Accountancy Project Workbook - 2

octorate in Commerce
of the Student......................................................................................
of the School.......................................................................................
........................................... Roll No. ....................................................
XII CBSE
AUTHOR Dr. VINOD KUMAR M.Com.,

ACCOU
NTANCY
PROJECT WORKBOOK
As per the Latest Syllabus & guidelines Issued by CBSE for Project Work in
Accounting
Chandigarh–Bengaluru–Delhi–Guwahati–Hyderabad–In
dore
Jammu–Jodhpur–Kolkata–Lucknow–Mumbai–Patna–Ra
nchi
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. I am extremely grateful to the entire team of Vishvas Publications for providing wings to my ideas. I would also like to
thank to the students, teachers, lecturers and Chartered Accountants across the country for appreciating my work in the field of
accountancy. Why this project workbook is valuable for the students?
 They will learn the meaning of project work and how to prepare a
good project?  They will understand the value of project work in their real life. 
They will learn that how to identify, collect,
and analyse the financial
data for the project work.  They will understand the concept of Analysis and Interpretation.  They will understand the concept
of Cash Flow Statement.  They will understand the concept of Ratio Analysis. This project workbook is designed as per the
latest syllabus issued by C.B.S.E. In this book Four Solved Sample Projects have been given to assist the students to develop a
good project. Topics covered under this project work are : 1. Analysis and Interpretation of Financial Statements. 2. Ratio
Analysis 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) www.accountancybook.com E-mail : authorcbse@gmail.com

Author
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Contents
CBSE Guidelines 6 8
Part-B : Financial Statement Analysis
PROJECT 1 9 32
Part-A : Comprehensive Problem Part-B : Project on Segement Analysis Part-C : Cash Flow Statement
PROJECT 2 33 52
Part-A : Comprehensive Problem Part-B : Project on Segement Analysis Part-C : Cash Flow Statement
Computerized Accounting (Part-C)
Project 3 53 55 Payroll Mate Software
Project 4 56 61 Easy Accounts
Viva Questions (Part B) 62 66 Viva Questions (Part C) 67 68
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
Acknowledgem
ent
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 C : Computerzised Accounting Practical Work Unit-1 File :
Part B : Financial Statement Analysis Project Work Duration: 1:30 Min Marks: 20 Unit-1Unit-2
4 Marks ProjectPractical
File 4 Marks : As per requirement (given below) Unit-2 Written Test 12 Marks : One hour Unit-3 Viva : 12 Marks-1hr. Unit-3 Viva Voce : 4 Marks
Examination
Voce 4 Marks : As per requirement (given below)
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.
XII 6
Vishvas Accountancy Project Workbook
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
uidelines for Examiners l The work done by the
questions. This will rehearse the students for the final examination. G
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.
XII 8 Vishvas Accountancy Project Workbook

