Accounting For Banking Institutions

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ACCOUNTING FOR BANKING INSTITUTIONS
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CHAPTER 0:
OVERVIEW OF BANKING COMPANIES
A bank is a commercial institution, licensed to accept deposits and acts as a safe custodian of
the spendable funds of its customers. Banks are concerned mainly with the functions of banking, i.e.,
receiving, collecting, transferring, buying, lending, investing, dealing, exchanging and servicing (safe
deposit, custodianship, agency, trusteeship) money and claims to money both domestically and
internationally. The principal activities of a bank are operating current accounts, receiving deposits,
taking in and paying out notes and coins, and making loans.
Banking activities undertaken by banks include personal banking (non-business customers),

commercial Banking (small and medium-sized business customers) and corporate banking (large
international and multinational corporations).
According to Charles J. Woelfel, A complete banking service would comprehend a variety of

functions, including any of the following:
1. Receive demand deposits and pay customers’ cheques drawn against them, and operate
Automated Teller Machines (ATM);
2. Receive time and savings deposits, issue negotiable orders of withdrawal, and pay interest
thereon, as well as provide Automatic Transfer Service (ATS) for funds from serving accounts
to cover cheques;
3. Discount notes, acceptances and bills of exchange;
4. Supply credit to business firms with or without security, issue letters of credit and accept bills
drawn thereunder;
5. Transfer money at home and abroad;
6. Make collections and facilitate exchanges;
7. Issue drafts, cashier’s cheques, money orders, and certify cheques;
8. Furnish safe deposit vault service;
9. Provide custodianship for securities and other valuables;
10. Provide personal loans, credit and services to individuals, and lend or discount customer
installment receivables of vendors;
11. Act in a fiduciary capacity for individuals, as well as establish common trust funds;
12. Provide corporate trust services (stock transfer agent, registrar, paying agent, escrow agent, and
indenture trustee);
13. Act as factors and engage in equipment leasing;
NCHENDEH CHRISTIAN (M.Sc. FINANCE) 674-10-16-90 Page 5

14. Deal in Government securities and underwrite general obligations of state and municipal
securities;
15. Invest in government and other debt securities;
16. Act as fiscal agent or depository for the Central Government, states and subdivisions of states;
17. Provide miscellaneous services such as place orders in securities for customers; act as insurance
agent of incidental to banking transactions; serve as finder to bring buyers and sellers together;
act as travel agent and issue letters of credit and traveler’s cheques; provide club accounts and
other special purpose accounts; act as agent for accepting service of legal process of incidental
normal banking or fiduciary transactions of the bank; act as pay role issuer; establish charitable
foundations, invest in small business investment corporations and bank service corporations;
deal in foreign exchange; buy and sell gold bullion under license from the Treasury Department,
and foreign coin; provide domestic and international correspondent banking services, etc.
In Cameroon, banking activities are governed by COBAC Regulation Act, 1999. As per the
provision of the said Act, “banking” means the accepting, for the purpose of lending or investment, of
deposits of money from the public, repayable on demand or other-wise, and with-drawable by cheque,
drafts, order or otherwise.
“Banking Companies” can be defined as any company which transacts the business of banking
in Cameroon. However, any company which is engaged in the manufacture of goods or carries on any
trade and which accept deposits of money from the public merely for the purpose of financing its
business as such manufacturer or trader shall not be deemed to transact the business of banking within
the meaning of this clause.
Business of Banking Companies
As per the provision of Section 6 of the Banking Regulation Act, 1949, a banking company may
engage in any one or more of the following forms of business, in addition to the business of banking.
These are:
a) The borrowing, raising, or taking up of money; the lending or advancing of money either upon
or without security; the drawing, making, accepting, discounting, buying, selling, collecting and
dealing in bills of exchange, hundis, promissory notes, coupons, drafts, bills of lading, railway
receipts, warrants, debentures, certificates, scrips and other instruments, and securities whether
transferable or negotiable or not; the granting and issuing of letters of credit, traveler’s cheques
and circular notes; the buying, selling and dealing in bullion and specie; the buying and selling
of foreign exchange including foreign bank notes: the acquiring, holding, issuing on
commission, underwriting and dealing in stock, funds, shares, debentures, debenture stock,

bonds, obligations, securities and investments of all kinds; the purchasing and selling of bonds,
scrips or other forms of securities on behalf of constituents or others, the negotiating of loans
and advances; the receiving of all kinds of bonds, scrips or valuables on deposit or for safe
custody or otherwise, the providing of safe deposit vaults; the collecting and transmitting of
money and securities;
b) Acting as agents for any Government or local authority or any other person or persons; the
carrying on of agency business of any description, including the clearing and forwarding of
goods, giving of receipts and discharges, and otherwise acting as an attorney on behalf of
customers; but excluding the business of a managing agent or secretary and treasurer of a
company;
c) Contracting for public and private loans and negotiating and issuing the same;
d) The effecting, insuring, guaranteeing, underwriting, participating in managing and carrying out
of any issue, public or private, of State, municipal or other loans or of shares, stock, debentures,
or debenture stock of any company, corporation or association, and the lending of money for the
purpose of any such issue;
e) Carrying on and transacting every kind of guarantee and indemnity business;
f) Managing, selling and realizing any property which may come into the possession of the
company in satisfaction or part satisfaction of any of its claims;
g) Acquiring and holding and generally dealing with any property or any right, title or interest in
any such property which may form the security or part of the security for any loans or advances
or which may be connected with any such security;
h) Undertaking and executing trusts;
i) Undertaking the administration of estates as executor, trustee or otherwise;
j) Establishing and supporting or aiding in the establishment and support of associations,
institutions, funds, trusts and conveniences calculated to benefit employees or ex-employees of
the company or the dependents or connections of such persons; granting pensions and
allowances and making payments towards insurance; subscribing to or guaranteeing money for
charitable or benevolent objects or for any exhibition or for any public, general or useful object;
k) The acquisition, construction, maintenance and alteration of any building or works necessary or
convenient for the purposes of the company;
l) Selling, improving, managing, developing, exchanging, leasing, mortgaging, disposing of or
turning into account, or otherwise dealing with all or any part of the property and rights of the
company;
m) Acquiring and undertaking the whole or any part of the business of any person or company,
when such business is of a nature enumerated or described in this sub-section;

n) Doing all such other things as are incidental or conducive to the promotion or advancement of
the business of the company;
o) Any other form of business which the Central Government may, by notification in the Official
Gazette, specify as a form of business in which it is lawful for a banking company to engage.
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CHAPTER 1:
CUSTOMERS’ DEPOSITS
1- DEPOSIT IN ORDINARY ACCOUNTS
All deposits (lodgment) made by customers (either by cash or by cheque) are credited in the
customer’s account while all withdrawals or payments effected by the customer (either by cash or by
cheque) is debited in the customer’s account. The following accounts are used for customer’s deposits:
35 SPECIAL REGIME DEPOSIT ACCOUNTS

36 TERM DEPOSIT ACCOUNTS
37 OVERDRAFTS AND SIGHT DEPOSIT ACCOUNTS
371 CURRENT ACCOUNTS
372 CHEQUE ACCOUNTS
373 PASSBOOK ACCOUNTS

