ACCOUNTANCY PROJECT WORKBOOK

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

Name of the Student........................................................................................

Name of the School.........................................................................................

Class ........................................... Roll No. ......................................................

XII
CBSE

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 : authorcbse@gmail.com

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 VALIDITY CERTIFICATE
This is to certify that this Accountancy Project Workbook belongs to

Name ......................................................................................................................

Roll No ............................ Class .................................... Section .............................

Session ................................... of ..............................................................................

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.

 The student's initiative, cooperation and participation during the practical

classes is Excellent/Good/Average.

 His/Her aesthetic presentation, visual appeal, expression and neatness is

Excellent/Good/Average.

 His/Her content accuracy, creativity, originality and analysis of different

perception is Excellent/Good/Average.

Date : ..................... Teacher-Incharge

 Acknowledgement
I would like to convey my heartfelt thanks to

Mr/Mrs................................................ my Accountancy

teacher, who always gave valuable suggestions and guidance

for completion of my project. He/She helped me to

understand and remember important details of the project

that I would have otherwise lost. My project has been a

success only because of his guidance.

Name of Project................................................................

Name of Student..............................................................

Class................Roll No....................... Section.................

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.

Part B : Financial Statement Analysis Part C : Computerzised Accounting

Project Work Practical Work
Duration: 1:30 Min Marks: 20 Unit-1 File : 4 Marks
Unit-1 Project File 4 Marks : As per requirement (given below) Unit-2 Practical
Unit-2 Written Test 12 Marks : One hour Examination : 12 Marks-1hr.
Unit-3 Viva Voce 4 Marks : As per requirement (given below) Unit-3 Viva Voce : 4 Marks

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.

Vishvas Accountancy Project Workbook XII 6

Scope
For the purpose of Project Work, the following ratios will be included :
Liquidity Ratios : Current Ratio, Liquidity Ratio.
Solvency Ratios : Debt to Equity; Total Assets to Debt, Proprietary Ratio.
Activity Ratios : Inventory Turnover, Debtors Turnover, Payables Turnover, Working Capital
Turnover, Fixed Assets Turnover, Current Assets Turnover.
Profitability Ratio : Gross Profit Ratio, Operating Ratio, Net Profit Ratio, Return on Investment,
Earning Per Share Price Earnings Ratio.
A few projects have been given in detail at the end of the guidelines for practice. The student is
expected to analyze the facts, and present the information in a meaningful manner for
interpretation. Teachers are expected to discuss these problems thoroughly with the students and
encourage them to come out with solutions. They are also expected to collect the quarterly or half
yearly or annual Segment reports and Revenue and Net Profit reports of companies from
newspapers or from the websites of the companies and formulate their own problems for Project
Work.

UNIT-1: PROJECT FILE

Students will prepare a Project File to record their work related to the problems attempted by them
in the following format :
1. First page of the file should describe title of work, identity of student, school, and the teacher
concerned.
2. Index to indicate columns for title of work, page no., date, teacher's remarks and signature.
3. The format for Project Work will be :
l Statement of the problem/Name of the Project
l Objectives
l Period of Study
l Source Material
l Tools of Analysis used
l Processing and Tabulation of data
l Diagrammatic/graphic presentation- pie-diagrams, bar diagrams and graphs.
l Derivations, Interpretation and Conclusion.
l Assumptions (if any)
Project File should be neatly handwritten and presentable with page numbers. Each step of the
solution needs to be highlighted. Conclusions drawn should be placed in boxes at the end.
Evaluation
Guidelines for the Examiner
While evaluating the Project File, marks are to be awarded out of four, based on :
l Content
l Coverage
l Presentation
l Interpretation and Conclusion
l Originality and Quality of work

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.

Guidelines for Teachers

Teachers will discuss with students the sample questions for this test and develop question papers
for the purpose in their house examinations.

