It is informed that the answers to the questions asked in the fourth level advertisement opened by the Agricultural Development Bank Limited (ADBL) in the last financial year are as follows.
What is meant by accounting system? Write the difference between single-entry accounting system and double-entry accounting system.2+3=5
Accounting system means the system of accounting, recording, presentation and analysis of financial transactions. The accounting system provides information about the organization’s financial status, performance and financial responsibility.
Accounting system is a method of keeping information about business transactions of an organization, keeping records, processing records and giving information to related parties through financial reports.
Today’s era is the era of accounting. Nowadays, accounting is a subject that is used in everything and everywhere. There are two types of accounting systems. Single accounting system and double accounting system.
Basis of Difference Single Accounting System Double Accounting System
According to the method, the most advanced non-scientific accounting system is the latest scientific accounting system
According to the system relatively simple accounting system complex accounting system
Incomplete accounting system based on completeness Complete accounting system
Balance test Difficult to test balance Easy to test balance
According to the aspect of records, in an accounting system only one aspect of the record is maintained, such as cash account, bank account, personal account etc. •
Double-entry bookkeeping records both sides of a financial transaction, i.e. debits and credits. It can give a complete picture of the business.
It is difficult to identify errors and fraud in a single accounting system based on identity • It is easy to do in a double accounting system.Agricultural development bank can use double entry accounting system.
Conclusion accounting system
Accounting is the art of keeping systematic, regular and scientific records of economic transactions. Two types of systems are used for keeping accounts, single and double. In a single accounting system,
only one side of any transaction is accounted for, while in a double accounting system, both sides are accounted for. Compared to single accounting system, double accounting system is considered scientific and reliable.
Agricultural Develpoment Bank Question Number-2
How is national income calculated by giving the definition of economics? Mention it in brief 2+3=5
The definition of economics can be different from different perspectives. But generally, economics is considered as a social science that studies the relationship between human needs, wants, and resources. Economics analyzes economic activities such as production, distribution, consumption, and exchange.
There are two major branches of economics: macroeconomics and macroeconomics. Macroeconomics studies the economic behavior and decisions of a single individual, firm, or market. Macroeconomics studies economic phenomena at the civic, national, or global level.
Gross National Income (GNI) is the amount of total income produced by the citizens of a country in a year. The method of calculating it can be different, but generally it is calculated in two ways.
- A. Production Method
• Final Production Method
• Value Added Method
B. Income Method
C. Expenditure Method
• On the basis of production:- It is calculated by including agriculture, industry, service, tourism and other sectors of production within any one year of a country. A+I+T+O=GDP ,NNP=GDP+(X-M)-CCA (capital consumption allowance) - From the point of view of income: In this, the gross domestic product of the country (Gross Domestic Product, GDP) and the income earned by the citizens of the country abroad (Net Factor Income from Abroad, NFIA) are calculated as national income. That is, GNI = GDP + NFIA
- From the point of view of expenditure: In this, the country’s domestic expenditure (Gross Domestic Expenditure, GDE) and the net expenditure made by the citizens of the country abroad (Net Expenditure from Abroad, NEA) are calculated as national income. That is, GNI = GDE + NEA
Agricultural Develpoment Bank Question No.3
Introduce the cash flow statement and mention in detail the direct method of preparing this statement. 3+7=10
A cash flow statement is a financial statement that shows the cash income and expenses of a business or organization. This statement divides the sources and uses of cash into three categories: operating, investing and financing activities. This statement shows the cash flow position and capacity of the business.
A cash flow statement is a financial statement that provides an overview of the inflows and outflows of cash within an organization over a period of time.
It is one of the three main financial statements used for financial reporting, along with the income statement and the balance sheet. The cash flow statement is important in assessing a company’s liquidity, solvency, and overall financial health.
A cash flow statement is generally divided into three main sections:
Operating Activities: This segment includes cash transactions related to the company’s core business operations. It includes receipts and payments for items such as sales and purchases of goods and services, payments to employees, and operating expenses.
Investing Activities Investing Activities: This section details the cash flows associated with the purchase and sale of long-term assets and investments. Investments in property, equipment and securities, as well as proceeds from the sale of these assets, are included here.