Part – A : Comprehensive Problem
PROJECT – 2
Mr. Vinod Kumar is an aspiring entrepreneur who has been severely impacted by the aftermath of the Jammu & Kashmir floods tragedy.
He has post graduated from the London School of Economics with masters in Business Administration (MBA) and International Relations.
Through this catastrophic event, Vinod has decided to purchase an existing business in the Kashmir Valley which has been adversely
affected by the flood. He is extremely inclined towards providing employment to the people in the affected areas nearby. The existing
business, located in the valley that he intends to purchase had been running on profits. However, due to the floods the factory had to be
shut down immediately as there was heavy damage. The owners are in no position to recover the former condition of the factory and have
therefore decided to sell it. Mr. Kumar purchased the business of Singh Bros. on 1st April 2015. The business is mainly concerned with
manufacturing electronic goods i.e. (1) Batteries for Mobile Phones, Laptops and Digital Cameras (2) Battery Chargers (3) Pen Drives and
(16 GB, 32 GB, 64 GB) (4) USB Cables etc. (5) CCTV Cameras Following assets were taken over by Mr. Vinod Kumar on the above
mentioned date: Land and Building Rs.10,00,000 Plant and Machinery Rs.8,00,000 Furniture & Fittings Rs.2,50,000 Stock Rs.3,00,000
Office Equipment Rs.1,00,000 Mr. Vinod Kumar paid Rs.25,00,000 as purchase consideration. On the same day he bought Rs.20,00,000
as his capital and took loan Rs.5,00,000 from the bank @ 8% p.a. interest and Rs.2,00,000 from his wife @ 6% p.a. interest to meet the
working capital. His transactions during the accounting period was as follows: E Total Purchases Rs.28,00,000 including credit purchases
worth Rs.20,00,000. E He invested Rs.2,00,000 in shares of Reliance Limited. E Total Sales Rs.48,00,000 including credit sales worth
Rs.18,00,000. Direct Expenses: Wages Rs,3,50,000 Manufacturing expenses Rs.50,000 Factory Lighting Rs.20,000 Carriage inwards
Rs.10,000 Commission on purchases Rs.15,000
33 Project–2
Freight Rs.5,000 Indirect Expenses: Salaries Rs.2,00,000 Office Rent Rs.10,000 Postage and Telephone expense Rs.5,000 Stationery
Rs.3,000 Water & Electricity (office) Rs.12,000 Conveyance Rs.8,000 Advertising Rs.12,000 l He withdrew Rs.60,000 from the business
to buy a personal Laptop. l Goods worth Rs.30,000 given as charity to the financially weaker group of women associated
with women welfare club. l Cash received from debtors Rs.10,00,000. l Cash paid to creditors Rs.12,00,000. l Interest paid
on Bank Loan Rs.28,000. l Interest paid on Mrs. Vinod's loan Rs.10,000. l B/R received from debtors Rs.80,000. l Bill accepted in favour of
creditors Rs.1,00,000. l Dividend received on investment Rs.10,000. You are required to : (i) Give journal entries for these transactions and
post them into ledger account and prepare a
Trial Balance. (ii) Prepare Trading Account, Profit & Loss Account and Balance Sheet considering the following
adjustments: (a) Interest is outstanding on Bank Loan Rs.12,000 and on Mrs. Vinod's Loan Rs.2,000. (b) Plant and Machinery is to be
depreciated by 5% and Furniture by 10%. (c) Closing Stock Rs.3,50,000. (d) Wages outstanding Rs.30,000 and office rent outstanding
Rs.5,000. (e) Manager is entitled to a commission of 5% on net profit before charging such commission. (iii) Find Gross Profit and Net
Profit Ratio and also comment on the profitability and liquidity of the
business when Gross Profit of the similar firm is Rs.13,50,000 and Net Profit Rs.9,00,000.
Solution. Journal Entries
Date Particulars L.F Debit (`) Credit (`) 1 Apr Bank A/c Dr. 20,00,000 2012 To Capital A/c 20,00,000
(Being capital introduced by Vinod)
1 Apr Land and Building A/c Dr. 10,00,000 2012 Plant and Machinery A/c Dr. 8,00,000 Furniture & Fittings A/c Dr.
2,50,000 Stock A/c Dr. 3,00,000 Office Equipments A/c Dr. 1,00,000
XII 34
Goodwill A/c (Bal. Fig.) Dr. 50,000

To Bank A/c 25,00,000 (Being assets purchased)
Bank A/c Dr. 5,00,000

To 8% Bank Loan A/c 5,00,000 (Being loan obtained from bank)
Bank A/c Dr. 2,00,000

To 6% Mrs. Vinod's Loan 2,00,000 (Being loan obtained)
Purchases A/c Dr. 8,00,000

To Bank A/c 8,00,000 (Being goods purchased)
Purchases A/c Dr. 20,00,000

To Creditors A/c 20,00,000 (Being goods purchased)
Investment A/c Dr. 2,00,000
To Bank A/c 2,00,000 (Being money invested in shares of Reliance Ltd.)
Bank A/c Dr. 30,00,000

To Sales A/c 30,00,000 (Being goods sold on cash basis)
Debtors A/c Dr. 18,00,000

To Sales A/c 18,00,000 (Being goods sold on credit)
Wages A/c Dr. 3,50,000

To Bank A/c 3,50,000 (Being wages paid)
Manufacturing Expense A/c Dr. 50,000

To Bank A/c 50,000 (Being manufacturing expenses paid)
Factory Lighting A/c Dr. 20,000

To Bank A/c 20,000 (Being factory expenses paid)
Carriage Inwards A/c Dr. 10,000

To Bank A/c 10,000 (Being expenses on purchase paid)
Commission on Purchase A/c Dr. 15,000

To Bank A/c 15,000 (Being commission paid)
Freight A/c Dr. 5,000

To Bank A/c 5,000 (Being freight expenses paid)
35 Project–2
Salaries A/c Dr. 2,00,000
To Bank A/c 2,00,000 (Being Salaries paid)
Office Rent A/c Dr. 10,000

To Bank A/c 10,000 (Being office rent paid)
Postage and Telephone A/c Dr. 5,000

To Bank A/c 5,000 (Being postage & telephone expense paid)
Stationery A/c Dr. 3,000

To Bank A/c 3,000 (Being stationery expenses paid)
Water & Electricity A/c Dr. 12,000