Guidelines for Examiners

Students will be given 2 application-oriented problems of 6 marks each covering the tools for
analysis of financial statements. The question paper will be set in consultation with the school
teacher. No question similar to the question given in the 3 hour question paper of the Board,
should be asked here. Only such questions, relating to financial statements of companies should
be asked which encourage thinking on practical lines. The external examiner will discuss with the
internal examiner all the projects completed during the year and set the questions accordingly. On
the day of the examination both should come prepared with atleast 10 questions each. Both the
internal and external examiners must agree on the nature and scope of questions asked. It must
be ensured that multiple sets of papers are prepared. Marks will be awarded on the steps taken,
data identified and solution arrived at.

UNIT-3: VIVA VOCE

Objectives
l To assess whether the student has understood the topic covered and is able to express.
l To assess whether the Project File presented by the student is genuine and prepared by him
only.
Guidelines for Teachers
l During the course of the academic year, the teacher must give thorough practice to the
students on Viva Voce examination on each aspect of the Project report and file.
l During all internal examinations 'Viva Voce' examination should form an integral part of the
practical examination.
l Wherever possible, the teacher may invite a colleague/expert from another school for asking
questions. This will rehearse the students for the final examination.
Guidelines for Examiners
l The work done by the students in Project file will form the basis of asking questions. The
external examiner may ask 2-3 questions to test the authenticity of the work done in the files.
Marks will be awarded out of 4 in consultation with the school teacher.
Viva Questions
l Should relate only to the Project.
(a) To check the authenticity of the work and
(b) To check that the student understands the idea behind the Project.

Vishvas Accountancy Project Workbook XII 8

 PART B : FINANCIAL STATEMENT ANALYSIS
Part – A : Comprehensive Problem
PROJECT – 1
Vinod Kumar a highly motivated commerce student from Delhi, very much interested in the field of
commerce. At school level he had decided to become an entrepreneur as he was very much
interested in Business Studies, Accountancy and Entrepreneurship subjects. He pursued B. Com
for under graduation and did his Masters (MBA) in Business Administration from Delhi University.
After completing his masters, he decided to start his own business (Sole Proprietorship). For this
purpose he carried out a market survey, the results of which convinced him to target the young
generation.
After doing a lot of market research and survey, he decided to manufacture the following products:
(1) Smartphones (Product Line)
(2) Digital Cameras (Product Line)
(3) Tablets (Product Line)
(4) Home Theater System (Product Line)
He has also decided to open a school to provide free education to the children belonging to remote
areas and economically backward section of the society. For this purpose he has decided to spend
some amount of profit every year.
He told his parents about his business ideas (He had decided to start), parents were very
supportive and gave him Rs.30,00,000 as an addition to his own savings of Rs.5,00,000.
l He started business with Rs.35,00,000
l He opened a Bank Account with ICICI bank in the name of business and deposited Rs.50,000.
l He found that his investment amount (Capital) is not enough to run the business. So he
decided to obtain a loan from IDBI (Bank) of Rs.15,00,000 @ 10% p.a.
He purchased the following assets for business:
Land and Building Rs.12,00,000
Plant and Machinery Rs.7,00,000
Office Furniture Rs.60,000
Office Equipments Rs.40,000
Stock Rs.4,00,000
Payment is made through cash Rs.15,00,000 and Balance through cheque.
l Goods purchased for cash Rs.5,00,000
l Goods purchased on credit Rs.7,00,000
l He also purchased a laptop for office use for Rs.40,000 and four computers for staff for
Rs.60,000
l Goods sold (Cash) Rs.11,00,000
l Goods sold (Credit) Rs.9,00,000
l Purchase return during the year Rs.50,000
l Sales return during the year Rs.30,000
l Cash received from debtors Rs.5,00,000
l Cash paid to creditors Rs.6,00,000

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.

