School for Continuing Education (NGA-SCE) Course: Financial Accounting and Analysis

Internal Assignment Applicable for December 2021 Examination

Submitted by – Bhaskar Paliwal
Roll No – 77121510927

Ans.1.

Introduction

The cash flow statement will tell you how much money entered and exited your company during a specific
period of time. A cash flow analysis alongside a balance sheet and income statement isamong the three
most important financial statements you should have for your small business accounting and making sure
that you are able to continue in operation. An organization can see how much cash it has to and from the
company by analyzing a cash flow statement. Through analyzing the balance of cash in a business, an
understanding will be gained about the way the company is managing its obligations and finances its
activities.

An organization's capability to generate coins for debt repayment and operating cost-of-living (the “cash
flow" report). A cash flow analysis, along with the balance sheets and profit and loss statements, has been
an essential part of annual financial reports since. CFS allows traders to understand what agencies do, where
the money is sourced, and how they manage the funds. The measure of financial stability is crucial in
determining the quality of the company's finances. A technique known as liquidity analysis may also be
utilized by creditors in order to estimate cash flows or how they can use them for paying expenses and for
paying off obligations. This cash flow account is made up of three fundamental components including
operating operations,investment sports, in addition to financing the sports.

Concept and Application:

• Cash flow from operating operations: Companies' cash balance statements contain a separatesection
for operational activity cash flow that details how the cash generated from regular, continuous business
activities is derived and subsequently spent. Most likely, this is comprisedof net earnings from the
income declaration as well as modifications to net profits as well as
adjustments to the operating capital. The development work is visible in the operation and cash flows. As
assets grow from one period to the following, the cash outflow is recorded. When liabilities grow from one
length and then the other, the flow is recorded as a cash flow. Cashflow from operations can be defined
as changes in the cost of inventory as well as accrued tax liabilities, tax-free sales and deferred sales.

• Cash flowing from investing activity: Under this section of the cash flow report you can see the amount
of Cash earned or spent in certain time frames via various funding-related actions.It's one of the key
elements of the flow announcement. If you are interested in investing, there are various choices:
purchasing physical property, investing in shares, or promoting shares or property. If the cash flow of an
employer is low, it's generally a sign that they are experiencing poor performance. It could be due to huge
amounts of money that are spent on long-term health issues, such as studies and developments.

• Finance activities generate money: These figures show how excellent deal cash is being utilized to steer
a company when it announces the float of its coin. It appears within the finance activities (CFF) report as a
firm's funding cash flows. It includes borrowing or investing money and paying dividends. Financial
interest cash flow gives traders with information about the financial soundness of an business and how its
management takes care of its capital shape.

The following kinds of activities could be classified logically:

Particular Amount Logical Reasoning

Loss when selling an 95780 The activities of investing will reflect developments in that
asset field. The difference between the sum received at thetime sale
or disposal, and the book value is what is
known as a loss.

Dividend income 26000 In your cash flow statement, it's located as "Cash fluxfrom
the financing of activities". This section of yourcash flow
report summarizes all your business's financial operations
including credit, inventory, and
dividends transactions.
Interest income 35000 Interest profits generated from investments go to investment
activities. Because of their connection to the entity's
investments, and because the assets are considered to be
investing under interests, any income from investments should
also be disclosed under the
investing activities.

Financing cost for 12000 Components of the cash flow statements include bonds- issue
debentures. charges that are part of an income announcement as well as
modifications on coins assets as a in the balance sheet. Debt
issuance proceeds are reported in part of the financing section
of the cash flow statement while thefees associated with
issuance are recorded in the running
section.

Gain from sale of 45000 The investment part of the cash flow statement is a recordof
investment income from the long-term properties, while the operating
sports section exhibits a discount from online
profit.

Depreciation of fixed 85000 In the cash flows statement, which is located in operating
assets activities and other expenses consisting of amortization,
depletion and amortization, depreciation is a non-cash
item.

