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Accountancy Project Workbook - 1 PDF
Accountancy Project Workbook - 1 PDF
As per the Latest Syllabus & guidelines Issued by CBSE for Project Work in Accounting
AUTHOR
Dr. VINOD KUMAR
M.Com., B.Ed, Doctorate in Commerce
Chandigarh–Bengaluru–Delhi–Guwahati–Hyderabad–Indore
Jammu–Jodhpur–Kolkata–Lucknow–Mumbai–Patna–Ranchi
Preface
I am feeling great pleasure in putting the Accountancy Project Workbook for
class XII in the hands of Honorable Academic Community. The main
purpose of writing this project workbook is to provide the practical
knowledge of accounting to the students. I am confident that this project
workbook will be certainly helpful to the students and the teaching
fraternity.
Contents
I am extremely grateful to the entire team of Vishvas Publications for CBSE Guidelines 6 8
providing wings to my ideas. Part-B :
I would also like to thank to the students, teachers, lecturers and Chartered Financial Statement Analysis
Accountants across the country for appreciating my work in the field of PROJECT 1 9 32
accountancy.
Part-A : Comprehensive Problem
Why this project workbook is valuable for the students?
Part-B : Project on Segement Analysis
They will learn the meaning of project work and how to prepare a
Part-C : Cash Flow Statement
good project?
They will understand the value of project work in their real life. PROJECT 2 33 52
They will learn that how to identify, collect, and analyse the financial Part-A : Comprehensive Problem
data for the project work. Part-B : Project on Segement Analysis
They will understand the concept of Analysis and Interpretation. Part-C : Cash Flow Statement
They will understand the concept of Cash Flow Statement.
Computerized Accounting (Part-C)
They will understand the concept of Ratio Analysis.
This project workbook is designed as per the latest syllabus issued by Project 3 53 55
C.B.S.E. Payroll Mate Software
In this book Four Solved Sample Projects have been given to assist the
students to develop a good project. Project 4 56 61
Topics covered under this project work are : Easy Accounts
1. Analysis and Interpretation of Financial Statements. Viva Questions (Part B) 62 66
2. Ratio Analysis Viva Questions (Part C) 67 68
3. Cash Flow Statement
Students and teachers may directly contact to the Author to clear their
doubts or for any suggestion for the improvement.
Vinod Kumar (Accountancy Guru) Author
www.accountancybook.com E-mail : [email protected]
PUBLISHED BY
Printed at :
PRINTOMEX PRINTERS Like us on : www.Facebook.com\VishvasPublications
MOHALI – 160062
VALIDITY CERTIFICATE
This is to certify that this Accountancy Project Workbook belongs to
Name ......................................................................................................................
The Projects recorded in this Project Workbook have been done by the candidate in
the school and the signatures affixed on recorded projects are genuine.
Mr/Mrs................................................ my Accountancy
Name of Project................................................................
Name of Student..............................................................
School Name....................................................................
5 Project–1
CBSE GUIDELINES FOR PROJECT WORK IN ACCOUNTING FOR CLASS XII
The Board has introduced Project Work in Accounting for Class-XII in the Optional Part B :
'Financial Statement Analysis'. It is expected that the Project Work will help the students in
developing the skills to comprehend, analyse and interpret accounting data of the business firms
and make it meaningful for taking business decisions.
Objectives
l To enable a student to complete the accounting process in real life business situations and
apply the tools of analysis as per the syllabus for a comprehensive project.
l To develop the competence of reading accounting data from quarterly or half yearly or annual
reports of business firms and interpreting the information on the basis of given guidelines to
present the desirable information in required format in the Project File for Specific Projects.
Guidelines for Teachers
During the academic session the students will work on at least three types of projects out of which
one will be of Comprehensive nature. The comprehensive project will involve the students from the
initial stage of accounting to the preparation and analysis of financial statements. The data
provided or the Project Statement will be as close to the real life situations as possible. The project
statement should cover all important aspects like investments, financing, operating, adjustments
to final accounts, etc. in a condensed form. The situations given in these problems will require a
student to derive meaningful conclusion for taking decisions for the purposes of investment,
expansion, financing, etc.
Two projects will be of specific nature using atleast one tool of analysis in each. The data for these
will be drawn mainly from quarterly or half yearly or annual reports of corporate sector. Students
will analyze the information given in the financial statements as follows:
(a) Performance of Segments keeping in mind their three parameters Revenue, Net Profit and
Capital Employed of companies on quarterly or half yearly or annual basis. This is widely
published and reported by the companies. It can be picked up either from the newspapers or
from the websites of the companies.