Vishvas Accountancy Project Workbook XII 10

Solution. Journal Entries
Date Particulars L.F Debit (`) Credit (`)

Cash A/c Dr. 35,00,000

To Capital A/c 35,00,000
(Being business commenced)
Bank (ICICI) A/c Dr. 50,000
To Cash 50,000
(Being bank (ICICI) account opened)
Bank (ICICI) A/c Dr. 15,00,000
To 10% Bank Loan (IDBI) 15,00,000
(Being loan obtained from bank)
Land and Building A/c Dr. 12,00,000
Plant and Machinery A/c Dr. 7,00,000
Office Furniture A/c Dr. 60,000
Office Equipments A/c Dr. 40,000
Stock A/c Dr. 4,00,000
To Cash A/c 15,00,000
To Bank (ICICI) A/c 9,00,000
(Being assets purchased)
Purchase A/c Dr. 5,00,000
To Cash 5,00,000
(Being goods purchased in cash)
Purchase A/c Dr. 7,00,000
To Creditors A/c 7,00,000
(Being goods purchased on credit)
Office Equipments A/c Dr. 1,00,000
To Cash A/c 1,00,000
(Being laptop purchased for office use)
Cash A/c Dr. 11,00,000
To Sales A/c 11,00,000
(Being goods sold in cash)
Debtors A/c Dr. 9,00,000
To Sales 9,00,000
(Being goods sold on credit)
Creditors A/c Dr. 50,000
To Purchase Return A/c 50,000
(Being goods returned)
Sales Return A/c Dr. 30,000
To Debtors A/c 30,000
(Being goods returned)
Cash A/c Dr. 5,00,000
To Debtors A/c 5,00,000
(Being cash Received from debtors)

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)

Vishvas Accountancy Project Workbook XII 12

 Fire Insurance Premium A/c Dr. 6,000
To Bank (ICICI) A/c 6,000
(Being fire insurance premium paid)
Advertisement A/c Dr. 60,000
To Cash A/c 60,000
(Being advertisement expenses paid)
Printing and Stationery A/c Dr. 4,000
To Cash A/c 4,000
(Being printing and stationery expenses paid)
Cash A/c Dr. 2,00,000
To Capital A/c 2,00,000
(Being additional capital introduced)
Loss by fire A/c Dr. 6,000
To Purchase A/c 6,000
(Being goods lost by fire)
Postage and Telephone expenses A/c Dr. 2,000
To Cash A/c 2,000
(Being postage & telephone expenses paid)
Carriage Inward A/c Dr. 6,000
To Cash A/c 6,000
(Being carriage inward expenses paid)
Carriage Outward A/c Dr. 5,000
To Cash A/c 5,000
(Being carriage outward expenses paid)
Office Equipment A/c Dr. 7,000
To Cash A/c 7,000
(Being printer purchased for office)
Bank Charges A/c Dr. 1,000
To Bank (ICICI) A/c 1,000
(Being bank charges charged by bank)
General Expenses A/c Dr. 1,500
To Cash A/c 1,500
(Being general expenses paid)
License and Registration fee A/c Dr. 800
To Cash A/c 800
(Being license & registration fee paid)
Transportation Expenses A/c Dr. 1,200
To Cash A/c 1,200
(Being transportation expenses paid)
Audit Fees A/c Dr. 4,000
To Cash A/c 4,000
(Being audit fee 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)

Preparation of Ledger Accounts:

Cash Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Capital A/c 35,00,000 By Bank A/c 50,000
To Sales A/c 11,00,000 By Assets A/c 15,00,000
To Debtors A/c 5,00,000 By Purchase A/c 5,00,000
To Bank A/c 1,50,000 By Office Equipments A/c 1,00,000
To Capital A/c 2,00,000 By Creditors A/c 6,00,000
By Rent A/c 5,000
By Stationery A/c 8,000
By Electricity Expenses A/c 4,000
By Salaries A/c 1,00,000
By Office Equipment A/c 9,000
By Repair A/c 3,000
By Advertisement A/c 60,000
By Printing & Stationery A/c 4,000
By Postage & Telephone Exp. 2,000
By Carriage Inward A/c 6,000
By Carriage Outward A/c 5,000
By Office Equipments A/c 7,000
By General Expenses A/c 1,500
By License and Registration A/c 800
By Transportation A/c 1,200
By Audit Fee A/c 4,000
By Balance c/d 24,79,500
54,50,000 54,50,000
To Balance b/d 24,79,500

