CA CMA Syam sundar

  Complete Accounts Receivable (AR) Process with Accounting Entries Managing Accounts Receivable (AR) effectively ensures steady cash flow and minimizes financial risk. Below is a step-by-step AR process, from invoice generation to payment collection, including accounting entries at each stage. 1️⃣ Sales & Invoice Generation When a company sells goods or services on credit, it records the transaction as an account receivable. 📌 Entry: Dr. Accounts Receivable (Asset) 🏦 Cr. Sales Revenue (Income) 💰 ✅ This records revenue and recognizes the customer's obligation to pay. 2️⃣ Payment Tracking & Collections The AR team monitors due dates, sends reminders, and follows up on overdue invoices. (No entry here—only tracking and reporting). If payment is delayed, the company may impose late fees or interest charges: 📌 Entry (if applicable): Dr. Accounts Receivable (Asset) 🏦 Cr. Interest Income (Income) 💰 ✅ This recognizes additional revenue from late fees. 3️⃣ Paym...

 𝐅𝐮𝐥𝐥 𝐃𝐞𝐭𝐚𝐢𝐥𝐬 𝐨𝐟 𝐀𝐜𝐜𝐨𝐮n𝐭𝐬 𝐑𝐞𝐜𝐞𝐢𝐯𝐚𝐛𝐥𝐞: Definition Accounts Receivable (AR) refers to the amount of money that customers owe to a business for goods or services sold on credit. Types of Accounts Receivable Trade Accounts Receivable: Amounts owed by customers for goods or services sold in the normal course of business. Non-Trade Accounts Receivable: Amounts owed by customers for goods or services sold outside of the normal course of business. Notes Receivable: Formal written promises to pay a certain amount of money at a specified future date. Importance of Accounts Receivable Cash Flow: AR provides a source of cash flow for businesses. Liquidity: AR helps businesses meet their short-term financial obligations. Growth: AR can help businesses grow by providing the necessary funds for expansion. Accounts Receivable Process Sales: Goods or services are sold to customers on credit. Invoicing: Customers are sent invoices for the amount owed. Payment: Customers...

  Common Mistakes in Accounts Payable & How to Avoid Them Accounts Payable (AP) plays a crucial role in financial stability, but common mistakes can lead to inefficiencies and risks. Here are key pitfalls to watch out for: 1️⃣ Data Entry Errors – Mistyped amounts or vendor details can cause overpayments or missed payments. Double-check entries! 2️⃣ Ignoring Invoice Matching – Failing to match invoices with purchase orders may lead to duplicate or fraudulent payments. 3️⃣ Late Payments – Missing due dates harms vendor relationships. Set up reminders or use AP automation. 4️⃣ Unverified Vendor Details – Incorrect or fraudulent accounts can result in financial losses. Always verify vendor information. 5️⃣ Weak Controls – Lack of approvals or oversight increases fraud risks. Implement strong internal checks. 6️⃣ Missed Discounts – Many vendors offer early payment discounts—take advantage to improve cash flow. 7️⃣ Poor Recordkeeping – Incomplete documentation can cause audit issue...

Key Financial Reporting & Audit Considerations for FY 2024-25: 1️⃣ CARO 2020 Exemption for Small Companies: Small companies are excluded from the applicability of CARO 2020. Ensure compliance assessment before reporting. 2️⃣ Provisions & Contingencies – AS 29 / Ind AS 37: Review all outstanding provisions to ensure they are correctly recognized, measured, and disclosed under the applicable accounting standards. 3️⃣ Unadjusted Advances Over 365 Days: Identify old advances that have remained unadjusted beyond a year and assess their treatment under Deposits Rules. 4️⃣ FD-Backed Loans – Charge Creation: If the company has availed loans backed by fixed deposits, verify that a charge has been appropriately created and disclosed. 5️⃣ Interest Provision for Delayed MSME Payments: Failure to pay a micro or small non-trading enterprise within the stipulated timeline under the MSMED Act requires an interest provision in financials. 6️⃣ CSR Expenses – Separate Line Item in P...