To Bank A/c 12,000 (Being water & electricity expenses paid)
Conveyance A/c Dr. 8,000

To Bank A/c 8,000 (Being conveyance expenses paid)
Advertising A/c Dr. 12,000

To Bank A/c 12,000 (Being advertising expenses paid)
Drawings A/c Dr. 60,000

To Bank A/c 60,000 (Being withdrawn for personal use)
Advertising A/c Dr. 30,000

To Purchase A/c 30,000 (Being goods give as charity)
Bank A/c Dr. 10,00,000

To Debtors A/c 10,00,000 (Being cash received from debtors)
Creditors A/c Dr. 12,00,000

To Bank A/c 12,00,000 (Being cash paid to creditors)
Interest on Bank Loan Dr. 28,000

To Bank A/c 28,000 (Being interest paid on bank loan)
Interest on Mrs. Vinod's Loan Dr. 10,000

To Bank A/c 10,000 (Being interest paid on Mrs. Vinod's Loan)
Bills Receivable A/c Dr. 80,000

To Debtors A/c 80,000 (Being B/R received from debtors)

Creditors A/c Dr. 1,00,000
To Bills Payable A/c 1,00,000 (Being bill accepted in favour of creditors)
Bank A/c Dr. 10,000
To Dividend Received A/c 10,000 (Being dividend received on investment)
Preparation of Ledger: Bank A/c
Date Particulars Amount (`)
Date Particulars Amount (`) To Capital A/c 20,00,000 By Land and Building A/c 10,00,000 To 8% Bank Loan A/c
5,00,000 By Plant and Machinery A/c 8,00,000 To 6% Mrs. Vinod's Loan 2,00,000 By Furniture & Fittings A/c
2,50,000 To Sales A/c 30,00,000 By Stock A/c 3,00,000 To Debtors A/c 10,00,000 By Office Equipment A/c
1,00,000 To Dividend Received A/c 10,000 By Goodwill A/c 50,000 By Purchase A/c 8,00,000 By Investment A/c
2,00,000 By Wages A/c 3,50,000 By Manufacturing Exp. A/c 50,000 By Factory Lighting A/c 20,000 By Carriage
Inward A/c 10,000 By Commission on Purchase 15,000 By Freight A/c 5,000 By Salaries A/c 2,00,000 By Office
Rent A/c 10,000 By Postage & Telephone A/c 5,000 By Stationery A/c 3,000 By Water & Electricity A/c 12,000 By
Conveyance A/c 8,000 By Advertising A/c 12,000 By Drawings A/c 60,000 By Creditors A/c 12,00,000 By Int. on
bank loan 28,000 By Int. on Mrs. Vinod's loan 10,000 By Balance c/d 12,12,000 67,10,000 67,10,000
Capital A/c
Date
Particulars Amount (`) By Bank A/c 20,00,000 To Balance c/d 20,00,000
20,00,000 20,00,000
37 Project–2
Land and Building A/c
Date Particulars Amount (`) To Bank 10,00,000 By Balance c/d 10,00,000
10,00,000 10,00,000
Plant and Machinery A/c
8,00,000 8,00,000
Furniture & Fittings A/c
2,50,000 2,50,000
Stock A/c
3,00,000 3,00,000
Office Equipment A/c
1,00,000 1,00,000
Goodwill A/c
Date Particulars Amount (`) To Bank 50,000 By Balance c/d 50,000
50,000 50,000
8% Bank Loan A/c
Date Particulars Amount (`) To Balance c/d 5,00,000 By Bank A/c 5,00,000
5,00,000 5,00,000
6% Mrs. Vinod's Loan A/c
2,00,000 2,00,000
XII 38
Purchase A/c Date Particulars Amount (`)
Date Particulars Amount (`) To Bank A/c 8,00,000 By Advertising 30,000 To Creditors A/c 20,00,000 By Balance
c/d 27,70,000 28,00,000 28,00,000
Creditors A/c
Date Particulars Amount (`) To Bank A/c 12,00,000 By Purchase A/c 20,00,000 To Bills Payable A/c 1,00,000 To
Balance c/d 7,00,000
20,00,000 20,00,000
Investment A/c
Date Particulars Amount (`) To Bank A/c 2,00,000 By Balance c/d 2,00,000
2,00,000 2,00,000
Debtors A/c Date Particulars Amount (`)
Date Particulars Amount (`) To Sales A/c 18,00,000 By Bank A/c 10,00,000
By Bills Receivable A/c 80,000 By Balance c/d 7,20,000 18,00,000 18,00,000
Sales A/c
By Debtors A/c 18,00,000 48,00,000 48,00,000
Wages A/c
3,50,000 3,50,000
Manufacturing Expenses A/c Date Particulars Amount (`)
Date Particulars Amount (`) To Bank A/c 50,000 By Balance c/d 50,000
50,000 50,000
Factory Lighting A/c
20,000 20,000
39 Project–2
Carriage Inwards A/c
10,000 10,000
Commission on Purchase A/c Date Particulars Amount (`)
15,000 15,000
Freight A/c
5,000 5,000
Salaries A/c
2,00,000 2,00,000
Office Rent A/c
10,000 10,000
Postage and Telephone A/c
5,000 5,000
Stationery A/c
Date Particulars Amount (`) Date