(b) Comparison of Revenue, Net Profit and Earning Per Share (EPS) on quarterly or half yearly or
annual basis with the help of comparative or common size statements. The Projects given in
these guidelines are on sample areas of business activities like Segment Reporting, etc. The
teachers and students are free to explore more such areas of business activities for specific
projects.
There are four tools of analysis given in the syllabus for the analysis of Financial Statements,
namely (i) Comparative Statement, (ii) Common Size Statements, (iii) Ratios and (iv) Cash Flow
Statement. Any one or more of these tools are to be used to derive conclusions. No project is to
be prepared on the tools, but these tools are to be used to achieve the object of the project. For
instance, there will not be any project on the 'Ratios' as such, but ratios will be used in the
development of the project to reach a conclusion.
7 Project–1
UNIT-2: WRITTEN TEST
Objectives
l To give them exposure to analyse the financial statements of business firms and help them to
derive meaningful information and conclusions therefrom.
l To know how effectively the students can derive conclusions and express them.
9 Project–1
l Bills Receivable Rs.60,000
l Bills Payable Rs.40,000
l Goods taken for personal use Rs.10,000
l Goods given as charity Rs.15,000
l Goods distributed as free samples Rs.20,000
l Rent paid for Office Building Rs.5,000
l Stationery purchased for office Rs.8,000
l Withdrawn from bank for office use Rs.1,50,000
l Paid electricity bill Rs.4,000
l Office expenses paid through cheque Rs.12,000
l Salaries paid to staff Rs.1,00,000
l Typewriter purchased for office use Rs.9,000
l Paid Rs.3,000 for repair of machinery
l Paid fire insurance premium for office building by cheque Rs.6,000.
l Paid for advertisement (TV and 'The Hindustan Times') Rs.60,000
l Printing and stationery expenses Rs.4,000
l Additional capital introduced by Mr. Vinod Kumar as per the requirement of Business
Rs.2,00,000
l A fire occurred in the godown and stock of the value of Rs.6,000 was destroyed. Nothing was
received from insurance company because these goods were not insured.
l Postage and telephone expenses Rs.2,000
l Carriage inward Rs.6,000
l Carriage outward Rs.5,000
l A new printer purchased for office Rs.7,000
l Bank charges Rs.1,000
l General expenses Rs.1,500
l License and registration fee Rs.800
l Transportation Expenses Rs.1,200
l Audit fees paid Rs.4,000
l Interest paid on bank loan (IDBI) by the bank (ICICI) as per the standing advice Rs.1,20,000
As an accountant you are required to Journalise these transactions and post them into ledger
accounts and prepare a Trial Balance.
(1) Prepare Trading and Profit and Loss Account for the year ending 31st March 2016 and balance
sheet on the same date after considering the following adjustments:
(a) Plant & machinery are to be depreciated @ 6% p.a.
(b) Depreciation on office furniture and office equipments is to be charged @8% p.a.
(c) Closing Stock at the end Rs.1,00,000.
(d) Salaries outstanding Rs.40,000
(e) Interest on bank loan outstanding Rs.30,000
(f) Manager will get commission on net profit after charging such commission @ 5% p.a. (only
in the case of profit).
(2) Comment on the financial position and profitability of the business and give valuable
suggestion to the management when gross profit of the similar firm is Rs.5,00,000 and net
profit is Rs.40,000.
