Question

p&L A/C of a bank required
A) 4 schedules
B) 5 schedules
C) 6 schedules
D) 9 schedules​

Answer 1

Answer:

ok

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Answer 2

Answer:

These includes

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These include: All revenue expenditures and provisions, viz. Rent, Taxes and Lighting, Salaries, Wages, Depreciation, Law charges etc. Provision for Bad Debt, Provision for Contingences, etc.

Profit and Loss Account:

Thus, Profit and Loss Account will present the net result of the operation. This accounts deals with the expenses and incomes of the current year, i.e. if incomes exceed expense, this is profit, and vice versa in the opposite case. The same is brought forward.

Appropriation:

Only appropriation items will appear in this account viz, amount transferred to General Reserve or Statutory Reserve or Proposed Dividend etc. and the balance will appear in the Liability side of the Balance Sheet.

These drafts and telegraphic transfers etc. are paid to the holders by the issuing bank’s branches who reimburse the money. Naturally, any such draft issued by a bank but which remains unpaid at the date of the Balance Sheet is treated as a liability of the issuing bank.

Bills for Collection:

These include drafts and hundies drawn by a creditor on his debtor, and the same is lodged with the bank for collection against documents already attached. These are numbered by the bank serially and all information about them is recorded in a book known as Bills for Collection Register. Until they are actually collected they are not recorded in any other account.

After collection — the entry will be:

Journal entry

These bills, at the time of preparing Final A/c, are shown on both sides of the Balance Sheet. It will be recorded on the Assets side since the bank will get the payment in due course and also on the Liabilities side since it will have to be accounted for to customers.

These items appear as:

On Liabilities side — Bills for collection, being Bills Received as per contra.

On Assets side — Bills Receivable, being Bills for Collection as per contra.

Acceptance, Endorsements and other obligations:

It is a liability of a bank in respect of bills accepted or endorsed on behalf of its customers including letter of credit issued and guarantees given. A security is usually required for this purpose and a commission is charged by the bank. The customers are liable to pay to the bank for full payment of the bills plus any loss or expenses that may be incurred.

As a result, this item will appear in both sides of the Balance Sheet in the following manner:

On Liabilities side:

Acceptance, Endorsements and other obligations as per contra.

Most of the business houses prefer to use cash credit although the rate of interest is higher since the same is most convenient to them.”