38 OTHER CUSTOMER ACCOUNTS
Example
On the 10th October, Akweseh Ltd decided to open an account at BICEC Bank Buea by a cash
deposit of 25,000,000F and a bank transfer of 8,000,000F from her saving account. On the 25 th
October, Akweseh Ltd withdrew 12,000,000F using a cheque.
Work Required
Journalize the above transactions at BICEC Bank
SOLUTION
10/10/N
571 Cash 25,000,000
373 Passbook accounts 8,000,000
371 Current accounts 33,000,000
371 Opening of Akweseh Ltd current account
25/10/N
571 Cash 12,000,000
Withdrawal of funds by Akweseh Ltd

2- SAVING ACCOUNTS
2.1 PASSBOOK ACCOUNTS
These accounts are not entitled to a cheque booklet. They are opened by physical persons and
remunerated at a minimum rate of 5% per annum. Hence, the interest rate is negotiable for huge
amounts.
Example
On the 14/09/2018, in other to save part of his salary, Mr. Selebobo decides to open a passbook
account at NFC bank by lodging the sum of 360,000F by cash.
Work Required
Present the accounting entry at NFC Bank
SOLUTION
14/09/2018
571 Cash 360,000

373 Passbook accounts 360,000
Opening of Selebobo passbook account
TAXES RELATIVE TO SAVING ACCOUNTS

Saving accounts are exonerated from the proportional tax on income from securities (PTIS) to a
limit of 10,000,000F. Savings accounts above 10,000,000F are subject to PTIS at 15% increased by
10% of additional council tax (that is a total of 16.5%).
Example
On the 1st April 2018, the balance of Nyangono’s saving account at Afrikland First Bank
amounted to 8,000,000F (credit balance). During the 1st semester 2018, Afrikland First Bank realized
the following transactions on the said account:
Date Operations
- 11/04/2018: Lodgment of 7,000,000
- 19/05/2018: Withdrawal of 6,000,000
- 22/05/2018: Deposit of 5,000,000
- 08/06/2018: Withdrawal of 4,000,000
- 14/06/2018: Deposit of 9,000,000
Work Required
1- Determine the value date of each transaction
2- Calculate the net interest at the end of the 1st semester (interest rate 4.5%)
3- Journalize all the transactions up to the 30/06/2018

SOLUTION
1- Determination of the value dates
Date of operation Operations Value dates
01/04/2018 Opening balance 01/04/2018
11/04/2018 Lodgment of 7,000,000 06/04/2018
19/05/2018 Withdrawal of 6,000,000 15/05/2018
22/05/2018 Deposit of 5,000,000 01/06/2018
08/06/2018 Withdrawal of 4,000,000 31/05/2018
14/06/2018 Deposit of 9,000,000 16/06/2018
2- Calculation of net interest as at the 30th June 2018
Value Movements No of
Operations Balance Numbers
dates Dr Cr days
01/4/2018 Opening balance 8000000 5 days 40000000
06/4/2018 Lodgment 7000000 15000000 39 days 585000000

15/05/2018 Withdrawal 6000000 9000000 16 days 144000000
01/6/2018 Deposit 5000000 14000000 -1day -14000000
31/05/2018 Withdrawal 4000000 10000000 16 days 160000000
16/06/2018 Deposit 9000000 19000000 15 days 285000000
TOTAL 1200000000
𝟒. 𝟓
𝑰𝒏𝒕𝒆𝒓𝒆𝒔𝒕 𝒅𝒖𝒆 = 𝟏𝟐𝟎𝟎, 𝟎𝟎𝟎, 𝟎𝟎𝟎 × = 𝟏𝟓𝟎, 𝟎𝟎𝟎
𝟑𝟔𝟎𝟎𝟎
𝑵𝒐𝒏𝒅𝒆𝒅𝒖𝒄𝒕𝒊𝒃𝒍𝒆 𝒊𝒏𝒕𝒆𝒓𝒆𝒔𝒕
𝟒. 𝟓
= [(𝟓, 𝟎𝟎𝟎, 𝟎𝟎𝟎 × 𝟏𝟓) + (𝟒, 𝟎𝟎𝟎, 𝟎𝟎𝟎 × −𝟏) + (𝟗, 𝟎𝟎𝟎, 𝟎𝟎𝟎 × 𝟏𝟓)] × = 𝟐𝟓, 𝟕𝟓𝟎
𝟑𝟔𝟎𝟎𝟎
𝟏𝟔. 𝟓
𝑷𝑻𝑰𝑺 = 𝟐𝟓, 𝟕𝟓𝟎 × = 𝟒, 𝟐𝟕𝟖
𝟏𝟎𝟎
𝑵𝒆𝒕 𝒊𝒏𝒕𝒆𝒓𝒆𝒔𝒕 = 𝟏𝟓𝟎, 𝟎𝟎𝟎 − 𝟒, 𝟐𝟕𝟖 = 𝟏𝟒𝟓, 𝟕𝟐𝟐
3- ACCOUNTING ENTRIES
11/04/2018
571 Cash 7,000,000
Initial deposit
19/05/2018
571 Cash 6,000,000
Withdrawal

22/05/2018
571 Cash 5,000,000
Deposit
08/06/2018
571 Cash 4,000,000
Withdrawal
14/06/2018
571 Cash 9,000,000
Deposit
30/06/2018
613 Interest on passbook accounts 150,000
434 Taxes and rates collected 4,278
2.2 HOUSING LOAN SCHEMES AND ACCOUNTS

It is a sight saving account. These accounts are remunerated and reserved to physical persons
and gives rights to loans bases on certain conditions. Interests on these accounts are exonerated from
the proportional tax on income from securities (PTIS).
Example
Ngwanard has decided to save at Atlantic Bank in view to acquire a duplex. On the 15 th
September 2019, he opens an account and deposited 1,580,000F by cash. On the 20th September 2019,
he deposited 1,690,000F.
Work Required
1- Record the above transactions at Atlantic Bank
SOLUTION
ACCOUNTING ENTRIES
15/09/2018
571 Notes and currencies 1,580,000
353 Housing loan schemes and accounts 1,580,000
Opening of account
20/09/2018
353 Housing loan schemes and accounts 1,690,000
Deposit

2.3 TERM DEPOSITS
These are investments (deposits) with a specified duration which are remunerated at the rate of
5% per annum. There exist three types of term deposits:
2.3.1 TERM DEPOSIT ACCOUNTS (361)
The funds received by the banker from clients are blocked. These funds are unblocked or put at
the disposal of the customer only the expiry date of the predefined duration specified when the account
was opened. There is no movement on the account during the blocked period.
Example
On the 4th November 2019, Ndetseh opened a term deposit account at BICEC under ther
following terms and conditions:
- Amount: 6,800,000F
- Duration: 10 months
- Interest rate: 7.2% per annum

Work Required
1- Record the above transactions at BICEC Bank on the date of subscription and maturity.
SOLUTION
ACCOUNTING ENTRIES
04/11/2019
361 Term deposits 6,800,000
Opening of account
04/08/2020
612 Interest on term deposit 408,000
Withdrawal
Remark: in accounting for banking institutions, each month has 30 days.

