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    Pre and Post Incorporation: Class Presentation ON

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    Viswajit
    The document discusses pre-incorporation and post-incorporation periods for companies. It defines incorporation as the union of accounts of a subsidiary company with an existing company. It notes that profits earned before incorporation are considered capital profits and are not available for distribution as dividends, while profits after incorporation are revenue profits which can be distributed. It provides details on how to calculate and account for pre-incorporation profits and losses separately from post-incorporation profits and losses.

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    © All Rights Reserved
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    Pre and Post Incorporation: Class Presentation ON

    Uploaded by

    Viswajit
    91 views10 pages
    The document discusses pre-incorporation and post-incorporation periods for companies. It defines incorporation as the union of accounts of a subsidiary company with an existing company. It notes that profits earned before incorporation are considered capital profits and are not available for distribution as dividends, while profits after incorporation are revenue profits which can be distributed. It provides details on how to calculate and account for pre-incorporation profits and losses separately from post-incorporation profits and losses.

    Original Description:

    this is for b.com 2nd year

    Original Title

    Corporate Accounting

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    © © All Rights Reserved

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    The document discusses pre-incorporation and post-incorporation periods for companies. It defines incorporation as the union of accounts of a subsidiary company with an existing company. It notes that profits earned before incorporation are considered capital profits and are not available for distribution as dividends, while profits after incorporation are revenue profits which can be distributed. It provides details on how to calculate and account for pre-incorporation profits and losses separately from post-incorporation profits and losses.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    91 views10 pages

    Pre and Post Incorporation: Class Presentation ON

    Uploaded by

    Viswajit
    The document discusses pre-incorporation and post-incorporation periods for companies. It defines incorporation as the union of accounts of a subsidiary company with an existing company. It notes that profits earned before incorporation are considered capital profits and are not available for distribution as dividends, while profits after incorporation are revenue profits which can be distributed. It provides details on how to calculate and account for pre-incorporation profits and losses separately from post-incorporation profits and losses.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    You are on page 1of 10

    CLASS PRESENTATION

    ON

    PRE AND POST INCORPORATION


    1) Rishav Gupta(24)
    2) Somraj Singh(29)
    3) Vishvdeep Singh Bhadouriya(31)
    4) Viswajit Singh Bhadoriya(32)

    B.Com (Eco) 2nd Year


    INCORPORATION MEANING

     Incorporation meaning: The union books of


    accounts of a subsidiary company with already
    existing company (purchasing company)

     INCORPORARTION

    it can be classified in to pre incorporation post


    incorporation period.
    WHAT IS PROFIT PRIOR TO INCORPORATION
     Profit prior to incorporation is the profit earned
    or loss suffered during the period before
    incorporation. It is a capital profit and is not
    legally available for distribution as dividend
    because a company cannot earn a profit before it
    comes into existence. Profit earned after
    incorporation is revenue profit, which is
    available for dividend.
    PROFIT OR LOSS SUBSEQUENT TO
    INCORPORATION

     Net profit & loss: After incorporation and from the data of receiving the
    certificate of commencement of business till the end of financial year the
    expenses of the period is deducted from the gross revenue earned to
    arrive at net profit or net loss.

     Use of profit prior to incorporation: The profit made before


    incorporation is not available for distribution as dividends to the
    shareholders of the purchasing company because it is treated as capital
    profit.

     Record of loss prior to incorporation: (i) this loss is added to the


    amount of goodwill, if it is given .(ii) if no amt of goodwill is given,
    goodwill account is opened with this amount. It may be directly written
    PRE INCORPORATION AND POST INCORPORATION
    PERIOD

     Pre Incorporation And Post Incorporation


    Period: The period before incorporation and
    the period after incorporation is called as per
    incorporation and post incorporation.
    PRE INCORPORATION AND INCORPORATION
    PROFIT:

     Private Company Starts Its Business Soon After Its


    Incorporation Whereas Public Company Commences Its
    Business Only After Obtaining Certificate Of
    Commencement From The Registrar Of The Company.
    The Profit Earned Before The Incorporation Period By
    The Company Is Termed As Pre Incorporation
    Profit/Profit Prior To Incorporation; The Profit Earned Is
    Considered As Capital Profits And Is Transferred To
    Capital Reserve A/C.
    CONTUD…

     Incase if the company suffers loss prior to


    incorporation, it is treated as capital loss and is
    transferred to goodwill a/c.

     The profit/loss earned by the companies after


    incorporation is called as post incorporation
    profit/loss
    STEPS TO DETERMINE PRE INCORPORATION
    PROFIT/LOSS

    1) Prepare A TRADING A/C FOR THE WHOLE PERIOD.


    2)Calculate Time Ratio And Sales Ratio.
    Time Ratio Can Be Calculate By Taking Pre Incorporation
    And Post Incorporation Time .
    From The Eg 1: Pre Incorporation Period Is 3 Months
    Post Incorporation Period Is 9 Months Therefore Time
    Ratio=3:9 Or 1:3 Sales Ratio Can Be Calculated On
    The Sales Taken Place During Pre And Post
    Incorporation Period.
    3) Prepare a net profit statement to analyze pre and post
    incorporation periods.
    POINTS TO BE NOTED WHILE PREPARING NET
    PROFIT STATEMENTS

     Gross profit to be calculated on sales ratio.

     Divide all standing expenses or fixed expenses on time basis.


    E.g., salaries, rent, printing & stationery, telephone charges,
    postage & telegram, general expenses, depreciation,
    administration expenses, audit fees etc.,

     Divide all variable expenses on sales ratio e.g., carriage


    outward, advertisement, salesman salaries, commission,
    brokerage, bad debts etc.,
    THANK
    YOU

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