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| Corporate Practice bd |
11.What is letter of credit? Kinds of letter of credit:
Ans:
LC stands for Letter of credit /documentary credit which issued by a bank in favor of importer to the exporter or his bank against delivery of goods/services in respect to the presentation of valid documents as per terms & conditions which are already specified in the Letter of credit(LC).
Kinds of letter of credit
1. Import/Export LC
2. Back to Back LC
3. Deferred LC
4. AT sight LC
5. Recoverable LC
6. Irrecoverable LC
12.Back to Back LC:
This is a special type of Letter of credit (LC) which is originally issued on behalf of a customer against the Export Letter of credit (LC) for procurement of raw materials. The importer's export LC is usually used as a security for opening Back to Back LC (BTB) LC.
13.Deferred LC:
This type of Letter of credit (LC) states the payment will not be given immediately. The seller will receive a payment after a certain period of time mentioned in the letter of credit. The issuing bank may review the documents early but the payment is made only after the agreed-upon time.
14.AT sight LC:
This type of Letter of credit (LC) states that the payment will be given immediately to the beneficiary /exporter/seller upon the presentation of correct documents to the bank. The bank after taking necessary action and recommended discounting the bill 100% of LC value after charging the bank charge.
15.What are the LC commission charges by bank?
Charged by issuing bank at the time of opening LC and the rate would be 0.125% on the total LC value. This charge is applicable from the date of issuing of LC to the date of LC expiry.
16.What is cash flow statement? Method of cash flows Name the three parts of Cash flow statements:
Ans:
The Cash Flow Statement, also known as the Statement of Cash Flows, is a financial statement that provides information about the cash inflows and outflows of a company during a specific period. It presents the sources and uses of cash, allowing stakeholders to assess the company's ability to generate cash, its liquidity, and its operating, investing, and financing activities.
Method of cash flows statements
< Direct method
< Indirect method
There are three Parts in cash flow statements names are-
1.Operating Activities like-
Decrease / (Increase)
Inventories
Trade Debtors
Advance, Deposit and Pre-payment
2.Investing Activities like-
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Addition of Non-Current Assets |
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Loss on Fire Non-Current Assets |
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Investment in FDR |
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3.Financial Activities like-
Term Finance
17.Excise duty charged by Bank as per SRO No.162-Law/2022/175
As per SRO No.162-Law/2022/175-Excise date 01 June 2022 is to be applicable from 01 July 2022 all banks operating in Bangladesh are bound to deduct Excise duty from each customer Accounts (saving, current, loan or others accounts) in the following way.
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Highest Balance(Credit/Debit in Taka) |
Excise Duty in Taka |
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0-100,000 |
Nil |
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100,001-5,00,000 |
150 |
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500,001-10,00,000 |
500 |
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10,00,001-1,00,00,000 |
3,000 |
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1,00,00,001-5,00,00,000 |
15,000 |
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5,00,00,001 and above |
50,000 |
18.Import (Procedures or Documentation):
There are some formalities that importer or buyer have to take for releasing their goods, such as,
01. Letter of credit (LC)
02. Commercial invoice: (Includes full description of goods shipped, its quality, quantity)
03. Packing list :(NO. Container, Lot no. No of bales, Gross weight, Tare weight, Net weight)
04.Insurance cover note no:(Description of goods shipped, Name of Exporter & importer)
05.Original Bill of lading: (voyage number, Bill of lading number, Consignee name)
06. Certificate of origin :(Gross weight, Net weight, Invoice no & date)
07. Letter of credit Authorization form(LCAF)
08. Bill of Entry(BE)
19. What’s Depreciation, differing types of depreciation & its journal entry?
Depreciation is the systematic allocation of the cost of a tangible fixed asset over its useful life. It reflects the wear and tear, usage, or obsolescence of the asset. Depreciation helps in matching the cost of an asset with the revenue it generates over time, following the accrual principle of accounting.
1.Straight-Line Depreciation:
Depreciation Expense = (Cost of Asset−Salvage Value) / Useful Life
2.Declining Balance Method:
Depreciation Expense= Book Value at Beginning of Year × Depreciation Rate
3.Double Declining Balance Method:
Depreciation Expense=2×Straight Line Depreciation Rate× Book Value at Beginning of Year
4.Units of Production Method:
DepreciationExpense=(CostofAsset−SalvageValue)/Total Estimated Production) ×Actual Production
5.Sum-of-the-Years'-Digits Method:
Depreciation Expense=(Remaining Life of the Asset/Sum of the Years’ Digits)×(Cost of Asset−Salvage Value)
20. What is goodwill? How does it calculated?
Goodwill is an intangible asset that represents the value of a business's reputation, customer base, brand recognition, and other factors that contribute to its overall worth beyond its tangible assets. It typically arises when one company acquires another for a price higher than the fair market value of its identifiable net assets (assets minus liabilities).
Calculate Goodwill: Purchase Price−Fair Market Value of Net Assets