | In case of a company, which is limited, the liability of the members is limited to the extent of its share capital. |
| 4.Transfer of Shares | In a firm, a partner cannot transfer or assign the whole of his share without the consent of all the partners of the firm | In a company, a shareholder can transfer his share subject to the provisions of the Articles of the Company. |
| 5.Mutual Agents | In a firm, all partners are mutual agents. | In a company, a member is not an agent of |
| 6.Registration | Registration of a firm is not compulsory under the Partnership Act, 1932. | Registration of a company is compulsory under the Companies Act, 2013. |
| 7.Management | Management vests in the hands of the Partners except in the case of Sleeping Partners. | Management vests in the board of Directors, elected periodically by the shareholders. |
| 8.Creditors | Creditors of firm are also creditors of the partners individually as well. | Creditors are only the creditors of the company and not of the individual shareholders. |
| 9.Statutory obligations | A partnership has less statutory obligations | A company is strictly regulated under the Companies Act, 2013. |
| 10.Accounts | Accounts of a partnership firm need not be audited by the auditor. | Accounts of a company must be audited by an auditor. |
2. Can a company forfeit shares for non-payment of calls? If so, explain the procedure of share forfeiture. (10)
Ans: Forfeiture of shares: A company has no inherent power to forfeit shares. The power to forfeit shares must be contained in the articles. Where a shareholder fails to pay the amount due on any call, the directors may, if so authorized by the articles, forfeit his shares. Shares can only be forfeited for non-payment of calls. An attempt to forfeit shares for other reasons is illegal. Thus where the shares are declared forfeited for the purpose of reliving a friend from liability, the forfeiture may be set aside.
Before the shares are forfeited the shareholder:
i) Must be served with a notice requiring him to pay the money due on the call together with interest;
ii) The notice shall specify a date, not being earlier than the expiry of 14 days from the date of service of notice, on or before which the payment is to be made and must also state that in the event of non-payment within that date will make the shares liable for forfeiture;
iii) There must be a proper resolution of the board;
iv) The power of forfeiture must be exercised bonafide and for the benefit of the company.
A person, whose shares have been forfeited, ceases to be a member of the company. But he shall remain liable to pay to the company all moneys which at the date of forfeiture were payable by him to the company in respect of the shares. The liability of such a person shall cease as and when the company receives payment in full in respect of the shares.
3. Describe the functions of modern commercial banks. (10)
Ans: Functions of Modern Commercial Banks
A) Primary functions:
1. Acceptance of deposits: It is the most important function of a bank. Under this function, bank accepts deposits from individuals and organizations and finances the temporary needs of firms.
2. Making loans and advances: The second important function of banks is advancing loan. The commercial bank earns interest by lending money.
3. Investments of Funds: Besides loans and advances, banks also invest a part of its funds in securities to earn extra income.
4. Credit Creations: The Bank creates credit by opening an account in the name of the borrower while making advances. The borrower is allowed to withdraw money by cheque whenever he needs.
B) Secondary functions of a bank: This function is divided into two parts
1. Agency functions: These functions are performed by the banker for its own customer. For these bank changes certain commission from its customers. These functions are:
- Remittance of Funds: Banks help their customers in transferring funds from one place to another through cheques, drafts etc.
- Collection and payment of Credit Instruments: Banks collects and pays various credit instruments like cheques, bill of exchange, promissory notes etc.
- Purchasing and Sale of securities: Banks undertake purchase and sale of various securities like shares, stocks, bonds, debentures etc. on behalf of their customers.
- Income Tax Consultancy: Sometimes bankers also employ income tax experts not only to prepare income tax returns for their customer but to help them to get refund of income tax in appropriate cases.
- Dealings in Gold/Silver: The buying and selling of gold and silver.
2. General Utility functions: These are certain utility functions performed by the modern commercial bank which are:
- Locker facility: Banks provides locker facility to their customers where they can their valuables.
- Traveler’s cheques: Bank issue travelers cheques to help their customers to travel without the fear of theft or loss of money.
- Gift cheque: Some banks issue gift cheques of various denominations to be used on auspicious occasions.
- Letter of Credit: Letter of credit is issued by the banks to their customers certifying their credit worthiness. Letter of credit is very useful in foreign trade.
- Foreign Exchange Business: Banks also deal in the business of foreign currencies.