Capital Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Balance c/d 37,00,000 By Cash A/c 35,00,000
By Cash A/c 2,00,000
37,00,000 37,00,000
By Balance b/d 37,00,000

Bank Account (ICICI)

Particulars Amount ( ` ) Particulars Amount ( ` )

To Cash A/c 50,000 By Assets A/c 9,00,000
To 10% IDBI Bank Loan 15,00,000 By Cash A/c 1,50,000

Vishvas Accountancy Project Workbook XII 14

 By Office Expenses A/c 12,000
By Fire Insurance Premium 6,000
By Bank Charges 1,000
By Interest on bank loan 1,20,000
By Balance c/d 3,61,000
15,50,000 15,50,000
To Balance b/d 3,61,000

10% IDBI Bank Loan Account

Particulars Amount ( ` ) Particulars Amount ( ` )

By Bank A/c 15,00,000

To Balance c/d 15,00,000
15,00,000 15,00,000
By Balance b/d 15,00,000

Land and Building Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Balance b/d 12,00,000
By Balance c/d 12,00,000
12,00,000 12,00,000
To Balance b/d 12,00,000

Plant and Machinery Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Balance b/d 7,00,000

By Balance c/d 7,00,000
7,00,000 7,00,000
To Balance b/d 7,00,000

Office Furniture Account

Particulars Amount ( ` ) Particulars Amount ( ` )
To Balance b/d 60,000
By Balance c/d 60,000
60,000 60,000
To Balance b/d 60,000

Office Equipments Account

Particulars Amount ( ` ) Particulars Amount ( ` )
To Balance b/d 40,000
To Cash A/c 1,00,000 By Balance c/d 1,56,000
To Cash A/c 9,000
To Cash A/c 7,000
1,56,000 1,56,000
To Balance b/d 1,56,000

15 Project–1
 Stock (Inventory) Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Balance b/d 4,00,000
By Balance c/d 4,00,000
4,00,000 4,00,000
To Balance b/d 4,00,000

Purchase Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Cash A/c 5,00,000 By Loss by fire 6,000
To Creditors A/c 7,00,000 By Charity 15,000
By Purchase A/c 10,000
By Free Samples 20,000
By Balance c/d 11,49,000
12,00,000 12,00,000
To Balance b/d 11,49,000

Creditors Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Purchase Return A/c 50,000 By Purchase A/c 7,00,000
To Cash A/c 6,00,000
To Bills Payable A/c 40,000
To Balance c/d 10,000
7,00,000 7,00,000
By Balance b/d 10,000

Sales Account

Particulars Amount ( ` ) Particulars Amount ( ` )

By Cash A/c 11,00,000
To Balance c/d 20,00,000 By Debtors A/c 9,00,000
20,00,000 20,00,000
By Balance b/d 20,00,000

Debtors Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Sales A/c 9,00,000 By Sales Return A/c 30,000
By Cash A/c 5,00,000
By Bills Receivable 60,000
By Balance c/d 3,10,000
9,00,000 9,00,000
To Balance b/d 3,10,000

Vishvas Accountancy Project Workbook XII 16

 Purchase Return Account

Particulars Amount ( ` ) Particulars Amount ( ` )

By Creditors A/c 50,000
To Balance c/d 50,000
50,000 50,000
By Balance b/d 50,000

Sales Return Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Debtors A/c 30,000
By Balance c/d 30,000
30,000 30,000
To Balance b/d 30,000

Bills Receivable Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Debtors A/c 60,000
By Balance c/d 60,000
60,000 60,000
To Balance b/d 60,000

Bills Payable Account

Particulars Amount ( ` ) Particulars Amount ( ` )

By Creditors A/c 40,000
To Balance c/d 40,000
40,000 40,000
By Balance b/d 40,000

Drawings Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Purchase A/c 10,000
By Balance c/d 10,000
10,000 10,000
To Balance b/d 10,000

