Short Notes on Office order

Office order is a means of internal communication within an organization. The term 'order' generally means telling subordinates to do or refrain from doing a specific job. But' passing an order high level executives want their subordinates carry out the order. When a message is conveyed as an order, it means that it carries a stamp of authority with it and has to be accepted. The high level executives circulate office order to the employees. Order is generally issued for posting of employees, promotion, suspension, transfer, and discharge from job, sanction or recession of yearly increment, imposing rules and regulations, enforcing certain rules or course of action etc.

An office order descends from the top of the organizational structure down to the employees for execution. Since office 'order is a formal course of action, it should preferably be written.

Office order is a sensible part of communication. Its subject matter should be well thought, organized, meaningful and attached with reasonable interpretation so that no unpleasant situation grows in the enterprise. It should be relevant, concise, and easy to understand and issued with proper authority and interpretation.

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Short Notes on Office circular

Office circular means written communication to be moved within the organization. It is issued to make the people concerned informed of the general matters of the organization.

In the words of R. Pal and J. S. Korlahalli "Office circulars are meant to convey some information to a large number of people. Such information are usually of general nature and not confidential."

Thus, office circular is a written method of exchanging information by which the written message of higher level are sent to lower level for their information. By means of an office circular many people are made informed of the same matter simultaneously. It is an important means of establishing written communication about 'official matters among the employees of an organization.

An office circular can be made to reach the concerned people in two ways— (i) hanging on the notice board and 

(ii) distribution of copies of circular to the readers. 

In many organizations a notice board is hung near the main gate used for entry or exit. Copies of the circular are hung on the board. Of course many organizations follow the practice of hanging circulars on notice board fixed on walls adjacent to different departments of the organization. Of course, where readers are more or numerous, many copies of office circular are distributed among the readers with or without their signature.

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Short Notes on Annual General Meeting

Every company limited by shares is required to hold a meeting with all of its shareholders once a year. Such a meeting is called annual general meeting. The first annual general meeting must be held within 18 months from the date of its incorporation. In the subsequent years the annual general meeting should be held at least once a year, but under emergency the gap between two annual general meetings may be upto 15 months. The annual general meeting carries important message to the shareholders. Usually its agenda includes declaration of dividend of shares appointment of auditor and fixation of his fees, approval of auditors report and audited accounts, approval of annual report, appointment of new directors where necessary etc.

The notice of the annual general meeting should be sent to the shareholders at least 14 days before the meeting. However, a notice of less than 14 days may be sent with the consent of all shareholders expected to remain present. The agenda of the meeting should be sent with the notice, For failure to convince the annual general meeting in time the company itself and every director liable for such failure may be fined upto Tk. 500/.

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Short Notes on Extra-ordinary Meeting

Any general meeting convened in between two annual general meetings is called extra-ordinary meeting or extra-ordinary general meeting or emergency meeting. Usually such meeting is convened for discussing and resolving important and emergency topics. Exta-ordinary meeting can be convened by the directors or shareholders. It is generally convened for altering. any clause of Memorandum of Association (M/ A) or Articles of Association (A/A) change of share capital, removal of any director, alternation of the rights of debenture holders or for any fundamental change etc.

The owners of at least one-tenth of the paid up capital of the company may submit a prayer to the board of directors for an extra-ordinary meeting. The shareholders must state the reason of the meeting in the requisition letter and it must be signed by all of them and submitted in the company's registered office. Tice board of directors must convene the extra-ordinary meeting within 21 days from the submission of the requisition. On their failure the requisiteness themselves be able to convene the meeting. Of course, the meeting should be held within three months from the 'date of requisites will bear the same effects as it were convened by the board and all expenses will be borne by the company. However, such expenses may be realized from the fees of the directors at fault.

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Short Notes on Internship Program Report

An internship report is prepared by a student under internship program and submitted to the supervisor. It is returned to the student with some comments and suggestions. After necessary modifications and alterations the internee submits the final report to the supervisor who puts his signature on the report and recommends for its evaluation by a board.

From an internship report the supervisor can learn about the nature of the activities of the internee, pattern of work in a particular organization and the nature of the people guiding his activities there.

