Term life Insurance protect assured agreed payment

Unlike degree term life, very existence protect provides an assured agreed payment, which to a lot of persons causes it to be much better value for money eventually. Although reimbursements upon this sort of protection are more pricey as compared to degree term insurance policies, the particular insurance company is likely to make compensate every time the particular covered party drops dead, hence the increased monthly payments will certainly ensure an agreed payment sometime. There is a variety involving unique variations of very existence plans, as well as buyers can easily choose the one that very best satisfies their desires as well as their spending budget. Just like additional plans, it is possible to tailor-make your entire insurance coverage protect to add in added protect for instance vital sickness insurance policies. The actual variations upon very existence insurance policy incorporate:
Non-profit UK very existence plans: This is the simplest sort of very existence protect, as well as permits you to enjoy the capability of degree expenses throughout the term in the plan unless you perish. Upon death, your household acquired an agreed payment as well as the plan gets null as well as useless. If you want to pay somewhat extra, it is possible to get an insurance policy that is predetermined over a specified term, meaning you will simply possibly be generating expenses regarding some occasion, however, your spouse and children will certainly nonetheless obtain an agreed payment once you perish. With-profit UK very existence insurance policies: This is a protected as well as expense form structure, exactly where your current monthly payments are usually split regarding the protect monthly premiums as well as the expense side of the plan. You might try an assured total, and you'll know that your current insurance company gives discretionary additional bonuses. Inexpensive UK very existence insurance policies: Among the least expensive forms of very existence protect, this sort of plan features a reducing term prepare, as well as the plan,  is usually along with a gains finance. While additional bonuses are usually included in the particular benefit side in the plan, the particular plan term lessons. This gives a cost-effective option for those that are looking to savor the advantages of the very existence insurance policy without having to help to make excessive monthly payments.
UK complete life insurance policy
Unitised UK complete life insurance policy: After you acquire this sort of very existence protects, you will additionally possibly be committing to with-profit items. Because of this when the insurance company helps make an agreed payment, the particular total given is going to be influenced by online in the items in comparison with online in the death advantage (the agreed payment will be based about no matter which would be the best inside value). Month after month items is usually terminated so as to boost amounts of death advantage protect, using critiques accomplished every once in awhile to guarantee sufficient amounts of death advantage protect.

Huge funds collected and many cases investors cheated

Capital market has witnessed a tremendous growth in recent times. Huge funds have been collected from the public and in many cases investors have been cheated by presenting rosy pictures about the security of investments, high dividends and capital appreciation which were not actually true. This necessitated the need for properly regulated securities market in India. As a consequence of this, Securities and exchange Board of India (SEBI) was setup to take care of the capital market. Accounting can play an effective role in the development of healthy capital market by proving accounting data to the prospective investors. By making an analysis and interpretation of the financial statements of an existing firm and other accounting information available in case of a new firm, the prospective investor can make a rational decision of the investment and there are chances that he will not be cheated. Some areas where accounting can be useful in capital market are:
Accountant’s Report in Prospectus; Schedule II Part II of the Companies Act, 1956 specifies that an accountant should report about the use of the proceeds or any part of the proceeds raised by issuing debentures or shares in his report. Any report by accountants mentioned in this schedule shall be made by accountants qualified under the Act for appointment as auditor of a company and shall not be made by any accountant who is an officer or servant, or a partner or in the employment of officer or servant of the company. A report by accountant must cover the
The profit or loss of the business for each of the last date to which the accounts of preceding the issue of prospectus
The assets and liabilities of the business at the last date to which the accounts of the business were made of, being the data not more than 120 days before the date of issue of the prospectus.
This Accountant’s report in the prospectus will be very useful to prospective investors in forming an opinion of the company which is issuing shares or debentures.
Furnishing Financial Results on Quarterly Basis by listed Companies: As per modified clause 41 of the Listing Agreement, all the listed companies are now required to publish unaudited financial results on a quarterly basis. Un- audited financial results prepared with the help of accounting records will be helpful to the prospective investors in making rational decision for investments in the capital market.

