VCC 102

FUNDAMENTALS OF ACCOUNTING AND FINANCE

UNIT-1
INTRODUCTION
CONTENTS: Meaning, Objectives and importance of Accounting, Terminology of Accounting, Accounting concepts and
conventions, Double Entry System.

MEANING:
Business is an economic activity undertaken with the motive of earning profits and to maximize the wealth for the
owners. Business cannot run in isolation. Largely, the business activity is carried out by people coming together with a
purpose to serve a common cause. This team is often referred to as an organization, which could be in different forms
such as sole proprietorship, partnership, body corporate etc. The rules of business are based on general principles of
trade, social values, and statutory framework encompassing national or international boundaries. While these
variables could be different for different businesses, different countries etc., the basic purpose is to add value to a
product or service to satisfy customer demand.

The business activities require resources (which are limited & have multiple uses) primarily in terms of material, labour,
machineries, factories and other services. The success of business depends on how efficiently and effectively these
resources are managed. Therefore, there is a need to ensure the businessman tracks the use of these resources. The
resources are not free and thus one must be careful to keep an eye on cost of acquiring them as well. As the basic
purpose of business is to make profit, one must keep an ongoing track of the activities undertaken in course of
business. Two basic questions would have to be answered:

(a) What is the result of business operations? This will be answered by finding out whether it has made profit or loss.
(b) What is the position of the resources acquired and used for business purpose? How are these resources financed?
Where the funds come from?
The answers to these questions are to be found continuously and the best way to find them is to record all the business
activities. Recording of business activities has to be done in a scientific manner so that they reveal correct outcome.
The science of book-keeping and accounting provides an effective solution.

DEFINITIONS OF ACCOUNTING:
Definition by the American Institute of Certified Public Accountants (Year 1961):
“Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money,
transactions and events which are, in part at least, of a financial character, and interpreting the result thereof”.

Definition by the American Accounting Association (Year 1966):

“The process of identifying, measuring and communicating economic information to permit informed judgments
and decisions by the users of accounting”.
From the above definitions, it can be said that “Accounting is science of recording and classifying trading transaction
of financial nature and is an art in which financial results are summarized and interpreted.”
Objectives of Accounting

(i) Providing Information to the Users for Rational Decision-making: The primary objective of accounting is to
provide useful information for decision-making to stakeholders such as owners, management, creditors, investors, etc.
Various outcomes of business activities such as costs, prices, sales volume, value under ownership, return of
investment, etc. are measured in the accounting process. All these accounting measurements are used by stakeholders
(owners, investors, creditors/bankers, etc.) in course of business operation. Hence, accounting is identified as
‘language of business’.

(ii) Systematic Recording of Transactions: To ensure reliability and precision for the accounting measurements, it
is necessary to keep a systematic record of all financial transactions of a business enterprise which is ensured by
bookkeeping. These financial records are classified, summarized and reposted in the form of accounting measurements
to the users of accounting information i.e., stakeholder.

(iii) Ascertainment of Results of above Transactions: ‘Profit/loss’ is a core accounting measurement. It is

measured by preparing profit and loss account for a particular period. Various other accounting measurements such
as different types of revenue expenses and revenue incomes are considered for preparing this profit and loss account.
Difference between these revenue incomes and revenue expenses is known as result of business transactions
identified as profit/loss. As this measure is used very frequently by stockholders for rational decision making, it has
become the objective of accounting. For example, Income Tax Act requires that every business should have an
accounting system that can measure taxable income of business and also explain nature and source of every item
reported in Income Tax Return.

(iv) Ascertain the Financial Position of Business: ‘Financial position’ is another core accounting measurement.
Financial position is identified by preparing a statement of ownership i.e., Assets and Owings i.e., liabilities of the
business as on a certain date. This statement is popularly known as balance sheet. Various other accounting
measurements such as different types of assets and different types of liabilities as existed at a particular date are
considered for preparing the balance sheet. This statement may be used by various stakeholders for financing and
investment decision.

(v) To Know the Solvency Position: Balance sheet and profit and loss account prepared as above give useful
information to stockholders regarding concerns potential to meet its obligations in the short run as well as in the long
run.