Particulars Amount (`) To Bank A/c 3,000 By Balance c/d 3,000
3,000 3,000
Water and Electricity A/c
12,000 12,000
Conveyance A/c Date Particulars Amount (`)
8,000 8,000
XII 40
Advertising A/c
Date Particulars Amount (`) To Bank A/c 12,000 By Balance c/d 42,000 To Purchase A/c 30,000
42,000 42,000
Drawings A/c
60,000 60,000
Interest on Bank Loan A/c
28,000 28,000
Interest on Mrs. Vinod's Loan A/c
10,000 10,000
Bills Receivable A/c
Date Particulars Amount (`) To Debtors A/c 80,000 By Balance c/d 80,000
80,000 80,000
Bills Payable A/c
Date Particulars Amount (`) To Balance c/d 1,00,000 By Creditors A/c 1,00,000
1,00,000 1,00,000
Dividend Received A/c
Date Particulars Amount (`) Date
Particulars Amount (`) To Balance c/d 10,000 By Bank A/c 10,000
10,000 10,000
Trial Balance
Debit Credit
Particulars
Bank A/c 12,12,000 Capital A/c 20,00,000 Land and Building A/c 10,00,000 Plant and Machinery A/c 8,00,000
41 Project–2
Furniture & Fittings A/c 2,50,000 Stock A/c 3,00,000 Office Equipment A/c 1,00,000 Goodwill A/c 50,000 8%
Bank Loan A/c 5,00,000 6% Mrs. Vinod's Loan A/c 2,00,000 Purchase A/c 27,70,000 Creditors A/c 7,00,000
Investment A/c 2,00,000 Debtors A/c 7,20,000 Sales A/c 48,00,000 Wages A/c 3,50,000 Manufacturing Expenses
A/c 50,000 Factory Lighting A/c 20,000 Carriage Inward A/c 10,000 Commission on purchase A/c 15,000 Freight
A/c 5,000 Salaries A/c 2,00,000 Office Rent A/c 10,000 Postage and Telephone Exp. A/c 5,000 Stationery A/c
3,000 Water and Electricity A/c 12,000 Conveyance A/c 8,000 Advertising A/c 42,000 Drawings A/c 60,000
Interest on Bank Loan 28,000 Interest on Mrs. Vinod's Loan 10,000 Bills Receivable 80,000 Bills Payable 1,00,000
Dividend Received 10,000 83,10,000 83,10,000
Trading Account
Amount (`)
Particulars
Amount (`)
Particulars To Opening Stock 3,00,000 By Sales 48,00,000 To Purchases 27,70,000 By Closing Stock
3,50,000 To Wages 3,50,000 Add : Outstanding 30,000 3,80,000 To Manufacturing Exp. 50,000 To Factory
Lighting 20,000 To Carriage Inward 10,000 To Commission on purchase 15,000 To Freight 5,000 To Gross Profit
16,00,000
51,50,000 51,50,000
XII 42
Profit and Loss Account
Amount (`)
Particulars
Amount (`)
Particulars To Salaries 2,00,000 By Gross Profit b/d 16,00,000 To Office Rent 10,000 By Dividend
Received 10,000 Add: Outstanding 5,000 15,000 To Postage & Telephone 5,000 To Stationery 3,000 To Water &
Electricity 12,000 To Conveyance 8,000 To Advertising 42,000 To Int. on Bank Loan 28,000 Add : Outstanding
12,000 40,000 To Int. on Mrs. Vinod's Loan 12,000 (10,000 + 2,000 due) To Dep. on plant & machinery 40,000 To
Dep. on Furniture 25,000 To Net Profit 12,08,000
16,10,000 16,10,000 To Manager's Commission 60,400 By Net Profit b/d 12,08,000 12,08,000 × 5/100 To Net
Profit 11,47,600
12,08,000 12,08,000
Balance Sheet
Amount (`)
Liabilities
Amount (`)
Assets Capital 20,00,000 Goodwill 50,000 Add : N/P 11,47,600 Land and Building 10,00,000 Less :
Drawings 60,000 30,87,600 Plant and Machinery 8,00,000 8% Bank Loan 5,00,000 Less : Depreciation 40,000
7,60,000 Add: Interest due 12,000 5,12,000 Furniture & fittings 2,50,000 6% Mrs. Vinod's Loan 2,00,000 Less :
Depreciation 25,000 2,25,000 Add: Interest due 2,000 2,02,000 Office Equipment 1,00,000 Creditors 7,00,000
Investment 2,00,000 Bills Payable 1,00,000 Debtors 7,20,000 Wages Outstanding 30,000 Bills Receivable 80,000
Office Rent 5,000 Stock 3,50,000 Manager Commission 60,400 Bank 12,12,000 46,97,000 46,97,000
Analysis & Interpretation 1. Gross Profit Ratio = Gross Profit/ Net Sales × 100
= 16,00,000/48,00,000 × 100 = 33.33% 2. Net Profit Ratio = Net Profit/Net Sales × 100
= 11,47,600/48,00,000 × 100 = 23.90%
43 Project–2
3,60,000
Direct Expenses
Indirect Expenses
Comparison of Expenses
XII 44
16,00,000 15,50,000 15,00,000 14,50,000 14,00,000
13,50,000 13,00,000 12,50,000 12,00,000 Main
Business
Similar Firm

