Finance Numericals

Hire purchase repair and maintenance cost: In hire purchase system the vendor is owner until the purchaser pay the full amount of goods. So, the repair and maintenance amount is paid by vendor. The vendor pays estimated amount of maintenance and repair amount and if the estimated repair amount is more than the actual amount then the surplus amount is adjusted with next year repair amount. And if the estimated amount is less than the actual amount of repair then the excess amount is charged from profit and loss a/c. Example: Mr. Verma has purchased 2 machines on july 1 st 2006 from Company X on hire purchase. The cash value of per machine is Rs. 20, 000. Mr. Verma pays Rs. 8, 000 each in 6 half yearly instalments. The total estimated amount of repair is Rs. 3, 500 in which Rs.600 is for first year, Rs. 700 is for second year, Rs. 300 for third year and Rs. 2,100. The actual total amount of repair and maintenance is Rs. 1, 900.   The repair expense of first year is Rs. 900, Rs...

Equity share and preference share capitals both are used by company to raise fund for business and in return company have to pay dividend to equity shareholders and preference shareholders. The preference share capital bears a fixed rate of dividend that company have to pay out of profit from business activity. Company pay the dividend to its equity shareholder after paying dividend to preference shareholders. An equity shareholder is also known as ordinary shareholders. There are some difference between preference share and equity share. Point of difference Preference share Equity share What is preference share capital and equity share capital? A preference share bears the fixed rate of dividend and earn dividend before paying to equity shareholders. Equity share does not receive the fixed rate of dividend as preference share and it gets dividend after paying to preference share and all outside creditors. What is the o...