Accountancy Project for Class 12

Project Guidelines

A. Points to be kept in mind while preparing the Accountancy Project for Grade - 12

1. Always try to choose interesting accountancy project topics.

2. Always keep your pro short and precise. Add content related to your project topic only.
3. Try to Add Diagrammatic/Graphic Presentation. Add Diagrams, Pie-Charts, Bar Charts, and
Graphs (If possible)
4. If you have any doubts, ask your project guide for project guidelines.
5. Submit your project report on time.

B. Important points that should be included in the project.

1. Title of the project

2. Problem being discussed in the project
3. The main reason for selecting this project topic
4. Literature Review
5. The objective of the project
6. Scope of the project
7. Limitations of the project
8. Working methodology of project
9. Acknowledgement
10. Preface
11. Contents of the project
12. Observations and findings
13. Conclusion
14. References (reference books. journals, magazines, websites, etc.)

C. Steps to be kept in mind while writing the project

1. Identifying the Project Statement
2. Setting the Project Objective and Scope of the Project
3. Defining the Project Tasks and Responsibilities (Creating the Work Flow Structure)
4. Monitoring the Project and Finding the Important Resources Required

D. Here is a sample project with detailed essential points to be kept in mind while creating
your project.
 Accountancy Project for Class 12

Accountancy Project - Class 12

PROJECT WORK (_____YEAR)

NAME OF THE SCHOOL : _____________

NAME OF THE STUDENT : _____________
CLASS : _____________
CBSE ROLL NUMBER : _____________
ACADEMIC YEAR : _____________
TEACHER IN CHARGE : _____________

ACKNOWLEDGEMENT
I would like to convey my sincere thanks to ……… (teacher’s name), my accountancy teacher,
who always gave me valuable suggestions and guidance during the project. She/he has a
source of inspiration and helped me understand and remember important details of the
project. She/he gave me an amazing opportunity to do this wonderful project ‘(name of the
project)’.
I also thank my parents and friends for their help and support in finalising this project within
the limited time frame.

Place : ________ Name : ________

Date : ________ Signature :________

CERTIFICATE BY GUIDE
This is to certify that ________ (name of the student) of class XII of _________ (name of the
school), _______ (name of the state) has completed his/her project file under my guidance.
He/she has taken proper care and shown the utmost sincerely in completing this project.

I certify that this project is up to my expectations and as per the guidelines issued by CBSE.

_____________(Name of the faculty) _____________

(Commerce Department) (Signature)
 Accountancy Project for Class 12

CERTIFICATE BY STUDENT
I ________ (name of the student), student of class XII of ________ (name of the school),
________ (name of the state) hereby certify that the project was undertaken by me as per
the CBSE curriculum. I take it to be authentic and reliable.

_____________(Name of the student)

_____________ (Signature)
_____________ (Roll number)
 Accountancy Project for Class 12

CONTENTS
Sl. No. PARTICULARS PAGE NO.

1. Ratio Analysis

(a) Liquidity Ratios

(i) Current Ratio
(ii) Quick Ratio

(b) Profitability Ratio

(i) Net Profit Ratio
(ii) Return on Total Assets
(iii) Return on Capital Employed

(c) Activity or Turnover Ratio

(i) Inventory Turnover Ratio
(ii) Fixed Assets Turnover Ratio
(iii) Current Assets Turnover Ratio
(iv) Total Assets Turnover Ratio

(d) Financial Ratios

(i) Debt to Equity Ratio
(ii) Fixed Assets to Long-term Funds Ratio
(iii) Proprietor’s Ratio

2. Comments
 Accountancy Project for Class 12

PROJECT - 02
SPECIFIC PROJECT
(Name of the project)

Information and Data for the Project:

I have selected two companies namely Nayan Ltd. and Nutan Ltd. They do a similar business in a
similar business environment and they are similar in size also. I have found them to be comparable and
therefore, have selected them.