6,800,000 × 7.2 × 10
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 = = 408,000
1200
16.5
𝑃𝑇𝐼𝑆 𝑜𝑛 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 = 408,000 × = 67,320
100

04/11/2019
Opening of account
04/08/2020
Withdrawal of term deposit
do
571 Notes and currencies 408,000
Interest on term deposit
do
571 Notes and currencies 67,320
435 Other amounts payable to the state 67,320
PTIS on interest
Remark: in the example above, we have assumed that Ndetseh a cheque or current account in the bank.
Example
Let’s consider the example above assuming that Ndetseh is a customer at BICEC. The opening
of the term account was done by a reduction of his current account.
SOLUTION
04/11/2019

Opening of account
04/08/2020
Withdrawal of term deposit
do
371 Current accounts 408,000
Interest on term deposit
do
435 Other amounts payable to the state 67,320
PTIS on interest
2.3.2 CERTIFICATES OF DEPOSITS (352)
do

A certificate of deposit (CD) is a product offered by banks and credit unions that offers an
interest rate premium in exchange for the customer agreeing to leave a lump-sum deposit untouched for
a predetermined period of time. The duration ranges from 1 day to 1 year. (Not yet existing in
Cameroon)
2.3.3 CASH BONDS (351)
The lodgment duration ranges from 1 month to 2 years. The remuneration rate is 5% per annum.
The client has the possibility to negotiate the interest rate during lodging depending on the amount of
his deposit. We can distinguish 2 types:
- Registered bonds (having a name on it)
- Bearer certificate (anonymous)
Interests on cash bonds are pre-empted that is, paid in advance to customers during the
subscription. These interests are not liable to PTIS.
Example
On the 26th October 2019, Mr Njuh acquired some investment securities from Afriland. The
nature of these securities are as follows:
- Bearer certificate : 4,000,000F
- Registered bonds : 6,500,000F
Terms and conditions:
- Interest rate: 6% per annum
- Duration: 9 months
Work Required
1- Record the above transactions at Afrilad Bank on the date of subscription and maturity.
SOLUTION
26/10/2019
372 Cheque accounts 10,500,000
351 Cash bonds 10,500,000
Subscription of cash bonds
do
6111 Interest on cash bonds 472,500
372 Cheque accounts 472,500
Interest on cash bonds
26/07/2020
351 Cash bonds 10,500,000
372 Cheque accounts 10,500,000
Reimbursement of funds to customer
2.4 OTHER DEPOSIT ACCOUNTS

During the realization of certain transactions with special features, customers must make
deposits of varying lengths depending on the case. These provisions thus constituted are not
remunerated. They are recorded in account “38 OTHER CUSTOMER ACCOUNTS”. The sub
accounts are as follows:
- 3811 Dispositions for cheques to pay
- 3812 Dispositions for certified cheques
- 3813 Provisions
- 3814 Dispositions for loans
2.4.1 Dispositions for cheques to pay

These are guaranteed provisions for payments by issuing cheques called cheques to be paid or
bank cheques for which the request comes from the customer, thus guaranteeing the maximum
insurance to the beneficiaries. The accounting entries are as follows:
Step 1: issuing of the checque to pay
Dr Deposit accounts (371/372) Cr Dr Dispositions for cheques to pay (3811) Cr

A A
Step 2: Payment of the beneficiary by the bank
Dr Dispositions for cheques to pay (3811) Cr Dr Deposit accounts (371/372)

A Cr
A
2.4.2 Dispositions for certified cheques

Certifying a cheque means affixing a statement that ensures the availability of the provision and
the guarantee of payment for certain operations (payment and social contribution of the NSIF, various
purchases on other third parties). This provision is blocked for the benefit of the beneficiary. The
accounting entries of this provision is as follows:
Step 1: Cheque certification
Dr Deposit accounts (371/372) Cr Dr Dispositions for certified cheques (3812) Cr
A A

Dr Dispositions for certified cheques (3812) Cr Dr Deposit accounts (371/372)
A Cr
A
2.4.2 Provisions
These are funds that guarantee the execution of certain operations (purchase of securities,
safe/till deposit box rentals) required by the bank for customers who do not have provisions in the
account. The accounting entries are as follows:
Step 1: Transfer of funds

Dr Deposit accounts (371/372) Cr Dr Provisions (3813) Cr
A A
Dr Provisions (3813) Cr Dr Deposit accounts (371/372/7281) Cr

A A
2.4.3 Dispositions for loans

Also known as “the sums made available”, these are deposits received by the bank to transfer in
the customer’s account or to be paid to non-customers at the bank on customer orders. The accounting
entries are as follows:
Step 1: Transfer of funds

Dr Deposit accounts (371/372) Cr Dr Dispositions for loans (3814) Cr
A A
Dr Dispositions for loans (3814) Cr Dr Notes and currencies (571) Cr

A A

Example
BICEC Bank Bamenda realized the following transactions:
- 16/04/2019: Customer Nchendeh requested a bank cheque to pay his supplier Na-Beans.
Amount 24,000,000F
- 17/04/2019: Customer Nchendeh obtains the said cheque from BICEC and send it to his
supplier
- 18/04/2019: Certification of Nchendeh’s cheque for payment:
o Social contributions: 1,500,000F
o Taxes: 1,250,000F
- 19/04/2019: Presentation for the payment of cheque by supplier Na-Beans
- 22/04/2019: Presentation for the payment of the cheque at the NSIF
Work Required
Journalize the above transactions at BICEC Bank
SOLUTION
16/04/2019
3811 Dispositions for cheques to pay 24,000,000
Payment of investment loan
18/04/2019
3812 Dispositions for certified cheques 1,500,000
do
3812 Dispositions for certified cheques 1,250,000
19/04/2019
3812 Dispositions for certified cheques 472,500
22/04/2019
3812 Dispositions for certified cheques 472,500

CONSOLIDATION EXERCISE
Exercise 1
Cameroon investment credit realized the following transactions:
- 15/04/2018: Subscription for a bearer certificate of 12,000,000F at the rate of 6% per
annum. Duration: 6 months
- 01/05/2018: Subscription for a term deposit of 30,000,000F at the rate of 9% per annum.
Duration: 4 months
Work Required
Present the accounting entries:
- Of subscription
- Quarterly closure of account
- The repayment
Exercise 2
Community credit limited carried out the following operations on Mr Ndetseh saving account:
- 01/04/2019: Initial balance 15,000,000F
- 12/04/2019: Lodgment of 6,500,000F
- 18/04/2019: Withdrawal of 6,000,000F
- 10/05/2019: Lodgment of 12,000,000F
- 17/05/2019: Withdrawal of 3,000,000F
- 05/06/2019: Deposit of 8,000,000F
- 23/06/2019: Withdrawal of 3,500,000F
Work Required
1- Present the saving account and calculate the interest to be credited on the 30th June 2019 at the
rate of 4.5% civil year (retain at source 16.5%).
2- Post the accounting entries relative to this account up to the payment of the accrued interest
integrated monthly on the income statement.
Exercise 3
On the 22nd of May 2019, Mr SELEBOBO opened a saving account at SGBC and deposited the
same day 500,000F. He made anther lodgment of 300,000F on the 27th May 2019. On the 13th June
2019, he withdrew 400,000F and made a deposit of 300,000F two week later. On the 14 th of July, he
withdrew 150,000F.
Work Required
Post the accounting entries relative to this account knowing that the credit interest rate was 3.25% since
the creation of this account up to the 14th July 2019.

