Cash Budget Method :-

Cash Budget Method :-

Cash budget method is used for assessing WC finance for seasonal industries like sugar, tea, etc. and for construction activity. The cash budget analysis is also used for sanction of ad hoc WC limits. In these cases, the required finance is quantified from the projected cash flows and not from the projected values of current assets and current liabilities. Under this method of assessment, besides the cash budget other aspects of assessment like examination of funds flow, profitability, financial parameters, etc. will be carried out as per the PBS method. Cash Budget is usually forecast of receipts and payments of an enterprise, drawn at small intervals of time, say monthly, weekly etc. A cash Budget is therefore a projection into future as against cash flow statement that is usually historical in nature. The Cash budgeting technique helps a decision maker in situations especially where borrower need short term credit. A few example of this situations are (I) Opening of letter of credit. (ii) Providing adhoc/contingent working capital facility, (ii) bill financing, (iv) financing construction activities, and (V) financing activities with seasonal fluctuations. Etc.

Difference between company and partnership

Difference between company and partnership

Partnership and Company are the most familiar terms for the people who are pursuing business education or commerce education. Besides being very familiar, many of us can’t able to correctly differentiate these two forms of business. This article presents you the top differences between Partnership Firms and Companies.

PARTNERSHIP

Indian Partnership Act, 1932 defines Partnership as ” Partnership is a relationship between two or more persons who have agreed to share the profits of a business carried on by all partners or any one partner acting for all”. The members of the Partnership firm are called as Partners. There are different types of partners such as Active partner, Sleeping partner, Nominal partner, Minor partner, Etc.

Partnership Frim is created by agreement between two or more people by registering the partnership firm with Registrar of Firms according to Indian Partnership Act, 1936.

Registration of a partnership firm is very simple process and Application for registration of firm must contain the following details

✔ Name of the firm

✔ Names of the partners and their addresses

✔ location where the business is carried on.

✔ Partnership tenure between the partners

✔ The main office of the firm, etc.

COMPANY

Indian Companies Act, 2013 defines Company as ” A Company formed and registered under this Companies Act or under any previous company law”. A company is defined easily as an association of two or more persons which is formed for doing business collectively and registered with Registrar of Companies according to Indian Companies Act, 2013.There are different types of companies like One Person Company, Private company and Public Company, etc.

To get registered with Registrar of Companies, the promoters are required to submit the copies of Articles of Association and Memorandum of Association which consists of various information relating to internal management and external management of the company.

The company exhibits certain special characteristics, such as

✔ It have a Separate Legal Entity

✔ It contains Common Seal under its name

✔ It has limited liability

✔ It acts as an artificial person, Etc.

COMPARISON

PARTNERSHIP COMPANY

The members of the Partnership firm are called as Partners. The members of the company are called as shareholders of a company.

 Enacted by

Partnership Form of business is governed by "The Indian Partnership Act, 1932." Company Form of business is governed by "The Indian Companies Act, 2013”.

 Number of Members

Partnership firm must have Minimum of 2 partners and maximum of 20 partners. A Company must have Minimum of 2 and maximum of 200 in the case of private company. Minimum 7 and maximum is unlimited number of members in case of public company

 Created by

Partnership Firm is Created by Contract between two or more people. Company Firm is Created by Law i.e created by incorporation of a company under company law.

 Regulation Authority

It is regulated by the Registrar of Firms which comes under State Government. It is regulated by the Registrar of Companies which comes under Central Government.

 Registration procedure

The registration of a Partnership firm is Not Mandatory. The registration of Company with Registrar of Companies is Mandatory.

 Documents Required

Partnership Deed(Agreement Document) is the mandatory document for creation of a Partnership Firm. Memorandum of Association(MoA) and Articles of Association(AoA) are the main documents to the incorporation of the company.

 Separate Legal Entity

Partnership firm is not a separate legal entity from partners. The Partners of the firm are collectively referred as a Partnership firm. A company is a separate legal entity, It is a separate entity from its members, directors, promoters, etc.

 Liability of Members

The partners have Unlimited Liability in all the matters relating to Partnership Firm. The Shareholders and promoters have Limited liability to Capital of the company.

 Accounts and Audit

Partnership Firm has to maintain accounts as per the conditions stated in partnership deed. A Company should maintain accounts and auditing of accounts by certified Chartered Accountant are Compulsory.