Question:

The data is extracted from their annual financial statements of Nayan Ltd. and Nutan Ltd. The data is
for the financial year 2019 - 2020.

Particulars Nayan Ltd. Nutan Ltd.

(₹) (₹)

Revenue from Operations (Net Sales) 68,20,000 52,00,000

Net Profit after Tax 2,06,800 2,92,800
Equity Share Capital 20,00,000 16,40,000
(Subscribed and fully paid-up, share of ₹10 each)
Reserve and Surplus 4,70,000 11,80,900
6% Debentures 14,00,000 12,60,700
Trade Payables 7,12,600 8,96,000
Provision for Tax 1,00,000 1,16,000
Bank Overdraft 1,05,000 3,90,000
Fixed Assets (Tangible) 32,58,500 32,32,600
Inventories 6,30,200 14,58,300
Trade Receivable 8,56,960 7,56,800
Cash and Cash Equivalents 3,15,840 2,02,500

Planning and Execution:

The project is planned and executed as follows:
1. Two Liquidity Ratio, i.e., Current Ratio and Quick (Liquid or Acid Ratio) Ratio are computed.
 Accountancy Project for Class 12

2. Profitability Ratio, i.e., Net Profit Ratio, Return on Total Assets Ratio and Return on Capital
Employed are computed.

3. Activity Ratio, i.e., Inventory Turnover Ratio, Fixed Assets Turnover Ratio, Current Assets
Turnover Ratio and Total Assets Turnover Ratio are computed.

4. Ratios for financial position, i.e., Debt to Equity Ratio, Fixed Assets to Long-term Funds Ratio
and Proprietary Ratio are computed.

5. The accounting ratios so computed are plotted in a manner that comparison is easily made.

6. The accounting ratios of the two companies are analysed and accordingly commented upon.

Analytical tool used:

Analytical tool used in the project is accounting ratio.

 Accountancy Project for Class 12

Analysis and Conclusion

Computation of Ratios and Statement of Comparative Ratios

Ratio Nayan Ltd. (₹) Nutan Ltd. (₹)

A. Liquidity Ratios
(i) Current Ratio: ₹18,03,000 ₹24,17,600
₹9,17,600 ₹14,02,000
= 1.96 : 1 = 1.72 : 1

Current Assets = Inventories + Trade

Receivable + Cash and Cash Equivalents

Current Liabilities = Trade Payables +

Provision for Tax + Bank Overdraft

(ii) Quick Ratio:

₹11,72,800 ₹9,59,300
₹9,17,600 ₹14,02,600
= 1.28 : 1 = 0.68 : 1

Quick Assets = Trade Receivable + Cash and

Cash Equivalents

Current Liabilities = Trade Payables +

Provision for Tax + Bank Overdraft

B. Profitability Ratio
(i) Net Profit Ratio:
₹2,06,800 x 100 ₹2,92,800 x 100
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 (𝑎𝑓𝑡𝑒𝑟 𝑡𝑎𝑥) ₹68,20,000 ₹52,00,000
× 100 = 3.03% = 5.63%
𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝑓𝑟𝑜𝑚 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑜𝑛 𝑖. 𝑒. 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠

(ii) Return on Total Assets:

₹2,06,800 x 100 ₹2,92,800 x 100
₹50,61,500 ₹56,50,200
= 4.09% = 5.18%
Total Assets = Fixed Assets (Tangible) +
Inventories + Trade Receivable + Cash and
Cash Equivalents
 Accountancy Project for Class 12

(iii) Return on Capital Employed

₹3,90,800 x 100 ₹4,84,442 x 100

₹38,70,000 ₹40,81,600
= 10.10% = 11.87%
Profit before Interest and Tax = Net profit after
tax + Debenture Interest + Provision for Tax

Capital Employed = Equity Share Capital +

Reserve and Surplus + Long-term Debts - Non-
trade investments

C. Activity or Turnover Ratio

(i) Inventory Turnover Ratio:
₹68,20,000 ₹52,00,000
𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝑓𝑟𝑜𝑚 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑜𝑛𝑠 (𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠) ₹6,30,200 ₹14,58,300
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑖𝑒𝑠 = 10.82 times = 3.57 times