Thus, internship progress report plays its role as a media of communication between two organizations— one providing internees and the other offering opportunities as trainer for the internees.

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Popularity/ Advantages of Savings Accounts

Savings bank accounts are very popular among the general public because of the following advantages:

(a) A savings account can be opened with as little as Rs. 500 only. It helps the people of small means to save for their future.

(b) The balance lying in the savings bank earns some interest. The customer is benefited as his money grows with the bank.

(c) The money lying with the bank is quite safe. There is no fear of theft.

(d) The money can be withdrawn conveniently from the savings account.

(e) The customer gets the cheque book facility if his account is duly introduced by another account-holder and he keeps a minimum balance of $. 1000. It is quite easy to make payment to third parties by issuing cheques.

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Meaning of Unit banking

The banking system in different countries varies substantially from one another. Broadly speaking, however, there are two important types of banking systems, viz., unit banking and branch banking.

‘Unit banking’ means a system of banking under which banking services are provided by a single banking organization. Such a bank has a single office or place of work. It has its own governing body or board of directors. 

‘Unit banking’ functions independently and is not controlled by any other individual, firm or body corporate. It also does not control any other bank. Such banks can become member of the clearing house and also of the Banker’s Association. Unit banking system originated and grew in the U.S.A. Different unit banks in the U.S.A. are linked with each other and with other financial centers in the country through “correspondent banks.”

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Sources of a bank’s Income

A bank is a business organization engaged in the business of borrowing and lending money. A bank can earn income only if it borrows at a lower rate and lends at a higher rate. The difference between the two rates will represent the costs incurred by the bank and the profit. Bank also provides a number of services to its customers for which it charges commission. This is also an important source of income.

The followings are the various sources of a bank’s profit:

1. Interest on Loans: The main function of a commercial bank is to borrow money for the purpose of lending at a higher rate of interest. Bank grants various types of loans to the industrialists and traders. The yields from loans constitute the major portion of the income of a bank. The banks grant loans generally for short periods. But now the banks also advance call loans which can be called at a very short notice. Such loans are granted to share brokers and other banks. These assets are highly liquid because they can be called at any time. Moreover, they are source of income to the bank.

2. Interest on Investments: Banks also invest an important portion of their resources in government and other first class industrial securities. The interest and dividend received from time to time on these investments is a source of income for the banks. Bank also earns some income when the market prices of these securities rise.

3. Discounts: Commercial banks invest a part of their funds in bills of exchange by discounting them. Banks discount both foreign and inland bills of exchange, or in other words, they purchase the bills at discount and receive the full amount at the date of maturity. For instance, if a bill of Rs. 1000 is discounted for Rs. 975, the bank earns a discount of Rs. 25 because bank pays Rs. 975 today, but will get Rs. 1000 on the due date. Discount, as a matter of fact, is the interest on the amount paid for the remaining period of the bill. The rate of discount on bills of exchange is slightly lower than the interest rate charged on loans and advances because bills are considered to be highly liquid assets.

4. Commission, Brokerage, etc.: Banks perform numerous services to their customers and charge commission, etc., for such services. Banks collect cheques, rents, dividends, accept bills of exchange, issue drafts and letters of credit and collect pensions and salaries on behalf of their customers. They pay insurance premiums, rents, taxes etc., on behalf of their customers. For all these services banks charge their commission. They also earn locker rents for providing safety vaults to their customers. Recently the banks have also started underwriting the shares and debentures issued by the joint stock companies for which they receive underwriting commission.

Commercial banks also deal in foreign exchange. They sell demand drafts, issue letters of credit and help remittance of funds in foreign countries. They also act as brokers in foreign exchange. Banks earn income out of these operations. Read More

Precautions to be Taken by a Banker in Case of Lending Against Hypothecation

A banker should take the following precautions:

(a) Loans to be given to Reputed Parties Only: A banker should sanction loan only to such customers who have good reputation and sound financial position. Such parties should have a clean record of past dealings.

(b) Regular Inspection of Hypothecated Goods: The bank should regularly inspect the stock of the hypothecated goods. It should also verify the stocks with account books.

(c) Periodical Statement of Stocks: The banker should ask the borrower to submit periodical statement of stock. It should verify those statements with the stocks of the goods.