Charity Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Purchase A/c 15,000
By Balance c/d 15,000
15,000 15,000
To Balance b/d 15,000

17 Project–1
 Free Samples Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Purchase A/c 20,000
By Balance c/d 20,000
20,000 20,000
To Balance b/d 20,000

Rent Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Cash A/c 5,000
By Balance c/d 5,000
5,000 5,000
To Balance b/d 5,000

Stationery Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Cash A/c 8,000
By Balance c/d 8,000
8,000 8,000
To Balance b/d 8,000

Electricity Expenses Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Cash A/c 4,000
By Balance c/d 4,000
4,000 4,000
To Balance b/d 4,000

Office Expenses Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Bank A/c 12,000
By Balance c/d 12,000
12,000 12,000
To Balance b/d 12,000

Salaries Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Cash A/c 1,00,000
By Balance c/d 1,00,000
1,00,000 1,00,000
To Balance b/d 1,00,000

Vishvas Accountancy Project Workbook XII 18

 Repair Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Cash A/c 3,000
By Balance c/d 3,000
3,000 3,000
To Balance b/d 3,000

Fire Insurance Premium Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Bank A/c 6,000
By Balance c/d 6,000
6,000 6,000
To Balance b/d 6,000

Advertisement Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Cash A/c 60,000
By Balance c/d 60,000
60,000 60,000
To Balance b/d 60,000

Printing and Stationery Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Cash A/c 4,000
By Balance c/d 4,000
4,000 4,000
To Balance b/d 4,000

Loss by Fire Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Bank A/c 6,000
By Balance c/d 6,000
6,000 6,000
To Balance b/d 6,000

Postage & Telephone Expenses Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Cash A/c 2,000
By Balance c/d 2,000
2,000 2,000
To Balance b/d 2,000

19 Project–1
 Carriage Inward Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Bank A/c 6,000
By Balance c/d 6,000
6,000 6,000
To Balance b/d 6,000

Carriage Outward Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Bank A/c 5,000
By Balance c/d 5,000
5,000 5,000
To Balance b/d 5,000

Bank Charges Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Bank A/c 1,000
By Balance c/d 1,000
1,000 1,000
To Balance b/d 1,000

General Expenses Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Bank A/c 1,500
By Balance c/d 1,500
1,500 1,500
To Balance b/d 1,500

License and Registration Fee Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Bank A/c 800
By Balance c/d 800
800 800
To Balance b/d 800

Transportation Expenses Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Bank A/c 1,200
By Balance c/d 1,200
1,200 1,200
To Balance b/d 1,200

Vishvas Accountancy Project Workbook XII 20

 Audit Fee Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Bank A/c 4000
By Balance c/d 4000
4000 4000
To Balance b/d 4000

Interest on Bank Loan Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Bank A/c 1,20,000
By Balance c/d 1,20,000
1,20,000 1,20,000
To Balance b/d 1,20,000

Trial Balance

Particulars Debit Credit

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

Particulars Amount ( ` ) Particulars Amount ( ` )

To Opening Stock 4,00,000 By Sales 20,00,000
To Purchases 11,49,000 Less : Return 30,000 19,70,000
Less : Return 50,000 10,99,000 By Closing Stock 1,00,000
To Carriage Inward 6,000
To Gross Profit 5,65,000
20,70,000 20,70,000

Profit and Loss Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Charity 15,000 By Gross Profit b/d 5,65,000
To Free Samples 20,000
To Rent 5,000
To Stationery 8,000
To Electricity Expenses 4,000
To Office Expenses 12,000
To Salaries 1,00,000
Add : outstanding 40,000 1,40,000
To Repair 3,000
To Fire Insurance Premium 6,000
To Advertisement 60,000
To Printing & Stationery 4,000
To Loss by fire 6,000
To Postage & Telephone 2,000
To Carriage outward 5,000