IMPORTANCE OF ACCOUNTING:
#1. Every industry needs an accounting system

For as long as money has existed, so has accounting. Historians have evidence of accounting systems as old as ancient
Egypt and Babylon. The Roman Empire kept detailed financial records. Modern accounting has existed as a profession
since the early 19th century. You can now find bookkeepers and accountants in every industry and every type of
organization, profit and non-profit. All businesses need to manage money, financial records, and taxes, so all
businesses need an accounting system.

#2. Accounting keeps a business organized

There are many groups interested in an organization’s financial records, including investors, lenders, and employees.
Certain types of organizations (like non-profits) benefit from being as transparent as possible about their finances. If
your records are messy, it can have a negative impact on your reputation and the health of your business. An
accounting system keeps these often complex records organized, so they’re easier to access and give to the interested
groups.

#3. Accounting helps evaluate a business’ performance

An organization’s financial records are a reflection of its health. If you want to know how your business is doing, the
financial records give you information about expenses, gross margin, debt, and more. A good accounting system makes
it easier to look back in the past, as well, and make comparisons. You can see if things are better or worse.

#4. Accounting helps you stay within the law

Having good accounting systems and processes helps keep your business in good legal standing. One of the main duties
of an accountant is to handle the organization’s financial matters according to various laws and regulations. At
any time, an organization’s business might be reviewed, so the financial records need to be accessible, accurate, and
organized. Not having good records can get your business in serious trouble.

#5. Accounting helps with budgeting and future projections

Budgeting and future projections let you plan for the upcoming fiscal year. Using your past financial records for this
process is essential. An analysis gives you an accurate starting point, so you can use the past as a blueprint for a more
profitable future. An accounting system designed by an expert gives you the information you need for budgeting and
future projections.

#8. Accounting improves an organization’s decision-making

It’s hard to make decisions about a business without accurate information. A good accounting system provides the
information necessary to make decisions about the future of the organization. Analysis of financial records can also
help a company make decisions about hiring employees, making purchases, gifting charitable donations, and more.

#9. A good accounting system saves an organization time

If your accounting system isn’t good, you’ll spend a lot of time sifting through records and trying to understand
information that isn’t organized well. Preparing for tax season would be a nightmare and take up a lot of your valuable
time. Having a good accounting system and accountant on staff makes the money-managing process much smoother
and faster. An organization can now spend time on other areas of business.

RELATIONSHIP BETWEEN BOOK-KEEPING, ACCOUNTING & ACCOUNTANCY:

Book-Keeping:
Book-keeping is a primary and basic function in the process of accounting and concerned with recording and
maintenance of books of accounts only.
In this process the following basic activities are considered essential:

(i) Identification of the transactions from the various business transactions, which have financial character;

(ii) Measurement of those transactions in terms of money;

(iii) Recording those transactions in the books of original entry;

(iv) Classification of the transactions keeping in view the respective ledger accounts.

Accounting:

Accounting is the secondary function and it starts where function of book-keeping ends.

In this process the following basic activities are considered essential:

(i) Summarisation of the classified transactions in the shape of final accounts;

(ii) Analysis and interpretation of the results disclosed by final accounts and drawing meaningful conclusions;

(iii) Communicating the required information to all the concerned parties.

Accountancy:
Accountancy is a study of systematic knowledge and contains those rules, regulations, procedures, principles,
concepts, conventions and techniques, which are to be applied in the process of accounting. In this sense, we can say
that accountancy is a broader term that acts as a guide for the preparation of books of accounts, summarisation of
information and communicating the results to all the concerned parties.
 PROCESS OF ACCOUNTING:

TERMINOLOGY OF ACCOUNTING:
Every subject has got its own terminology. Accounting also, as a subject has got its own terms. These terms have their
specific meaning in Accounting and used to express financial nature of the business.

1. Business Transactions: The economic event that relates to a business entity is called business transaction. Every
business activity is not an Accounting activity. This is why; every activity is not recorded in the books of accounting.
We record only business transactions in financial Accounting. The first step in the accounting process is the
identification of business transactions. Every activity of financial nature having documentary evidence, capable of
being presented in numerical, monetary term causing effect on assets, liabilities, capital revenue and expenses is
termed as Business Transactions. Special features of Business transactions are as under
a. Business transactions must be financial in nature.

b. Business transactions must be supported by documentary evidence.

c. Business transactions must be presented in numerical monetary terms.

d. Business transactions must cause an effect on assets, liabilities, capital, revenue and expenses.

