{"id":8117,"date":"2020-05-08T11:16:20","date_gmt":"2020-05-08T05:46:20","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=8117"},"modified":"2024-05-18T14:07:32","modified_gmt":"2024-05-18T08:37:32","slug":"accounting-treatment-of-charitable-institutions-under-microfinance","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/accounting-treatment-of-charitable-institutions-under-microfinance\/","title":{"rendered":"Accounting Treatment of Charitable Institutions under Microfinance"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The Accounting Standards apply to NGOs, even if some of their activities are not so commercial or of business nature. Moreover, the facts say that there are various <a href=\"https:\/\/corpbiz.io\/ngo-registration\"><strong>NGOs<\/strong><\/a> as Microfinance that lacks in commercial content in their daily activities. However, it would be reasonable to follow the Accounting Standards laid down by the Institute of Chartered Accountants of India. It will help in the sufficient flow of finance and monitoring as well.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/accounting-treatment-of-charitable-institutions-under-microfinance\/#Microfinance_Institutions_Operations\" >Microfinance\nInstitutions Operations<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/accounting-treatment-of-charitable-institutions-under-microfinance\/#What_are_the_Internal_Financial_Sources_for_Non-Profit_Microfinance\" >What\nare the Internal Financial Sources for Non-Profit Microfinance?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/accounting-treatment-of-charitable-institutions-under-microfinance\/#What_are_the_External_Funding_Sources_under_Non-Profit_Microfinance\" >What\nare the External Funding Sources under Non-Profit Microfinance?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/accounting-treatment-of-charitable-institutions-under-microfinance\/#Non-Profit_Microfinance_Enterprises_Registered_as_Societies_and_Trusts\" >Non-Profit Microfinance\nEnterprises Registered as Societies and Trusts<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/accounting-treatment-of-charitable-institutions-under-microfinance\/#What_are_Micro_Finance_Operational_Expenses\" >What are Micro Finance\nOperational Expenses?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/accounting-treatment-of-charitable-institutions-under-microfinance\/#What_are_the_Parameters_of_Taxation_for_Microfinance_Registered_as_Societies_and_Trusts\" >What are the Parameters of\nTaxation for Microfinance Registered as Societies and Trusts?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/accounting-treatment-of-charitable-institutions-under-microfinance\/#What_is_the_Applicability_of_Accrual_Basis_of_Accounting_Standards\" >What is the Applicability of\nAccrual Basis of Accounting Standards?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/accounting-treatment-of-charitable-institutions-under-microfinance\/#What_are_the_Salient_Features_and_Principle_requirements_for_accounting_treatment_of_charitable_society_or_NGO_under_Microfinance_loans_Briefed\" >What are the Salient Features and\nPrinciple requirements for accounting treatment of charitable society or NGO\nunder Microfinance (loans)? Briefed<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/corpbiz.io\/learning\/accounting-treatment-of-charitable-institutions-under-microfinance\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Microfinance_Institutions_Operations\"><\/span>Microfinance\nInstitutions Operations <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>The prime operations held by the\nMicrofinance are as follows:-<\/em><\/strong><\/p>\n\n\n\n<ul>\n<li>Making small and flexible loans according to clients\u2019 requirements<\/li>\n\n\n\n<li>Providing secure deposit facilities to the poor<\/li>\n\n\n\n<li>Includes collateral substitutes, such as group guarantees and compulsory savings<\/li>\n\n\n\n<li>Continuous monitoring and following up to ensure timely repayment of loans. <\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Internal_Financial_Sources_for_Non-Profit_Microfinance\"><\/span>What\nare the Internal Financial Sources for Non-Profit Microfinance?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li><strong>Income from loan portfolio<\/strong>: It is the income that a Non-Profit Microfinance derives from\nits lending operations. <\/li>\n\n\n\n<li><strong>Investment income:<\/strong>&nbsp;The second income for Microfinance is from its prudent as\nwell as&nbsp;<strong>cautious investments<\/strong>.\nThese Investments generally are of excess cash invested by the Microfinance\ninto &#8216;<strong>fixed deposits,&#8217; &#8216;savings\nbank accounts,&#8217; &#8216;marketable securities,&#8217;<\/strong>&nbsp;etc.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_External_Funding_Sources_under_Non-Profit_Microfinance\"><\/span>What\nare the External Funding Sources under Non-Profit Microfinance?