 Common Seal

A Common Seal is not required for Partnership Firm. A Common Seal in the form of a stamp is required for the company for legal and functional purposes.

 Management

Management of the activities of a Partnership Firm is usually done by the working partners. Management of the activities of a Company is done by Board of Directors.

 Change of Name

The name of the Partnership Firm can be changed easily by having a discussion between partners. The name of the company cannot be changed easily and a prior approval of Central Government is required to change the name.

CONCLUSION

The Indian Partnership Act, 1932 laid down certain rules and regulations on matters relating to Rights of partners, Liabilities of Partners, Duties of Partners, etc. Indian Companies Act, 2013 laid down various principles relating to the functioning of companies to protect the shareholders and investors of companies. Both Partnership and Company form of businesses is very prevalent in the world.

Some Important Things to Remember PPB and Legal

Some Important Things to Remember PPB and Legal

✅Cheque truncation-Electronic Image

✅Notice of dishonour waived mentioned in an endorsement - Facultative endorsement

✅Endorsement without recourse-Sans recourse endorsement

✅In crossing where banks name is included-Special crossing

✅Not negotiable crossing indicates that payee has got a better title.

✅Difference in words and figures-Amount in words to be paid.

✅As per CTS 2010- Amount in words is called as legal amount and amount in figures is called as courtesy amount.

✅Cheque drawn in different inks-Pass the cheque

✅Cheque having impossible date like 31/11/2016 presented on 30/11/2016 pass the cheque.

✅Cheque dated prior to date of account opening – Pass the cheque.

✅Bearer cheques - Pass the cheque.

✅Validity of a Cheque - 3 months

✅Immediate credit of outstation cheques - Rs 15000

✅Minor becomes major at the age of 18, if guardian is appointed by court he becomes major at the age of 18.

✅Minor can endorse but will not be liable

✅Missing person-A person is presumed to be died only after of lapse of 7 years from date of report to be missing.

✅For individuals, Joint accounts(not survivor,if issued by survivor,pass the cheque), partnership-Death of individual/partner- Payment of the cheque to be stopped

✅For Trust, Company, POA-Death of Trustee, Director, Agent-Pass the cheque.

✅In joint account, Partnership account, any person, partner can give stop payment notice, but revocation to be done by all.

E or S, death of one amount to be paid to survivor.

✅In joint operation account, if any one dies then amount will be paid to legal heirs of the deceased plus survivor.

✅In former or survivor only former has got all the rights, survivor can’t give stop payment nor withd be signed by both.

✅In case of locker operated jointly, if any person dies then access will be given to survivors along with nominee. In case of E OR S, then articles will be taken by the survivor.

✅Banks will issue notice for operation or surrender if Locker is not operated for one year in high risk accounts Locker is not operated for three years for medium risk accounts.

✅Break open of lockers to be done in front of the Branch officials, locker hirer, and two independent witnesses.

✅Premature or closure of deposit accounts, nominations to be signed by all joint account holders-Note-Premature can be done if demanded by survivor provided the authorisation was given at the time of account opening by the joint account holders for premature closure if any one dies.

✅In HUF Senior male coparcener is Karta.

✅A blind person can open a current account but an illiterate cannot open a current account.

✅Inland bills-Drawn in India, Payable in India by a foreigner or resident, payable abroad by an Indian.

Foreign bill other than the above.

✅A bill presented on 15/05/2017 and accepted on 16/05/2017.Due date will be 2 months from the date of presentment. Due date?

✅Even though 2 months presentment is given only accepted date to be taken into account.

✅2 months from 16/05/2016 -16/07/2016 Add 3 days grace- 19/07/2016 (3rd day)

✅If the due date happens to be a holiday then the bill will be paid on previous or preceding working date

✅Issue of DD without indemnity/no payment advice-Rs 5000

Contract act

CONTRACT ACT

1. A mandate may not continue to be operative in cases of Death of agent, Lunacy of Agent,

Insolvency of Agent etc

2. The term ― Power of Attorney refers to An instrument by which one person i.e. Agent acts on

behalf of another i.e. Principal

3. Your customer Mr. Qureshi had executed a power of attorney in favour of Mr.Ahmed who operates

the account. You received a notice of death of Mr. Qureshi when a cheque signed by Mr. Ahmed is

presented for payment. Whether Cheque can be paid? Cheque should not be paid. (principal has died

– authority is derived from principal)

4. Mr. Modi maintains a current account in your branch which is operated by Mr. Jain in whose favour

Mr. Modi has executed a Power of Attorney. A notice about the death of Mr.Jain is received.