Business transactions as such refer to business activities involving transfer of money or goods or services between two
parties or two accounts. Purchase and sale of goods, receipts of income etc. are business transactions. Business
transactions may be both Cash or Credit.

2. Assets: The valuable things owned by the business are known as assets. These are the properties owned by the
business. Assets are the economic resources of an enterprise which can be expresses in monetary terms. In the words
of Prof. R.N. Anthony, “Assets are valuable resources owned by a business which were acquired at a measurable money
cost.” There are following types of assets:

 Current Assets- Assets which are easily convertible into cash like stock, inventory, marketable securities, short-
term investments, fixed deposits, accrued incomes, bank balances, debtors, bills receivable, prepaid expenses etc. are
classified as current assets. Current assets are generally of a shorter lifespan as compared to fixed assets which last for
a longer period. Current assets can also be termed as liquid assets.
 Fixed Assets- Fixed assets are of a fixed nature in the context that they are not readily convertible into cash.
They require elaborate procedure and time for their sale and converted into cash. Land, building, plant, machinery,
equipment, and furniture are some examples of fixed assets. Other names used for fixed assets are non-current assets,
long-term assets or hard assets. Generally, the value of fixed assets generally reduces over a period of time (known as
depreciation).
 Tangible Assets- Tangible assets are those assets which we can touch, see and feel. All fixed assets are tangible.
Moreover, some current assets like inventory and cash fall under the category of tangible assets too.
 Intangible Assets- We cannot see, feel or touch Intangible assets physically. Some examples of intangible
assets are goodwill, franchise agreements, patents, copyrights, brands, trademarks etc.
These are also classified under assets because the business owners reap monetary gains with the help of these
intangible assets. A company’s trademark, brand, and goodwill contribute to its marketing and sale of its products.
Many buyers purchase goods only by seeing its trademark and brand in the market.

3. Goods/Services: These are tangible article or commodity in which a business deals. These articles or commodities
are either bought and sold or produced and sold. At times, what may be classified as ‘goods’ to one business firm may
not be ‘goods’ to the other firm. E.g. for a machine manufacturing company, the machines are ‘goods’ as they are
frequently made and sold. But for the buying firm, it is not ‘goods’ as the intention is to use it as a long term resource
and not sell it. Services are intangible in nature which are rendered with or without the object of earning profits.

4. Profit: The excess of Revenue Income over expense is called profit. It could be calculated for each transaction or for
business as a whole.

5. Loss: The excess of expense over income is called loss. It could be calculated for each transaction or for business as
a whole.

6. Liability: It is an obligation of financial nature to be settled at a future date. It represents amount of money that the
business owes to the other parties. E.g. when goods are bought on credit, the firm will create an obligation to pay to
the supplier the price of goods on an agreed future date or when a loan is taken from bank, an obligation to pay interest
and principal amount is created. Depending upon the period of holding, these obligations could be further classified
into Long Term on noncurrent liabilities and Short Term or current liabilities.

7. Working Capital: In order to maintain flows of revenue from operation, every firm needs certain amount of current
assets. For example, cash is required either to pay for expenses or to meet obligation for service received or goods
purchased, etc. by a firm. On identical reason, inventories are required to provide the link between production and
sale. The whole of these current assets from the working capital of a firm which is termed as Gross Working Capital.
Gross Working capital = Total Current Assets

There is another concept of working capital. Working capital is the excess of current assets over current liabilities. That
is the amount of current assets that remain in a firm if all its current liabilities are paid. This concept of working capital
is known as Net Working Capital which is a more realistic concept. Working Capital (Net) = Current Assets – Currents
Liabilities.

8. Contingent Liability: It represents a potential obligation that could be created depending on the outcome of an
event. E.g. if supplier of the business files a legal suit, it will not be treated as a liability because no obligation is created
immediately. If the verdict of the case is given in favour of the supplier then only the obligation is created. Till that it is
treated as a contingent liability. Please note that contingent liability is not recorded in books of account, but disclosed
by way of a note to the financial statements.

9. Capital: It is amount invested in the business by its owners. It may be in the form of cash, goods, or any other asset
which the proprietor or partners of business invest in the business activity. From business point of view, capital of
owners is a liability which is to be settled only in the event of closure or transfer of the business. Hence, it is not
classified as a normal liability. For corporate bodies, capital is normally represented as share capital.

