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Responsibility Accounting Process In Mutual FundsArticle Summary: Responsibility process allows the recognition of the subunits as responsibility centers. In Mutual funds, the Transfer agents, Fund accounting and Custody are three separate sub units which work as an individual cost center. The decision rights are assigned to the cost center [url=http://changyanglife.net/forum.php?mod=viewthread&tid=4331604]lancel pas cher Company Profile and SWOT Analysis on Abu Dhabi Airports[/url] heads and cascaded down based on the need and to allow the free work flow. Once the decision of processing a mutual fund is taken by the senior management, the work force implements [url=http://www.club-se.eu/forum/viewtopic.php?t=9]moncler pas cher 6 month payday loans - The fast a[/url] the daily transaction process which involves recording the economic transactions between entities.
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Responsibility process allows the recognition of the subunits as responsibility centers. In Mutual funds, the Transfer agents, Fund accounting and Custody are three separate sub units which work as an [url=http://www.thehygienerevolution.com/barbourparis.php]barbour paris[/url] individual cost center. The decision rights are assigned to the cost center heads and cascaded down based on the need and to allow the free work flow. Once the decision of processing a mutual fund is taken by the senior management, the work force implements the daily transaction process which involves recording the economic transactions between entities and these [url=http://www.mquin.com/saclancel.php]lancel[/url] transactions are reported on the end of period financial statements.
In Mutual funds, the individual shareholder and the Fund are the entities. An individual shareholder receives an end of month statement detailing the opening balances, the transactions within the period and the ending balance in each of the funds the shareholder is invested in. The [url=http://www.achbanker.com/hollister.php]hollister france[/url] Bookkeeping process of accounting is used in capturing the transactions of the mutual fund also.
A transaction in a Fund can be a Purchase of Shares (BUY), Redemptions of Shares (SELL), dividend transactions, Exchange transactions and Transfer transactions.
In case of a Purchase transaction, the following steps are involved:
i) You send money to the broker or set a specific amount to be deducted from your paycheck as part of your 401K Fund.
ii) This money is now used [url=http://www.rtnagel.com/louboutin.php]louboutin pas cher[/url] to buy the shares of your requested Fund at the given price.
iii) A transaction is generated recording this purchase.
iv) This transaction is then posted to the account
v) Since its a purchase transaction, the share balance to the account in the said Fund increases.
In case of Redemption, the following steps are involved:
i) You send your request to the broker to sell a specific number of shares or a specific amount to be received.
ii) The specific number of shares are now sold and the money is obtained.
iii) A transaction is generated recording this redemption.
iv) This transaction is then posted to the account
v) Since its a redemption transaction, the share balance to the account in the said Fund decreases.
Exchange transactions are similar to the [url=http://www.mquin.com/saclancel.php]lancel pas cher[/url] Purchase and Redemption transactions. Exchange transaction involves redemption of shares from one fund and a Purchase of shares into another fund for the same shareholder.
Transfer transactions are similar to the Purchase and Redemption transactions. Transfer transaction involves a redemption shares from one fund and a Purchase of shares into another shareholder in the same Fund.
A dividend transaction is created when the Fund pays a dividend to all the shareholders at month end (or periodically). This dividend amount is paid as cash to the shareholder or is reinvested into the Fund depending on the shareholders preference. When the dividend amount is reinvested, the share balance increases.
The individual transaction entries are called Journal entries. The account share balance is maintained [url=http://www.gotprintsigns.com/abercrombiepascher/‎]abercrombie soldes[/url] in a separate record called Ledger. Each transaction/Journal entry has an impact on the accounts share balance on the Ledger. If the shareholder has investments in 5 Funds, there will be 5 separate ledgers which will hold the updated [url=http://hotel-birth.com/cgi-bin/C-002/birthboad/visit/main.pl?PAGE_NUM=1%2525255D1]louboutin Bail Bond Services [/url] share balance from each fund at any given point in time. At any given point in time (either daily, monthly, quarterly, Yearly etc), the sum of all journal entries for a particular shareholder in a fund will be equal to the ledger balance.
If the Journal entries are selected for a specific period, then the ledger balance [url=http://www.ilyav.com/uggsoldes.php]ugg pas cher[/url] at the beginning of the period + the sum of all the journal entries during [url=http://www.moncleroutletosterblade.com]moncler[/url] the period will be equal to the ledger [url=http://www.mxitcms.com/tiffany/]tiffany[/url] balance at the end of the period. The below example explains transactions in specific numbers to enumerate how the journal entries are posted, how the balances match at any given point in time etc.
Suppose a shareholder John Doe has Mutual fund investments in two simple money market funds as part of his 401K plan. John's shareholder account [url=http://www.mnfruit.com/airjordan.php]jordan pas cher[/url] number [url=http://www.mxitcms.com/tiffany/]tiffany outlet[/url] is 12345.
Fund [url=http://www.gotprintsigns.com/abercrombiepascher/‎]abercrombie pas cher[/url] NameFund numberOpening Share balance
1.Vanguard Money MarketVIN5551000.000
2.Fidelity Money Market FDL999 5000.000
These balances are as at 04/30/2012 and hence the ledgers will look like this.
Account number Fund numberShare balance
12345VIN5551000.000
12345FDL9995000.000
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