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Bangladesh University of Professionals (BUP)
Term Paper on
Introduction to Financial Accounting and It’s Particulars
Course Title
Introduction to Financial Accounting
Code: ACT-1101
Prepared by:
Name: Md. Shahriar Khan
Roll: 24211409158
Section: B
Prepared for:
Asst Prof. Mohammed Moin Uddin Reza
Lecturer
Dept. of BBA in Accounting and Information Systems
Bangladesh University of Professionals (BUP)
Date of submission: 05th June, 2024
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Acknowledgement
First and foremost, I would like to express my sincere gratitude to the Almighty for the chance to
experience and write this term paper in good health.
I am deeply grateful to our Assistant Professor Mohammed Moin Uddin Reza, my teacher, for his
invaluable guidance, continuous support, and encouragement throughout this project. His extensive
knowledge and expertise have been crucial in shaping this work.
I would also like to extend my appreciation to my classmates and seniors who have provided
valuable feedback on this paper. Their constructive criticism has helped me identify weakness in my
work and improve overall quality of this paper.
Lastly, I would like to express my deepest gratitude to my family for their unwavering support and
patience throughout this journey. Their love and encouragement have been my driving force.
Thank you all.
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Letter of Transmittal
05th June, 2024
Mohammed Moin Uddin Reza
Assistant Professor
Faculty of Business Studies
Bangladesh University of Professionals
Subject: Submission of Term Paper
Sir,
I am pleased to submit my term paper titled "An Analysis of the Particulars in Financial Statements
and Balance Sheet of Singer Bangladesh" as part of the requirements for ACT 1101 Introduction to
Financial Accounting. This paper explores the detailed financial statements and balance sheet of
Singer Bangladesh.
Throughout the research and writing process, I have endeavored to apply the theoretical knowledge
gained in class to the practical analysis of Singer Bangladesh's financial documents. The paper
includes a comprehensive review supported by relevant financial data reflecting a thorough
understanding of the subject matter and adherence to the academic standards expected for this
course.
I hope this paper meets your expectations and contributes to the ongoing discussion in the field of
financial accounting. I look forward to any feedback or comments you may have.
Thank you for your time and consideration.
Sincerely,
Name: [Link] Khan
ID :24211409158
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Serial no. Contents Page No.
1 Acknowledgement 02
2 Letter of Transmittal 03
3 Description and Introduction 05
4 Particulars in Income Statement 06 - 11
5 Particulars in Balance Sheet 12 - 16
6 Particulars in Retained Earing 17 - 18
7 Conclusion 19
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Introduction to Financial Accounting
And
It’s Particulars
Description
I was instructed to choose a company listed in the stock exchange of Bangladesh. For my term paper,
I choose Singer Bangladesh, downloaded the annual report of that company and went through all
the financial statements. Now I am writing my understanding regarding all the heads given in the
income statement, balance sheet and retained earnings statement.
Introduction
“Financial Accounting” provides a foundational understanding of key principles and practices
essential for recording, summarizing, and communicating financial information. Topics include
accounting principles, financial statement preparation, accrual accounting, and basic financial
analysis techniques. Financial Accounting aims to equip learners with the necessary skills to interpret
financial statements and make informed decisions in a business context.
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Particulars and its description
"Particulars" in accounting usually relate to the details or particulars of a transaction. Accountants
frequently use the phrase "particulars" to describe the details of a financial transaction when
recording it. This contains particulars such the transaction date, account names impacted, total
amount of money involved, and any other pertinent information. Here are some particulars that I
found in the income statement, Balance sheet and retained earnings statement of Singer Bangladesh.
Particulars in Income Statement (Appendix-01)
1. Sales: Sales is a term used to describe the activities that lead to the selling of goods or
services. It can be anything. Sales can occur from various channels like Inside sales, Outside
sales, B2B sales, B2C sales etc. It’s the main source of generating revenue for businesses.
Example: Singer Bangladesh Ltd. sells 500 washing machines at BDT 25,000 each,
generating BDT 12,500,000 in revenue.
2. Earned carrying charges: Earned carrying charges usually occurs when a company, offers
installment payment plans for its products. Customers who choose to pay in installments are
typically charged an additional fee or interest. The earned carrying charges represent the extra
amount a company earns from this financing arrangement.
Example: If Singer Bangladesh Ltd. sells a refrigerator for BDT 70,000 and allows the
customer to pay in 12 monthly installments with a carrying charge of 7%, the total amount
the customer pays will include the product price plus the carrying charge (4,900). Here this
4,900 is earned carrying charges.