10. Drawings: It represents an amount of cash, goods or any other assets which the owner withdraws from business
for his or her personal use. E.g. if the life insurance premium of proprietor or a partner of business is paid from the
business cash, it is called drawings. Drawings will result in reduction in the owners’ capital. The concept of drawing is
not applicable to the corporate bodies like limited companies.

11. Net worth: It represents excess of total assets over total liabilities of the business. Technically, this amount is
available to be distributed to owners in the event of closure of the business after payment of all liabilities. That is why
it is also termed as Owner’s equity. A profit making business will result in increase in the owner’s equity whereas losses
will reduce it.

12. Non-current Investments: Non-current Investments are investments which are held beyond the current period as
to sale or disposal. e. g. Fixed Deposit for 5 years.

13. Current Investments: Current investments are investments that are by their nature readily realizable and are
intended to be held for not more than one year from the date on which such investment is made. e. g. 11 months
Commercial Paper.
14. Debtor: The sum total or aggregate of the amounts which the customer owe to the business for purchasing goods
on credit or services rendered or in respect of other contractual obligations, is known as Sundry Debtors or Trade
Debtors, or Trade Payable, or Book-Debts or Debtors. In other words, Debtors are those persons from whom a business
has to recover money on account of goods sold or service rendered on credit.

15. Creditor: A creditor is a person to whom the business owes money or money’s worth. E.g. money payable to
supplier of goods or provider of service. Creditors are generally classified as Current Liabilities.

16. Capital Expenditure: This represents expenditure incurred for the purpose of acquiring a fixed asset which is
intended to be used over long term for earning profits there from. e. g. amount paid to buy a computer for office use
is a capital expenditure. At times expenditure may be incurred for enhancing the production capacity of the machine.
This also will be a capital expenditure. Capital expenditure forms part of the Balance Sheet.

17. Revenue expenditure: This represents expenditure incurred to earn revenue of the current period. The benefits
of revenue expenses get exhausted in the year of the incurrence. E.g. repairs, insurance, salary & wages to employees,
travel etc. The revenue expenditure results in reduction in profit or surplus. It forms part of the Income statement. (

18. Balance Sheet: It is the statement of financial position of the business entity on a particular date. It lists all assets,
liabilities and capital. It is important to note that this statement exhibits the state of affairs of the business as on a
particular date only. It describes what the business owns and what the business owes to outsiders (this denotes
liabilities) and to the owners (this denotes capital). It is prepared after incorporating the resulting profit/losses of
Income statement.

19. Profit and Loss Account or Income Statement: This account shows the revenue earned by the business and the
expenses incurred by the business to earn that revenue. This is prepared usually for a particular accounting period,
which could be a month, quarter, a half year or a year. The net result of the Profit and Loss Account will show profit
earned or loss suffered by the business entity.

20. Trade Discount: It is the discount usually allowed by the wholesaler to the retailer computed on the list price or
invoice price.

21. Cash Discount: This is allowed to encourage prompt payment by the debtor. This has to be recorded in the books
of accounts. This is calculated after deducting the trade discount.

22. Accounting equation: The accounting equation, the basis for the double-entry system (see below), is written as
follows:

Assets = Liabilities + Stakeholders’ equity

This means that all the assets owned by a company have been financed from loans from creditors and from equity
from investors. “Assets” here stands for cash, account receivables, inventory, etc., that a company possesses.

23. Accounting year: Books of accounts are closed annually. From the balance of different ledger accounts we prepare
income statement and position statement. Income statement shows gross and net income of the business. Position
statement, traditionally known as Balance sheet is a mirror, which reflects the true value of assets and liabilities on a
particular date. There is no legal restriction about the accounting year of sole proprietorship and partnership firm.
They may adopt the accounting year of their choice. It may be between January 1st to December 31st of the same year
or July 1st of the year to June 30th of the next year or between two Diwalis or even financial year, i.e., April 1st to
March 31st of the next year. The only restriction is that accounting period must consist of 12 months. Companies must
adopt financial year as their accounting year

ACCOUNTING CONCEPTS:
1. Business entity concept: A business and its owner should be treated separately as far as their financial
transactions are concerned.

