ACCOUNTS PROJECT
2025-2026
THE FUTURE KIDS SCHOOL
(Affiliated to the Council for the Indian School Certificate Examinations (CISCE), New Delhi)
School Affiliation Code : A.P – 104 [ICSE (Std.X) and ISC (Std. XI & XII)], Rajahmahendravaram
This is to certify that the following candidate of the standard XII has successfully
completed the Accounts Project file. Proper care has been taken by student to
complete the project. All the works related to the project was done by the candidate
only. The approach towards the subject has been sincere and scientific.
I certify that this project up to my expectation and as per the guidelines issued by the
I.S.C.
Name : BALLA LIKHITHA MALLISWARI
Class : XII
Stream : M.E.C
Subject : ACCOUNTS
Topic : 1. CASH FLOW STATEMENT
2. FINANCIAL STATEMENT
Submitted to : Mr. K. Venkanna
Academic year : 2025-2026
Unique ID :
External Examiner Internal Examiner
Principal
ACKNOWLEDGMENT
I wish to thank my esteemed Accountancy Teacher Mr.K. Venkanna with great
pleasure and deep sense of gratitude for their invaluable help and guidance.
I am extremely thankful and greatly acknowledge the support and
encouragement from our Principal Mr. M.Seshagiridhar and our Dean
Mrs.Harshini Devi.D, in completing my project , helped me in gaining
knowledge, searching Commerce and enlightened me on this subject.
I would also like to thank my parents and my friends who supported me and
encouraged me in finishing this project within the stipulated time frame.
I believe, this project not only helped me in my academic growth but also
ignited the passion for doing a further research on this subject.
Name of the student : BALLA . LIKHITHA MALLISWARI
Date : 05.05.2025.
PROJECT - I
CASH FLOW STATEMENT
X Ltd. has applied for a short-term loan of Rs. 10 Lac from State Bank of India.
The bank manager, while making a decision about granting the loan, wants to
have an idea about the Sources and Utilisation of Cash. You are required to
submit a project report to the bank manager which would enable him to
decide about granting the loan. Following particulars are related to X Ltd.
BALANCE SHEET as at 31st March, 2023 (Rs ‘000)
Particulars Note March 31, March 31,
No. 2023 2022
I. Equity & Liabilities:
(1) Shareholder’s Funds
Share Capital 2,500 2,000
Reserves and Surplus 1,800 1,200
(2) Non-Current Liabilities
Long term Borrowings 1,200 1,000
(3) Current Liabilities
Short term Borrowings 1 250 _
Trade Payables 1,860 1,800
Short term Provision 2 240 200
7,850 6,200
II. Assets:
(1) Non Current Assets
(a) Property, Plant and Equipment and
Intangible Assets
(i) Property, Plant and Equipment
(Machinery) 3 4,300 2,900
(b) Non-Current Investments 300 200
(2) Current Assets
Short term Investments (Marketable) 120 250
Inventories 1,000 500
Trade Receivables 1,500 1,400
Cash & Bank Balance 630 850
Other Current Assets 4 _ 100
7,850 6,200
(Rs ‘000)
31-3-2023 31-3-2022
Note: 1. Short term Borrowings: 250 -
Bank Overdraft
2. Short term Provision: 240 200
Provision for Tax 6,200 4,500
3. Machinery: 1,900 1,600
Less: Accumulated Depreciation 4,300 2,900
4. Other Current Assets:
Payment in Advance - 100
Additional Information:
1. Provision for Tax made during the year 2022-23 amounted to Rs. 2,25,000.
2. An interim dividend of Rs. 2,00,000 was paid during the year.
3. Machinery costing Rs. 8,00,000 (accumulated depreciation thereon being
Rs.1,80,000) were sold during the year at a loss Rs. 1,20,000.
4. Interest received on Investments amounted to Rs. 30,000.
5. Interest on long term borrowings paid during the year amounted to
Rs.1,20,000.
SOLUTION:
Introduction of the Project:
The project work is to submit a report to the bank manager which sould
enable him to arrive at a decision regarding granting a short-term loan of
Rs.10Lac. To XLtd.
Necessary data is provided in the form of Balance Sheets as at 31st March
2022 and 2023 and additional information. The data provided is used for the
purpose of the project work.
Since X Ltd. Has applied for a short-term loan bank manager will require
information regarding the short-term financial position of the company. He will
also require information regarding the sources and utilisation of cash during
the period to assess the ability of the enterprise to generate future cash flows.
Hence, the project work is planned and executed by preparing a Cash
Flow Statement.