Subsequently a cheque signed by Mr. Jain is presented for payment. What action will be taken? May

be paid after clearance from Mr.Modi

5. A and B maintain a joint account which is operated independently. A serves a notice not to honour

any cheque drawn by B. Subsequently a cheque signed by B is presented for payment. Whether the

cheque can be paid? His cheque should not be paid

6. The current account of a minor is operated by his natural guardian. Whether the Bank can grant

an Overdraft? No.

7. A minor can be admitted to a firm as what? Beneficiary

8. If one of the defendants in a suit is a minor, whether he can be sued? He can be sued thro

his/her guardian

9. When customer hands over money to the bank for remittance, the relationship between customer

and banker is: Principal and agent

10. For recovering the dues the Bank can enforce the security by: Selling movable properties

pledged to it after giving due notice

11. Right of set off - It can be exercised even for time barred debts

12. What type of right available to a guarantor is not available to an Indemnifier? Right of

Subrogation.

13. The contract of insurance is a contract of Indemnity.

14. Right of lien/rights as pledge/right set off of a Banker are not barred by limitation.

15. The notice of assignment should be signed by Both by assignor and assignee

16. What is the consideration in the case of a guarantee? Any promise or act done for the benefit of

the principal debtor.

17. Government dues will have priority over pledged security. No. Pledge will prevail over

government dues provided there is no special act giving priority to government dues in that state.

18. The very important condition/feature of a pledge is: Prior notice of sale is a must in the case of

sale of pledged property

19. Do we have to exhaust all avenues against the Principal Debtor before proceeding against the

guarantor? No, we can proceed against any of them

20. Mr.X has given the guarantee on behalf of Mr.Y on 1/10/01. Your branch has invoked the

guarantee on 1/10/2003. The last date of filing suit is: 1-10-2006.

21. There are 2 loan accounts of the same borrower with different guarantors. To recover through

court of law- Two different suits should be filed.

22. The guarantor of defaulted account is navy personnel. What amount can be recovered from him?

Salary of Navy personnel is not attachable.

23. Guarantee is defined under which act? Contract Act.

24. Assignment to be valid legally Must be in writing

25. Whether the Bank can exercise its lien on the Credit balance in the loan account? YES.

26. The essence of the Right of Set Off is that Mutual claims of debtor and creditor can be merged

and only the remainder is Payable by the debtor/creditor

27. Whether the Creditor can proceed against the surety at his will? No.

28. Bank has got a right to take possession of movable securities hypothecated to us in the event of

default of the borrower on account of Hypothecation agreement

29. Can the Illiterates, Minors; Married Women are competent to endorse an instrument? YES.

30. The transactions relating to safe custody of articles are governed by The Indian Contract Act

31. The important requirement of a valid guarantee executed by Central/State government is that: It

should be executed on behalf of the President or Governor as the case may be

32. When the bank carries out standing instructions for paying insurance premia it acts as An agent

33.Actionable claim means A claim to any debt other than the debt secured by hypothecation, pledge

or mortgage.

34.Whether consideration is required in case of an assignment? Consideration is not essential in case

of an assignment.

35. Whether Claims of debt secured by mortgage can be assigned? No. Claims of debt secured by

mortgage can not be assigned.

36. Whether Assignment of a debt should be in writing? YES. It should be in writing.

37. Who can create a valid pledge? Owner of the goods and the Agent of the owner can create a

valid pledge.

38. When the bank takes possession of hypothecated goods, it is converted into Pledge.

39. Whether an agreement of Hypothecation or Pledge can be attested? No. It should not be

attested.

40. Whether the power to sell without the intervention of the court In case of a pledge/

hypothecation/an English mortgage is available?

YES. The power to sell without the intervention of the court is there even beyond limitation.

41. Whether we can proceed against either the borrower or the guarantor reserving the right to

proceed against the other subsequently?

YES. We can do so with the leave of the court under Order 2 Rule 2 of CPC

42. If court appoints a guardian then when shall a person attain majority? On completion of 18 years

of age

43. While computing the age of majority of a person domiciled in India which of the following shall be

taken into account.

The day on which he was born is to be included as a whole day and he shall be deemed to have

attained majority at the beginning of 18th anniversary of that day