Vishvas Accountancy Project Workbook XII 22

To Bank Charges 1,000
To General Expense 1,500
To License & Registration 800
To Transportation Expense 1,200
To Audit Fee 4,000
To Int. on Bank Loan 1,20,000
Add : Outstanding 30,000 1,50,000
To Dep. on Plant & machinery 42,000
To Dep. on Office Furniture 4,800
To Dep. on Office Equipments 12,480
To Net Profit 57,220
5,65,000 5,65,000
To Manager's Commission 2,725 Net Profit b/d 57,220
57,220 × 5/105
To Adjusted N/P 54,495
57,220 57,220

Balance Sheet

Liabilities Amount ( ` ) Assets Amount ( ` )

Capital 37,00,000 Land and Building 12,00,000
Add : N/P 54,495 Plant & Machinery 7,00,000
Less : Drawings 10,000 37,44,495 Less : Depreciation 42,000 6,58,000
10% Bank Loan (IDBI) 15,00,000 Office Furniture 60,000
Interest outstanding on loan 30,000 Less : Depreciation 4,800 55,200
Creditors 10,000 Office Equipments 1,56,000
Bills Payable 40,000 Less : Depreciation 12,480 1,43,520
Salaries Outstanding 40,000 Debtors 3,10,000
Manager's Commission 2,725 Bills Receivable 60,000
Stock 1,00,000
Bank 3,61,000
Cash 24,79,500
53,67,220 53,67,220

Analysis & Interpretation

1. Gross Profit Ratio = Gross Profit/ Net Sales × 100
= 5,65,000/19,70,000 × 100 = 28.68%
2. Net Profit Ratio = Net Profit/Net Sales × 100
= 54,495/19,70,000 × 100 = 2.77%
3. Working Capital Turnover Ratio = Net Sales/Cost of Revenue from Operations
= 19,70,000/14,05,000 = 1.40 Times
Cost of Revenue from Operation = Net Sales Gross Profit
4. Inventory Turnover Ratio = Cost of Revenue from Operations/ Average Inventory
= 14,05,000/2,50,000 = 5.62 Time

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)

Comparison of Gross Profit with other Business

600000

500000

400000

300000

200000

100000

0
Gross Profit Gross Profit
of Main of Similar
Business Business

Comparison of Net Profit with other Business

60000

50000

40000

30000

20000

10000

0
Net Net
Profit of Profit of
Main Similar
Business Business

Vishvas Accountancy Project Workbook XII 24

Conclusion
i Investment : The amount invested by Mr. Vinod Kumar is very effective and able to make the
profit in the first year of its working.
i Financing : Mr. Vinod Kumar has successfully arranged the finance for the business and used it
in a very systematic way.
i Expansion : Cash in hand Rs.24,79,500 is a big amount, Mr. Vinod Kumar can use this amount
for the expansion of the business.
i Suggestions and Comments : There is a big difference in the amount of Gross Profit and Net
Profit. Mr. Vinod Kumar should practice cost cutting methods. Net profit of the business can be
increased only by reducing or cutting the cost. He should also use effective advertising methods to
increase the sales of the business and to make a solid foothold in the market. Gross Profit Ratio is
very good but Net Profit Ratio is not satisfactory in comparison to the Gross Profit. Working
Capital Turnover Ratio is 1.40 times, it indicates that working capital should be utilized effectively
and efficiently. Trade Receivable Turnover Ratio indicates that business has successfully realized
the amount due from debtors. Inventory management of the business is very good. Mr. Vinod
Kumar is not only operating a good business but also doing social work by promoting education
among the financially weak children who cannot afford expensive education, books and stationery
etc. Overall his business is doing well in comparison to the similar business.