(d) Signboard of Hypothecation in Favour of the Banker: The banker should ask the borrower to display a signboard on the gate of the godown where the goods are stored indicating that the goods are hypothecated with the banker. The banker should regularly check that such display is being done. It will be a public notice and would avoid the chances of duplicate charge being created on those goods.

(e) Insurance: The banker should ask the borrower to get the goods insured against fire, theft, flood etc., and assign the policy in its favour. The banker should inform the insurer that the goods are hypothecated with him.

(f) Registration of Charge: If the borrower is a company, the banker should get the charge registered under Section 125 of the Companies Act, 1956. The charge is to be registered with the Registrar of Companies within 30 days of its creation. The banker should obtain a copy of registration of the charge. The banker should also get declaration from the company that it will not create a second charge over those goods. This undertaking should also be registered with the Registrar of Companies along with the registration of charge.

(g) Declaration from the Borrower that he is not Availing Similar Facilities from other Banks: The banker should obtain a declaration from the borrower to this effect. This undertaking should also be obtained periodically along with periodical statement of stock of hypothecated goods. This declaration should be cross-checked with the information obtained from other banks of the area.

From the above discussion, it is made clear that the banker should give the facility of hypothecation to honest persons only because the goods remain in the possession of the borrower. In case the loan is granted to any unscrupulous person, he may sell the goods hypothecated and pay off other creditors.

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Essential Features of a Mortgage

The following are the essential features of a mortgage:

(a) Immovable Property: A mortgage can be effected only in respect of immovable properties. Immovable properties include land and building, trees in the forest, standing crops, and any machinery that is permanently fixed to the earth.

(b) Transfer of Interest in the Property: Creation of a mortgage requires the transfer of interest in a specific immovable property. Transfer of interest does not mean transfer of ownership. The mortgager transfers some of his rights on the property to the mortgagee. Therefore, a mortgaged property cannot be sold without the consent of the mortgager in the event of any default.

 (c) Specific Property: The interest to be transferred is always with respect to a “specific property.” In other words, the property must be made specific through proper identity like its size, location, boundaries etc.

(d) Possession with the Mortgager: The actual possession of the mortgaged property is with the mortgager. He need not always transfer it to the mortgagee.

(e) Object or Purpose of Mortgage: The object of creating a mortgage is either to secure a loan or to perform an engagement. If the transfer of property is made for any other purpose, it cannot be called a mortgage.

(f) Reconveyance of Interest: On repayment of the loan the interest in specific immovable property is reconveyed to the mortgager. Thus, the mortgager gets back all his interest and rights in the property mortgaged as soon as he repays the loan.

(g) Right of Sale: In the event of non-payment of the loan, the mortgage has a right to sell the mortgaged property through the intervention of the court. But in case of legal mortgage, the mortgagee can sell the property without the intervention of the court.

(h) Mortgage Deed: An agreement in writing between the mortgager and the mortgagee is essential for creating a mortgage. The document which contains this agreement is called “mortgage deed.”

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Discuss the Right and Obligations of Pledger

Section 177 of the Indian Contract Act, 1872 states as under:

“If a time is stipulated for the payment of the debt, or performance of the promise for which the pledge is made and the pawner makes default in payment of the debt or performance of the promise at the stipulated time, he may redeem the goods pledged at any subsequent time, before the actual sale of them; but he must, in that case, pay, in addition, any expenses which have arisen from his default.”

Rights

From the above statement, the main rights of the pledger are given below:

(a) The pledger has a right to claim accruals to the goods pledged.

(b) The pledger has a right to receive any surplus from the pledgee in case of sale, that may remain with him after the debt is paid off.

(c) The pledger has a right to claim back the security pledged on repayment of the debt along with interest.

(d) In case the pledgee intends to sell the goods, the pledger has a right to receive a notice in stipulated time.

(e) In case there is any increase in the goods, the pledger has right to such increase.

Obligations (Duties)

(a) It is necessary for a pledger to disclose any fault or risk before the pledgee.

(b) The pledger must repay from the loan and take the delivery of the property from the pledgee within the stipulated time.

