Accounts Project Work

                                              Project Work for Accounts

                                        

                                                       Acknowledgement

I am highly grateful to Kasiga International school  which has provided me an opportunity to present my project in such a grand way.I also express my project work acknowledgement to my parents and teachers for providing me such a valuable information made me competent enough that i became able to complete my project work within the given time frame.

I am highly grateful to my teacher Mr Ashwani Singh Bisht who has given me his full support& guidelines.

I finally thank our principal Mr Carol P Joseph who constantly inspired me throughout the session.

Certificate

Name of teacher- Mr.Ashwani Singh Bisht

Designation-PGT Commerce

Name of school- Kasiga International School Dehradun

It is certified that XYZ of 12^th Commerce has completed his project file under my supervision.

I certify that project is in accordance with the guidelines issued by CBSE.

Mr. Ashwani Singh Bisht

(Signature)

Index

S.R.No	Topic	Source	Time period	Teacher’s remarks
1)	Comprehensive Project	.Internet .Newspaper .D.K.Goel .Together with ,Tulsans	1 Month
2)	Specific Problem-1 (Ratio Analysis)	.Internet .Newspaper .D.K.Goel .Together with, Nisha Gupta	15 days
3)	Specific Problem-2 (Cash Flow    Statement)	.Internet .Newspaper .D.K.Goel .Together with Nisha Gupta	15 days

                                                 Comprehensive Project

On first April 2011 Mr Raj started a business of General store with the capital of Rs 100000/- entire amount deposited into bank. He made contract with whole seller of his locality; whole seller gave his free consent to Mr Raj & also agrees to give him credit of one month.

During the year details of purchase, sale, and expenses were as follows:

(i)Goods purchased from Ram Rs 2000/-

(ii)Insurance premium paid Rs1000/-

(iii)Goods Sold Rs20000/-

(iv) Goods sold to Mohan Rs1000/-

(v)Goods Purchased Rs5000/-

(vi)Stationary purchased Rs 2000/-

(vii)Furniture purchased Rs 5000/-

(viii) Fan & other equipments purchased Rs2000/-

(ix) Salary paid Rs1000/-

(x) Wages paid Rs 500/-

(xi) Electricity charges Rs 1500/-

(xii)Telephone & postage expenses Rs 2500/-

Other Information: Mr Raj wants to know about his financial position so with the help of the following details a project over his business is made.

Solution:

Introduction of project: Under this project work following steps will bbe followed

(i)Preparation of journal  entries.

(ii) Preparation of ledger accounts

 (iii) Preparation of trial balance

(iv) Preparation of Income statement

(v) Preparation of position statement

(vi)Calculation of current ratio, quick ratio, gross profit ratio, net profit ratio,& return of capital employed to analyse short term financial position & profitability of business.

                                           Journal entries in the book of Mr Raj

Date	Particulars	Lf	Amount	Amount
1 April 2011	Bank a/c                                                         Dr           To Raj’s Capital a/c (Business Started by him )		100000	100000
	Purchase a/c                                                Dr                   To Ram (Goods purchased on credit from Ram)		2000	2000
	Insurance premium a/c                              Dr                                    To Bank a/c (insurance premium paid)		1000	1000
	Bank   a/c                                                       Dr             To Sales a/c (Goods sold)		20000	20000
	Mohan’s a/c                                                  Dr                To sales a/c (Goods sold to Mohan on credit)		1000	1000
	Purchase  a/c                                               Dr                  To Bank a/c (Goods purchased)		5000	5000
	Stationary  a/c                                            Dr                   To Bank   a/c ( Stationary purchased)		2000	2000
	Furniture   a/c                                            Dr                 To Bank   a/c ( Furniture purchased)		5000	5000
	Fan & Other Equipments  a/c                 Dr                                      To Bank    a/c (Fan & other equipments purchased)		2000	2000
	Salary   a/c                                            Dr            To Bank   a/c ( Salary paid)		1000	1000
	Wages    a/c                               Dr              To Bank a/c (Wages paid)		500	500
	Electricity charges a/c                      Dr                         To Bank a/c (electricity charges paid)		1500	1500
	Telephone & postage expenses a/c   Dr                            To Bank a/c (telephone & postage expenses paid)		2500	2500
			143500	143500

                                      Bank A/c

Date	Particulars	Jf	Amount	Date	particulars	Jf	Amount
1 April 2011	To Raj’s capital a/c To Sales a/c		100000  20000		By Insurance premium By Purchase By Stationary By Furniture By Fan & Other Equipments By salary By Wages   By Electricity charges By Telephone & postage expenses To Balance		1000 5000 2000 5000 2000 1000 500 1500 2500 99500
			120000				120000

                                                  Raj’s Capital A/C

Date	Particulars	Jf	Amount	Date	particulars	Jf	Amount
1 April2011	To Bank a/c		100000		By Balance		100000
			100000				100000