Corporate Governance Associated with Accountability

Accounting plays a very important role in corporate governance by ascertaining efficiency with which funds of shareholder and investor are used in a company. What is corporate governance? It is about how those entrusted with day to day management of the company’s affairs are held accountable to shareholders and another provider of finance. It is a system by which companies are directed and controlled. Everyone who is a part of the system is contributing to corporate governance. It is associated with accountability to the company’s equity shareholders. Equity shareholders pool their monies to run a business. Because of the size and complexities involved, they do not manage the business but let a group of executives operate it under the surveillance of a representative board of directors. Shareholders are residual claimants to the firm’s income. Gain or loss from good or bad performance is a lot of shareholders. To give good return to shareholders, efficient corporate governance is required an annual report of the company comprising profit and loss account, balance sheet, director’s report, and auditor’s report gives an idea of the efficiency of the resources employed in the business. An annual report reflecting corporate governance can be prepared if proper and adequate accounting records are maintained. Various tools of management accounting cost accounting and financial accounting are useful to know the performance of a company which is the basis of corporate governance.
Corporate governance as a concept has come to the forefront in recent years following major business failures worldwide. It has resulted in a redefinition of what is expected from the management and board of directors by the shareholders of a company. A new sense of responsibility on the board of directors and management is supposed to inform their working to shareholders and other investors. Branches of accounting (i.e. financial accounting, cost accounting, and management accounting) are very useful in this regard by giving comprehensive information on the working of management and board of directors by preparing an annual report of a company which is legally required to be given annually to every shareholder of a company. It may be made clear that good corporate governance is a key driver of sustainable growth and long term value creation for all shareholders. A company should be committed to the highest standards of corporate governance and should follow the basic tenets of integrity, transparency, accountability, and responsibility in all its activities. Accounts should be prepared in such a way that they exhibit a true and fair view of the profitability and financial position of a company and give a true and fair view of corporate governance. There should be no window dressing in the presentation of accounts to shareholders so that the performance of the management and board of directors may be properly ascertained which is the apex of corporate governance. 

Responsibility accounting is control device

Responsibility accounting is control device.A control system to be effective should be such that deviations from the plans must be reported at the earliest so as to take corrective action for the future. The deviations can be known only when performance is reported. Thus responsibility accounting system is focused on performance reports also known as responsibility reports, prepared for each responsibility unit. Unlike authority which flows from top to bottom, reporting flows from bottom to up. These reports should be addressed to appropriate persons in respective responsibility centers. The report should contain information in comparative from as to show plans and the actual performance and should give details of variance which are related to that center. The variances which are not controllable at a particular responsibility center should also mention separately in the report. To be effective, the reports should be clear and simple. The function of responsibility accounting system becomes more effective if participative or democratic style of management is followed, wherein, the plans are laid or budgets and standards are fixed according to the mutual consent and the decisions reached after consulting the subordinates. It provides motivation to the workers by ensuring their participation and self imposed goals. It is well accepted fact that at successive higher level of management in the organizational chain less and less time is devoted to control and more and more to planning. Thus, an effective responsibility accounting system must provide for management by exception i.e., it should focus attention of the management on significant deviations and not burden them with all kind of routine matters, rather condensed report requiring their attention must be sent to them particularly at higher level of management.

The aim of responsibility accounting is not to place blame. Instead it is to evaluate the performance and provide feed back so that future operations can be improved. Goals and objectives are achieved through people and, hence, responsibility accounting system should motivate people. It should be used in positive sense. It should not be taken as a device to punish subordinates. It should rather help in improving their performance. Subordinate sometimes dislike control because they take them as restraints. The best responsibility accounting system enlightens employees about the positive side of control. To ensure the success of responsibility accounting system, it must look into human aspect also by considering needs of subordinates, developing mutual interests, providing information about control measures and adjusting according to requirement.