11 Project–1
Creditors A/c Dr 6,00,000
To Cash A/c 6,00,000
(Being cash paid to creditors)
Bills Receivable A/c Dr. 60,000
To Debtors A/c
(Being bills receivable from debtors) 60,000
Creditors A/c Dr. 40,000
To Bills Payable 40,000
(Being bills payable to creditors)
Drawings Dr. 10,000
To Purchase A/c 10,000
(Being goods taken for personal use)
Charity A/c Dr. 15,000
To Purchase A/c 15,000
(Being goods given as charity)
Free Samples A/c Dr. 20,000
To Purchase A/c 20,000
(Being goods given as free sample)
Rent A/c Dr. 5,000
To Cash A/c 5,000
(Being rent paid)
Stationery A/c Dr. 8,000
To Cash A/c 8,000
(Being stationery purchased for office)
Cash A/c Dr. 1,50,000
To Bank (ICICI) A/c 1,50,000
(Being cash withdrawn from bank)
Electricity Expenses A/c Dr. 4,000
To Cash A/c 4,000
(Being electricity expenses paid)
Office Expenses A/c Dr. 12,000
To Bank (ICICI) A/c 12,000
(Being office expenses paid)
Salaries A/c Dr. 1,00,000
To Cash A/c 1,00,000
(Being salaries paid)
Office Equipments A/c Dr. 9,000
To Cash A/c 9,000
(Being typewriter purchased for office use)
Repair A/c Dr. 3,000
To Cash A/c 3,000
(Being repair expenses paid)
13 Project–1
Interest on Bank Loan A/c Dr. 1,20,000
To Bank (ICICI) A/c 1,20,000
(Being interest on bank loan paid)
Capital Account
15 Project–1
Stock (Inventory) Account
Purchase Account
Creditors Account
Sales Account
Debtors Account
Drawings Account
Charity Account
17 Project–1
Free Samples Account
Rent Account
Stationery Account
Salaries Account
Advertisement Account
19 Project–1
Carriage Inward Account
Trial Balance
Cash 24,79,500
Capital ......... 37,00,000
Bank 3,61,000 ........
10% IDBI Bank Loan 15,00,000
Land and Building 12,00,000 ........
Plant and Machinery 7,00,000 ........
Office Furniture 60,000 ........
Office Equipments 1,56,000 ........
Stock 4,00,000 ........
Purchase 11,49,000 ........
Creditors ....... 10,000
Sales ....... 20,00,000
Debtors 3,10,000 ........
Purchase Return ...... 50,000
Sales Return 30,000 ........
Bills Receivable 60,000 ........
Bills Payable ...... 40,000
Drawings 10,000 ........
Charity 15,000 ........
Free Samples 20,000 ........
Rent 5,000 ........
Stationery 8,000 ........
Electricity Expense 4,000 ........
Office Expense 12,000 ........
Salaries 1,00,000 ........
21 Project–1
Repair 3,000 ........
Fire Insurance Premium 6,000 ........
Advertisement 60,000 ........
Printing and Stationery 4,000 ........
Loss by Fire 6,000 ........
Postage and Telephone Expenses 2,000 ........
Carriage Inward 6,000 ........
Carriage Outward 5,000 ........
Bank Charges 1,000 ........
General Expenses 1,500 ........
License & Registration Fee 800 ........
Transportation Expenses 1,200 ........
Audit Fee 4,000 ........
Interest on Bank Loan 1,20,000 ........
73,00,000 73,00,000
Trading Account
Balance Sheet
23 Project–1
5. Trade Receivables Turnover Ratio = Net Credit Sales/Average Trade Receivables
= 8,70,000/3,70,000 = 2.35 Times
6. Trade Payable Turnover Ratio = Net Credit Purchase/Average Trade Payables
= 6,50,000/50,000 = 13 Times
Presentation Through Bar Diagram
6,00,000
5,00,000
4,00,000
Profit
3,00,000
2,00,000
1,00,000
0
Gross Profit Net Profit Net Profit (after commission)
(before commission)
500000
400000
300000
200000
100000
0
Gross Profit Gross Profit
of Main of Similar
Business Business
60000
50000
40000
30000
20000
10000
0
Net Net
Profit of Profit of
Main Similar
Business Business
25 Project–1
6. Processing of data :
I. Common Size Statement of Segment Wise Revenue
Compare the Revenue from Operations of each segment of VK Industries with total revenue for
the year ended 31 March 2015
Revenue of the segment
Use the formula = × 100
Total Revenue
Revenue of the segment
Degree = × 360
Total Revenue
Common Size Statement Showing Inter-Segment Comparison of Revenue
For the year ended 31 March, 2015
Segment Petrochemicals Refining Oil & gas Others Total
Revenue 19133 142352 9746 4619 175850
Percentage of 10.88 80.95 5.54 2.63 100
Revenue
o o o o o
Degrees for 39.17 291.43 19.95 9.45 360
Pie Diagram
Petrochemicals
Refining
Oil & gas
Others
Total
Petrochemicals
Refining
Oil & gas
Others
Total
27 Project–1
Graphic Presentation of ROI
60
50
40
30 ROI
20
10
g
s
l
in
al
ga
ta
er
in
ic
To
th
&
em
ef
O
il
R
O
ch
t ro
Pe
Conclusions
l VK Industries is doing well in the area of oil & gas and Petrochemicals.
l Company must focus on refining sector also because it may also contribute to the high profit to
the firm.
l Oil and gas Segment has the highest ROI 55.28% with capital share of only 1.83%.
l With the Revenue share of 10.88% of the Total Revenue, Power Segment is able to generate a
PBIT of 41.53% of the Total Profit.
l Power Segment also has a good ROI of 46.91%.
l Therefore, oil & gas Segment and Petrochemicals Segment are the best performing segments.