                                                 Fan & other equipments A/C

Date	Particulars	Jf	Amount	Date	particulars	Jf	Amount
	To Bank a/c		2000		By Balance		2000
			2000				2000

                                                     Furniture A/C

Date	Particulars	Jf	Amount	Date	particulars	Jf	Amount
	To Bank a/c		5000		By Balance		5000
			5000				5000

                                Salary A/C

Date	Particulars	Jf	Amount	Date	particulars	Jf	Amount
	To Bank a/c		1000		By Balance		1000
			1000				1000

                                          Wages A/C

Date	Particulars	Jf	Amount	Date	particulars	Jf	Amount
	To Bank a/c		500		By Balance		500
			500				500

                                           

Stationary A/C

Date	Particulars	Jf	Amount	Date	particulars	Jf	Amount
	To Bank a/c		2000		By Balance		2000
			2000				2000

                                                        Purchase A/C          

Date	Particulars	Jf	Amount	Date	particulars	Jf	Amount
	To Bank a/c To Ram		5000 2000		By Balance		7000
			7000				7000

Sales A/c

Date	Particulars	Jf	Amount	Date	particulars	Jf	Amount
	To Balance		21000		By Bank a/c By Mohan		20000 1000
			21000				21000

Mohan’s A/C

Date	Particulars	Jf	Amount	Date	particulars	Jf	Amount
	To Sales		1000		By Balance		1000
			1000				1000

                                                               Ram’s A/c

Date	Particulars	Jf	Amount	Date	particulars	Jf	Amount
	To Purchase a/c		2000		By Balance		2000
			2000				2000

Insurance Premium A/c

Date	Particulars	Jf	Amount	Date	particulars	Jf	Amount
	To Bank a/c		1000		By Balance		1000
			1000				1000

Electricity charges A/C

Date	Particulars	Jf	Amount	Date	particulars	Jf	Amount
	To Bank a/c		1500		By Balance		1500
			1500				1500

Telephone & postage expenses A/C

Date	Particulars	Jf	Amount	Date	particulars	Jf	Amount
	To Bank a/c		2500		By Balance		2500
			2500				2500

                                                       Trial Balance as on 31 march 2011

Particulars	Amount Rs	Particulars	Amount Rs
Purchase(5000+ 2000 credit purchase) Insurance premium Stationary Furniture Fan & other equipments Salary Wages Debtors (Mohan) Cash at Bank Electricity charges Telephone & postage expenses	7000 1000 2000 5000 2000 1000 500 1000 99500 1500 2500	Sales (20000 + 1000 credit sales) Capital a/c Creditors(Ram)	21000 100000 2000
	123000		123000

Additional information:

(i)                  Closing stock as on 31 march 2011 Rs 6000/-

(ii)                Outstanding wages Rs 500/- & outstanding electricity charges Rs 500/- & Rs 500 was prepaid telephone & postage.

Liabilities

Amount

Assets

Amount

                  Trading profit & loss account for the year ended 31 March 2011

Particulars	Amount	Particulars	Amount
To Purchase To wages                500 Add: outstanding  500 To Gross profit	7000 1000 19000	By Sales By Closing Stock	21000 6000
	27000		27000
To Insurance premium To salary To Stationary To Electricity charges  1500 Add: outstanding            500 To Telephone & postage expenses                    2500 Less: Prepaid                500 To net profit(transferred to capital a/c)	1000 1000 2000 2000 2000 11000	By Gross Profit	19000
	19000		19000

                            Balance sheet as on 31 March 2011

Liabilities	Amount	Assets	Amount
Capital                 100000 Add: Net profit 11000 Creditors Outstanding expenses(Wages & Electricity charges)	111000       2000      1000	Furniture Fan & other equipments Closing stock Cash at bank Debtors Prepaid Telephone & postage expenses	5000 2000 6000 99500 1000 500
	114000		114000

Specific Project no 1

Particulars	31March 2011		31March 2012
	Assets	Liabilities	Assets	Liabilities
Stock Sundry Debtors Prepaid expenses Cash balance Sundry creditors Bills Payable Bank Overdraft	1080000 2450000 20000 50000	1500000 100000 400000	1500000 2640000 40000 20000	2000000 80000 720000

Additional information:

Sales amount to Rs 17885000 during the year ended31 March2003 & Rs17520000 during the year 31 March 2004.

Here financial position is to be judged through appropriate accounting ratios .

Solution:  Introduction of the project:

The project work is to be submit project report on short term financial position of the Gujarat oil Ltd. For this purpose two years balance sheet of the company will be used.