2. Money measurement concept: Only business transactions that can be expressed in terms of money are
recorded in accounting, though records of other types of transactions may be kept separately.
3. Dual aspect concept: For every credit, a corresponding debit is made. The recording of a transaction is
complete only with this dual aspect.

4. Going concern concept: In accounting, a business is expected to continue for a fairly long time and carry out
its commitments and obligations. This assumes that the business will not be forced to stop functioning and
liquidate its assets at “fire-sale” prices.

5. Cost concept: The fixed assets of a business are recorded on the basis of their original cost in the first year of
accounting. Subsequently, these assets are recorded minus depreciation. No rise or fall in market price is
taken into account. The concept applies only to fixed assets.
6. Accounting year concept: Each business chooses a specific time period to complete a cycle of the accounting
process—for example, monthly, quarterly, or annually—as per a fiscal or a calendar year.

7. Matching concept: This principle dictates that for every entry of revenue recorded in a given accounting
period, an equal expense entry has to be recorded for correctly calculating profit or loss in a given period.

8. Realisation concept: According to this concept, profit is recognised only when it is earned. An advance or fee
paid is not considered a profit until the goods or services have been delivered to the buyer.
 9. Verifiable Objective Concept: - according to this principle, the accounting data should be definite, verifiable
and free from personal bias of the accountant. In other words, this principle requires that each recorded
transaction/event in the books of accounts should have an adequate evidence to support it.

ACCOUNTING CONVENTIONS:
There are four main conventions in practice in accounting: conservatism; consistency; full disclosure; and materiality.

1. Conservatism is the convention by which, when two values of a transaction are available, the lower-value
transaction is recorded. By this convention, profit should never be overestimated, and there should always be a
provision for losses.

2. Consistency prescribes the use of the same accounting principles from one period of an accounting cycle to the
next, so that the same standards are applied to calculate profit and loss.

3. Materiality means that all material facts should be recorded in accounting. Accountants should record important
data and leave out insignificant information.

4. Full disclosure entails the revelation of all information, both favourable and detrimental to a business enterprise,
and which are of material value to creditors and debtors.

Basis of Accounting?
The basis of accounting refers to the methodology under which revenues and expenses are recognized in the financial
statements of a business. When an organization refers to the basis of accounting that it uses, two primary
methodologies are most likely to be mentioned:

 Cash basis of accounting. Under this basis of accounting, a business recognizes revenue when cash is
received, and expenses when bills are paid. This is the easiest approach to recording transactions, and is
widely used by smaller businesses.

 Accrual basis of accounting. Under this basis of accounting, a business recognizes revenue when earned
and expenses when expenditures are consumed. This approach requires a greater knowledge of accounting,
since accruals must be recorded at regular intervals. If a business wants to have its financial statements
audited, it must use the accrual basis of accounting, since auditors will not pass judgment on financial
statements prepared using any other basis of accounting.

ACCOUNTING SYSTEMS
The main systems of Financial Accounting are as under:
(1) Cash system – In this system, only cash entries are recorded in the accounts. All credit entries are written in a
handbook and are entered in Cash Book only when they are paid or received. This system is kept by small trades,
professional persons or non-trading institutions where most of the transactions are in cash.

(2) Mahajani system – It is oldest method of keeping accounts in India. Long Bahis are used for recording transactions
and entries can be made in Mudia, Urdu, Sarafi, Hindi and any regional language. This system is completely scientific
system as it is based on certain principles.

(3) Single entry system – Under it, some transactions are recorded at one place, some other transactions at two places
and some transactions are not recorded at all. Cash book and personal accounts are kept in it. It is an incomplete and
unscientific system. Hence it is rarely used.

(4) Double entry system – Under it, every entry is recorded at two sides of the account so that the effect on each side
of the account may remain equal. There are debit and credit side in it. This system was originated in Italy. Being a
complete and scientific method, it is widely used and is more popular.
CONCEPT OF DOUBLE ENTRY SYSTEM
There are many systems of presenting business transactions in accounting books e.g., Mahajani system, Cash system,
Double entry system etc. The use of these systems depends upon the size and type of business and nature of
transactions. But in modern business world, double entry system of bookkeeping is more popular and widely used.
The focus of the double entry system is that every business transaction has two aspects, i.e., when we receive
something, we give something else in return. This approach of writing both the aspects of the transactions is known
double entry system of accounting. Of the two accounts one account is given debit while the other is given credit with
an equal amount. Thus, on any date the debits must be equal to the credits.