 Accounting Formulas 1. Gross Profit = Sales - Cost of Goods Sold 2. Gross Profit Margin = (Gross Profit / Sales) x 100 3. Operating Profit = Gross Profit - Operating Expenses 4. Operating Profit Margin = (Operating Profit / Sales) x 100 5. Net Profit = Operating Profit - Taxes and Interest 6. Net Profit Margin = (Net Profit / Sales) x 100 7. Return on Investment (ROI) = (Gain / Cost) x 100 8. Return on Equity (ROE) = (Net Profit / Shareholder Equity) x 100 9. Asset Turnover = Sales / Total Assets 10. Inventory Turnover = Cost of Goods Sold / Average Inventory 11. Days Sales Outstanding (DSO) = Accounts Receivable / Sales x Number of Days 12. Days Inventory Outstanding (DIO) = Inventory / Cost of Goods Sold x Number of Days 13. Current Ratio = Current Assets / Current Liabilities 14. Quick Ratio = (Current Assets - Inventory) / Current Liabilities 15. Debt-to-Equity Ratio = Total Debt / Shareholder Equity 16. Earnings Per Share (EPS) = Net Profit / Number of Shares 17. Price-Earnin...

 Transition from accounting to FP&A is not easy. Many accountants have made this shift. They obviously struggle at first, but they learnt. Everything feels new.  In accounting - There are rules.  - Fixed formats.  - Clear answers.  But in FP&A - there are no perfect answers.  - Only possibilities. One needs to think differently.  Instead of just reporting numbers, one needs to explain what they mean. And that is hard. I remember my first forecast. I spent hours making it perfect. Every number checked. Every formula right. But my manager asks me just one question, "So what?" I freeze. The numbers are correct, but I haven’t explained the story behind them.  - What is changing?  - Why is it happening?  - What should we do about it?  That’s what matters. Slowly, one learns. One asks better questions. Talks to different teams. Realises that FP&A is about decisions. In FP&A, no one expects perfect answers. But they expect ...

 Advance Tax: A Simplified Guide What is Advance Tax? Advance tax is a payment made before the end of the financial year. It's also known as "pay as you earn." When is Advance Tax Payable? You need to pay advance tax if: - Your tax liability exceeds ₹10,000 after deducting TDS, TCS, etc. Exceptions Senior citizens (60+ years) with no business income are exempt from paying advance tax. Advance Tax Payment Due Dates Mark these dates in your calendar: - June 15: 15% of advance tax payable - September 15: 45% of advance tax payable - December 15: 75% of advance tax payable - March 15: 100% of advance tax payable Presumptive Scheme If you've opted for a presumptive scheme under 44AD or 44ADA, you only need to pay one installment by March 15. Why Pay Advance Tax? Don't skip paying advance tax! You might face consequences like interest under: - Section 234A (interest for late filing of return) - Section 234B (interest for non-payment of advance tax) - Section 234C (inter...

GST on Corporate Guarantee : one company (let’s say Company H) provided a corporate guarantee to a Bank or Financial institutions on behalf of its related entity, Company S . Since Company H and Company S are related persons under GST law, the question arises: ➡ Is a Corporate Guarantee taxable under GST? ➡ If yes, on what value should it be taxed, considering it is provided free of cost? Analysis As per Section 7(1)(c) read with Para 3 of Schedule I of the CGST Act, 2017, any supply of goods or services between related persons or distinct persons, made in the course or furtherance of business, is deemed a supply even without consideration. Further, Rule 28(2) of the Valuation Rules, 2017, provides that the value of a Corporate Guarantee shall be determined as: ✅ 1% per annum of the guaranteed amount (irrespective of whether the loan is partly or fully utilized) OR ✅ Actual consideration charged (if any) Whichever is higher However, as per the proviso under Rule 28, if the recip...

 Tasks you need to complete on GST portal before 31/03/2025 1. Taxpayers can opt for Composition Scheme (CMP-02) for the FY 2025-26 by accessing the GST Portal, which will be open up to March 31, 2025.  2. GTA desirous of opting to pay GST under the Forward Charge Mechanism for FY 2025-26 are required to file a declaration in Annexure V on GST portal and the last date to file is 15.03.25. 3. File LUT form for FY 2025-26 by 31.03.25 which is available on GST portal for making zero rated supplies (Export) from 1st April onwards.