Net Profit 23.90% Gross Profit 33.33%
3. Working Capital Turnover Ratio = Net Sales/Cost of Revenue from Operations
= 48,00,000/32,00,000 = 1.5 Times Cost of Revenue from operation
= Net Sales Gross Profit 4. Inventory Turnover Ratio = Cost of Revenue from operations/ Average Inventory
= 32,00,000/3,25,000 = 9.84 Times 5. Trade
Receivables Turnover Ratio = Net Credit Sales/Trade Receivables
= 18,00,000/8,00,000 = 2.25 Times 6. Trade Payable
Turnover Ratio = Net Credit Purchase/Trade Payables
= 20,00,000/8,00,000 = 2.5 Times
4,80,000
4,60,000
4,40,000
4,20,000
4,00,000
3,80,000
Comparison of Expenses
Comparison of Gross Profit with Similar Firm
Comparison of Gross Profit

Comparison of Gross Profit
Comparison of Net Profit with Similar Firm

Comparison of Net Profit
12,00,000
10,00,000
8,00,000
6,00,000
4,00,000
2,00,0000 Business Main

Similar Firm
Comparison of Net Profit
Conclusion and Comments (1) Mr. Vinod Kumar has made a useful investment by purchasing this business. He is able to manage a good
profit in the first year. It shows that, if this business is continued in the same manner, it will provide good profits in the future too. (2) Mr.
Vinod Kumar is successful in arranging finance for the business. It shows that in future business will not face any financial hurdle because
business has earned a good profit in the first year of its commencement. Customers and investors will take it very positively. (3) Mr. Vinod
Kumar can think about the expansion of the business because he is having a good
bank balance i.e. Rs.12,12,000. (4)
Suggestions
Business is already doing well but it may earn more profits by cost control (by reducing Direct Expenses) and increasing its sales.
Gross profit and net profit of the business is better than the similar firm (doing same business). Mr. Kumar must think about the new
selling techniques, new customers, new market and latest advertising techniques. It is beginning only and after sometimes he has to
face competition in the market, so it is better to prepare himself in advance for the future business. Loan taken from bank should be
paid off as soon as possible because it will reduce a huge liability of the business. Instead of paying a big amount to manager as
commission, Mr. Kumar should appoint new sales agents to increase the sale of the business. Overall business is doing very well and
performance in each and every area is satisfactory.
Part – B : Project on Segment Analysis
1. Name of the Project : Vinod Motor Company Vinod Motor Company is the third largest two-wheeler manufacturer in India and one
among the top ten in the world, with annual revenue of more than Rs.1,00,000 Cr in 2015-16 and is the flagship company of the, USD 9.35
billion in 2014-15, Vinod Group of companies. The company has an annual sales of 3.5 million units a year. Vinod Motor Company is also
the 2nd largest exporter in India with exports to over 53 countries Vinod Motor Company Ltd (Vinod Motor), member of the Vinod Group
of companies, is the largest company of the group in terms of size and turnover with more than 3.7 crore customers riding this company's
bike. Mr.Vinod Kumar, the Chairman of Vinod Motor Company has led by example, winning many laurels including the prestigious
Padma Shri award. Order of Diplomatic Service
45 Project–2
Merit" medal from Korean President, The JRD Tata Corporate, The Star of Asia award by Business Week, The
Jamshedji TATA Lifetime Quality Achievement Award and Emerging Corporate Giant - Times & Harvard Business
School Association are other high-profile awards bestowed on him, on behalf of the company. He was also awarded
the coveted Ishikawa-Kano Award presented by Asian Network for Quality. Among the latest honours conferred on
him was an honorary doctor of science degree by Purdue University, USA. Analysis of performance of each
segment of Vinod Motor Company with reference to:
(i) Revenue (ii) Profit and (iii) Capital employed 2. Objectives:
l To study whether the contribution of various segments of Vinod Motor Company with
respect to (i) Revenue and (ii) Profit is justified ? l 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:
(i) Common Size Statement and (ii) Ratios 5. Source material:
Newspaper cutting of Audited Financial Results of Vinod Motor Company from the Economic Times dated 22
October, 2015 or the Website of the company.
6. Processing of data : I. Common Size Statement of Segment Wise Revenue
l Compare the Revenue from Operations of each segment of Vinod Motor Company 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 Motorcycles Bike Tyres Brake lining Others Total Revenue 58,000 22,000 13,000 7,000 1,00,000
Percentage of 58% 22% 13% 7% 100 Revenue o o o o o Degrees for 208.8 79.2 46.8 25.2 360 Pie
Diagram
Source: The Economic Times 22 October, 2015.