3. Turnover: Turnover is the total amount of sales income that a business makes in a certain
time frame. It calculates the revenue generated by the company's sales of goods and services.
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4. Cost of sales: Cost of sales also known as COGS (Cost of Goods Sold). Both are the same
thing refers to the direct expenses incurred by a company in producing the goods or services
it sells.
Example: If Singer Bangladesh Ltd. Has opening inventory 10000, purchase during that year
is 20000 and closing inventory 15000 BDT then The cost of sales would be (10,000+20,000-
15,000) 15,000 BDT.
5. Gross profit: The difference between a business's net sales revenue and cost of goods sold
(COGS) or Cost of Sales is known as gross profit. It stands for the revenue generated by the
sale of products or services.
Example: If Singer Bangladesh Ltd has net sales revenue of 40,000 BDT and the COGS is
15,000 then the Gross Profit would be (40,000-15,000) 25,000 BDT.S
6. Operating expenses: Operating expense has lots of factors. The continuous spending a firm
faces in order to carry out its regular business operations are known as operating expenses.
These expenses consist of depreciation, rent, utilities, wages, marketing charges, and
administrative expenditures. They reflect the costs required to maintain the business's
operations and are subtracted from gross profit to determine operational income.
Example: Suppose Singer Bangladesh Ltd has depreciation cost 5000, rent 5000, Utilities
expense 3000, wages 2000, marketing charges 10000 and administrative expense 4000 then
there operating expense would be 29,000 BDT.
7. Other income: Revenue received by a firm from sources other than its main business
operations is referred to as “other income”.
Example: Interest Income, rental Income etc are considered as other income.
8. Operating profit: Operating profit is the amount of money a business makes before
deducting taxes and interest costs. It shows how successfully a business is doing in its daily
activities.
Example: If Singer Bangladesh Ltd has Gross profit 50,000 and the Operating expenses
30,000 then there Operating profit would be (Gross profit – Operating expense= 50,000-
30,000) 20,000 BDT.
9. Finance income: Income from financial activity is particularly referred to as finance income.
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Example: Interest Income, Dividend Income, Gains on Financial Assets can be used for an
example.
10. Finance costs: The expenses a business makes when support its operations are frequently
referred to as finance costs.
Example: Interest Expenses, Loan Fees, Bank Charges, Amortization of Financing Fees can
be used for an example.
11. Net finance costs: Net finance costs refer to the difference between a company's finance
costs and its finance income. This amount shows the net income or cost from the business's
financial operations.
Example: In the Income statement we can see the Finance income is 1,665,906 then the
Finance costs is 604,135,180 so then the Net finance costs should be (1,665,906-
604,135,180)
-602,469,274
12. Profit before contribution to workers' profit participation fund: The net profit that a
business determines before to distributing a part of its earnings to the Workers' Profit
Participation Fund is known as profit before contribution to Workers' Profit Participation
Fund.
Example: Profit Before Contribution to WPPF = (Operating Profit−Net Finance Costs)
= 1,478,223,475 - 602,469,274
= 875,754,201
13. Contribution to workers' profit participation fund: This is the amount that gets distributed
as Workers profit participation fund. Here in the Income statement of Singer Bangladesh LTD
we can see the amount is 43,787,710.
14. Profit before taxation: The amount shown here reflects the company's taxable earnings.
Here in Singer Bangladesh the amount is 831,966,491.
15. Income tax expense: The amount of money a business owes the government in taxes as a
result of its taxable income is known as income tax expense. The tax rates and laws
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governing the area in which the business operates are taken into account when calculating
this cost.
Example: Let’s suppose the profit before tax is 10,00,000 and the corporate tax rate is 10%
then the Income tax expense would be (10,00,000 x 10%) 1,00,000 BDT .
16. Profit after tax: Profit after taxes, frequently referred to as net profit or net income, is the
remaining profit following the deducting of all expenses, including income tax, from total
revenue. This amount is the total profit that will either be distributed to shareholders or
reinvested in the company. Here in the Income statement of Singer Bangladesh LTD has
Profit after tax 522,087,796.
17. Other comprehensive income: Any money received by the firm from sources unrelated to
its primary business operations but not necessarily related to its financial activities is referred
to as other comprehensive income.
Example: Rental Income, Gain on Sale of Assets, Royalty Income, Miscellaneous Income
etc. These can be used as an example for other comprehensive income.