Exercise 4
On the 2nd January 2019, Madam Njuh, a customer at BICEC deposited 20.000,000F relative to
an investment plan maturing on the 31st December 2019. The interest rate per annum is 4.25%
Work Required
Present the accounting entries on prepaid interest and on postpaid interest:
- At subscription
- At the disposal of funds
- At maturity

Chapter 3:
LOANS
1. CHARACTERISTICS OF LOANS
The accounting entries of loans depends on the following particularities:
1.1. THE DURATION OF THE LOAN
It is established at the origin of the loan and it is also called the initial duration. We can
distinguish:
- Short term loans: these are loans or credit with a duration less than 2 years
- Medium term loans: these are loans or credit with a duration between 2 to 7 years
- Long term loans: these are loans or credit with a duration strictly more than 7 years
1.2. THE OBJECTIVE OF THE LOAN
We distinguish:
- Housing or real estate loans
- Equipment loans
- Personal loans
- Loans link to commercial debts
1.3. THE NATURE OF THE LOAN
We distinguish:
- Loans by discount
- Loans by account (overdraft)
1.4. THE CATEGORIES OF LOAN BENEFICIARY
We distinguish:
- Loans to physical persons
- Loans to moral persons
1.5. CHARGES INVOLVE
The loan contract between the bank and her customer results to some charges in the customer’s
account, amongst which are:
- Commissions,
- VAT (collected uniquely on commissions)
- Subscription to an insurance policy (life insurance)
1.6. ACCOUNTS USED
30 LONG-TERM CREDITS/LOANS
31 MEDIUM-TERM CREDITS/LOANS
32 SHORT-TERM LOANS

1.7. ACCOUNTING ENTRIES OF LOANS
a) LOAN GRANTING PROCESS
The procedure for obtaining credit consists of setting it up and releasing (paying) it. During the
setting up, the amount of the loan is posted on the debit side of one of the following sub-accounts:
Account 30 (LONG-TERM CREDITS/LOANS), Account 31 (MEDIUM-TERM CREDITS/LOANS)
and Account 32 (SHORT-TERM LOANS) depending on the nature of the loan. The customer’s
account (Account 371 or 372) is credited with the net to be collected after deduction of expenses
(commissions 717, insurance 461, VAT 434). The summary of the accounting entry can be depicted as
follows:
Dr Loan account (30/31/32) Cr Dr Commission (717) Cr

A B
Dr Insurance (461) Cr
Dr VAT (434) Cr
D
Dr Customer Account (371/372) Cr

E
𝑬 = 𝑨 − (𝑩 + 𝑪 + 𝑫)
Example
On the 24th October, Dady-Chris PLC requested and obtained from BICEC Bank Bamenda a
loan for the acquisition of an industrial equipment worth 45,000,000F to be reimbursed in 8 years.
Funds are deposited to his account less the following expenses for file study:
- Commissions 200,000F (tax exclusive)
- Insurance 354,000F
Work Required
Journalize the payment of this loan at BICEC Bank
SOLUTION
24/10/N
301 Loans for fixed assets investments 45,000,000
7171 Commission from long-term loans 200,000
461 Insurance and capitalization companies 354,000
24/10/N
b) LOAN AMORTIZATION PROCESS

Loan amortization is the fraction of loan to be reimbursed periodically. The repayment period is
established on the terms and conditions of the loan contract. The periodicity can be monthly, quarterly,
bi-annually or annually. The periodic repayment is made up of:
- The amount to be reimbursed and the corresponding interest
- Commissions
- VAT calculated on interests and commissions to be recorded in account 434
The accounting entries relative to the repayment of loan is summarized below
Dr Customer Account (371/372) Cr Dr Commission (717) Cr

A B
Dr Interest (71) Cr
C
Dr VAT (434) Cr
Dr Loan Account (30/31/32) Cr

E
𝑨= 𝑩+𝑪+𝑫+𝑬
Example 1
UBA granted to Atechupe a medium term loan for the acquisition of a car worth 16,000,000F.
Expenses relative to the setting up of the loan amounted to 46,000F tax exclusive and life insurance at
100,000F.
Work Required
1- Journalize the payment of this loan by UBA Bank
2- Present the accounting entries relative to the 1st repayment knowing that quarterly repayment is
950,000F made up of:
- Loan amortization 804,000F
- Interest tax exclusive 146,000F

SOLUTION
a) Accounting entries of the loan
a
313 Equipment loans 16,000,000
7172 Commission from long-term loans 46,000
461 Insurance and capitalization companies 100,000
Payment of equipment loan to Atechupe
b) Accounting entries of the loan amortization
b
313 Equipment loans 804,000
712 Interest from medium-term loans 146,000
Repayment of equipment loan by Atechupe
Example 2
Assume that the above loan was granted under the following conditions:
- Loan duration: 5years
- Repayment by constant amortizations
- Interest rate: 12% per annum
Work Required
1- Present the loan amortization table
2- Present the accounting entries at the end of the 1st and 4th year
SOLUTION
a) Presentation of the loan amortization table
Loan Loan
Years outstanding Interest VAT Amortization Annuities outstanding at
at start the end
1 16,000,000 1,920,000 369,600 3,200,000 5,489,600 12,800,000
2 12,800,000 1,536,000 295,680 3,200,000 5,031,680 9,600,000
3 9,600,000 1,152,000 221,760 3,200,000 4,573,760 6,400,000
4 6,400,000 768,000 147,840 3,200,000 4,115,840 3,200,000
5 3,200,000 384,000 73,920 3,200,000 3,657,920 0

b) Accounting entries of the loan
1st year
712 Interest from medium-term loans 1,920,000
1st Repayment of equipment loan by Atechupe
2nd year
712 Interest from medium-term loans 768,000
2nd Repayment of equipment loan by Atechupe

CHAPTER 4:
VALUE RECOVERY OPERATIONS
1- VALUE RECOVERY OPERATIONS WITHIN THE BANK
Diverse operations are carried out between the bank’s units through accounting documents
(debit advice, credit advice,…)
- Sending cheques or bills to be cashed from one agency to another or between
headquarters and the agency;
- Customer’s transfer order from one bank agency to another;
- The transfer of customer’s account from one agency to another.
The accounting entries of transactions within the bank is done using account 45 (LIAISON
ACCOUNTS).
Example
Mr Coyort, a client at BICEC Nkwen branch, made a transfer of 254,000F to the order of
Atechupe (client of BICEC Douala branch).
Work Required
Present the accounting entries:
- At the Nkwen branch
- At the Douala branch
SOLUTION
a) Accounting entries at the Nkwen branch

452 Inter branch liaison accounts 254,000
Customer’s transfer
b) Accounting entries at the Douala branch
452 Inter branch liaison accounts 254,000

Customer’s transfer

2- VALUE RECOVERY OPERATIONS WITHOUT THE BANK
2.1
Tel: +237 674 101 690;
Email: fosoh69@yahoo.com

Chapter 7:
FINANCIAL STATEMENTS OF BANKS
1- THE INCOME STATEMENT
This table regroups accounts of classes 6 and 7 which are respectively used to record expenses
or losses and revenues or incomes distinctly classified following the nature of activities (operational or
exceptional activities). The significant management balances are regrouped in class 8 and the
following balances are successively determined:
- NET BANKING INCOME (Account 80)
- VALUE ADDED
- GLOBAL OPERATING INCOME (Account 81)
- GROSS OPERATING INCOME (Account 82)
- CURRENT INCOME (Account 83)