(c) The pledger is bound for any loss of the pledgee in case of any defects in pledger’s title to the goods.

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Difference between Pledge and Lien

Following are the points of difference between a pledge and a lien:

1. Pledge is always created by a contract, whereas no contract is necessary for a right of lien. In most of the cases, lien is created by law.

2. Though in both the cases the possession of the goods is transferred to the creditor, yet in case of a lien, the party in possession of the goods does not have in general any right to sell the goods. In case of pledge, the creditor or the pledgee has right to sell the goods in his possession on the default by the debtor.

3. Right of lien is lost with the loss of the possession of the goods. But pledge is not necessarily terminated by return of goods to the owner. The goods pledged may be redelivered to the pledger for a limited purpose.

4. Lien is purely a passive right. Lien-holder can only hold the goods till the payment is made. Lien holder cannot enforce its claim through a court of law. But a pledgee enjoys the right to sue, right of sale and the right of lien.

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Accounting for Financial Services Question Solve [(4(c), November-2011]

NANDAN PARK
JOURNAL ENTRIES
Date	Account title	L.F	Dr TK	Cr TK
APRIL
1	CASH ACCOUNT		200000
	MR.KAMAL`S CAPITAL			200000
	(Being kamal give the cash as capital)
4	LAND		50000
	CASH ACCOUNT			50000
	(Being land purchased)
8	Advertising expenses		2000
	A/C Payable			2000
	(As advertising expenses incrurred )
11	Salaries expenses		15000
	Cash a/c			15000
	( As salaries paid on cash)
13	Prepaid insurance		36000
	Cash a/c			36000
	( As insurance paid on cash)
17	Mr. kamal`s withdrawal		10000
	Cash a/c			10000
	( As Mr. kamal withdraw cash)
20	Cash a/c		6000
	Adimission revenue			6000
	( As admission fees received on cash)
25	Cash a/c		25000
	Unearned Adimission revenue			25000
	( As admission fees received on cash)
30	Cash a/c		8900
	Adimission revenue			8900
	( As admission fees received on cash)
30	A/C Payable		900
	Cash a/c			900
	( As a/c payable paid for adv. Expenses)

CASH ACCOUNT

Date	Account title			J.F	Dr TK		Cr TK	Balance
	MR.KAMAL`S CAPITAL				200000			200000
	LAND						50000	150000
	Salaries expenses						15000	135000
	Prepaid insurance						36000	99000
	Mr. kamal`s withdrawal						10000	89000
	Adimission revenue				6000			95000
	Unearned Adimission revenue				25000			120000
	Adimission revenue				8900			128900
	A/C Payable						900	128000
Land
Date	Account title	J.F	Dr TK			Cr TK		Balance
	Cash		50000					50000
KAMAL`S CAPITAL
Date	Account title	J.F	Dr TK			Cr TK		Balance
	Cash account					200000		200000
Advertising Expenses
Date	Account title	J.F	Dr TK			Cr TK		Balance
	Account Payable		2000					2000
Accounts payable
Date	Account title	J.F	Dr TK			Cr TK		Balance
	Cash		900					900
	Adv. Expenses					2000		1100
Salaries
Date	Account title	J.F	Dr TK			Cr TK		Balance
	Cash		15000					15000
Prepaid insurance
Date	Account title	J.F	Dr TK			Cr TK		Balance
	Cash		36000					36000
Mr. kamal`s drawings
Date	Account title	J.F	Dr TK			Cr TK		Balance
	Cash		10000					10000
Admission Revenue
Date	Account title	J.F	Dr TK			Cr TK		Balance
	Cash					6000		6000
	Cash					8900		14900
Unearned Admission Revenue
Date	Account title	J.F	Dr TK			Cr TK		Balance
	Cash					25000		25000
	NANDAN PARK
	Trial Balance
	for the period ended............
	Account title		Dr TK			Cr TK
	Cash		128000
	Mr. Kamai`sCapital					200000
	Land		50000
	Advertising Expenses		2000
	Accounts payable					1100
	Salaries Expenses		15000
	Prepaid insurance		36000
	Mr. Kamai`s Drawings		10000
	Admission revenue					14900
	Unurned Revenue					25000
			241000			241000

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