  Red Flags In Financial Statements Of Corporates For Credit Risk Analysis Financial statements of corporates are crucial for making smart investment choices and credit risk analysis in banks. They include the balance sheet, income statement, cash flow statement.They reveal a company’s health and potential for growth. These are useful for investors, analysts, and other stakeholders to make informed decisions. However, financial statements can sometimes contain red flags – signals of potential problems or hidden irregularities. Knowing what these red flags are key to making informed decisions about investing or doing business with a company. ◼️BALANCE SHEET 1. High Debt Levels High levels of debt increase financial risk, especially if not aligned with sustainable earnings and cash flows. It can strain liquidity, increase interest expenses, and limit flexibility in challenging economic environments. 2. Negative Equity 3. Declining Asset Quality 4. Increasin...

  Accounts Receivable Interview: From Basics to Advanced Technicals 🔧 Whether stepping into your first Accounts Receivable (AR) role or aiming for a senior position, excelling in your interview is all about preparation. Here's a guide to mastering key questions from basic concepts to advanced technicalities – with smart answers to leave a lasting impression! 🔹 1. What is the Accounts Receivable process? Why they ask: To assess your understanding of core AR functions. Best Answer: "Accounts Receivable involves tracking and managing customer invoices and payments. The process typically includes generating invoices, recording payments, reconciling customer accounts, following up on overdue balances, and ensuring accurate reporting. Timely collections and accurate postings are critical to maintaining cash flow and financial health." 🔹 2. How do you manage overdue invoices? Why they ask: To gauge your collection strategy and communication skills. Best Answer: "I priori...

  Essential Excel Formulas for Accounts Payable (AP) Management Managing accounts payable in Excel requires efficient tracking of due payments, invoice aging, reconciliation, and discount calculations. Below are some key formulas to streamline AP processes: 1. Invoice Due Date Calculation Determine when an invoice is due based on the invoice date and payment terms: = A2 + B2 • A2: Invoice Date • B2: Payment Terms (e.g., 30 for Net 30) 2. Identifying Overdue Invoices Check if an invoice is past its due date: =IF(TODAY()>C2,"Overdue","Not Due") • C2: Due Date 3. Calculating Days Past Due Find out how many days an invoice is overdue: =IF(TODAY()>C2, TODAY()-C2, 0) • C2: Due Date 4. Early Payment Discount Calculation Determine the discount amount if payment is made within the discount period: =IF(TODAY()<=D2, E2 * F2, 0) • D2: Discount Deadline • E2: Invoice Amount • F2: Discount Rate (e.g., 0.02 for 2%) 5. Outstanding Balance Calculation Trac...

 Common Accounting Interview Questions: What is Working Capital? The difference between current assets and current liabilities, representing liquidity for short-term obligations. What is Trial Balance? A statement listing all ledger account balances to verify that total debits equal total credits. What are Financial Statements? Records of financial activities, including: Income Statement: Shows revenues and expenses. Balance Sheet: Displays assets, liabilities, and equity. Cash Flow Statement: Tracks cash inflows and outflows. Difference Between Amortization and Depreciation? Amortization: Allocates intangible asset costs over time. Depreciation: Reduces tangible asset costs over their useful life. What is Accrued Expense? Expenses incurred but not yet paid (e.g., wages payable). What is the Going Concern Concept? Assumes a business will continue operating normally without liquidation. What is the Matching Concept? Matches expenses with the revenues they help generate in the same p...

