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The impact of the following transaction on the Profit & Loss Account for the financial
year 2010-11:
a. The interest for the period 1st July 2010 to 31st March 2011 will be accounted for
in Profit & Loss Account. Accordingly interest amounting to `9 Crores will be
charged to the Profit & Loss A/c using accrual basis of accounting.
b. Stationary consumed = Opening Inventory + Stationary Purchased Closing
Inventory. Accordingly `13.5 million will be debited to the Profit and Loss A/c as
stationary consumed. (`2.3 million + `13 million `1.8 million).
c. Employee Cost = Paid during the year advances + salary outstanding +
provision for retirement benefits; = `134.75 million - `2 million + `15.35 million
+ `2.35 million = `150.45 Million
2. a) Operating Income
b) Other Income
c) Other Operating Income
d) Other Operating Income
e) Other Income
f) Extra-ordinary Income
g) Not an Income
h) Extra-ordinary Income
i) Other Operating Income
j) Other Income
3. Various measures of profits:
Pre tax profit (PBT) = PAT + Provision for Tax = `743 + `131 = `874 Crores.
Operating Profit (EBIT) = PBT + Interest and Finance Charges = `874 + `160 = `1034
Crores
Cash Operating Profit (EBITDA) = EBIT + Depreciation = `1034 + 130 = `1164 Crores
4. Preparation of Profit & Loss Account: The Profit & Loss Account for the Jack
Paints Limited for the year 2010-11 is given below:
1
` Crores
5528.8
2
403.74
Particulars
Net Sales
5125.08
Other Income
Interest Earned
131.3
Dividend Received
1.85
10.7
Total Income
143.85
5268.93
Expenses
Material Consumed
2840.2
4
Employee Cost
280.84
Manufacturing Expenses
718.73
295.27
Earnings Before
Amortization
Interest,
Tax,
Depreciation
4135.08
and
1133.85
60.74
1073.11
13.76
1059.35
Extra-Ordinary Income
25.46
1084.81
336.46
-6.29
2
330.17
754.64
Appropriations
Interim Dividend
Proposed Dividend
Tax on Dividend
Balance Carried to Balance Sheet
81.53
177.45
44.03
303.01
451.63
13120
235
13355
180
23
203
Total Income
13558
Expenses
Raw Material Consumed
Opening Stock
+ Raw Material Purchased
- Closing Stock
Purchase of Stock in Trade
Change in Stock
Opening Stock
Work in Progress
Finished Goods
Less: Closing Stock
Work in Progress
Finished Goods
554
8332
662
8224
233
328
205
432
156
-55
1120
212
34
1366
Financial Cost
Interest
Bank Charges
191
14
205
331
12
343
Other Expenses
Freight Outwards
Handling Cost
Loss on Sales of Assets
Power & Fuel
Provisions and Write offs
Repair & Maintenance
Stores and Spares
Other Expenses
356
130
12
462
17
168
518
809
2472
Total Expenses
Profit Before Tax and Exceptional Items
Exceptional Item
Profit Before Tax
Tax Expenses
Profit After Tax
12788
770
6
764
258
506
Profit & Loss Account of Star Limited for the year ended 31st March 2011
Amount (` Million)
Amount (` Million)
Income
Sales
1,602.76
17.37
Interest
8.56
3.43
1,585.39
11.99
Total
1,597.38
Expenditure
Opening Stock
255.40
Add: Purchases
983.95
13.49
171.03
1,054.82
Wages
152.93
Salaries
26.13
Freight
6.73
General Expenses
34.58
Auditors Fees
11.78
Directors Fees
35.96
Depreciation
Premises
5.48
33.39
Furniture
0.93
39.81
6.17
Total Expenditure
1,368.90
228.48
68.54
159.94
Appropriations
Profit After Tax
159.94
60.81
220.75
Less:
Transfer to General Reserves
8.00
Proposed Dividend
41.10
6.17
55.26
165.49
Cases
Case 4.1: Preparation of Profit & Loss Account for Infosys Limited
Profit & Loss Account for the year ended 31st March
Income
Income from software services and products
Interest Income
Dividend Income
Other income / (loss)
Total Income
` Crores
2010
21140
743
101
66
22050
2009
20264
836
2
-334
20768
Expenses
Software development expenses