18. Other comprehensive income/(expense) for the year, net of tax: The entire amount of
profits or losses that, after taxes are deducted, impact a company's equity but are not included
in net income is represented as other comprehensive income/expense for the year, net of tax.
19. Total comprehensive income for the year: An indicator of a company's overall financial
performance is its annual total comprehensive income. To get this total comprehensive
income for the year we have to add Other comprehensive income or deduct Other
comprehensive expenses.
Example: In the income statement of Singer Bangladesh LTD has Net income after tax of
522,087,796 and Other comprehensive income/expense for the year, net of tax (18,582,678)
so the Total comprehensive income for the year would be 503,505,118.
20. Earnings per share (EPS): Earnings per share (EPS) is a financial metric that indicates the
profitability of a company on a per-share basis. Investors frequently use earnings per share to
determine a company's profitability and to value its shares.
Example: The formula for EPS is :-
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EPS= (Net income - Preferred Dividends) / Weighted Average Number of Common Shares Outstanding.
Here in the income statement the EPS is 5.24
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Particulars in Balance Sheet (Appendix-02)
Assets:
1. Property, plant and equipment: Property, Plant, and Equipment (PP&E) refers to a company's
tangible fixed assets that are expected to provide positive economic benefits over the long term (> 12
months).
Example: Buildings, machinery, vehicles, furniture, lands and office equipment.
2. Intangible assets: An intangible asset is an asset that lacks physical substance. They are
identifiable, meaning they can be separated from other assets and can be sold, transferred, licensed,
or exchanged. They are hard to evaluate.
Example: patents, copyright, franchises, goodwill, trademarks, and trade names, as well as any form
of digital asset such as software or crypto-currency etc.
3. Right-Of-Use (ROU) assets: Right-of-Use (ROU) Assets represent a lessee's right to use a leased
asset over the lease term.
Example: Office space, vehicles, heavy machinery, specialized tools, furniture, equipment, and
other similar items.
4. Investments: An investment is a financial asset that is acquired with the goal of generating
income or recognition. In finance, an investment is a financial asset bought with the idea that it will
provide income further or will later be sold at a higher cost price for a profit.
Example: Government bonds, securities, shares, and debts of companies.
5. Deferred tax assets: A scenario where a corporation has paid more taxes to the government than
it really owes because of short-term differences between accounting principles and taxes is
represented by the accounting phrase "deferred tax asset" on the balance sheet.
6. Advances, deposits and prepayments: Prior to receiving the products or services, they are listed
as assets. When a business pays for goods or services before they are used or consumed, this is
known as "prepayments". When the benefit is realized, these are first recorded as assets and
subsequently recognized as expenses over time.
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7. Inventories: Inventory is a current asset and refers to all stock in the various production stages.
By keeping stock, both retailers and manufacturers can continue to sell or build items.
Example: Raw Materials, Components, Finished Goods, Transit Inventory etc.
8. Trade and other receivables: Trade receivables refer to the amount of money owed by a
company for goods or services it has sold, which are reflected in invoices that the company has
issued to its clients, but has not yet received payments for.
9. Current tax assets: A company's current tax assets are sums that it owes the government, either
as a result of overpaying taxes or receiving tax credits that are refundable within a year. They stand
for a demand for a refund or a decrease in extra taxes owed.
10. Cash and cash equivalents: A category of assets on a company's balance sheet that are cash or
may be quickly turned into cash are referred to as cash and cash equivalents.
Example: Local Government Investment Pool (LGIP) deposits, treasury bills, commercial paper,
short-term deposits in financial institutions, and money market funds.
Equity:
11. Share capital: The total amount of money raised by a business through the issuance of shares to
shareholders is known as share capital. It represents the ownership interest that shareholders have in
the company and is a basic part of equity in a business.
12. Reserves: In accounting, revenue is the total amount of income generated by the sale of goods
and services related to the primary operations of the business. Commercial revenue may also be
referred to as sales or as turnover. Some companies receive revenue from interest, royalties, or other
fees.
13. Retained earnings: Retained earnings are the amount of profit a company has left over after
paying all its direct costs, indirect costs, income taxes, and dividends to shareholders. They represent
the portion of the company's equity that can be used to invest in New Equipment, Research and
development (R&D), and Marketing.
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Liabilities:
14. Defined benefit obligations: The term "defined benefit obligations" (DBO) describes the current
value of the retirement or pension benefits that an organization has agreed to provide to its staff in
the future as part of a defined benefit plan. It’s a long term liabilities for a company.