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li><strong>Promoter&#8217;s contribution:<\/strong> Non-Profit Microfinance can collect funds as a promoter&#8217;s contribution. It could be as a donation for not-for-profit existences only.<\/li>\n\n\n\n<li><strong>Share Capital:<\/strong>&nbsp;Share capital is an advanced instrument primarily for earning a return automatically.&nbsp;<\/li>\n\n\n\n<li><strong>Commercial Debt:<\/strong>&nbsp;These borrowings evolve from commercial banks, development banks, and other regional and foreign funding bureaus for lending to clients.<\/li>\n\n\n\n<li><strong>Preserved earnings from Schedule operations:<\/strong>&nbsp;By way of reserve in the profit and loss statement, some Microfinance keep part of their earnings and incorporate them in the&#8217; balance sheet&#8217; as&nbsp;<strong>retained earnings<\/strong>.<\/li>\n\n\n\n<li><strong>Grants from global and national donor bureaus:<\/strong>&nbsp;These are either as a revolving grant or as a grant for operational deficit, or could be grants for program support.<\/li>\n\n\n\n<li><strong>Grants from the government:<\/strong>&nbsp;The government combines different development programs with Microfinance, such as by way of donations, grants, etc. Though this is not significant in terms of volume, it has contributed too many Microfinance to move forward.<\/li>\n\n\n\n<li><strong>Promotion funds\/subsidized funds from NABARD:<\/strong>&nbsp;NABARD provides promotional grant to Self Help Promotion Institutions. <\/li>\n\n\n\n<li><strong>Corporate Donors:<\/strong>&nbsp;In this corporate world, Non-Profit Microfinance is getting identifying with <strong>social causes<\/strong>, receive contributions from corporates by way of donations in cash or kind, etc.<\/li>\n\n\n\n<li>There are few considerations that need to be taken care of in terms of Internal and external circle of Accounts treatment. The cycle is as follows:-<\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" width=\"669\" height=\"474\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-34.png\" alt=\"External Funding Sources under Non-Profit Microfinance\" class=\"wp-image-8118\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-34.png 669w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-34-300x213.png 300w\" sizes=\"(max-width: 669px) 100vw, 669px\" \/><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Non-Profit_Microfinance_Enterprises_Registered_as_Societies_and_Trusts\"><\/span>Non-Profit Microfinance\nEnterprises Registered as Societies and Trusts<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>Non-Profits Microfinance activities are often gets registered under the <a href=\"https:\/\/corpbiz.io\/society-registration\"><strong>Societies Registration<\/strong><\/a><strong> <\/strong>Act, 1860. As they got instituted as a not-for-profit, the Microfinance activities also need to get created under the&nbsp;<strong>same legal umbrella<\/strong>.<\/li>\n\n\n\n<li>Few of the Non-Profit Microfinance gets registered under <strong>the Indian Trusts Act, 1882<\/strong> either as public charitable trusts or as private, determinable trusts with specified beneficiaries\/members.<\/li>\n\n\n\n<li>By considering the public nature of Microfinance actions, it gets a widely accepted notion that it works for the relief of poverty. Under this law, the registered society would need to consider &#8216;<strong>Microfinance&#8217; clearly&nbsp;<\/strong>as an activity it would be taking up as part of its &#8216;charity&#8217; work \u2013 as one of the objectives in its&nbsp;<strong>&#8216;Memorandum of  Association.&#8217;&nbsp;<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_Micro_Finance_Operational_Expenses\"><\/span>What are Micro Finance\nOperational Expenses? <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>Funds for Microfinance clients can be obtained either by obtaining <strong>wholesale loans<\/strong> from the formal sector or by building up their <strong>surpluses<\/strong>. It is possible only if Microfinance charges their clients, not only the full cost of providing services but also a <strong>small additional amount<\/strong> that enables them to generate a miand build up their net worth.<\/li>\n<\/ul>\n\n\n\n<ul>\n<li><a href=\"https:\/\/corpbiz.io\/microfinance-company-registration\"><strong>Microfinance institutions<\/strong><\/a> usually incur three types of costs while delivering financial services to clients:<\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-35.png\" alt=\"Microfinance institutions types\" class=\"wp-image-8119\" width=\"549\" height=\"320\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-35.png 576w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-35-300x175.png 300w\" sizes=\"(max-width: 549px) 100vw, 549px\" \/><\/figure><\/div>\n\n\n<ol>\n<li><strong>Operating costs: &#8211;&nbsp;<\/strong>The Microfinance experiences these costs in delivering credit to the clients, including visits to the clients, completing paperwork, disbursing loans and collecting repayments. It includes the cost of minimizing risk through monitoring and follow-up of disbursed loans, exercising internal control, and undertaking an external audit of the Microfinance.