  𝗝𝗩 𝘃𝘀. 𝗖𝗼𝗻𝘀𝗼𝗿𝘁𝗶𝘂𝗺 𝗶𝗻 𝗠𝗲𝗴𝗮 𝗣𝗿𝗼𝗷𝗲𝗰𝘁𝘀 – 𝗞𝗲𝘆 𝗗𝗶𝗳𝗳𝗲𝗿𝗲𝗻𝗰𝗲𝘀 In mega projects, companies often collaborate to leverage expertise and resources. Two common structures are Joint Ventures (JVs) and Consortiums, but they operate differently. Here’s a breakdown: 🔹 Legal Structure 𝗝𝗩: A separate legal entity is formed, with partners sharing ownership, risks, and profits. 𝗖𝗼𝗻𝘀𝗼𝗿𝘁𝗶𝘂𝗺: No new entity is created; partners collaborate under an agreement while remaining independent. 🔹 Risk & Liability 𝗝𝗩: Partners have shared liability for the entire project. 𝗖𝗼𝗻𝘀𝗼𝗿𝘁𝗶𝘂𝗺: Each member is responsible only for their assigned scope, limiting liability. 🔹 Decision-Making & Governance 𝗝𝗩: Governed by a board or management structure with predefined decision-making rules. 𝗖𝗼𝗻𝘀𝗼𝗿𝘁𝗶𝘂𝗺: Each partner retains autonomy, coordinating through a lead partner or contractual arrangement. 🔹 Profit & Taxation 𝗝𝗩: Profi...

 Indian Accounting Standards (Ind AS) Framework & Presentation 1. Ind AS 1 – Presentation of Financial Statements: Sets the structure and content of financial statements. 2. Ind AS 7 – Statement of Cash Flows: Guidelines for preparing cash flow statements. 3. Ind AS 8 – Accounting Policies, Changes in Accounting Estimates, and Errors: Specifies accounting policies and treatment of errors. 4. Ind AS 10 – Events after the Reporting Period: Defines adjustments for post-reporting date events. 5. Ind AS 34 – Interim Financial Reporting: Guidelines for interim (quarterly) financial statements. 6. Ind AS 113 – Fair Value Measurement: Standardizes fair value calculations. Assets 7. Ind AS 2 – Inventories: Defines valuation and recognition of inventories. 8. Ind AS 16 – Property, Plant & Equipment (PPE): Covers recognition, depreciation, and derecognition of PPE. 9. Ind AS 38 – Intangible Assets: Covers goodwill, patents, and trademarks. 10. Ind AS 40 – Investment Property: Covers a...

  In Accounts Payable (AP), suppliers frequently reach out with various queries related to invoices, payments, and account reconciliation. Here are some common supplier queries and how to handle them: --- 1. Payment-Related Queries 1.1 Payment Status Inquiry Query: "When will my invoice be paid?" ✅ Check in SAP T-Code: FBL1N (Vendor Line Item Display) ✅ Look for invoice status (Cleared = Paid, Open = Pending) ✅ Verify due date and payment terms ➡ Response: "Your invoice [Invoice No.] is scheduled for payment on [Payment Date]." --- 1.2 Payment Not Received Query: "We have not received the payment. Can you confirm?" ✅ Check in SAP T-Code: F110 (Payment Run) or FBL1N ✅ Verify if payment was processed & check bank details ✅ If processed, send remittance advice ➡ Response: "Your payment was processed on [Date]. Here’s the remittance advice. Please check with your bank." --- 1.3 Short Payment / Deduction Query: "Why was the pay...

  Registration Process for LLP The registration process for a Limited Liability Partnership (LLP) in India is governed by the Ministry of Corporate Affairs (MCA) under the Limited Liability Partnership Act, 2008. Here’s a step-by-step guide: Step 1: Obtain Digital Signature Certificate (DSC) -All designated partners must obtain a Class 3 Digital Signature Certificate (DSC). -It is required for filing forms electronically on the MCA portal. -Can be obtained from certifying authorities like eMudhra, Sify, or NSDL. Step 2: Apply for Director Identification Number (DIN) or Designated Partner Identification Number (DPIN) -DIN/DPIN is required for designated partners. -Apply through Form DIR-3 (if not obtained earlier). Step 3: Name Reservation (LLP-RUN) -File LLP-RUN (Reserve Unique Name) form on the MCA portal. -Propose up to two names, ensuring they are unique and comply with naming guidelines. -MCA may approve or request resubmission if the name conflicts with existing en...