4. What is a debenture? How does it differ from a share? (10)
Ans: Meaning of Debentures: According to Sec. 2 (30) of the companies Act, 2013, debentures include “debenture stock, bonds and any other securities of a company evidencing a debt, whether constituting a charge on the assets of the company or not.”
Debentures are debt instruments issued by a joint stock company. Amounts collected by way of debentures form part of the loan capital of a company. They are repayable after a fixed period. Debenture holders get interest on their debentures. They are creditors of the company. They do not get dividend. Only shareholders get dividend.
The characteristics of debentures can be summarised as follows:
a) Debentures are debt instruments.
b) They generally carry fixed rate of interest.
c) They are normally repayable at the end of a fixed period. Repayment of debenture or cancellation of debenture liability in the books of the company is known as redemption of debentures.
d) They can be issued at par, premium or at discount depending on the reputation of the company.
e) They can either be placed privately or offered for public subscription.
f) They may or may not be listed in the stock exchange.
Difference between Shares and Debentures
| Basis of Difference | Shares | Debentures |
| Ownership | Shareholders are the owners of the Company. | Debenture holders are the Creditors of the Company. |
| Repayment | Normally, the amount of share is not returned during the life of the company. | Debentures are issued for a definite period. |
| Convertibility | Shares cannot be converted into debentures. | Debentures can be converted into shares. |
| Restrictions | There are legal restrictions to be fulfilled to issue shares at a discount. | There are no restrictions on the issue of debentures at a discount. |
| Purchase | A company can buy back its own shares, but subject to fulfillment of stipulated conditions. | A Company can purchase its own debentures from the market without any conditions. |
| Forfeiture | Shares can be forfeited for non-payment of allotment and call monies. | Debentures cannot be forfeited for non-payment of call monies. |
| Payment of dividend/ Interest | Shareholders will get dividend which is dependent on the profits of the company. | Debenture holders will get interest on debentures and will be paid in all circumstances, whether there is profit or loss. |
5. Enumerate four items each of current assets and current liabilities. (10)
Ans: Coming Soon
BCOC 137 Corporate Accounting Solved Assignment 2023 - 2024
Section – B
6. How does cash flow analysis helps the management in decision making? (6)
A Cash Flow Statement is similar to the Funds Flow Statement, but while preparing funds flow statement all the current assets and current liabilities are taken into consideration. But in a cash flow statement only sources and applications of cash are taken into consideration, even liquid asset like Debtors and Bills Receivables are ignored.
A Cash Flow Statement is a statement, which summarises the resources of cash available to finance the activities of a business enterprise and the uses for which such resources have been used during a particular period of time. Any transaction, which increases the amount of cash, is a source of cash and any transaction, which decreases the amount of cash, is an application of cash.
Simply, Cash Flow is a statement which analyses the reasons for changes in balance of cash in hand and at bank between two accounting period. It shows the inflows and outflows of cash.
The Cash Flow Statement is prepared because of number of merits, which are offered by it. Such merits are also termed as its objectives. The important objectives are as follows:
a) To Help the Management in Making Future Financial Policies: Cash Flow statement is very helpful to the management. The management can make its future financial policies and is in a position to know about surplus or deficit of cash.
b) Helpful in devising the cash requirement: Cash flow statement is helpful in devising the cash requirement for repayment of liabilities and replacement of fixed assets.
c) Helpful in finding reasons for the difference: Cash Flow Statement is also helpful in finding reasons for the difference between profits/losses earned during the period and the availability of cash whether cash is in surplus or deficit.
d) Helpful in predicting sickness of the business: Cash flow is helpful in predicting sickness of the business. A sound cash position is a true indicator of sound financial position.
e) Supply Necessary Information to the Users: A Cash Flow Statement supplies various information relating to inflows and outflows of cash to the users of accounting information in the following ways:
(i) To assess the ability of a firm to pay its obligations as soon as it becomes due;
(ii) To analyze and interpret the various transactions for future courses of action;
(iii) To see the cash generation ability of a firm;
(iv) To ascertain the cash and cash equivalent at the end of the period.
f) Helps the Management to Ascertain Cash Planning: No doubt a cash flow statement helps the management to prepare its cash planning for the future and thereby avoid any unnecessary trouble.