- EXCEPTIONAL INCOME (Account 84)
- NET INCOME BEFORE TAX (Account 85)
- INCOME TAX (Account 86)
- NET INCOME FOR THE PERIOD (Account 87)
- DETERMINATION OF THE INCOME FROM DISPOSAL OF FIXED ASSETS
1.1 THE INCOME STATEMENT USING T-ACCOUNTS

The significant management balances can be presented using eight T-accounts as indicated below:
SIGNIFICANT MANAGEMENT BALANCES
STEP 1: NET BANKING INCOME
Dr Net banking income (80) Cr
Account 60 ………… ………… Account 70
STEP 2: GLOBAL OPERATING INCOME

Dr Global operating income (81) Cr
Account 80 (D/B) ………… ………… Account 80 (C/B)
STEP 3: GROSS OPERATING INCOME

Dr Gross operating income (82) Cr
Account 65 Account 78
………… …………
Account 66 …………
STEP 4: CURRENT INCOME

Dr Current income (83) Cr
STEP 5: EXCEPTIONAL INCOME

Dr EXCEPTIONAL INCOME (84) Cr
………… Account 77
STEP 6: NET INCOME BEFORE TAX

Dr NET INCOME BEFORE TAX (85) Cr
STEP 7: INCOME TAX

Dr INCOME TAX (86) Cr
Provisional advance tax ………… ………… Excess tax relief obtained
Fiscal minimum account …………
Recalls …………
Net income tax …………
STEP 8: NET INCOME FOR THE PERIOD

Dr NET INCOME FOR THE PERIOD (87) Cr
1.2 The specimen of a bank income statement

The income statement of financial institutions is presented using the vertical format on two
separate sheets (one sheet for expenses and another for revenues). The sample of the income statement
can be as follows:

Tel: +237 674 101 690;


TABLE 1A
FINANCIAL YEAR : BUSINESS NAME :
SIGNIFICANT MANAGEMENT BALANCES (DEBIT)
Operational Exceptional TOTAL
N° HEADINGS Line
1 2 3 = 1+2
ACCOUNT 80: NET BANKING INCOME
60 Cash and interbank operations charges 1
61 Charges on customer and leasing operations 2
62 Charges on sundry banking operations 3
63 Expenses on permanent resources 4
80 Net banking income (credit balance) 5
TOTAL Line 01 to 05 6
ACCOUNT 81 : GLOBAL OPERATING INCOME
80 Net banking income (debit balance) 7
641 Supplies consumed 8
642 Transport and traveling expenses 9
643 Other services consumed 10
644 Technical assistance and inspection expenses 11
Value added (credit balance) 12
TOTAL line 07 to 12 13
Value added (debit balance) 14

64 General operating expenses 15
Global operating income (credit balance) 16
TOTAL : line 14 to 16 17
ACCOUNT 82 : GROSS OPERATING INCOME
65 Payroll expenses 18
66 Taxes and rates 19
68 Depreciations 20
82 Gross operating income (credit balance) 21
ACCOUNT 83 : CURRENT INCOME
82 Gross operating income (debit balance) 23
691 Provisions 24
692 Losses on bad debts 25
83 Current income (credit balance) 26
TOTAL LINES 23 to 26 27
ACCOUNT 84 : EXCEPTIONAL INCOME
67 Exceptional or previous year’s losses 28
67 Capital losses on the disposal of assets 29
84 Exceptional income (credit balance) 30
TOTAL EXPENSES AND LOSSES : line 1 to 29 32
ACCOUNT 85 : NET INCOME BEFORE TAX
83 Current income (transfer of debit balance of account 83 from table 1B) 33
84 Exceptional income (transfer of debit balance of account 86 from table 1B) 34
85 Net income before tax (credit balance) 35
TOTAL : 33 to 35 36
- Income tax 37
ACCOUNT 86 :
- Recalls 38
INCOME TAX
- Excess relief (credit balance) 39
TOTAL lines 37 to 39 40
Net income before tax (transfer of debit balance of account 85 from table 1B) 41
ACCOUNT 87 : Income tax (transfer of debit balance of account 86 from table 1B) 42
NET INCOME FOR THE
NET PROFIT FOR APPROPRIATION (credit balance of account 87) 43
PERIOD
INCOME FROM THE DISPOSAL OF FIXED ASSETS
Acquisition value of disposed items excluding destruction, scrapping without compensation 45
Disposal expenses transferred 46
Gains on disposal (credit balance) 47

TABLE 1B
SIGNIFICANT MANAGEMENT BALANCES (CREDIT)
N° HEADINGS Line
1 2 3 = 1+2
70 Revenues from cash and interbank operations 1
71 Revenues from customer and leasing operations 2
72 Revenues from sundry banking operations 3
Revenues from portfolio of securities and loans on
73 4
obligatory subscription
TOTAL Lines 01 to 05 6
80 Net banking income (credit balance) 7
74 Accessory revenues 8
VALUE ADDED (debit balance) 9
VALUE ADDED (credit balance) 11
81 Global operating income (debit balance) 12
Total Line 11 to 12 13
81 Global operating income (credit balance) 14
78 Depreciations written back 15
82 Gross operating income (credit balance) 18
791 Provisions on bad debts written back 19
792 Abandoned debts recovered 20
83 Current income (debit balance) 21
76 Operating and compensatory subsidies 23
77 Exceptional or previous year’s incomes 24
776 Capital gains on the disposal of assets 25
84 Exceptional income (debit balance) 26
Total Lines 23 to 26 27
TOTAL REVENUES AND PROFITS : Lines 1 to 26 28
83 Current income (transfer of credit balance of account 83 from table 1A) 29
84 Exceptional income (transfer of credit balance of account 86 from table 1A) 30
85 Net income before tax (debit balance) 31
TOTAL ACCOUNT 85 : lines 29 to 31 32
Excess relief 33
ACCOUNT 86 :
Income tax (debit balance) 34
INCOME TAX
Net income before tax (transfer of credit balance of account 85 from table 1A) 36
ACCOUNT 87 : Income tax (transfer of credit balance of account 86 from table 1A) 37
NET INCOME FOR THE
PERIOD NET LOSS FOR APPROPRIATION (debit balance of account 87) 38
Depreciations relative to disposed items 40
Disposal price 41
Losses on disposal (debit balance) 42

Example 1
The management accounts of NFC bank are presented below
Acc
Name Amount
No
60 Cash and interbank operations charges 400,00
72 Revenues from sundry banking operations 50,000
68 Depreciation of equipment and furniture for operating activities 10,500
62 Charges on sundry banking operations 14,500
74 Chargeback of sundry expenses 6,400
63 Expenses on permanent resources 8,500
64 General operating expenses 18,000
76 Operating and compensatory subsidies 7,000
62 Commissions on commitments by signature 1,400