Selling expenses
Salaries, wages and other employee benefits
Managerial remuneration
Depreciation and amortization
Auditor's remuneration
Provision for doubtful debts
Provision for post-sales client support and warranties
Other expenses
Total Expenses
Profit Before Tax and Extra-Ordinary Items
Provision for Taxation
Profit Before Extra-Ordinary Items
Extra-ordinary Income, net of taxes
Profit After Tax
2317
215
10340
16
807
1
-1
-2
885
14578
7472
1717
5755
48
5803
2111
247
9960
15
694
1
74
39
913
14054
6714
895
5819
0
5819
Appropriations
Interim Dividend on Equity Shares
Final Dividend on Equity Shares
Tax on dividend
Total Appropriations
Balance Carried to Balance Sheet
573
861
240
1674
4129
572
774
228
1574
4245
Case 4.2: Preparation of Profit & Loss Account for Cipla Limited based upon the Trial
Balance and additional information
Profit & Loss Account of Cipla Limited for the year ended 31st
March 2010
` Crores
` Crores
Gross Sales
Less : Excise Duty
Other Income
5411.68
52.16
Total Income
5359.52
353.72
5713.24
Expenses
Material Consumed
Opening Stock
+ Purchases
- Closing Stock
Employee Cost
+ Salary Outstanding
+ Provisions for Retirement Benefits
1398.32
2567.24
1512.58
263.01
26.74
29.12
2452.98
318.87
83.61
231.05
957.85
250.69
165.25
22.95
4483.25
1229.99
95.00
1324.99
243.5
1081.49
Less : Appropriations
Proposed Dividends
Dividend Distribution Tax
160.58
26.67
894.24
Case 4.3: Preparation of Profit & Loss Account for Siemens Limited based upon the Trial
Balance and additional information
The Profit & Loss Account of Siemens Limited for the year ended 30 th September 2009 is given
below:
Profit & Loss Account of Siemens Limited for the year ended 30th September 2009
Particulars
` '000
Income
85,554,11
4
2,186,779
Commission Income
520,410
697,219
Interest Earned
523,002
2,059,459
Other Income
2,341,188
83,367,33
5
6,141,278
89,508,61
3
Total Income
Expenses
Raw Material, Stores and Components Purchased
20,200,72
5
Add: Opening Stock - Raw Material, Stores &
Components
1,526,726
2,531,516
19,195,93
5
11,335,32
6
5,445,792
53,197
5,498,989
28,535,47
4
5,237,014
769,201
Other Costs
4,877,553
Depreciation
777,794
Interest Expense
58,772
6,094,417
7,190,455
(1,096,03
8)
14,318,59
3
4,007,464
Deferred
(208,879)
71,500
3,870,085
10,448,50
8
Proposed Dividend
1,685,801
Tax on Dividend
286,502
1,972,303
8,476,205
Case 4.4
Profit & Loss Statement of TCS Limited for the year ended 31st
March 2012
` Crores
Income
Revenue from Operations
Other Income
Dividend
Interest
Other Income
Total Income
38,858.54
2,428.00
658.57
31.43
Expenditure
Employee Benefit Expenses
Other Expenses
Exchange Loss
Finance Cost
Depreciation
Amortisation
Total Expenditure
3,118.00
41,976.54
14100.41
13372.41
432.82
16.4
681.23
6.94
28610.21
13,366.33
2390.35
10,975.98
10
Case 4.5: Comparison of Profit & Loss Account of Hero Honda Motors Limited and Tech
Mahindra Limited for the year 2009-101
Hero
Honda
Motors
Limited
(` Crores)
Particulars
i.
the
Tech
Mahindra
Limited
(` Crores)
15,758
341
16,099
560
10,736
4,484
91
4575
1,599
0
1,800
1,803
191
-20
0
2,832
130
160
9
874
592
8
2,232
138
-7
743
2,707
1,598
599
371
225
1,350
2,146
1,774
Compare
43
7
269
d) Tech Mahindra has higher Finance Charges signifying higher reliance on borrowed
funds.
ii.
Hero Honda Motors Limited has negative finance charges. What does it indicate?
The interest earned is netted from interest paid and finance charges. Hero Honda being a
cash rich company might have kept surplus funds in bank deposits etc. on which it is
earning interest. The negative finance charges indicate that the interest earned in higher
than interest paid.
iii.
12