(ii) Fixed Assets Turnover Ratio:

₹68,20,000 ₹52,00,000
₹32,58,500 ₹32,32,600
= 2.09 times = 1.61 times

(iii) Current Assets Turnover Ratio:

₹68,20,000 ₹52,00,000
₹18,03,000 ₹24,17,600
= 3.78 times = 2.15 times

(iv) Total Assets Turnover Ratio:

₹68,20,000 ₹52,00,000
₹50,61,500 ₹56,50,200
= 1.35 times = 0.92 times
 Accountancy Project for Class 12

D. Financial Ratios
(i) Debt to Equity Ratio:
₹14,00,000 ₹12,60,700
𝐿𝑜𝑛𝑔 − 𝑡𝑒𝑟𝑚 𝐷𝑒𝑏𝑡𝑠 ₹24,70,000 ₹28,20,900
𝐸𝑞𝑢𝑖𝑡𝑦 𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠′ 𝐹𝑢𝑛𝑑
= 0.57 : 1 = 0.45 : 1
Long-term debts = Debentures
Shareholders’ funds = Equity Share Capital +
Reserves and Surplus

(ii) Fixed Assets to Long-term

Funds Ratio:
₹32,58,500 ₹32,32,600
₹38,70,000 ₹40,81,600

= 0.84 Times = 0.79 Times

Long-term funds = Equity share capital +
Reserves and Surplus + Debentures

(iii) Proprietor’s Ratio:

₹24,70,000 ₹28,20,900
₹50,61,500 ₹56,50,200

Proprietor’s funds = Equity Share = 0.49 times = 0.50 times

Capital + Reserves and Surplus
 Accountancy Project for Class 12

Comments

Liquidity Position:

1. Current Ratio shows short-term financial soundness of the business. Higher

current ratio means better capacity to meet its current obligation.
Norms for current ratio vary on the basis of nature of the business. Generally the
ideal current ratio is 2 : 1. Nayan Ltd. has a current ratio of 1.96 : 1; whereas Nutan
Ltd. has a current ratio of 1.72 : 1. Since, the Current Ratio of Nayan Ltd. is closed
to 2 : 1, it indicates that it has a comfortable current assets position. And it is in the
better position to meet its current liabilities on time as compared to Nutan Ltd.

2. Quick Ratio is a fairly stringent measure of liquidity. It is based on those current

assets which are highly liquid.
Generally the ideal quick ratio is 1 : 1. Nayan Ltd. has a quick ratio of 1.28 : 1;
whereas Nutan Ltd. has a current ratio of 0.68 : 1. It indicates that Nayan Ltd. is in
a better position to meet its current liabilities at a short notice. Thus, Nayan Ltd.
has a better liquidity position as compared to Nutan Ltd.

Profitability Position:
Profitability refers to the financial performance or efficiency of the business.
All the profitability ratios of Nutan Ltd. are better than that of Nayan Ltd.It shows that Nutan
Ltd. is making better utilisation of available resources than Nayan Ltd. Due to making more
economical purchases or products are better priced, the Net Profit Ratio of a Nutan Ltd. is
better. This must be due to the better result of Gross Profit Ratio.

Activity Ratio:
Activity Ratios measure how well the resources have been used by the enterprise.
After the analysis of all the activity ratios, it shows that activity ratios of Nayan Ltd. are
better than that of Nutan Ltd. It also shows that Nayan Ltd. is making better utilisation of
available resources to achieve sales. But Nayan Ltd. is earning lower profit as compared
to Nutan Ltd.

Financial Position:
After analysing all financial ratios, it shows that both the companies' financial
position is not much different. The ratios indicate that both the companies are equally
placed.
 Accountancy Project for Class 12

Teacher’s Observation
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