<\/li>\n\n\n\n<li><strong>Risk costs: &#8211; <\/strong>These&nbsp;are the cost of portfolio losses incurred despite undertaking every effort to minimize it. They are the provisioning expenses reserved to meet the possible losses. These represent non-cash operating expenses for Microfinance.<\/li>\n\n\n\n<li><strong>Cost of Funds: &#8211;<\/strong>&nbsp;The third cost that Microfinance incurs is the cost of funds. This cost gets incurred in borrowing or raising funds for on-lending to Microfinance clients. Here, Funds mean the borrowed funds as well as the interest-bearing savings, if any. <\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Parameters_of_Taxation_for_Microfinance_Registered_as_Societies_and_Trusts\"><\/span>What are the Parameters of\nTaxation for Microfinance Registered as Societies and Trusts? <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>Microfinance institutions registered under the Societies Registration Act, 1860 and Indian Trusts Act, 1882 as societies and trusts respectively, are subject to <strong>standard rules of taxation<\/strong> under the <strong><em>Income-tax Act, 1961<\/em><\/strong><sup><a href=\"https:\/\/www.incometaxindia.gov.in\/pages\/acts\/index.aspx\"><strong><em>[1]<\/em><\/strong><\/a><\/sup><strong>.<\/strong><\/li>\n\n\n\n<li><strong>Section 11 <\/strong>of the Income-tax Act, exempts the income of charitable societies and trusts from the charge of tax on the fulfillment of certain conditions. The sections 12, 12A, 12AB, 13 administer the issue of taxation of such enterprises.<\/li>\n\n\n\n<li>To get exemption under sections 11 and 12, a Society\/ Trust engaged in Microfinance is required to fulfill the following conditions:<\/li>\n<\/ul>\n\n\n\n<ol>\n<li><strong>Registration:<\/strong>&nbsp;For registration under section 12A with the Commissioner of Income-tax, the Society or Trust should apply within one year from the date of creation of Society or Trust<\/li>\n\n\n\n<li><strong>Compulsory Audit:<\/strong>&nbsp;The total income of the Society\/Trust is required to get audited, and the audit report in Form No. 10B, is expected to be furnished along with the return.<\/li>\n\n\n\n<li><strong>Application of income:<\/strong>&nbsp;If the Society\/Trust has applied the entire income or at least a specified percentage of income for the year (85 %) for charitable purposes (Microfinance), the whole of the income shall be exempt from tax.<\/li>\n<\/ol>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/setting-off-excess-expenditure-against-income-of-next-year-by-trust-and-ngo\/\">Setting off Excess Expenditure against Income of next year by Trust and NGO<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_Applicability_of_Accrual_Basis_of_Accounting_Standards\"><\/span>What is the Applicability of\nAccrual Basis of Accounting Standards? <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>The term \u2018<strong>basis of accounting\u2019<\/strong> refers to the timing of recognition of revenues, assets, expenditure, and liabilities in accounts. The commonly prevailing bases of accounting are:-<\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-36.png\" alt=\"Applicability of Accrual Basis of Accounting Standards\" class=\"wp-image-8121\" width=\"541\" height=\"336\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-36.png 576w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-36-300x186.png 300w\" sizes=\"(max-width: 541px) 100vw, 541px\" \/><\/figure><\/div>\n\n\n<ul>\n<li><strong>Cash\nBasis Accounting<\/strong><\/li>\n<\/ul>\n\n\n\n<ol>\n<li>With this, transactions get documented when the related &#8216;c<strong>ash receipts<\/strong>&#8216; or &#8216;<strong>cash payments<\/strong>&#8216; take place.\nThus, the interest received on loans advanced is recognized when cash is\ncollected.&nbsp;<\/li>\n\n\n\n<li>Similarly, expenditure on &#8216;<strong>acquisition<\/strong>&#8216; and &#8216;<strong>maintenance of assets&nbsp;<\/strong>&#8216;used in the rendering\nof services as well as on employee remuneration and other items gets recorded\nwhen the&nbsp;<strong>related payments<\/strong>&nbsp;take\nplace.&nbsp;<\/li>\n\n\n\n<li>The end-product of the cash basis of accounting is a statement\nof &#8216;<strong>receipts and payments,&#8217; which<\/strong>\nclassifies cash receipts and cash payments under different heads. An\nexplanation (statement) of assets and liabilities may or may not get prepared.<\/li>\n<\/ol>\n\n\n\n<ul>\n<li><strong>Accrual basis of accounting<\/strong><\/li>\n<\/ul>\n\n\n\n<ol>\n<li>It is the method of recording transactions by which <strong>revenues, costs, assets, and liabilities<\/strong> get shown in the accounts in the period in which they accrue. The &#8216;accrual basis of accounting&#8217; includes considerations associating to <strong>deferral, allocations, depreciation, and amortization<\/strong>. This basis gets assigned to as <strong>&#8216;Mercantile Basis of Accounting<\/strong>.