CASH FLOW STATEMENT
For the year ended 31st March, 2023 (Rs’ 000)
A. Cash flows from Operating Activities:
Net Profit before Tax (Note 1) 1,025
Adjustments For Non-Cash and Non-Operating Items:
Add: Depreciation(4) 480
Loss on Sale of Machinery 120
Interest on Long term Borrowings 120
Interest on Non Current Investments (30)
Operating Profit before Working Capital Changes 1,715
Add: Increase in Trade Payables 60
Decrease in Payment in Advance 100 160
1,875
Less: Increase in Inventories 500
Increase in Trade Receivables 100 600
1,275
Payment of Tax(2) (185)
B. Net cash from operating activities 1,090 1,090
Cash flows from Investing Activities:
Sales of Machinery 500
Purchase of Machinery(3) (2,500)
Purchase of Non Current Investments (100)
Interest received 30
C. Net cash used in investing activities (2,070) (2,070)
Cash flows from Financing Activities:
Proceeds from issue of share capital 500
Proceeds from Long term Borrowings 200
Proceeds from Short term Borrowings 250
(Increse in Bank Overdraft)
Interest paid (120)
Interim Dividend Paid (200)
Net cash from financing activities 630 630
Net decrease in cash and cash equivalents (350)
Add: Cash and cash equivalents in the beginning of the
period (5) 1,100
Cash and cash equivalents at the end of the period 750
Notes:
(1) (Rs’000)
Rs.
Calculation of Net Profit before Tax:
Reserve and Surplus Balance on 31st March 2023 1,800
Less: Reserve and Surplus Balance on 31st March 2022 1,200
600
Add: Current year’s Provision for Tax 225
Interim Dividend 200
1,025
(2) PROVISION FOR TAX ACCOUNT
(Rs’000)
Rs. Rs.
To Bank A/c (balancing 180 By Balance b/d 200
figure, being Payment of By Statement of P & L (Provision
Tax) 240 made during Current Year) 225
To Balance c/d 425 425
(3) MACHINERY ACCOUNT
Rs. Rs.
To Balance b/d 4,500 By Bank A/c (Sale) 500
To Bank A/c (Balancing By Accumulated Depreciation
figure, being purchase) 2,500 A/c 180
By Loss on Sale of Machinery A/c 120
By Balance c/d 6,200
7,000 7,000
(4) ACCUMULATED DEPRECIATION ACCOUNT
Rs. Rs.
To Machinery A/c 180 By Balance b/d 1,600
(Accumulated By Depreciation A/c (balancing
depreciation of Machinery figure, being current year’s
sold) depreciation)
To Balance c/d) 1,900 480
2,080 2,080
(5) (Rs’000)
Rs. Rs.
Cash and Cash Equivalents:
Marketable Securities 120 250
Cash & Bank Balances 630 850
750 1,100
Comments: Cash outflow due to Investing activities is Rs.20,70,000
whereas cash inflow from operating and financing activities is only
Rs.10,90,000 and Rs.6,30,000 respectively. As a result, there is a net cash
outflow of Rs.3,50,000. Fixed Assets should have been purchased from long-
term sources.
PRESENTATION OF INFORMATION:
CASH FLOWS ACTIVITIES IN X LTD.
PROJECT - II
FINANCIAL STATEMENT
The General Manager of Galaxy Foods Ltd. Was surprised to find that
though the company earned a profit during the year ended 31st March 2023,
yet the bank overdraft has increased during the period.
The financial statements of the company are given below:
BALANCE SHEETS (as at 31st March)
Note 31st March, 31st March,
No. 2023 2022
Rs. Rs.
I. Equity & Liabilities:
(1) Shareholder’s Funds 6,00,000 5,00,000
Share Capital 3,30,000 80,000
Reserves and Surplus 1
(2) Non-Current Liabilities
5% Long term Borrowings 2,40,000
(3) Current Liabilities
Short term Borrowings 2 2,80,000 1,00,000
Trade Payables 9,40,000 10,50,000
Other Currebt Liabilities 3 10,000 -
Short term Provision 4 40,000 30,000
22,00,000 20,00,000
II. Assets:
(1) Non Current Assets
(a) Property, Plant and Equipment
and Intangible Assets
(i) Property, Plant and Equipment 5 10,50,000 9,85,000
(ii) Intangible Assets 6 1,60,000 2,00,000
(2) Current Assets
Inventories 6,60,000 5,00,000
Trade Receivables 3,30,000 2,90,000
Cash Balance - 25,000
22,00,000 20,00,000
Notes 1. Reserve and Surplus: 2023 (Rs.) 2022 (Rs.)