7. Describe the various advantages of a Holding Company. (6)
Ans: Advantages of Holding Company: Following are the important advantages of holding company:
a) Easy Formation: The holding company can be formed very easily. There is no legal formality. Any company may purchase the majority shares from stock exchange and can become holding company.
b) Large Business: A holding company can collect the capital and expand the business on large scale.
c) Foreign Capital: The holding company may also attract the foreign capital for the expansion of a business.
d) A Stable Combination: The holding company is a very stable form of business organization. Its life is not affected by the disagreement of subsidiary company.
e) Goodwill: When the goodwill of the holding company is established in the market, it also improves the goodwill of its subsidiary company before the public.
f) Separate Position: The subsidiary companies can maintain their separate position under this system. They do not lose their identity.
g) Control on Production: A holding company can check the production and adjusts the supply according the demand. So over production cannot take place.
8. Identify the difference between Holding Company and Subsidiary Company? (6)
Ans:
9. Explain the characteristics of Goodwill in detail. (6)
Ans: Goodwill is an intangible asset which indicates the value of the reputation of a firm. It comes into existence due to various favourable factors such as favourable location, efficient management, good quality of product and services etc. It is one factor which distinguishes an old established business from a new business. It can also be defined as the capacity of a business to earn extra income.
In the words of Eric L. Kohler “Goodwill is the present value of expected future profits in excess of a normal return on the investment in tangible assets.”
Features of goodwill: Goodwill has certain peculiar features which distinguish from other assets and it is worthwhile considering them here.
a) It is an intangible and not a fictitious asset.
b) It indicates the capacity of a firm to earn extra income.
c) It comes into existence due to various favourable factors such as favourable location, efficient management, good quality of product and services etc.
d) It is difficult to ascertain the exact value of goodwill. The value of goodwill fluctuates from time to time due to changing circumstances which are internal and external to business.
e) It can be sold along with the sale of the business.
f) Goodwill may be positive value or negative value. It is positive when the value of business is more than the value of its net separable assets and negative when the value of the business is less than the value of its net separable assets.
10. Discuss various methods of valuation of shares? Explain. (6)
Ans: Methods of valuation of shares
There are primarily three methods for valuation of shares, namely, Net assets methods which takes into account the net assets employed and earning capacity or yield basis or market method which takes into account the earning capacity of the organisations. Third method of valuation of shares considers both net asset method and earning yield method while calculating value of a share. All these methods are stated below:
1) Net assets method: Under this method value per share is obtained by dividing net value of the company’s assets subtracting therefrom the amount of the outsider’s liabilities and preference shareholder’s claims, with the number of equity shares. Net asset value may be expressed by the following formula:
Net assets value of a shares = (Net value of assets – Outsider’s Liabilities – preference shareholders’ claim)/Number of equity shares.
If goodwill is already given in the question, it is also added with assets while calculating value of a shares.
2) Yield or Earning capacity valuation or income method: In this method the valuation of share is done by comparing expected rate of return of a concern with normal rate of return. If the particular concern is able to give a higher return than the normal yield, its value should be higher. On the other hand, if it gives less return than normal yield, its value will be lower. The following steps are to be followed to find the value of shares:
- Ascertaining the future maintainable profits.
- Ascertaining the normal rate of return.
- Determining the capitalisation factor or the multiplier which is 100 divided by the normal rate of return. If normal rate of return is 10%, multiplier would be 100/10=10.
- Ascertaining the capitalised value of maintainable profits. This is ascertained by multiplying the future maintainable profits with the multiplier ascertained under step c.
- The yield value of share is ascertained by dividing capitalised value of maintainable profits under step d) with the number of equity shares.
This method is suitable for growing companies and small investors but this method fails to consider net asset of the company.
3) Fair value or dual method: This method is the combination of both the above methods. Fair value of share= intrinsic value+ yield value/2
Since this method takes the average of the values obtained in the net assets basis and earning basis, it makes an attempt to minimise the demerits of both net assets basis and earnings basis methods.
BCOC 137 Corporate Accounting Solved Assignment 2023 - 2024
Section – C
a) Net payment method of Purchase Consideration. (10+10)
b) Intrinsic worth method of Purchase Consideration.
Q.12 Write the short notes on the following: (8+6+6)
a) Disposal of non-Banking Assets.
b) Condition for the license of Banking Company.
c) Distinction between a Bank and a NBFC.
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