15. Lease liabilities: A financial obligation that arises when a lessee (The person taking the lease)
agrees to make periodic payments to a lessor (The person giving the lease) in exchange for the right
to use an asset for a specified period.
16. Other liabilities: Other liabilities are future commitments made by a company that do not fit into
one of the established categories - for example, accounts payable, leasing obligations, or long-term
debt.
17. Unclaimed dividend: Dividends that a corporation has declared but that the shareholders have
not yet claimed or redeemed are known as unclaimed dividends. Until the dividends are either
properly forfeited or claimed by the shareholders, they are shown as a liability on the balance sheet
of the corporation.
18. Trade and other payables: Trade and other payables are amounts a company owes to its
suppliers and creditors for goods and services received but not yet paid for.
19. Short-term borrowings - secured: Short-term borrowings - secured loans or credit facilities
with a one - year repayment duration that are secured by assets are known as secured borrowings.
Assets that provide security for the lender in the event of default, such as inventory, accounts
receivable, or other firm assets, may be used as collateral.
20. Current liabilities: Current Liabilities are the sum of Long term and Short term liabilities that a
company has.
21. Total equity and liabilities: It’s the sum of Owner’s equity and the Liabilities of a company .
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22. Net Asset Value (NAV): Net Asset Value (NAV) per share represents the value of a company's
assets minus its liabilities, divided by the number of outstanding shares. It is a number that is
frequently used to assess the value per share of investment trusts or funds, especially when it comes
to real estate.
[NOTE: The assets and the equity plus liabilities will always be the same on the balance sheet.
Here in the balance sheet of Singer Bangladesh we can see the equity plus liabilities and Assets are
19,463,373,878]
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Particulars from retained earnings statement (Appendix-03)
1. Starting Balance: The total amount of net income that a business has kept rather than
distributing out as dividends to shareholders is represented by the balance in retained
earnings. It is an element of the balance sheet's shareholders' equity and shows the company's
accumulated reinvested earnings.
2. Profit of the year: The net income or net profit that a business makes during a financial year
- after all costs, expenses, and taxes are subtracted - is referred to as the profit of the year.
When this profit is not paid to shareholders as dividends, it becomes part of the retained
earnings.
3. Total comprehensive income for the year: All changes in equity during a period are
included in total comprehensive income, with the exception of those coming from owner
investments and payouts to owners.
4. Cash dividend: It is the amount that a company is bound to distribute among the Share
Holders. In the Statement of Changes in Equity of Singer Bangladesh LTD we can see that
the Cash dividend was 99,702,838 for the year 2023.
5. Transfer of depreciation on revaluation surplus: Retained earnings are not directly
impacted by the transfer of depreciation on revaluation excess, but they are indirectly
impacted by it because net income is a significant component of retained profits.
6. Ending Balance: After adding and deducting all the particulars in the retained earning we get
the ending balance for the year which will be used for the starting balance of the next year.
It’s what we use as Retained earing which is a part of Balance sheet.
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Conclusion
A company's income statement, balance sheet, and retained profits statement are crucial parts of its
financial reporting because they offer important information about its performance and position.
Income statement:
The company's sales, costs, and net income during a given time period - usually a quarter or an
annual period - are compiled in the income statement. It facilitates stakeholder’s knowledge of the
business's capacity for earnings and profitability. Investors can evaluate the company's performance
and financial health by looking at profitability statistics, cost management, and revenue patterns.
Balance Sheet:
The balance sheet lists the company's assets, liabilities, and shareholders' equity and provides a
moment in time view of its financial situation. It gives details on the assets, liabilities, and
percentage of debt and equity financing of the business. Stakeholders can appraise the company's
overall financial stability and capacity to fulfill short- and long-term obligations by looking at asset
turnover, leverage ratios, and liquidity ratios.
Retained Earnings:
The changes in retained earnings from the start of the reporting period to its conclusion are combined
in the retained earnings statement. It shows the total earnings or losses that the business has kept
after paying out dividends to its shareholders. Retained earnings are the profits that are reinvested in
the company for potential future growth, debt pay down, or dividend distributions. Retained earnings
trends analysis provide light on the company's long-term financial strategy, capital allocation
choices, and dividend policy.
To sum up, the income statement, balance sheet, and retained earnings statement provide an in-depth
overview of the financial health, position, and direction of a business. For creditors, investors, and
other stakeholders to evaluate the company's financial standing, make wise decisions, and track its
development over time, these financial statements serve as vital resources.