Future Projections
l Company has enough potential to handle the volatile situations. Company must create some
reserves out of profits to meet the future contingencies.
l Company has 55.28% share of ROI, oil & gas segment seems to have a bright future. More
funds should be diverted towards this segment from refining segment which is losing its shine.
l Petrochemical also has a future growth potential because of shortage of petrochemicals in the
country. It will be a good idea to divert some funds towards this segment from refining
Segment.
Vinod Limited is an Indian Conglomerate holding company headquartered in Delhi, Darya Ganj,
India. The Company is present in many business sectors including textiles, retail and health care.
Notes To Accounts
29 Project–1
5. Tangible Assets
Land and building 3,40,000 4,00,000
Plant and Machinery 4,00,000 1,60,000
6. Trade Receivables
Debtors 4,00,000 3,20,000
Bills Receivables 60,000 40,000
Additional Information:
(i) Depreciation of Rs.20,000 and Rs.40,000 have been charged on plant and machinery and land
and building during the year 2015-16.
(ii) An interim dividend of Rs.40,000 has been paid in the year 2015-16.
(iii) Rs.70,000 income tax has been during the year 2015-16.
Solution :
Introduction : The Project is to prepare Cash Flow Statement of Vinod Limited for the year ended
31st March 2016. Cash Flow Statement of the company will be prepared as per the Accounting
Standard 3 (Revised) issued by the Institute of Chartered Accountants of India. It also requires
the interpretation of the results of the company.
Tools for the Analysis of Company's Result
(1) Cash Flow Statement
(a) Cash Flow From Operating Activities
(b) Cash Flow From Investing Activities
(c) Cash Flow From Financing Activities
(2) Analysis and Observation
(3) Preparation of Bar Diagram to show the Cash Generated (or used) under, Operating, Investing
and Financing Activities.
Cash Flow Statement
31 Project–1
I. Cash Flow from Operating Activities
d Cash Flow from Operating Activities has a positive inflow of Rs. 2,50,000 in the year ended
March 31st, 2016 which shows that the company has good operating activities i.e. principal
revenue producing activities.
d Cash generated from operating activities amounted to Rs.2,50,000 which has been invested in
purchasing of Fixed Assets.
II. Cash Flow from Investing Activities
d Cash flow from investing activities means that Vinod Limited has invested in fixed assets.
Investment in terms of purchasing fixed assets which facilitated the business to earn more
profit in future. It is also a healthy sign for any business.
d Proceeds from Sale of Fixed Assets Rs.20,000 is also utilised for purchasing of fixed assets and
remaining amount is utilised for other payments.
III. Cash Flow From Financing Activities
d Rs.2,00,000 Share capital is raised and Preference Shares worth Rs.1,00,000 are redeemed by
the company.
d Dividend paid to the Shareholders on Time.
d Financing Activities showing cash outflow because of redemption of preference shares and
amount of dividend paid to the shareholders.
d Overall company is having Rs.36,000 Cash in hand which is a good sign.
d Company is able to meet its obligations and also meets the expectation of shareholders
regarding return on their investment. That is why company is able to issue its Equity shares
and raised Rs.2,00,000 share capital.
Result of Different Activities
Business Activities Amount
Cash From Operating Activities 2,50,000
Cash From Investing Activities (2,40,000)
Cash From Financing Activities (24,000)
3,00,000
2,00,000
1,00,000
1,00,000
2,00,000
-3,00,000
Operating Investing Financing
Activities Activities Activities
On the basis of the above analysis, we may conclude that business of Vinod Limited is doing well and
prospects of the company are bright. But the company is carrying unusually low cash and cash
equivalents, indicating the inefficient cash management. The management must consider this
situation and take decision for better cash management so that better standards are achieved.