Responsibility accounting recent developments

The fundamental function of management accounting is facilitating managerial control. Various devices are used by the management in performing this important function. Responsibility accounting is one of the most recent developments in this field. Responsibility accounting has assumed great significance and is rightly described as modern approach to managerial control and reporting. The growth of responsibility accounting is attributed to the realization that the results of operation must be regarded as human responsibilities and not as abstract concepts. While the other control techniques, available under conventional accounting, are directed towards determining the total and unit product cost for the organization as a whole, responsibility accounting lays emphasis on performance of individuals where responsibilities are fixed for persons and divisions accountable for the same. The concept of responsibility accounting is closely related to the systems of budgetary control and standard costing.

The system of costing like standard costing and budgetary control are useful to management for controlling the costs. In those systems the emphasis is on the devices of control and not on those who use such devices. Responsibility accounting is a system of control where responsibility is assigned for the control of cost. The persons are made responsible for the control of costs. Proper authority is given to the persons so that they are able to keep up their performance. In case the performance is not according to the predetermined standards then the persons who are assigned this duty will be personally responsible for it. In responsibility accounting the emphasis is on men rather than systems. For example, if Mr. C, the manager of a department, prepares the cost budget of his department, then he will be made responsible for keeping the budget under control. C will be supplied with full information of costs incurred by his department. In case the costs are more than the budgeted costs, then C will try to find out and take necessary corrective measures. C will be personally responsible for the performance of his department. Responsibility accounting is a system of accounting that recognizes various responsibility centers throughout the organization and reflects the plans and actions of each of the centers by assigning particular revenues and costs to the one having the pertinent responsibility. It is also called profitability accounting.

Maintenance of responsibility accounting system

The implementation and maintenance of responsibility accounting system is based upon information relating to inputs and outputs. The physical resources utilized in an organization such as raw material used and labor hours consumed, are termed as input. These input expressed in the monetary terms are known as costs. Similarly outputs expressed in monetary terms are called revenues. Thus responsibility accounting is based on cost and revenue information. Effective responsibility accounting requires both planned and actual financial information. It is only the historical cost and revenue data but also the planned future data which is important for the implementation of responsibility accounting system. It is through budget that responsibility for implementing the plans communicated to each level of management. The use of fixed budgets, flexible budget and profit planning are all incorporated into one overall system of responsibility accounting. The whole concept of responsibility accounting is focused around identification of responsibility center. The responsibility center represents the sphere of authority or decision points in an organization. In small firm, one individual or small groups of individuals who are usually the owners, may possibly manage or control the entire organization. However, for effective control, a large firm is usually, divided into meaningful segments, departments or divisions. These sub units or divisions of organization are called responsibility center. A responsibility center is under control of an individual who is responsible for the control of activities of that sub unit of the organization. This responsibility center may be very small sub unit of the organization, as an individual could be made responsible for one machine used in manufacturing operations.

A sound organization structure with clear cut lines of authority responsibility relationship is a prerequisite for establishing a successful responsibility accounting system. Further, responsibility accounting system must be so designed as to suit the organization structure of the organization. It must be founded upon the existing authority responsibility relationships in the organization. In fact, responsibility accounting system should parallel the organization structure and provide financial information to evaluate actual results of each individual responsible for a function.

Financial Ratios analysis one most powerful tools

The Ratios analysis is one of the most powerful tools of financial analysis. it is used as a device to analyse and interpret the financial health of enterprise. Just like doctor examines his patient by recording his body temperature, blood pressure etc. before making his conclusion regarding the illness and before giving his treatment, a financial analyst analyses the financial statements with various tools of analysis before commenting upon the financial health or weaknesses of an enterprise. A ratio is known as a symptom like blood pressure, the pulse rate or the temperature of an individual. It is with help of ratios that the financial statements can be analysed more clearly and decisions made from such analysis.

The use of ratios is not confined to financial managers only.There are different parties interested in the ratios analysis for knowing the financial position of a firm for different purposes. The supplier of good on credit, banks, financial institutions, investors, shareholders and management all make use of ratio analysis as a tool in evaluating the financial position and performance of a firm for granting credit, providing loans or making investments in the firm. With the use of ratio analysis one can measure the financial condition of a firm and can point out whether the condition is strong, good,questionable or poor. The conclusions can also be drawn as to whether the performance of the firm is improving or deteriorating. Thus ratios have wide applications.