Profit & Loss Balance 3,20,000 80,000
Securities Premium 10,000 -
3,30,000 80,000
2. Short term Borrowings:
Bank Overdraft 2,80,000 1,00,000
3. Other Current Liabilities:
Accrued Expenses 10,000 -
4. Short term Provisions:
Provision for Tax 40,000 30,000
5. Property, Plant and Equipment:
Palnt & Machinery 10,50,000 9,85,000
6. Intangible Assets:
Goodwill 1,60,000 2,00,000
Additional Information:
1. Depreciation on machinery charged during the year was Rs.85,000.
2. Machinery discarded during the year Rs.50,000.
3. Interest on long term borrowings paid during the year was Rs.12,000.
4. Provision for tax made during the year was Rs.42,000.
5. Interim Dividend paid during the year Rs.50,000.
You are required to prepare a statement to show as to why the bank
overdraft has increased in spite of higher profits.
SOLUTION:
Introduction of the Project:
The project work is to find out how the Bank Overdraft has increased from
Rs.1,00,000 at 31st March 2022 to Rs.2,80,000 at 31st March 2023 in spite of
increase in balance of profits by Rs.2,40,000.
Necessary data in the form of Balance Sheets as at 31st March 2022 and
2023 is provided and is utilised for the purpose of the project work.
The project work is planned and executed by preparing a Cash Flow
statement.
CASH FLOW STATEMENT
(As per AS-3 Revised)
for the year ended 31st March, 2023
Rs. Rs.
A. Cash flows from Operating Activities:
Net Profit before Tax (Note 1) 3,32,000
Adjustments For Non-Cash and Non-Operating Items:
Add: Good will written off 40,000
Depreciation Charged 85,000
Loss due to Michanery discarded 50,000
Interest on Long term Borrowings 12,000
Operating Profit before Working Capital Changes 5,19,000
Add: Increase in Accured Expenses 10,000
5,29,000
Less: Decrease in Trade Payables 1,10,000
Increase in Inventory 1,60,000
Increase in Trade Receivables 40,000 3,10,000
2,19,000
Payment of Tax(2) (32,000)
Net cash from operating activities 1,87,000 1,87,000
B. Cash flows from Investing Activities:
Purchase of Plant & Machinery(3) (2,00,000) (2,00,000)
C. Cash flows from Financing Activities:
Issue of Shares 1,00,000
Securities Premium 10,000
Repayment of Long term Borrowings (2,40,000)
Proceeds from Short term Borrowings 1,80,000
(Increse in Bank Overdraft)
Payment of Interest (12,000)
Payments of Dividend (50,000)
Net cash used in financing activities (12,000) (12,000)
Net decrease in cash and cash equivalents (25,000)
Add: Cash and cash equivalents in the beginning 25,000
Cash and cash equivalents at the end -
Notes:
(1)
Rs.
Calculation of Net Profit before Tax:
Profit & Loss Bal. on 31st March 2023 3,20,000
Profit & Loss Bal. on 31st March 2022 80,000
2,40,000
Add: Provision for Tax 42,000
Payment of Interim Dividend 50,000
3,32,000
(2)
PROVISION FOR TAX A/C
Rs. Rs.
To Bank A/c (balancing 32,000 By Balance b/d 30,000
figure, being Payment By Statement of P & L
made) (Provision made in Current
To Balance c/d 40,000 Year) 42,000
72,000 72,000
PLLANT AND MACHINERY A/C
Rs. Rs.
To Balance b/d 9,85,000 By Depreciation A/c 85,000
To Bank A/c (Balancing 2,00,000 By Statement of P & L
figure, being (Machinery discarded) 50,000
purchase) By Balance c/d 10,50,000
11,85,000 11,85,000
PRESENTATION OF INFORMATION:
CASH FLOWS ACTIVITIES IN GALAXY FOODS LTD.
Comments:
A study of Cash Flow Statement reveals that main causes of increase in bank
overdraft are:
(i) Repayment Long term Borrowings Out of Current Sources: Amount
paid for repayment of Long term Borrowings is Rs.2,40,000 whereas
amount raised by issue of share capital is only Rs.1,10,000 (Rs.1,00,000
Share Capital + Rs.10,000 Securities Premium). More amount should have
been raised by long-term sources to repay the long term borrowings.
(ii) Purchase of Plant & Machinery Out of Current Sources: Plant and
Machinery has been purchased for Rs.2,00,000. Full amount of Rs.2,00,000
has been paid from current sources whereas the amount required for
purchase of plant & machinery, which is a long-term asset, should have
been raised by long-term sources such as issue of shares or debentures.
(iii) Increase in Inventory: Inventory has increased by Rs.1,60,000.
Excessive funds blocked in inventory are a cause of shortage of liquid
resources.