Part – B : Project on segment analysis - Vk Industries

1. Name of Project: Segment Analysis of VK Industries

VK Industries is an Indian conglomerate holding company headquartered in Mumbai,
Maharashtra, India. VK Industries owns businesses across India engaged in petrochemicals,
refining, natural resources. VK Industries is the most profitable company in India, the second-
largest publicly traded company in India by market capitalization and the second largest
company in India as measured by revenue after the government-controlled Corporation. The
company is ranked 111th on the Fortune Global 500 list of the world's biggest corporations,
as of 2015. VK Industries contributes approximately 20% of India's total exports.
Analysis of performance of each segment of VK Industries Limited with reference to
(1) Revenue (2) Profit and (3) Capital employed
2. Objectives:
(a) To study whether the contribution of various segments of VK Industries Limited with
respect to (i) Revenue and (ii) Profit is justified ?
(b) To know as to which operation segment is performing best in terms of Net Profit and
Return on Investment?
3. Period under study:
Financial Year ending 31st March, 2015
4. Tools of analysis:
(1) Common Size Statement and (2) Ratios
5. Source material:
Newspaper cutting of Audited Financial Results of VK Industries Limited from the Economic
Times dated 5 August, 2015 or the Website of the company.

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

Source : The Economic Times 5 August, 2015.

Pie chart Representing Segment Revenue

Petrochemicals
Refining
Oil & gas
Others
Total

II. Common Size Statement of Segment Wise Profit

l Compare the profit of each segment of VK Industries Limited with total profit for the year
ended 31 March, 2015.
l Use the formula to calculate percentage and degrees for making pie diagram.
Profit of the segment
Percentage = × 100
Total Profit
Profit of the segment
Degree = × 360
Total Profit
Common Size Statement Showing Inter Segment Comparison of Profit
For the year ended 31 March, 2015

Segment Petrochemicals Refining Oil & gas Others Total

Profit (in Lakhs) 9759 11978 1352 408 23497
Percentage of 41.53 50.98 5.75 1.74 100
Profit
Degrees for 149.52° 183.52° 20.71° 6.25° 360°
Pie Diagram
Source : The Economic Times 5 August, 2015.

Vishvas Accountancy Project Workbook XII 26

 Pie chart Representing Segment Revenue

Petrochemicals
Refining
Oil & gas
Others
Total

III. Common Size Statement of Segment Wise Capital Employed

l Compare the capital employed of each segment of VK Industries Limited with total capital
employed for the year ended 31 March, 2015.
l Formula to calculate percentage and degrees for making pie diagram.
Capital Employed of the Segment
Percentage = × 100
Total Capital Employed
Capital Employed of the Segment
Degree = × 360
Total Capital Employed
Common Size Statement Showing Inter Segment Comparison of Capital Employed
For the year ended 31 March, 2015

Segment Petrochemicals Refining Oil & gas Others Total

Capital Employed 20805 99990 2445 10382 133622
(in Lakhs)
Percentage of total 15.57 74.83 1.83 7.77 100
capital employed
Degrees for 56.05° 269.39° 6.59° 27.97° 360°
Pie Diagram
Source : The Economic Times 5 August, 2015.

IV. Calculation of Return on Investment

l Calculate the Return on Investment of each segment of VK Industries Limited for the year
ended 31 March, 2015.
l Formula to calculate Return on Investment.
Profit Before Interest, Tax and Dividend
Return on Investment = × 100
Capital Employed
Statement Showing Inter Segment Comparison of ROI For the year ended 31 March, 2015

Segment Petrochemicals Refining Oil & gas Others Total

PBIT (in Lakhs) 9759 11978 1352 408 23497
Capital Employed 20805 99990 2445 10382 133622
(in Lakhs)
ROI % 46.91 11.98 55.28 3.93 17.58

Note: ROI % =PBIT/Capital Employed × 100

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

Combined Comparative Statement

Segment Petrochemicals Refining Oil & gas Others Total

Revenue (%) of total 10.88 80.95 5.54 2.63 100
PBIT (%) of total 41.53 50.98 5.75 1.74 100
Capital Employed 15.57 74.83 1.83 7.77 100
(%) of total
ROI (%) same 46.91 11.98 55.28 3.93 17.38

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.

Part – C : Cash Flow Statement

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.