Financing Activities: This segment includes cash transactions with the company’s owners and creditors. These include activities such as issuing or repurchasing stock, borrowing or paying off debt, and paying dividends.
A cash flow statement can be prepared using either the direct method or the indirect method. The direct method involves reporting actual cash inflows and outflows from operating activities, while the indirect method starts with net income and adjusts for non-cash items and changes in working capital to arrive at net cash provided or used in operating activities.
For the direct method of preparing a cash flow statement, major operating cash receipts and payments are listed individually. Here is a simple breakdown of the main components:
1. Cash Receipts from Customers:
• Cash sales during the period.
2. Cash Payments to Suppliers:
• Payments to suppliers for goods and services.
3. Cash Payments to Employees:
• Payments to employees for salaries and wages.
4. Other Operating Cash Payments:
• Other operating expenses paid in cash.
5. Interest and Income Tax Payments:
• Cash payments for interest on loans and income taxes.
6. Cash Flows from Operating Activities:
• The net result after adding cash receipts and subtracting cash payments related to operating activities.
Agricultural Develpoment Bank Question No.4
Referring to the national budget formulation process, what are the relationships and differences between financial policy and monetary policy? discuss 4+6=10
The National Budget formulation process is the process by which the government shares its income and expenditure estimates and details of economic policies and plans with the public. This process is prescribed for the union, state and local levels according to the Inter-Governmental Finance Management Act, 2074.
The process of national budget formulation consists of the following steps.
• Periodic plan and medium-term expenditure structure: Union, state and local levels should prepare periodic plan and medium-term expenditure structure for three financial years. It includes income,
expenditure and debt projections, economic growth and development targets, fiscal discipline and distribution policies, etc.
• Annual plan and budget formulation: Union, state and local levels should formulate an annual plan and budget with details of their income, expenditure, debt, financial policies and plans. It is based on periodic planning and medium-term expenditure structure.
• Budget presentation and passing: The federal government should present the budget to the President on or before 15th May. Provinces and local levels must present their budgets after May 15th and before June 15th. After the budget is presented, the federal parliament, the state assembly and the municipal assembly at the local level must discuss and pass the budget.
• Budget implementation, monitoring and evaluation: After the budget is passed, the federal, provincial and local levels must implement their budgets. Various agencies are responsible for monitoring and evaluating budget implementation.
For example, Ministry of Finance, National Audit Council, National Planning Commission, National Natural Resources and Finance Commission, Federal Parliament, Provincial Assembly, Municipal Assembly etc.
Both fiscal policy and monetary policy are important tools of economic management. Finance policy is the government’s policy related to revenue, expenditure and debt. It prepares the government budget with the goals of economic development, distributive justice, financial stability and financial support.
Monetary policy is the policy of the central bank. It provides and manages currency with the objectives of money supply, interest rate, foreign exchange rate, price stability, banking management and liquidity management.
Relationship between fiscal policy and monetary policy
Both financial policy and monetary policy help to create a favorable environment for economic growth, employment, price stability, foreign exchange balance and economic stability.
• Both fiscal policy and monetary policy affect the economic system. Fiscal policy influences income, distribution, investment, savings and spending through revenue, expenditure and credit. Monetary policy affects income, distribution, investment, savings, and spending through money supply, interest rates, and foreign exchange rates.
• Both fiscal policy and monetary policy remain interrelated in the economic system
Difference between fiscal policy and monetary policy
Finance policy is the government’s policy related to revenue, expenditure and public debt. It is published as the government’s budget. Monetary policy is the policy related to money supply, credit, interest rate and price stability. It publishes as Nepal Rastra Bank.
• Finance policy works with the goals of economic development, employment, income equality, distributional justice and economic stability. Monetary policy works with the objective of price stability, increasing economic activity, foreign exchange balance and banking system.
• Both fiscal policy and monetary policy influence the economic system. But the financial policy pays more attention to the development and distribution side of the economy. Monetary policy pays more attention to the balance and stability aspect of the economy.
• Both financial policy and monetary policy should cooperate and coordinate with each other. Fiscal policy guides monetary policy. Monetary policy prepares the environment for implementation of financial policy.https://www.youtube.com/watch?v=zomXgTvHAPM
Agricultural Develpoment Bank (ADBL) Notes-Level-4
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