Since data pertaining to current assets, current liabilities, & sale is provided the projection is planned& executed by calculating the following ratios:

(i)                  Current ratio

(ii)                Liquid ratio

(iii)               Average collection period

                                                     Calculation of ratios:

S.R.No	Ratios	31 March 2011	31 March 2012
(i) (ii) (iii)	Current ratio=        Current assets                        Current liabilities Liquid ratio=   Liquid  Assets                             Current liabilities                                         Average collection period =Average receivables    X  365     Net credit sales	3600000 2000000 =1.8:1 2500000        2000000 =1.25:1 2450000   X365 17885000 =50 Days	4200000 2800000 =1.5:1 2660000            2800000 =.95:1 1/2(2450000+2640000) X3 56         17520000 =53 Days

Comments:

(i)                   On the basis of particular analysis it can say that short term financial position of company is not satisfactory as current ratio of company is below the ideal current ratio 2:1. The position is further deteriorated in second year because current ratio has come down from 1.8:1 to 1.5:1.

(ii)                Liquid ratio of company can be deemed satisfactory in first year but it also came down still it is near to ideal liquid ratio 1:1.Increase in overdraft is also an adverse  indication in second year for the company.

(iii)               Company’s average collection period is also increased from 50 to 53 & sales is decreasing closing stock is increasing that have an adverse impact over cash flow of business. It is advised to company collect money from debtors etc so that it (Company) can pay its current liabilities in time.

                                    Specific Project No 2

Introduction of the project:

The project work is to prepare cash flow statement & comment upon the same. Necessary data is provided in form of balance sheet as at 31 Mar 2011. The data provided is used for the purpose of project work.

Project work is planned and executed by preparing a cash flow statement. Machinery A/C is also made to ascertain the actual balance of machine after sale & depreciation on machine.

Provision for depreciation A/C is also prepared to ascertain current year’s depreciation.

                      Balance sheet of Acc Ltd as on 1 Jan2011 & 31 Mar 2011 was as follows:

Liabilities	1 Jan2011	31 Mar2011	Assets	1 Jan2011	31 Mar2011
Creditors Mrs A”s Loan Loan from Bank Capital	40000   25000   40000 125000	44000 -    50000 153000	Cash Debtors Stock Machinery Land Building	10000 30000 35000 80000 40000 35000	7000 50000 25000 55000 50000 60000
	23000/-	247000/-		230000/-	247000/-

Additional information: During the year machinery costing rupees 10000/-(Accumulated depreciation Rs3000/-) sold for Rs 5000. Provision for depreciation against machinery as on 1 January 2011 was Rs 25000/- & as on March 2011 was Rs 40000/-. Net profit for the year 2011 amounted to Rs 45000/-.

Businessman wants details of cash of his business through cash flow analysis. You are required to give suggestions to businessman relating to cash position of the business.

                                                        Cash Flow Statement

                                                           (Indirect method)

Net cash flow from operating activities:              Net profit during the year                                                                          45000 Add:                Depreciation on machinery for current year       18000/-                Loss on sale of machinery                                          2000/-               Decrease in stock                                                      10000/-               Increase in creditors                                                   4000/-                   34000/-                                                                                                                                     79000/-   Less :              Increase in debtor                                                                                  20000/-                                                                                                                                     Net Cash from operating activities                                                                                    Cash from investing activities:               Purchase of Land                                                                                  10000/-               Purchase of Building                                                                            25000/-                                                                                                                                35000/- Less:     Sale of Machinery                                                                                    5000/-             Net Cash from investing activities              Cash from financing activities:             Drawings during the year                                                                       17000/-                                                                                         Mrs A”s Loan repaid                                                                                25000/-                                                                                                                                  42000/-   Less:                            Loan from bank                                                                                      10000/-               Net cash from financing activities                                                                                             Net decrease in cash and cash equivalents Cash and cash equivalents as on 1 Jan2011 Cash and cash equivalents as on 1 Mar2011

59000/- 30000/- 32000/- (3000/-) 10000/-  7000/-

Working Notes:

                                                    

                                                                                         

                                                                                                                                   

                                                                                                                                                                                                                             

                                      Machinery A/C (At Cost)

                                                                                                                                              

Particulars	Amount	Particulars	Amount
To Balance	105000	By Bank By loss on sale of machinery By provision for depreciation Br Balance	5000 2000 3000 95000
	105000		105000

           

                                    Provision for depreciation A/C

Particulars	Amount	Particulars	Amount
To Machinery a/c To Balance	3000 40000	By Balance By Profit & Loss a/c(Depreciation charged balancing figure)	25000 18000
	43000		43000

Comments:

(i)                  After analysis of through cash flow analysis it can say that in future company can face liquidity problem as its cash is decreasing in comparison of previous year.

(ii)                Debtors are also increasing. Creditors are also increasing .Overall it can say that company is required to improve its liquidity position so that it can also survive at the time of economic crisis.