Accounts AIP FINAL

AIR FORCE SCHOOL YELAHANKA,
BANGALORE
ART INTEGRETED PROJECT

ON ACCOUNTANCY
SUBMITTED BY:
CLASS 12TH A
BATCH 2022-23
AIR FORCE SCHOOL YELAHANKA,
BANGALORE
CERTIFICATE
This is to certify that the students of class XII ‘A’
have successfully completed the art integrated
project for accountancy as per the guidelines
prescribed by the CBSE for the AISSCE-2022/23
The students have taken proper care and have

done ample research work on the topic covered
and have shown utmost sincerity in the completion
of the project on time, with proper understanding
of the concept, involving the creative and
innovative thinking to present the topic.
ACKNOWLEDGEMENT
We would like to express our special thanks

to our Accountancy teacher Ms. Sajitha KR,
for her able guidance and support in
completing our Project.
We would also like to extend our gratitude

to our Principal Mam Ms. Shalini Narayan
for providing all the facility that was
required
--- The company UPA Tools Ltd. Is in the business of
manufacturing writing instruments. It being concerned about
its profitability and liquidity position has engaged you to
analyze its financial data and give observations/comments
thereon.
The company has provided its Financial Statements, i.e.,
Balance sheets and statements of Profit and Loss for the
financial year ended 31st March, 2018, 2019 and 2020.
Project Solution
Subject Matter of the Project
The Project is to analyze the financial data and give assessment

on the profitability and liquidity of UK Gel Ltd. For the last three
years on the basis of the following accounting ratios:
i. Gross Profit Ratio;
ii. Net Profit Ratio;
iii. Inventory Turnover Ratio;
iv. Current Ratio;
v. Liquidity Ratio; and
vi. Debit collection Period.
Information and Data for the Project
The Statement of Profit and Loss for the years ended 31st March,
2018, 31st March, 2019 and 31st March, 2020, the Balance Sheets
as at dates and Notes to Accounts have been provided. The data
so provided has been utilized for computing the ratios. The
computation of the ratios is given at the end of the conclusion as
Working Notes. The computed ratios of the three years have been
shown with the help of graphs for easy understanding. On the
basis of the computed ratios, views have been formed and
expressed.
The data provided by the company in the following page: -

STATEMENT OF PROFIT & LOSS for the year ended 31st March
2018, 2019, 2020
S No. Particular Note No. 31st March 31st March 31st March
2018 (₹) 2019 (₹) 2020 (₹)
I INCOME
(a) Revenue from operation (Net sales) 8,00,000 12,60,000 17,40,000
(b) Other Income 10,000 40,000 85,000
Total 8,10,000 13,00,000 18,25,000
II EXPENDITURE
(a) Purchase of stock in trade 6,00,000 8,00,000 9,50,000
(b) Change in inventories of stock in trade 1 -30,000 -50,000 -75,000
(c) Employees benefit expense 1,10,000 2,00,000 2,80,000
(d) Finance cost - - 70000
(e) Depreciation and amortisation expense 8,000 9,000 10,000
(f) Other expense 80,000 1,00,000 1,20,000
Total 7,68,000 10,59,000 13,55,000
III Profit before Tax 42,000 2,41,000 4,70,000

IV Less: Tax 21,000 1,00,000 1,80,000
V Net Profit after Tax 21,000 1,41,000 2,90,000
BALANCE SHEET as on 31st March 2018, 2019, 2020
Particular Note 31st March 31st March 31st March
No. 2018 (₹) 2019 (₹) 2020 (₹)
EQUITY AND LIABILITIES

1. Shareholders Fund
(a) Share Capital 2,00,000 2,00,000 2,00,000
(b) Reserves and Surplus 33,000 89,500 1,50,000
2. Non-Current Liabilities - - -
(a) Long term Borrowing (Debenture) - - 2,00,000
(b) Other Long term Liabilities 60,000 40,000 20,000
(c) Long term Provisions 10,000 15,000 15,000
3. Current Liabilities
(a) Short term Borrowing 20,000 15,000 20,000
(b) Trade payable 1,12,000 2,24,000 3,32,000
(c) Other Current Liabilities 20,000 20,000 20,000
(d) Short term Provisions (Provision for Tax) 5,000 40,000 65,000
TOTAL 4,60,000 6,43,500 10,22,000
ASSETS
1. Non-current Assets
(a) Property, Plant and Equipment and Intangible
Asset
(i) Property, Plant and Equipment 78,000 97,000 1,40,000
(ii) Intangible Asset 30,000 38,000 42,000
(iii) Capital Work in Progress 50,000 40,000 -
(iv) Intangible Asset under Progress 20,000 11,000 -
(b) Non-Current Investments 60,000 66,500 30,000
(c) Long term Loans and Advances 30,000 32,000 35,000
2. Current Assets
(a) Current Investments 2,000 7,000 43,000
(b) Inventories 70,000 1,20,000 1,95,000
(c) Trade Receivable 80,000 1,90,000 4,80,000
(d) Cash and Cash Equivalent 15,000 10,000 20,000
(e) Short term Loans and Advances 10,000 12,000 13,000
(f) Other Current Assets 15,000 12,000 13,000
TOTAL 4,60,000 6,43,500 10,22,000
NOTES TO ACCOUNTS
Particular 31st March 31st March 31st March
2018 (₹) 2019 (₹) 2020 (₹)
Change in Inventories of Stock in Trade
Opening Inventories 40,000 70,000 1,20,000
Less: Closing Inventories 70,000 1,20,000 1,95,000
(30,000) (50,000) (75,000)
Analytical Tools Used
Analytical Tool used for the analysis of financial data is accounting ratios.
Planning and Execution
Considering the requirements of the company following ratios have been