Pie chart Representing Segment Revenue
Motor cycle Bike Tyres Brake Lining
Others
II. Common Size Statement of Segment Wise Profit l Compare the profit of each segment of Vinod Motor Company
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 =
Profit of the segment
Total Profit × 100 Degree = Total Profit × 360 Common Size Statement Showing
Inter-Segment Comparison of Revenue For the year ended 31 March, 2015
Segment Motor cycles Bike Tyres Brake lining Others Total Profit (in Lakhs) 23450 11978 1458 398 37284
Percentage of 62.89 32.12 3.91 1.07 100 Profit Degrees for 226.40 o 115.63 o 14.07 o 3.85 o 360 o Pie
Diagram
Pie chart Representing Segment Revenue
Motor cycle
Bike Tyres
Brake Lining
Others
III. Common Size Statement of Segment Wise Capital Employed l Compare the Capital Employed of each segment
of Vinod Motor Company 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
Percentage = Total Capital Employed
the segment Capital Employed of the segment
× 100 Degree = Total Capital Employed × 360 47
Project–2
ROI

Common Size Statement Showing Inter Segment Comparison of Capital Employed For the year ended 31 March,
2015
Segment Motorcycles Bike Tyres Brake lining Others Total Capital Employed 52200 19800 14400 3600 90,000 (in
Lakhs) % of Total Capital 58% 22% 16% 4% 100 Employed (%) Degrees for 208.8 o 79.2 o 57.6 o 14.4 o 360 o Pie
Diagram
60000
50000
40000
30000
Capital Employed 20000
10000
0
Motor
Bike Cycle
Tyres
IV. Calculation of Return on Investment l Calculate the Return on Investment of each segment of Vinod Motor
Company for the year
ended 31 March, 2015.
l Formula to calculate Return on Investment:
Profit before interest
Return of Investment = Capital Employed
× Tax and Dividend
× 100 Statement Showing Inter Segment Comparison of ROI For the year ended 31 March,
2015
Segment Motorcycles Bike Tyres Brake lining Others Total PBIT (in Lakhs) 23450 11978 1458 398 37284 Capital
Employed 52200 19800 14400 3600 90000 (in Lakhs) ROI % 44.92% 60.49% 10.12 11.05 41.43%
Graphic Presentation of ROI
Brake Lining
Others
706050403020100
Motor Cycle Bike Tyres
Brake Lining Others