79 Provisions on bad debts written back and bad debts recovered 4,200
64 Technical assistance and inspection expenses 4,800
66 Taxes and rates 9,200
71 Revenues from customer and leasing operations 4,700
67 Transport and travelling 6,500
77 Capital gains on the disposal of assets 3,600
68 Derogatory depreciation expenses 5,400
69 Provisions and losses on bad debts 5,900
70 Revenues from cash and interbank operations 90,000
71 Commissions from operations with customers 105,000
61 Charges on customer and leasing operations 34,000
73 Revenues from portfolio of securities and loans on obligatory subscription 45,000
65 Payroll expenses 104,000
74 Accessory revenues 8,000
78 Depreciations written back 4,300
67 Exceptional losses 5,600
Work Required
1- Present the income statement knowing that income tax amounted to 24,750F

TABLE 1A
FINANCIAL YEAR : BUSINESS NAME : NFC BANK
SIGNIFICANT MANAGEMENT BALANCES (DEBIT)
N° HEADINGS Line
1 2 3 = 1+2
60 Cash and interbank operations charges 1 40,000 40,000
61 Charges on customer and leasing operations 2 34,000 34,000
62 Charges on sundry banking operations 3 15,400 15,400
63 Expenses on permanent resources 4 8,500 8,500
80 Net banking income (credit balance) 5 196,800
TOTAL Line 01 to 05 6 294,700
641 Supplies consumed 8 4,800 4,800
642 Transport and traveling expenses 9
643 Other services consumed 10
644 Technical assistance and inspection expenses 11
Value added (credit balance) 12 206,400
TOTAL line 07 to 12 13 211,200
Value added (debit balance) 14

64 General operating expenses 15 18,000 18,000
Global operating income (credit balance) 16 188,400
TOTAL : line 14 to 16 17 206,400
65 Payroll expenses 18 104,000 104,000
66 Taxes and rates 19 9,200 9,200
68 Depreciations 20 15,900 15,900
82 Gross operating income (credit balance) 21 63,600
TOTAL line 18 to 21 22 192,400
691 Provisions 24 5,900 5,900
692 Losses on bad debts 25
83 Current income (credit balance) 26 61,900
TOTAL LINES 23 to 26 27 67,800
67 Exceptional or previous year’s losses 28 6,500 6,500
67 Capital losses on the disposal of assets 29 5,600 5,600
84 Exceptional income (credit balance) 30
TOTAL line 28 to 30 31 12,100
TOTAL EXPENSES AND LOSSES : line 1 to 29 32 267,800
83 Current income (transfer of debit balance of account 83 from table 1B) 33
84 Exceptional income (transfer of debit balance of account 86 from table 1B) 34 1,500
85 Net income before tax (credit balance) 35
TOTAL : 33 to 35 36 60,400
- Income tax 37 61,900
ACCOUNT 86 :
- Recalls 38 24,750
INCOME TAX
- Excess relief (credit balance) 39
Net income before tax (transfer of debit balance of account 85 from table 1B) 41 24,750
ACCOUNT 87 : Income tax (transfer of debit balance of account 86 from table 1B) 42
NET INCOME FOR THE
NET PROFIT FOR APPROPRIATION (credit balance of account 87) 43 24,750
PERIOD
TOTAL lines 41 to 43 44 35,650
Acquisition value of disposed items excluding destruction, scrapping without compensation 45 60,400
Disposal expenses transferred 46
Gains on disposal (credit balance) 47

Tel: +237 674 101 690;


TABLE 1B
FINANCIAL YEAR : BUSINESS NAME : NFC BANK
SIGNIFICANT MANAGEMENT BALANCES (CREDIT)
N° HEADINGS Line
1 2 3 = 1+2
70 Revenues from cash and interbank operations 1 90,000 90,000
71 Revenues from customer and leasing operations 2 109,700 109,700
72 Revenues from sundry banking operations 3 50,000 50,000
Revenues from portfolio of securities and loans on
73 4
obligatory subscription 45,000 45,000
TOTAL Lines 01 to 05 6 294,700
80 Net banking income (credit balance) 7 196,800
74 Accessory revenues 8 14,400 14,400
VALUE ADDED (debit balance) 9
TOTAL Lines 07 to 09 10 211,200
VALUE ADDED (credit balance) 11 206,400
81 Global operating income (debit balance) 12
Total Line 11 to 12 13 206,400

81 Global operating income (credit balance) 14 188,400
78 Depreciations written back 15 4,300 4,300
TOTAL Lines 14 to 16 17 192,700
82 Gross operating income (credit balance) 18 63,600
791 Provisions on bad debts written back 19 4,200 4,200
792 Abandoned debts recovered 20
83 Current income (debit balance) 21
TOTAL Lines 18 to 21 22 67,800
76 Operating and compensatory subsidies 23 7,000 7,000
77 Exceptional or previous year’s incomes 24 3,600 3,600
776 Capital gains on the disposal of assets 25
84 Exceptional income (debit balance) 26 1,500
Total Lines 23 to 26 27 12,100
TOTAL REVENUES AND PROFITS : Lines 1 to 26 28 328,200
83 Current income (transfer of credit balance of account 83 from table 1A) 29 63,600
84 Exceptional income (transfer of credit balance of account 86 from table 1A) 30
85 Net income before tax (debit balance) 31
TOTAL ACCOUNT 85 : lines 29 to 31 32 63,600
Excess relief 33
ACCOUNT 86 :
Income tax (debit balance) 34 34,750
INCOME TAX
Net income before tax (transfer of credit balance of account 85 from table 1A) 36 60,400
ACCOUNT 87 : Income tax (transfer of credit balance of account 86 from table 1A) 37
NET INCOME FOR THE
PERIOD NET LOSS FOR APPROPRIATION (debit balance of account 87) 38
Depreciations relative to disposed items 40
Disposal price 41
Losses on disposal (debit balance) 42

2- THE BALANCE SHEET
The balance sheet for banking institutions is presented after the transition table of patrimonial
account balances has been established.
2.1The transition table of patrimonial account balances
This table schematically retraces the evolution of accounts from the balance sheet at the start of
the period by describing all the movements on the account during the accounting period. It permits to
establish a link between financial flows, resources and applications.
The transition table helps to overcome a number of shortcomings in the balance sheet and
dynamically analyses the evolution of the company’s net patrimonial situation. It helps to prepare the
financial plan and the notes to financial statements.
The movements of the period are distinctly posted on increase, decrease or transfer, only for
operations older than 1 year that is, fixed assets, results, depreciations, equity and long and medium
term loans. For short term loans, the movements of the period are globally posted on increase or
decrease depending on the nature of their variations.
The movements of the period are spread in external flows or internal flows. External flows
directly affects the consistency of the enterprise patrimonial situation while internal flows are purely
accounting adjustments which affects structure of the patrimony.
2.2The specimen of the balance sheet
The balance sheet of banking institutions is a privileged situation drawn from the debit or credit
balances of the transition table of patrimonial accounts. The structure of the balance sheet can be
presented as follows:

TABLE 3A
BALANCE SHEET (Patrimonial Situation) ASSETS
Gross Depreciation Net
Lines
N° HEADINGS amount or provision amount
1 2 3=1-2
20 Deferred expenses 01
20 Intangible non-current assets 02
DEFERRED EXPENSES AND INTANGIBLE FIXED ASSETS
03
(TOTAL line 1 & 2)
21 Lands 04
22 Other tangible fixed assets in service 05
23 Other tangible fixed assets in process 06
TANGIBLE FIXED ASSETS: TOTAL line 4 to 6 07
24 Advances and payments on account for fixed assets 08
25 Deposits and cautions 09
26 Equity and other long-term securities 10