Ratio analysis technique financial analysis

Ratio analysis is a technique of analysis and interpretation of financial statements. it is the process of establishing and interpreting various ratios for helping in making certain decisions. However, ratio analysis is not an end in itself. It is only a means of better understanding of financial strengths and weaknesses of a firm. Calculation of mere ratios does not serve any purpose, unless several appropriate ratios are analysed and interpreted. There are a number of ratios which can be calculated from the information given in the financial statements, but the analyst has select the appropriate data and calculate only few appropriate ratios from the same keeping in mind the objective of analysis. The ratios may be used as a symptom like blood pressure, the pulse rate or the body temperature and their interpretation depends upon the caliber and competence of the analyst. 

The main steps involved in the Ratio analysis

• Selection of relevant data from the financial statements depending upon the objective of the analysis.
• Calculation of appropriate ratios from the data
• Comparison of the calculated ratios with the ratios of the same firm in the past, or the ratios developed from projected financial statements or the ratios of some other firms or the comparison with ratios of the industry to which the firm belongs 
• Interpretation of the ratios.

The Comparative Income Statement Gives an Idea

The income statement gives the results of the operations of a business. The comparative income statement gives an idea of the progress of a business over a period of time. The changes in absolute data in money values and percentages can be determined to analyze the profitability of the business. Like the comparative balance sheet, the income statement also has four columns. The first two columns give figures for various items for two years. Third and fourth columns are used to show an increase and decrease in figures in absolute amounts and percentages respectively.

Guidelines for interpretation of income statement:

The analysis and interpretation of income statement will involve the followings steps: 

1. The increase and decrease in sales should be compared with the increase and decrease in the cost of goods sold. An increase in sales will not always mean an increase in profit. The profitability will improve if the increase in sales is more than the increase in the cost of goods sold. The amount of gross profit should be studied in the first step. 

2. The second step of analysis should be the study of operational profits. The opening expenses such as office and administrative expenses, selling and distribution expenses should be deducted from gross profit to find out operating profits. An increase in operating profits will result from the increase in a sales position and control of operating expenses. A decrease in operating profit may be due to an increase in operating expenses or a decrease in sales. The change in individual expenses should also be studied. Some expenses may increase due to the expansion of business activities while others may go up due to managerial inefficiency.

 3. The increase or decrease in net profit will give an idea about the overall profitability of the concern. Non operating expenses such as interest paid, losses from the sale of assets, written off of deferred expenses, payment of tax, etc. decrease the figure of operating profit. When all non-operating expenses are deducted from operational profit, we get a figure of net profit. Some non-operating incomes may also be there which will increase net profit. An increase in net profit will give us an idea about the progress of the concern. 

4. An opinion should be formed about the profitability of the concern and it should be given at the end. It should be mentioned whether the overall profitability is good or not.

Financial analysis is a powerful mechanism

Financial analysis is a powerful mechanism of determining financial strengths and weaknesses of a firm. But, the analysis is based on the information available in the financial statements. Thus, the financial analysis suffers from serious inherent limitation of financial statements. The financial analyst has also to be careful about the impact of price level changes, window dressing of financial statements, changes in accounting policies of a firm, accounting concept and conventions, and personal judgment etc.

Limitations of financial analysis are:

• It is only study of interim reports
• Financial analysis is based upon only monetary information and non monetary factors are ignored.
• It does hot consider changes in price levels
• As the financial statements are prepared in the basis of a going concern, it does not give exact position. Thus accounting concepts and conventions causes a serious limitation to financial analysis.
• Changes in accounting procedure by a firm may often make financial analysis misleading.
• Analysis is only a means and not an end in itself. The analyst has to make interpretation and draw his own conclusions. Different people may interpret the same analysis in different ways.