HUMAN RESOURCE ACCOUNTING

Total value of Human Capital is to be found out by

 Assuming all employees are starting from that age group (i.e. starting from same age) and end at the last age.

 Multiply average earnings with PVF.

 Multiply the present value earnings with total no of employees.

 Aggregate all present values to get value of Human Capital of a particular category.


ECONOMIC VALUE ADDED (EVA)

EVA = Net Operating Profit After Tax – Weighted Average Cost of Capital
= NOPAT – WACC

Where :-

NOPAT = PAT + Interest (+/-) Extraordinary Items

WACC = (Equity/Cap Emp) * Ke + (Pref Shares/Cap Emp) * Kp + (Debt/Cap Emp) * Kd

Where:-

Ke = Cost of Equity = Irf + Beta ( Irm – Irf)

Kd = Cost of Debt = [Interest(1-Tax Rate)/Long Term Borrowings] * 100

Note :

 If multiple Beta are given take Highest

 Capital Employed = Assets – Outside Liabilities (or) Total capital i.e Equity + Pref + Debt

 If market capitalization is given for equity that amount shall be considered for calculating rate of WACC on total capital employed. However while calculating WACC we take book value of equity.


FUND BASED ACCOUNTING ( NON PROFIT ORGANISATION)

Statement of Income and Expenditure

 Shall be prepared for Unrestricted fund and Restricted Fund.

 Restricted Funds receipts shall be accounted to the extent it is used.

 Transfers shall be separately presented.

Statement of Changes in Fund Balance

Balance shall be arrived by Opening Balance + Additions – Deductions (+/-) Transfers.

It shall be prepared for various funds Restricted funds, Endowment , Development funds etc.

Individual Balance sheets shall be prepared for each fund and a general balance sheet shall be prepared for Unrestricted funds.

Notes:

 Advances paid for purchase of land and payments to contractors for construction of buildings shall be shown directly in Balance sheet.

 Assets completed shall be transferred to general / unrestricted fund.

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DEFINITION OF ACCOUNTS

An account is a formal record, in the ledger, of all transactions relating to changes in particular item. It is a Used to convey information on transaction.

Classification of Accounts

Accounts can be classified in two ways: (a) Traditional Classification; (b) Modern classification.

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MEANING OF ACCOUNTING

The art of recording , classifying and summarizing , in a significant manner and in terms of money , transaction and events which are, in part at least, of financial character, and interpreting the result thereof."

The three important aspects of accounts have been highlighted by the above definition.


1. Account as an Art & science.


2. Accounting is done for Business transaction.


3. Accounting is a system.

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MEANING OF ACCOUNTING

The art of recording , classifying and summarizing , in a significant manner and in terms of money , transaction and events which are, in part at least, of financial character, and interpreting the result thereof."

The three important aspects of accounts have been highlighted by the above definition.


1. Account as an Art & science.


2. Accounting is done for Business transaction.


3. Accounting is a system.

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Agricultural Income

Any income which you receive as income from any agricultural activicity is demand as not included in total income. IF your father into agriculture and gives you a part of the income as gift then you dont need to pay tax it provided your father files his tax returns.

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