27 Obligatorily subscribed loans and securities 11
OTHER FIXED ASSETS: TOTAL line 8 to 11 12
FIXED ASSETS : TOTAL line 3,7 and 12 13
30 Long-term credits/loans 14
31 Medium-term credits/loans 15
32 Short-term loans 16
34 Overdue or delinquent loans 17
37 Overdrafts and sight deposit accounts 18
38 Other customer accounts 19
CUSTOMER’S CREDIT: TOTAL Line 14 to 19 20
40 Suppliers 21
41 Cheques and bills for collection 22
42 Personnel 23
43 State and international organizations 24
44 Shareholders 25
45 Liaison accounts 26
46 Other debtors and creditors 27
47 Management adjustment accounts-assets 28
47 Foreign currency adjustment account 29
48 Pending sundry debts 30
51 Temporary investment and trading securities 31
52 Monetary market 32
54 Loans and term accounts of correspondents 33
55 Overnight loans of correspondents 34
56 Current account of correspondents 35
57 Cash 36
58 Delinquent debts on correspondents 37
CURRENT ASSETS : TOTAL line 21 to 37 38
TOTAL ASSETS : Line 13, 20 and 38 39

TABLE 3B
BALANCE SHEET (Patrimonial Situation) LIABILITIES

N° HEADINGS Line AMOUNT
10 Capital and endowments 01
10 Shareholder: outstanding part of capital 02
11/12 Premiums related to capital and reserves 03
13 Unappropriated incomes brought forward 04
14 Special provisions and regulated reserves including gains on disposal to be
reinvested 05
of which capital gains on revaluation 06
15 Investment subventions 07
875 Net income for previous years not yet appropriated 08
NET SITUATION (BEFORE NET INCOME OF THE PERIOD) Total line 1 to 5, 8 09
16 Financing and guarantee funds (excluding mutual guarantee funds) 10

17 Gross value Redemption premium
Debentures (a) (b)
(bonds)
Net (a) - (b) 11
18 Other permanent resources 12
Fraction to be reimbursed in less than one year 13
19 Provisions for risks and expenses 14
OTHER PERMANENT RESOURCES Total line 10 to 12, 14 15
35 Special regime deposit accounts 16
36 Term deposit accounts 17
37 Overdrafts and sight deposit accounts 18
40 Suppliers 20
42 Personnel 22
44 Shareholders 24
47 Management adjustment accounts-liabilities 27
53 Other securities on repo and reverse repo 30
54 Loans and term accounts of correspondents 31
55 Overnight loans of correspondents 32
SHORT-TERM DEBTS: Total line 16 to 33 34
875 NET INCOME OF THE PERIOD FOR APPROPRIATION 35
NET LOSSES OF THE PERIOD FOR APPROPRIATION 36
TOTAL LIABILITIES : Line 9, 15, 34 + line 35 - line 36 37

TABLE 3C
OFF-BALANCE SHEET COMMITMENTS TABLE

COMMITMENTS RECEIVED AMOUNT
Commitments received from customers 01
Commitments received from correspondents 02
Leasing contracts and related commitments 03
Sundry 04
TOTAL COMMITMENTS RECEIVED: Total line 01 to 04 05
COMMITMENTS GIVEN AMOUNT

Commitments given on orders of customers 06

Commitments given on orders of correspondents 07
Other guarantees 09
Sundry 10
TOTAL COMMITMENTS GIVEN : Total line 06 to 10 11
Tel: +237 674 101 690;

Example 1
The accounts of SGBC bank are presented below (values in thousands francs) as at 31/12/2018
Acc
Name Amount
No
471 Management adjustment accounts-assets 32,000
101 Share capital 160,000
171 Debentures issued 45,000
321 Trade bills 37,000
931 Commitments received from customers 15,000
113 Premiums related to capital 48,000
235 Equipment and furniture for operating activities 75,000
191 Provisions for general banking risks 43,000
122 Statutory and contractual reserves 19,000
2023 Trademarks, software, licenses, trade names, models, designs. 88,000
221 Buildings for banking operations 54,000
443 Dividends 23,000

379 Related account payable 52,000
491 Provision for the depreciation of recovery accounts 27,000
901 Financing agreements granted on orders of correspondents 22,000
301 Loans for fixed assets investments 63,000
316 Consumption loans 77,000
5221 Loans on offers for tender 38,000
351 Cash bonds 68,000
371 Current accounts (debit balance) 53,000
925 Guarantees for the reimbursement of loans 56,000
552 Postal cheques centers 61,000
413 Bills to be recovered received from customers 65,000
511 Temporary investment and trading securities 57,000
924 Endorsements guarantees 59,000
403 Amounts payable to suppliers 85,000
371 Current accounts (credit balance) 63,000
544 Vostro term accounts central banks 67,000
591 Provision for depreciation of short-term and transaction securities 15,000
571 Cash 75,000
2821 Depreciations of buildings for operating activities 20,000
5411 Term loans central banks 66,000
403 Amounts payable to suppliers 98,000
382 Blocked accounts 52,000
391 Provisions on unpaid consumption loans 13,000
Work Required
1- Present the balance sheet of this bank
2- Complete the off balance sheet commitment table

SOLUTION
TABLE 3A
FINANCIAL YEAR :31/12/2018 BUSINESS NAME : SGBC BANK
BALANCE SHEET (Patrimonial Situation) ASSETS
Gross Depreciation Net
Lines
N° HEADINGS amount or provision amount
1 2 3=1-2
20 Deferred expenses 01 88,000 88,000
20 Intangible non-current assets 02
DEFERRED EXPENSES AND INTANGIBLE FIXED ASSETS
(TOTAL line 1 & 2)
03 88,000 88,000
21 Lands 04
22 Other tangible fixed assets in service 05 54,000 20,000 34,000
23 Other tangible fixed assets in process 06 75,000 75,000
TANGIBLE FIXED ASSETS: TOTAL line 4 to 6 07 129,000 20,000 109,000
24 Advances and payments on account for fixed assets 08
25 Deposits and cautions 09

26 Equity and other long-term securities 10
27 Obligatorily subscribed loans and securities 11
OTHER FIXED ASSETS: TOTAL line 8 to 11 12 0 0 0
FIXED ASSETS : TOTAL line 3,7 and 12 13 217,000 20,000 197,000
30 Long-term credits/loans 14 63,000 63,000
31 Medium-term credits/loans 15 77,000 13,000 64,000
32 Short-term loans 16
34 Overdue or delinquent loans 17
37 Overdrafts and sight deposit accounts 18 53,000 53,000
CUSTOMER’S CREDIT: TOTAL Line 14 to 19 20 193,000 33,000 160,000
40 Suppliers 21
41 Cheques and bills for collection 22 65,000 27,000 38,000
42 Personnel 23
44 Shareholders 25
47 Management adjustment accounts-assets 28 32,000 32,000
48 Pending sundry debts 30
51 Temporary investment and trading securities 31 57,000 15,000 42,000
54 Loans and term accounts of correspondents 33 66,000 66,000
55 Overnight loans of correspondents 34 61,000 61,000
57 Cash 36 75,000 75,000
58 Delinquent debts on correspondents 37
CURRENT ASSETS : TOTAL line 21 to 37 38 356,000 15,000 341,000
TOTAL ASSETS : Line 13, 20 and 38 39 742,000 68,000 674,000