  MSME dues due beyond the time limit have to be cleared by 31st Mar 2025: 1. Introduction: Section 43B(h) was introduced in the Finance Act, 2023, and applies from AY 2024-25 onwards. It deals with the deduction of payments made to Micro and Small Enterprises (MSEs) under the Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006. 2. Deduction Allowed on Payment Basis: Any sum payable to MSEs for goods or services will be allowed as a deduction only in the year in which the actual payment is made. 3. Exception – Statutory Payment Deadlines: If the payment is made within the time limit prescribed under Section 15 of the MSMED Act, 2006, deduction will be allowed on an accrual basis (i.e., even if not paid before the year-end). Section 15 prescribes: 45 days if there is a written agreement. 15 days if there is no agreement. 4. Non-MSMEs Are Not Covered: This provision applies only to payments to Micro and Small Enterprises (MSEs) registered under the MSMED Act, not t...

  Important GST Update: Mandatory E-Invoice Upload Within 30 Days – Effective April 1, 2025 🚨 Starting April 1, 2025, the Goods and Services Tax Network (GSTN) has mandated that taxpayers with an Annual Aggregate Turnover (AATO) of Rs 10 crore and above must upload e-invoices to the Invoice Registration Portal (IRP) within 30 days of issuance. 🔹 Key Highlights of the New Rule: ✔️ Applicability : Businesses with AATO of Rs 10 Crore and Above ✔️ Deadline: Mandatory Upload With in 30 Days from Invoice Issuance ✔️ Effective Date: April 1, 2025 ✔️ Non-compliance = Penalties & Rejected Invoices 📌 Penalties for Non-Compliance: 🚨 Non-Issuance of E-Invoice: 100% of tax due or ₹10,000 per invoice (whichever is higher) 🚨 Incorrect or Invalid E-Invoice: ₹25,000 per invoice 🚨 Delayed Uploads Beyond 30 Days: System will automatically reject late invoices 📢 Action Required: Clear Your Backlog Before March 31, 2025! To avoid penalties and ensure compliance, all pending e...

  Tax & Compliance Insights 🎯💡 🔍 Understanding HUF (Hindu Undivided Family) HUF is a unique entity under Indian tax law that offers tax benefits by treating a family as a separate taxable unit. Here's what you need to know: ✅ Who can form an HUF? A Hindu family (including Buddhists, Jains, and Sikhs) with common ancestors can create an HUF. It consists of a Karta (head of the family) and Coparceners (family members). ✅ Why form an HUF? 🔹 Separate PAN & tax benefits 🏦 🔹 Can own property & run a business 📊 🔹 Income splitting reduces tax liability 💰 ✅ How is HUF taxed? HUF files a separate tax return, enjoys basic exemptions, deductions under 80C, and slab rates, just like an individual. 📌 Example: Let’s assume: 🔹 Mr. A earns ₹25 lakh annually. 🔹 His HUF owns property generating rental income of ₹7 lakh. ➡ Without an HUF: Mr. A would be taxed on ₹32 lakh. ➡️ With an HUF: ₹7 lakh is taxed separately, reducing his tax burden by approximately ₹2 lakh per y...

  Procurement Abbreviations You should know!!! Procurement & Sourcing #RFP (Request for Proposal): Invitation for suppliers to propose solutions and pricing. #RFQ (Request for Quotation): Request for price quotes for specific products/services. #RFI (Request for Information): Inquiry to gather general supplier capabilities. #PO (Purchase Order): A formal commitment to buy goods/services. #PR (Purchase Requisition): Internal document requesting procurement. Supplier & Contract Management #SLA (Service Level Agreement): Defines performance standards for services. #KPI (Key Performance Indicator): Metrics to measure procurement/supplier performance. #SOW (Statement of Work): Detailed description of tasks, deliverables, and timelines. #TCO (Total Cost of Ownership): Full cost of a product/service, including indirect expenses. #EPC (Engineering, Procurement, and Construction): Contract model for project delivery. #ERP (Enterprise Resource Planning): Soft...