&#8217;<\/li>\n\n\n\n<li>Accrual basis of accounting attempts to <strong>record the financial effects<\/strong> of the transactions. It affects other events of an enterprise in the period in which they occur rather than recording them in the period(s) in which cash is collected or paid by the Microfinance.&nbsp;<\/li>\n\n\n\n<li>&nbsp;Accrual is a technical basis of accounting and has conceptual superiority over the &#8216;cash basis of accounting.&#8217; Accordingly, it gets recommended that all non-profit Microfinance should maintain books of account on an accrual basis for all elements of financial statements.&nbsp;<\/li>\n<\/ol>\n\n\n\n<p>Some\nexamples of the areas in which different accounting policies may be adopted by\ndifferent enterprises are as follows:-<\/p>\n\n\n\n<p><strong>Note: &#8211;<\/strong>The list of examples is not intended to be exhaustive.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-37.png\" alt=\"different accounting policies\" class=\"wp-image-8123\" width=\"536\" height=\"427\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-37.png 726w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-37-300x239.png 300w\" sizes=\"(max-width: 536px) 100vw, 536px\" \/><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Salient_Features_and_Principle_requirements_for_accounting_treatment_of_charitable_society_or_NGO_under_Microfinance_loans_Briefed\"><\/span>What are the Salient Features and\nPrinciple requirements for accounting treatment of charitable society or NGO\nunder Microfinance (loans)? Briefed <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Valuation of Inventories: &#8211; It applies to the assessment of all inventories except work-in-progress arising under construction contracts including directly related service contracts<\/strong><\/p>\n\n\n\n<ul>\n<li><strong>Cash\nFlow Statement: &#8211;&nbsp;<\/strong>Information\nabout the cash flows of an enterprise is useful in providing users of financial\nstatements. It works with a basis to assess the ability of the enterprise to\ngenerate cash and cash equivalents and the needs of the enterprise to utilize\nthose cash flows.&nbsp;<\/li>\n\n\n\n<li><strong>Contingency\noccurring after the Balance Sheet Date: &#8211;&nbsp;<\/strong>It deals with the treatment in the\nfinancial statements of emergencies and events occurring after the balance\nsheet.&nbsp;<\/li>\n\n\n\n<li><strong>Net\nProfit or Loss for the Period: &#8211;&nbsp;<\/strong>It deals with disclosure in the\nprofit and loss account of (a) significant items arising in the course of\nordinary activities of the enterprise; (b) extraordinary items; (c) prior\nperiod items; (d) changes in accounting estimates; and (e) changes in\naccounting policies.<\/li>\n\n\n\n<li><strong>Depreciation\nAccounting:-<\/strong>The\ndepreciable amount of a depreciable asset should get allocated on a systematic.\nIt should base on each accounting period during the useful life of the asset.<\/li>\n\n\n\n<li><strong>Construction\nof Contracts: &#8211;&nbsp;<\/strong>The\nobjective of this Standard is to prescribe the accounting treatment of revenue\nand costs associated with construction contracts.&nbsp;<\/li>\n\n\n\n<li><strong>Revenue\nRecognition: &#8211;&nbsp;<\/strong>Revenue\nfrom sale of goods should be recognized when all the following conditions get\nfulfilled:<\/li>\n<\/ul>\n\n\n\n<ol>\n<li>The\nseller of the goods has to provide by transferring to the buyer property for a\nprice. All notable risks and rewards of ownership have moved to the buyer, and\nthe seller retains no effective control of the goods to a degree usually\nassociated with ownership;<\/li>\n\n\n\n<li>No\nuncertainty should exist concerning the amount of the consideration that will\nderive from the sale of the goods; and<\/li>\n\n\n\n<li>It\nis not to be a single reason to expect the ultimate collection of the\nconsideration.<\/li>\n<\/ol>\n\n\n\n<ul>\n<li><strong>Accounting\nfor Fixed Assets: &#8211;&nbsp;<\/strong>A\nfixed asset defines as &#8220;an asset held to get used to produce or provide\ngoods or services and not held for sale in the normal course of business.&#8221;<\/li>\n\n\n\n<li><strong>Changes\nin Foreign Exchange Rates: &#8211;<\/strong>&nbsp;An\nenterprise should apply it in accounting for transactions in foreign currencies\nand in translating the financial statements of international operations.<\/li>\n\n\n\n<li><strong>Accounting\nfor Government Grants: &#8211;&nbsp;<\/strong>Government grants are &#8220;assistance by\ngovernment in cash or kind to an enterprise for past or future compliance with\ncertain conditions.&#8221;&nbsp;<\/li>\n\n\n\n<li><strong>Accounting\nfor Investments<\/strong>:\n&#8211; Investments are &#8220;assets held by an enterprise for earning income by way\nof dividends, interest, and rentals, for capital appreciation, etc.