TABLE 3B
FINANCIAL YEAR :31/12/2018 BUSINESS NAME : SGBC BANK
BALANCE SHEET (Patrimonial Situation) LIABILITIES

N° HEADINGS Line AMOUNT
10 Capital and endowments 01 160,000
10 Shareholder: outstanding part of capital 02
11/12 Premiums related to capital and reserves 03 67,000
13 Unappropriated incomes brought forward 04
14 Special provisions and regulated reserves including gains on disposal to be
reinvested 05
of which capital gains on revaluation 06
15 Investment subventions 07
875 Net income for previous years not yet appropriated 08
NET SITUATION (BEFORE NET INCOME OF THE PERIOD) Total line 1 to 5, 8 09 227,000
16 Financing and guarantee funds (excluding mutual guarantee funds) 10

17 Gross value Redemption premium
Debentures (a) (b)
(bonds)
Net (a) - (b) 11 45,000
18 Other permanent resources 12
Fraction to be reimbursed in less than one year 13
19 Provisions for risks and expenses 14 43,000
OTHER PERMANENT RESOURCES Total line 10 to 12, 14 15 88,000
35 Special regime deposit accounts 16 68,000
36 Term deposit accounts 17
37 Overdrafts and sight deposit accounts 18 163,000
38 Other customer accounts 19 52,000
40 Suppliers 20 85,000
42 Personnel 22
44 Shareholders 24 23,000
47 Management adjustment accounts-liabilities 27
53 Other securities on repo and reverse repo 30
54 Loans and term accounts of correspondents 31 67,000
55 Overnight loans of correspondents 32 38,000
SHORT-TERM DEBTS: Total line 16 to 33 34 496,000
875 NET INCOME OF THE PERIOD FOR APPROPRIATION 35
NET LOSSES OF THE PERIOD FOR APPROPRIATION 36 (137,000)
TOTAL LIABILITIES : Line 9, 15, 34 + line 35 - line 36 37 674,000

TABLE 3C
FINANCIAL YEAR : 31/12/2018 BUSINESS NAME : SGBC BANK
OFF-BALANCE SHEET COMMITMENTS TABLE
COMMITMENTS RECEIVED AMOUNT
Commitments received from customers 01 15,000
Commitments received from correspondents 02
Sundry 04
TOTAL COMMITMENTS RECEIVED: Total line 01 to 04 05 15,000
COMMITMENTS GIVEN AMOUNT

Commitments given on orders of customers 06 59,000
Commitments given on orders of correspondents 07 22,000
Other guarantees 09 56,000

Sundry 10
TOTAL COMMITMENTS GIVEN : Total line 06 to 10 11 137,000
CONSOLIDATION EXERCISE
The management accounts of Afriland First Bank are presented below in thousands.
Acc No Name Amount
60 Cash and interbank operations charges 60,000
72 Revenues from sundry banking operations 80,000
68 Depreciation of equipment and furniture for operating activities 30,500
62 Charges on sundry banking operations 24,500
74 Chargeback of sundry expenses 36,400
63 Expenses on permanent resources 18,500
64 Sundry operation expenses 28,000
76 Operating and compensatory subsidies 17,000
64 Transport and traveling expenses 34,800
66 Taxes and rates 39,200
86 Income tax 27,800
67 Transport and travelling expenses on previous year’s operations 42,000
77 Capital gains on the disposal of assets – exceptional income 13,600
69 Provisions and losses on bad debts 15,900
70 Revenues from cash and interbank operations 185,000
71 Commissions from operations with customers 134,700
61 Charges on customer and leasing operations 34,000
73 Revenues from portfolio of securities and loans on obligatory subscription 45,000
65 Payroll expenses 124,000
78 Depreciations written back 34,300
Work Required
1- Present the income statement of Afriland First Bank

Tel: +237 674 101 690;


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NCHENDEH CHRISTIAN +237 674 101 690

NCHENDEH CHRISTIAN (M.Sc. FINANCE) 674-10-16-90

NCHENDEH CHRISTIAN (M.Sc. FINANCE) 674-10-16-90

NCHENDEH CHRISTIAN (M.Sc. FINANCE) 674-10-16-90

NCHENDEH CHRISTIAN (M.Sc. FINANCE) 674-10-16-90

Banking activities undertaken by banks include personal banking (non-business customers),

international and multinational corporations).

According to Charles J. Woelfel, A complete banking service would comprehend a variety of

NCHENDEH CHRISTIAN (M.Sc. FINANCE) 674-10-16-90 Page 5

Business of Banking Companies

NCHENDEH CHRISTIAN (M.Sc. FINANCE) 674-10-16-90 Page 6

NCHENDEH CHRISTIAN (M.Sc. FINANCE) 674-10-16-90 Page 7

NCHENDEH CHRISTIAN (M.Sc. FINANCE) 674-10-16-90 Page 8

35 SPECIAL REGIME DEPOSIT ACCOUNTS

373 PASSBOOK ACCOUNTS

NCHENDEH CHRISTIAN (M.Sc. FINANCE) 674-10-16-90 Page 9

571 Cash 360,000

TAXES RELATIVE TO SAVING ACCOUNTS

NCHENDEH CHRISTIAN (M.Sc. FINANCE) 674-10-16-90 Page 10

06/4/2018 Lodgment 7000000 15000000 39 days 585000000

NCHENDEH CHRISTIAN (M.Sc. FINANCE) 674-10-16-90 Page 11

434 Taxes and rates collected 4,278

2.2 HOUSING LOAN SCHEMES AND ACCOUNTS

NCHENDEH CHRISTIAN (M.Sc. FINANCE) 674-10-16-90 Page 12

- Interest rate: 7.2% per annum

Remark: in accounting for banking institutions, each month has 30 days.

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371 Current accounts 6,800,000

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2.4.1 Dispositions for cheques to pay

Dr Deposit accounts (371/372) Cr Dr Dispositions for cheques to pay (3811) Cr

Step 2: Payment of the beneficiary by the bank

Dr Dispositions for cheques to pay (3811) Cr Dr Deposit accounts (371/372)

2.4.2 Dispositions for certified cheques

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Dr Dispositions for certified cheques (3812) Cr Dr Deposit accounts (371/372)

Step 1: Transfer of funds

Step 2: Payment of the beneficiary by the bank

Dr Provisions (3813) Cr Dr Deposit accounts (371/372/7281) Cr

2.4.3 Dispositions for loans

Step 1: Transfer of funds

Step 2: Payment of the beneficiary by the bank

Dr Dispositions for loans (3814) Cr Dr Notes and currencies (571) Cr

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Dr Loan account (30/31/32) Cr Dr Commission (717) Cr

Dr Customer Account (371/372) Cr

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Dr Customer Account (371/372) Cr Dr Commission (717) Cr

Dr Loan Account (30/31/32) Cr

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372 Cheque accounts 254,000

b) Accounting entries at the Douala branch

452 Inter branch liaison accounts 254,000

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- CURRENT INCOME (Account 83)