Combined Comparative Statement
Segment Motor cycles Bike Tyres Brake lining Others Total Revenue (%) of total 58 22 13 7 100 PBIT (%) of total 62.89 32.12 3.91 1.07
100 Capital Employed (%) of total 58 22 16 4 100 ROI (%) same 44.92% 60.49% 10.12% 11.05% 41.43%
Conclusions
l Vinod Motor Company is doing well in the area of Motor cycle and Bike Tyres.
l Company must focus on Brake Lining also because it may also contribute to the high profit to
the firm.
l Bike Tyres Segment has the highest ROI 60.49% with less amount of capital invested in it.
l With the Revenue share of 58% of the Total Revenue, Motor cycle segment is able to generate a
PBIT of 62.89% of the Total Profit.
l Tyres segment and Brake Lining also getting a good ROI of 60.49% and 10.12%.
l Therefore, Motor cycle and Tyres 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 41.43% share of ROI, Brake Lining seems to have a bright future. More funds
should be diverted towards this segment from other segment which is losing its shine.
l Bike tyres also has a future growth potential because of heavy demand of motor cycles in the
country. It will be a good idea to divert some funds towards this segment.
Part – C : Cash Flow Statement
VK Wind Energy Limited is a wind turbine supplier based in Delhi, India. Formerly ranked as the world's second largest supplier, the
company claims to have over 15,000 MW of wind energy capacity installed globally, with operations across 21 countries and a workforce
of over 5,000.
The company is listed on the National Stock Exchange of India and on the Bombay Stock Exchange.
VK Wind Energy Limited is a vertically integrated wind power company. VK Wind Energy Limited makes and installs wind turbines. The
company manufactures blades, generators, panels, and towers in-house and large or offshore turbines through its subsidiary Senvion. The
company is integrated downstream and delivers turnkey projects through its project management and installation consultancy, operations
and maintenance services. VK Wind Energy Limited has offices, R&D and technology centers, manufacturing facilities and service
support centers spread across the globe.
49 Project–2
The Balance Sheet of VK Wind Energy Limited on 31-3-2014 is as follows :
Particulars Note No. 31.3.2014 (`) 31.3.2013 (`)
I. Equity and Liabilities 1. Shareholder's

Funds:
(a) Share Capital 20,00,000 15,00,000 (b) Reserve and Surplus 1 5,00,000 3,00,000 2. Non-Current Liabilities:
Long-Term Borrowings 3,00,000 2,00,000 3. Current Liabilities:
(a) Trade Payables 1,50,000 2,00,000 (b) Short-Term Provisions 2 70,000 60,000 Total 30,20,000 22,60,000 II. Assets: 1.
Non-Current Assets:
(a) Fixed Assets:
(i) Tangible assets 3 19,00,000 15,00,000 (ii) Intangible assets 4 4,70,000 2,70,000 2. Current Assets:
(a) Inventories 2,50,000 1,60,000 (b) Trade Receivables 2,10,000 2,10,000 (c) Cash and Cash equivalents 1,90,000
1,20,000 Total 30,20,000 22,60,000
Notes to Accounts
S. No. Particulars As on 31.3.14 (`) As on 31.3.13 (`) 1. Reserves and Surplus Surplus (balance in Statement of Profit and Loss)
5,00,000 3,00,000 2. Short term provisions
Provision for tax 70,000 60,000 3. Tangible Assets
Machinery 27,00,000 21,00,000 Accumulated Depreciation (8,00,000) (6,00,000) 4. Intangible Assets
Goodwill 4,70,000 2,70,000
Financing Activities Prepare a Cash Flow Statement after taking into account the following adjustment : During the year a piece of
machinery costing ` 30,000 on which accumulated depreciation was ` 6,000 was sold for ` 20,000. Solution. Introduction : The Project is to
prepare Cash Flow Statement of VK Wind Energy Limited for the year ended 31st March 2014. 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.
XII 50
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
Cash flow from Operating Activities : Net Profit before tax & extraordinary items 2,00,000 Add : Provision for Tax 70,000
Add : Non cash and non-operating charges Depreciation on machinery 2,06,000 Loss on sale of machinery 4,000 Operating
profit before working capital changes 4,80,000 Less : Increase in Current Assets Increase in inventories (90,000) Less :
Decrease in Current Liabilities Decrease in trade payables (50,000) Operating profit after working capital changes
3,40,000 Less : Tax Paid (60,000) Cash generated from Operating Activities 2,80,000 Cash flow from Investing Activities :
Purchase of machinery (6,30,000) Sale of machinery 20,000 Purchase of Goodwill (2,00,000) Cash used in investing activities
(8,10,000) Cash flow from Financing Activities Issue of share capital 5,00,000 Money raised from long term borrowings
1,00,000 Cash from financing activities 6,00,000 70,000 Net increase in cash & cash equivalents Add : Opening balance of
cash & cash equivalents : 1,20,000 Closing Balance of cash & cash equivalents 1,90,000
Analysis and Conclusion VK Wind Energy 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. I. Cash Flow from Operating
Activities:  Cash Flow from Operating Activities has a positive inflow of Rs. 2,80,000 in the year ended March 31st, 2014 which shows
that the company has good operating activities i.e. principal revenue producing activities.
51 Project–2
 Cash generated from operating activities amounted to Rs.2,80,000 out of which some amount
has been invested in purchasing of Fixed Assets.
II. Cash Flow From Investing Activities:
 Cash flow from investing activities means that VK Wind Energy 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. Following assets are purchased by the company:
l Fixed Tangible Assets (Machinery) l Fixed Intangible Assets (Goodwill)  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:
 Rs.5,00,000 Share capital is raised and Rs.1,00,000 raised through other long term
borrowings.
 Dividend was not declared because more funds are required for the growth and development of
the company.
 Overall company is having Rs.1,90,000 Cash and Cash Equivalents which is a good sign.
 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.5,00,000 share capital.
Result of Different Activities
Business Activities Amount Cash From Operating Activities 2,80,000 Cash From Investing Activities (8,10,000)
Cash From Financing Activities 6,00,000
600,000
400,000
200,000
0
-200,000-400,000
-600,000
-800,000
-1,000,000
Operating Activities
Investing Activities
Financing Activities
On the basis of the above analysis, we may conclude that business of VK Wind Energy Limited is doing well and
prospects of the company are bright. The company is carrying a good amount of cash and cash equivalents,
indicating the efficient cash management. The management must consider this situation and utilize its cash and cash
equivalents so that better standards are achieved.Vishvas Accountancy Project Workbook
XII 52