<\/li>\n\n\n\n<li><strong>Accounting\nfor Amalgamations: &#8211;&nbsp;<\/strong>It\ndeals with the treatment of reserve or goodwill. The Standard is directed\nprincipally to companies, although some of its requirements also apply to\nfinancial statements of other enterprises.<\/li>\n\n\n\n<li><strong>Borrowing\nCosts: &#8211;&nbsp;<\/strong>Borrowing\ncosts get defined as &#8220;interest and other costs incurred by an enterprise\nin connection with the borrowing of funds.&#8221; Thus, apart from interest,\nborrowing costs would also include the following:<\/li>\n<\/ul>\n\n\n\n<ol>\n<li>Commitment\ncharges on bank borrowings and other short term and long-term borrowings;<\/li>\n\n\n\n<li>Amortisation\nof discounts or premiums concerning the borrowings;<\/li>\n\n\n\n<li>Amortisation\nof ancillary costs accrued in linking with the arrangement of such borrowings;<\/li>\n\n\n\n<li>Finance\ncharges in terms of assets acquired under finance leases or other similar\narrangements; and<\/li>\n<\/ol>\n\n\n\n<ul>\n<li><strong>Segment\nReporting:-<\/strong>It\nestablishes principles for reporting financial information, about the different\ntypes of products and services an enterprise produces (business segments) and\ndifferent geographical areas in which it operates (geographical segments).<\/li>\n\n\n\n<li><strong>Consolidated\nFinancial Statements: &#8211;&nbsp;<\/strong>The\nStandard applies to the preparation and presentation of consolidated financial\nstatements for a group of enterprises under the control of a parent and the\naccounting for investments in subsidiaries in the separate financial statements\nof a parent.<\/li>\n\n\n\n<li><strong>Accounting\nfor Taxes on Income: &#8211;&nbsp;<\/strong>It\napplies to accounting for taxes on income, including the determination of the\namount of the expense. It also determines saving related to taxes on income in\nrespect of an accounting period and the disclosure of such an amount in the\nfinancial statements.<\/li>\n\n\n\n<li><strong>Interim\nFinancial Reporting: &#8211;<\/strong>&nbsp;This\nStandard prescribes the minimum content of a temporary financial report and\nprescribes the principles for recognition and measurement in complete financial\nstatements for an &#8216;interim period.&#8217;<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p> The Trust\/Society as an ingredient of social capital helps microfinance institutions to accomplish their aim of improving the poor and\/or develop autonomous institutions by intending market failures. With this, we sought to give a sketch of the Account Treatments that describes results in the attainment of MFI\u2019s. Herewith, we at <a href=\"https:\/\/corpbiz.io\/\"><strong>Corpbiz<\/strong><\/a> have experienced professionals to help you with the process of Registering as well as accounting Micro Financed Trust\/institutions, guaranteeing the successful and timely fulfillment of your work. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/registration-u-s-12aa-without-commencing-any-activity-itat\/\">Trust is allowed for registration U\/s 12AA even if it\u2019s activity has not commenced yet: ITAT 2020\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Accounting Standards apply to NGOs, even if some of their activities are not so commercial or of business nature. Moreover, the facts say that there are various NGOs as Microfinance that lacks in commercial content in their daily activities. However, it would be reasonable to follow the Accounting Standards laid down by the Institute [&hellip;]<\/p>\n","protected":false},"author":20,"featured_media":8127,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[3,324],"tags":[551],"acf":{"service_id":"10"},"authorName":"Archita Bhattacharjee","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/WhatsApp-Image-2020-03-18-at-11.26.19-AM-1.jpeg","authorDescription":"Archita Bhattacharjee is working as Legal Analyst (Team Lead, Research &amp; Development) at Corpbiz and has proving experience about 2 years as Corporate Legal Researcher in law firms as well as Rajya Sabha and authors in diverse publications. She has refined her skills by representing India in Paris, France and the University of Leiden over implications of International Humanitarian and Criminal Law being certified member of many Legal Centers.","postViews":8971,"readingTime":8,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/8117"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/20"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=8117"}],"version-history":[{"count":20,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/8117\/revisions"}],"predecessor-version":[{"id":64222,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/8117\/revisions\/64222"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/8127"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=8117"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=8117"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=8117"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}