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Chapter: Business Science - Banking Financial Services Management

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Overview of Financial statement of banks

Income statement/profit &loss account statement: It is a statement which shows the incomes &expenses of the bank.

Overview of Financial statement of banks

 

 

OVERVIEW OF FINANCIAL STATEMENT

    Balance sheet

 

    Income statement

 

Balance sheet(banking regulation act ,1949,sec 29)

 

Every banking company is required to prepare with reference to that year a balance sheet & p/L account as on the last working day of the year in the form(a)&form(b) respectively set out in the third schedule .

    New form

 

    Assets &liabilities are shown in vertical form

 

    Liabilities are shown in top line

 

    Assets are shown in bottom line

 

Income statement/profit &loss account statement

    It is a statement which shows the incomes &expenses of the bank.

 

    It is a type of flow report, as compared to the balance sheet, which is a status report .

 

 

 It is perpared in vertical form. Focuses on

 

    Inflows(income)

 

    Outflows(expenses)

 

Net income/profit/net earning:(revenues exceeds the expenses)

 

Net loss:(expenses exceeds the revenues)

 

 

Form‘b‘ of the Third schedule of the banking regulation Act 1949 is used.

 

Sections

    Income

 

    Expenditure

 

    Profit/loss

 

    Appropriations

 

Relationship between balance sheet & income statement

 

Authorized capital

 

It is the total of the share capital which altd company is allowed to issue.it presents the upper boundary for the actually issued share capital.

 

Issued share capital

 

The total of share capital allocated to shareholders. less than authorised capital.

 

Subscribed capital

 

it is the portion of the issued capital which has been subscribed by all the investors including the public.

 

Called up share capital

 

It is the total amount of issued capital for which the shareholders are required to pay.this

 

may be less than the subscribed capital Paid up share capital

 

Is the amount of share capital paid by the shareholders. This may be less than the called

 

up capital as payments may be in instalments.

 

Reserves

 

Capital reserves:

These are created in particular situation such as revaluation of assets,issue of shareas and debentures at premium.

 

Statutory reserves

 

Reserves(profit) appropriate for compliance of any law. Share premium:

 

Amount paid by shareholders for shares in excess of their nominal value


 






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