Vishvas Accountancy Project Workbook XII 28

 Vinod Limited is the Third Largest publicly trading company in India by market capitalisation and
is the second largest company in India by its Revenue from operations. The Company is ranked in
Top in India by India Business Group. Company contributes 12% of India's total exports.
Following is the Balance Sheet of Vinod Limited (with additional information i.e. Notes to
Accounts), prepare Cash Flow Statement and Interpret the result thereof:
Balance Sheet of Vinod Limited

Particulars Note No. 2016 2015

I. EQUITY AND LIABILITIES
(1) Shareholders Funds
(a) Share capital 1 10,00,000 9,00,000
(b) Reserves and Surplus 2 2,36,000 1,40,000
(2) Current Liabilities
(a) Trade Payables 3 1,98,000 1,50,000
(b) Short term provision 4 2,00,000 1,64,000
Total 16,34,000 13,54,000
II. ASSETS
(1) Non-Current Assets
Fixed Assets
(i) Tangible Assets 5 7,40,000 5,60,000
(ii) Intangible Assets (goodwill) 1,80,000 2,30,000
(2) Current Assets
(a) Inventories 2,18,000 1,54,000
(b) Trade Receivables 6 4,60,000 3,60,000
(c) Cash and cash equivalents (cash) 36,000 50,000
Total 16,34,000 13,54,000

Notes To Accounts

Particulars 2016 2015

1. Share Capital
Equity share capital 8,00,000 6,00,000
Preference share capital 2,00,000 3,00,000
2. Reserves and Surplus
General Reserve 1,40,000 80,000
Statement of profit and loss 96,000 60,000
3. Trade Payables
Sundry Creditors 1,66,000 1,10,000
Bills Payable 32,000 40,000
4. Short Term Provisions
Proposed Dividend 1,00,000 84,000
Provision for Tax 1,00,000 80,000

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

Particulars Detail Amount

A. Cash flow from Operating Activities
Profit during the year
Statement of P/L 36,000
Add : General reserve 60,000
96,000
Add : Interim Dividend 40,000
Add : Proposed Dividend 1,00,000
Add : Tax 90,000 3,26,000
Add : Intangible Asset amortised 50,000
Add : Depreciation 20,000 + 40,000 60,000
Operating profit before working capital changes 4,36,000
Add : Increase in creditors 56,000
Less : Increase in sundry debtors (80,000)
Less : Increase in Inventories (64,000)
Less : Increase in Bills Receivable (20,000)

Vishvas Accountancy Project Workbook XII 30

Less : Decrease in Bills Payable (8,000)
3,20,000
Less : Tax (70,000)
Cash flow from operating activities 2,50,000
B. Cash flow from Investing Activities
Proceeds from sale 20,000
Purchase of fixed assets (2,60,000)
Cash flow from investing activities (2,40,000)
C. Cash flow from Financing Activities
Issue of Share Capital 2,00,000
Preference Shares Redeemed (1,00,000)
Interim Dividend (40,000)
Proposed Dividend (84,000)
Cash flow from financing activities (24,000)
D. Net increase in Cash and Equivalents (A+B+C) (14,000)
Add: Cash & cash equivalents 50,000
Cash & cash equivalents at the end 36,000
Land and Building Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Balance b/d 4,00,000 By Bank (bal. fig. sale) 20,000
By Depreciation A/c 40,000
By Balance c/d 3,40,000
4,00,000 4,00,000

Plant and Machinery Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Balance b/d 1,60,000 By Depreciation A/c 20,000
To Bank A/c 2,60,000 By Balance c/d 4,00,000
(bal. fig. purchase)
4,20,000 4,20,000

Provision for Tax Account

Particulars Amount ( ` ) Particulars Amount ( ` )

To Bank A/c (Tax paid) 70,000 By Balance b/d 80,000
To Balance c/d 1,00,000 By Statement of P/L 90,000
(bal. fig. provision made)
1,70,000 1,70,000

Analysis and Conclusion

Vinod Limited's Cash Flow Statement analysis shows the inflow and outflow of cash separately
from the three different activities namely, Operating Activities, Investing Activities and
Financing Activities.

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.

Vishvas Accountancy Project Workbook XII 32