Acquisition means one company takes control over another company by acquiring more than 50% of shares of the targeted company. Some of the reasons for acquisition are increased market share, diversification, cost reductions, etc.Acquisition structure is the organized framework for acquisition of a company. It considers both cash and non-cash (earn outs, equity rolled, take backs etc.).There are 3 types in acquisition structure, which is as follows −Stock purchase − Buys stocks from targeted companies' stockholders.Asset purchases − Buys only assets and liabilities mentioned in agreement.Merger.PurposeListed below are the purposes for an acquisition −Improve performance.Increase production by technology.Acquisition at early ... Read More

With change in market environments and evolving needs of customers, companies need to change their strategies and their dimensions to sustain and increase their market share.Merger is nothing but, when two companies combine to form a new company due to several reasons. The main motive is to expand their arms, explore new markets, increase their market share, decrease operational cost, etc.Terms used in merger are Acquiring Company and acquired company. Mergers can be done either by cash or by stock.In a cash merger, the acquiring company will pay in cash for the acquired company stocks.In a stock merger, the acquiring ... Read More

Merger is nothing but an agreement between two or more organizations or companies to form as a one company or organization.The main objective of merger is to gain more market share or to enter into new market areas or sectors and maximize their profits. It also helps companies to restructure their business units according to market changes.Merger helps companies to sustain market changes and go for more customer base.Types of mergersThe types of mergers are explained below −Horizontal Merger − If one company merges with another company or companies which have indirect competition in terms of product lines/markets is called ... Read More

The main objective of both merger and acquisitions are the same, that is to restructure their corporate order. That means both are involved in joining two or more than two business entities to restructure their corporate structure according to changes in market or in their sector.MergerMerger involves combining an individual organization to give rise to a new business unit or entity. In merger, a new entity, name, ownership, employees (combination of organizations) and management will form. The benefit in the merger is mutual that means merger organizations will have certain benefits.The main objective of merger is to expand their present ... Read More

Following are the components of financial management −AgreementThis is the agreement between the donor (who donates the funds) and the receiver (who accepts the funds). Mostly, the receiver may be an organization or a company.This document is very important for the accounting department.It contains deliverables (quantity and quality of deliverables), budget breakup (allocated funds for specific activities), deadlines, period of reporting, funds schedule, demarcation of both financial and non-financial aid.Transactions and accountsFinances are through bank accounts and transactions.It consists of bank accounts (opening an account), signatories, wherein depending on the board, one can have one or more than one signatories, ... Read More

The different branches of accounting are explained below −Financial accountingRecords daily transactions and gives the financial picture of business.Preparation of trial balances, profit and loss accounts and balance sheets.Creditors, financial institutions, banks, etc., use this type of accounts.Cost accountingRecord, present and do the analysis of manufacturing costs.With the help of this account, management can control the production cost and prices.Forecast by analysing actual cost to budget cost.Management accountingGives information about business administration.Budgeting, cost analysis, decision making.AuditingPrepares tax reports using financial statements.External − Financial statements are scrutinized by external/independent parties.Internal − Focuses on the companies' internal structure.Tax accountingPrepares and files various ... Read More

ProblemXYZ Enterprise Company has a pass book balance of Rs. 58700/- and cash book balance of Rs.68500/- as on 31st march 2014. Compute the correct cash book balance for the transactions and prepare a reconciliation statement.The transactions are as follows −Cheque issued (personal account) of enterprise debited to firm's account of Rs.3500/-Cheque deposited and yet to collect by bank of Rs.1900/-Cheque deposited and collected from bank and not recorded in cash books of Rs.3800/-Customer cheque dishonored Rs.1800/-Bank direct payments of Rs.4200/-Cheque issued and yet to present for payments of Rs.12000/-Customer deposited Rs.2000/- into bankDiscounted bill is dishonored when presented on ... Read More

ProblemAn enterprise company has an Rs.85700/- as passbook balance and Rs.95800/- as cash book balance as on 31st march 2004.The transactions are as follows −Cheque issued (personal account) of enterprise debited to firm’s account of Rs.5000/-Cheque deposited and yet to collect by bank of Rs.2500/-Cheque deposited and collected from bank and not recorded in cash books of Rs.4800/-Customer cheque dishonored Rs.2300/-Bank direct payments of Rs.3200/-Cheque issued and yet to present for payments of Rs.8500/-Customer deposited Rs.1500/- into bankDiscounted bill is dishonored, when presented on maturity Rs.9500/-Bank charges Rs.250/-Dividends and interest (collection) by bank Rs.2800/-SolutionThe bank reconciliation statement before adjusting cash ... Read More

Following are the steps involved in preparing bank reconciliation statement (BRS) −Step 1 − Compare the opening balances of cash books and bank statements for any difference. The differences may arise due to uncredited cheques from before. Identify them and tick on bank statements. Now, opening balances are agreed.Step 2 − Now, compare the debit side of the cash book and the debit side of the bank statement and vice versa and tick on items that appear in both cash book and bank statement.Step 3 − Now, check for items that are not ticked on the bank statement (debit side) ... Read More

Following items will appear in cash book but not in bank pass book −Cheques which are issued, but not debited in the bank.In cash books, entries for cheques issued are recorded immediately (reduces bank balances in books). The reason for not appearing in the passbook may be the cheque, which is in under clearance or the payee did not submit it to the bank.Cheques that are deposited, but not credited by the bank.In cash books, firms immediately record the transactions (increases the balance in books).The reason for not appearing in the passbook may be that the bank is yet to ... Read More