computed;
1. Gross profit ratio;

2. Net profit ratio;
3. Inventory turnover ratio;
4. Current ratio;
5. Liquid ratio and;
6. Debt collection Period
Computation analysis and Comments
COMPUTATION OF ACCOUNTING RATIOS

Working Note:
Calculation of gross profit:
PARTICULARS 31st march 2018 31st march 2019 31st march 2020
Revenue from operation

(sales). 8,00,000 12,60,000 17,40,000
Less : Cost of revenue from
operations* 5,70,000 7,50,000 8,75,000
GROSS PROFIT 2,30,000 5,10,000 8,65,000
Cost of revenue from operations=Purchases+ change in inventories

31st march 2018= Rs.6,00,000-Rs.30,000=Rs.5,70,000
31st march2019=Rs.8,00,000-Rs.50,000=Rs.7,50,000
31st march 2020=Rs.9,50,000-Rs.75,000=Rs.8,75,000
NOTE : Direct expenses are assumed to be nil .
ANALYSIS AND COMMENTS
1. Revenue from operations of the company shows significant growth

each year. Also, there is a significant increase in gross profit ratio
and net profit ratio. It means that the company has been able to
realize better price for the products which has resulted in better
gross profit and also better net profit. It is a good indicator for the
for the company. The graph of the gross profit ratio and net profit
ratio is shown below in fig:
Gross Profit Ratio

60
50
40
30
20
10
0
2017 2018 2019 2020
Net Profit Ratio

18
16
14
12
10
0
2017 2018 2019 2020
2. Inventory Turnover Ratio is 10.36 in the year 2018, it decreased to
7.89 in the year 2019 and further decreased to 5.56 in the year 2020.
That means company started maintaining more inventory to make
the sale. This should be analyzed whether maintaining more
inventory is required or not. It means that the company has invested
more than the required capital inventories. The change in inventory
turnover ratio can be seen in the following graph shown: -
Inventory Turnover Ratio
12
10
0
2017 2018 2019 2020
3. Current Ratio is approximately the same in the first two years. However,
it has improved in the third year, i.e., in 2020. However, in all the three
years, Current Ratio is lower than the accepted norm of 2: 1. The company
may face difficulty in meeting its short-term liabilities on time.
Improvement in the Current Ratio in the year 2020 to 1.77 is a significant
improvement. It is good for the company but needs to be improved further.
The change in the Current Ratio is shown below in Fig.:
Current Ratio
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2017 2018 2019 2020
4.It is observed that the Liquid Ratio is also on the same pattern as the
Current Ratio. 1 Ratio is approximately same in the first two years but
improved in the third year. In the year 2020, the company should be able
to meet its financial commitment on time. Liquid the change in Liquid
Ratio is shown below in Fig.
Liquid Ratio
2.00
1.50 1.33
In Times
1.00 0.8
0.78
0.50
0
0.00
2017 2018 2019 2020
5. Debt collection period has negative growth and has increased from 37
days in the year 2018 to 55 days in the year 2019 and further to 101 days
in the year 2020. It shows that the company is selling its stock by
offering higher credit period which may result in requirement of more
working capital and higher bad debts. Therefore, the company may face
problem in realization from debtors. Debt collection period is shown in
below figure.
Debt Collection Period
120
100 101
80
60
55
40
37
20
0
2017 2018 2019 2020
Years

Accounts AIP FINAL

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AIR FORCE SCHOOL YELAHANKA,

ART INTEGRETED PROJECT

The students have taken proper care and have

We would like to express our special thanks

We would also like to extend our gratitude

Subject Matter of the Project

The Project is to analyze the financial data and give assessment

The data provided by the company in the following page: -

III Profit before Tax 42,000 2,41,000 4,70,000

EQUITY AND LIABILITIES

Analytical Tools Used

Planning and Execution

Considering the requirements of the company following ratios have been

1. Gross profit ratio;

COMPUTATION OF ACCOUNTING RATIOS

Revenue from operation

GROSS PROFIT 2,30,000 5,10,000 8,65,000

Cost of revenue from operations=Purchases+ change in inventories

1. Revenue from operations of the company shows significant growth

Gross Profit Ratio

Net Profit Ratio

Inventory Turnover Ratio

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