Evolution of Double Entry system:

The double entry system was originated in Italy in 15th century. First of all in 1494 Lucas Pacioli, the famous
mathematician of Venice city of Italy wrote his first book “De Computiset Scripturise’ and mentioned method of
accounting in one of its part. Emphasis was given on division and utility of waste book. Journal, Ledger etc. In 1543
Huge Old Castle translated it in English and after that many learned persons showed their views and gave it a new
shape. The following are the three distinct stages of a complete system of double entry:

a) Recording the transactions in the journal.

b) Classifying the transactions in the journal by posting them to the appropriate ledger accounts and then preparing a
trial balance.

c) Closing the books and preparing the final accounts

Merits of Double Entry System

1. Full description: Every financial transaction is recorded in two related accounts separately in which full particulars
are given for each transaction.

2. Knowledge of some important information regarding business: In Double entry system, real and nominal accounts
are also maintained together with personal accounts. The information about capital employed, assets and liabilities
can be obtained easily.

3. Testing of Mathematical Accuracy: Under this system, each debit entry has a credit entry due to which arithmetical
accuracy can be checked with the help of trial balance.

4. Less chances of fraud: Under this system, double entry of each transaction reduces the possibility of forgery and
fraud. Fraud can be avoided and traced easily.

5. Information of Profit and Loss: under this system, profit and loss account is prepared at the end of the certain period
to find profit and loss.

6. Knowledge of Economic Status: With the help of balance sheet, the economic and financial status of the business
can be obtained easily.

7. Comparatively Study and useful results: Trading, profit and loss account and balance sheet of current year can be
compared with trading, profit & loss account and balance sheet of previous year to obtain useful analysis and
conclusions.

Demerits and Limitations of Double Entry system

1. It is difficult to follow the rules of debit and credit in this system.

2. Though this system is fully scientific even then there are chances of errors and mistakes.

3. It is necessary to follow the principles and even a small mistake may give erroneous results.

4. It is an expensive system for small traders.

5. In order to get full efficiency in the system, it is necessary to have education, training and practical knowledge of
accounts.

CLASSIFICATION OF ACCOUNTS
1) PERSONAL ACCOUNTS

a) Natural Personal Account: The term Natural persons means persons who are created by the almighty. For example:
Shyam’s Account, Gopals’s Account etc.

b) Artificial Personal Account: These accounts include accounts of institutions or companies which are recognized as
persons in business dealings. For example, the account of a Club, the account of an Insurance Company, Banking
Company.

c) Representative Personal Account: These are accounts which represent a certain person or group of persons. For
example, if the rent is due to the landlord, an account for the outstanding amount will be opened. Likewise for salaries
due to the employees (not paid) an outstanding salaries account will be opened. The outstanding rent account
represents the account of the landlord to whom the rent is to be paid while the outstanding salaries account represents
the account of the person to whom the salaries have to be paid therefore such accounts are called as representative
personal accountant.

2) REAL ACCOUNTS

a. Intangible Accounts: These accounts represent things which cannot be touched. However, they can be measured in
terms of money, for example goodwill account, patents accounts.

b. Tangible Accounts: Tangible accounts are those which relate to things which can be touched, felt, measured etc.
Examples of such accounts are furniture account, stock account, building account etc.

3) Nominal Accounts: - Accounts related to income and gain or expenditure and loss are known as Nominal Accounts,
e.g. Rent A/c, Interest A/c, Salary A/c, discount A/c, etc. Nominal Accounts are divided into two parts as:

i. Revenue Account: - Such as rent received, interest received, commission paid, salary paid, discount allowed, etc.
ii. Expenditure Account: - Such as rent paid, interest paid, commission paid, salary paid, discount received, etc. At the
end of each financial year, the balances of nominal accounts are transferred to Trading A/c or Profit & Loss A/c

RULES OF DOUBLE ENTRY SYSTEM The rules related to debit and credit of any account in double entry system are
as under:

Personal accounts: - Debit the receiver, and credit the giver.

Real accounts: - Debit what comes in, and credit what goes out

Nominal accounts: - Debit all expenses and losses and credit all incomes and gains.

_______________________________