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octorate in Commerce

........................................... Roll No. ....................................................

AUTHOR ​Dr. VINOD KUMAR M.Com.,

Vinod Kumar (Accountancy Guru) ​www.accountancybook.com E-mail : authorcbse@gmail.com

H.O. : 576, INDUSTRIAL AREA, PHASE-9, MOHALI-160062 (Chandigarh) ​PHONES : 0172-2210596,

This is to certify that this Accountancy Project Workbook belongs to

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

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

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

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

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.

UNIT-1: PROJECT FILE

Guidelines for Teachers

Guidelines for Examiners

XII 8​ ​Vishvas Accountancy Project Workbook

Solution. Journal Entries

Goodwill A/c (Bal. Fig.) Dr. 50,000

Bank A/c Dr. 5,00,000

Bank A/c Dr. 2,00,000

Purchases A/c Dr. 8,00,000

Purchases A/c Dr. 20,00,000

Bank A/c Dr. 30,00,000

Debtors A/c Dr. 18,00,000

Wages A/c Dr. 3,50,000

Manufacturing Expense A/c Dr. 50,000

Factory Lighting A/c Dr. 20,000

Carriage Inwards A/c Dr. 10,000

Commission on Purchase A/c Dr. 15,000

Freight A/c Dr. 5,000

Office Rent A/c Dr. 10,000

Postage and Telephone A/c Dr. 5,000

Stationery A/c Dr. 3,000

Water & Electricity A/c Dr. 12,000

Conveyance A/c Dr. 8,000

Advertising A/c Dr. 12,000

Drawings A/c Dr. 60,000

Advertising A/c Dr. 30,000

Bank A/c Dr. 10,00,000

Creditors A/c Dr. 12,00,000

Interest on Bank Loan Dr. 28,000

Interest on Mrs. Vinod's Loan Dr. 10,000

Bills Receivable A/c Dr. 80,000

XII 36​ ​Vishvas Accountancy Project Workbook

13,50,000 13,00,000 12,50,000 12,00,000 ​Main

Vishvas Accountancy Project Workbook

Comparison of Gross Profit with Similar Firm

Comparison of Gross Profit

Comparison of Net Profit with Similar Firm

2,00,000​0 Business Main

Comparison of Net Profit

Part – B : Project on Segment Analysis

XII 46​ ​Vishvas Accountancy Project Workbook

XII 48​ ​Vishvas Accountancy Project Workbook

Motor ​Cycle ​Bike ​Tyres

Brake ​Lining Others

Part – C : Cash Flow Statement

Particulars Note No. 31.3.2014 (​`​) 31.3.2013 (​`​)

I. Equity and Liabilities 1. Shareholder's

Tools for the Analysis of Company's Result 1. Cash Flow Statement

AUTHOR Dr. VINOD KUMAR M.Com.,

Vinod Kumar (Accountancy Guru) www.accountancybook.com E-mail : authorcbse@gmail.com

H.O. : 576, INDUSTRIAL AREA, PHASE-9, MOHALI-160062 (Chandigarh) PHONES : 0172-2210596,

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

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

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

XII 8 Vishvas Accountancy Project Workbook

XII 36 Vishvas Accountancy Project Workbook

13,50,000 13,00,000 12,50,000 12,00,000 Main

2,00,0000 Business Main

XII 46 Vishvas Accountancy Project Workbook

XII 48 Vishvas Accountancy Project Workbook

Motor Cycle Bike Tyres

Brake Lining Others

Particulars Note No. 31.3.2014 (`) 31.3.2013 (`)