Amortization 110000 There is no cash expenditure associated with depreciation. This

Expenses indirect cash flow statement declares it as a non-cash
expenditure; consequently, it can be accounted for in the net
income. Other fees not related to cash include increases in
payables and cumulative
interest costs.

Calculation of cash flow from operating activities:

 Particulars Amount Total

Net Income 2,69,244 2,69,244

Depreciation on fixed assets 85000

Add: (+) Loss on sale of an asset 95780

Amortization Expenses 110000 302780

Finance cost paid on debentures 12000

Dividend income 26000

Less: (-)
Interest income 35000
106000
Gain on sale of investment 45000

Net Cash provided by operating activities 466024

Conclusion

The function of a flow statement in financial accounting is an assertion of cash flows and is a financial
statement that explains how adjustments losses, surpluses, and profits affect an organization's current liquid
cash as well as cash equivalents. The cash float statement is made available to users as part of an
organization's operations, investments, and planning financial. In particular, the statements provide details
about the amount of cash received and paid out, as well as the proportion of the cash that was exchanged in
the period on the statement.
Ans.2.

Introduction

Analyzing financial statements can be a valuable tool in determining various trends and relationships
between accounts in financial statements. This analysis can be used by both internal decision makers
(finance manager) and by external users (stakeholders)or any person who needs to gauge profitability,
growth possibility, the potential of liquidity solvency as well as operational effectiveness. The most popular
techniques of financial statement analysis are ratio analysis, common-size statements trend analysis,
comparative analysis as well as percentageshift analysis and Management's Debate and Analysis. These
techniques encompass a range of calculations along with the relationship between the outcomes. Simply
put an accurate analysis and explanation of financial statements can be a good indicator of the financial
condition of an organization.

Concept and Application:

This technique is the computation for trend ratios (trend percentages) to represent a collection of years. The
horizontal analysis will give an image of just two years. This year's results are in comparison with the
previous year. This leaves the user completely unaware of the growth of the company. To overcome this
limitation, trend analysis could be used. With this method, the datato be analyzed is taken over a number
of years. The data from the year that is the base year is taken as 100. For subsequent years, trends
percentages will be computed.

A trend analysis tool is also used to analyze the financial statements of an organization by investors.
Investors utilize trend analysis in order to understand the financial status of an organization to make
decisions. In this manner, the financial statements for an organization are compared over time after which
they are converted into a percentage. This is why trend analysis analyses the financial statements of an
enterprise over a specified time. It could be a few months or quarters, or even years, depending on the
requirements. It is the goal of this study to calculate and determine the variation in the amount and percent
from one year to the next.

An analysis of trends in the company's financial statement must include the following steps:
• In order to conduct a trend analysis of an organization, it is necessary access the official
accounts of the business.
• Once you have the basic details, you can start by comparing the latest year's numbers with
previous year figures.
• You could spot the pattern that you are looking for in analyzing the financial statements of an
organization and also commenting on the financial health of an organization.
• Once you have all the data the company can work to improve certain areas.

The advantages of trend analysis are that it:

• Locate areas of potential benefit from the audit investigation

• There are significant variations in time
• Be easily understood and communicated
• Popular due to its wide-spread use

The disadvantages of trend analysis is that it is able to:

• Provide little insight into the roots of the causes

• Do not indicate the company's normative or benchmark situation is.
• Be affected by frequent changes in the formats of financial reports.
• Be heavily influenced by the choice of the fiscal base period

Comparative analysis of the accounts of ICICI Bank

BALANCE SHEET OF ICICI Mar-21 Mar-20 Absolute Percentage

BANK (in Rs. Cr.) change change

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS

Equity Share Capital 1383.41 1294.76 88.65 6.8468

TOTAL SHARE CAPITAL 1383.41 1294.76 88.65 6.8468

Revaluation Reserve 3093.59 3114.87 -21.28 -0.6832

Reserves and Surplus 143029.08 112091.29 30937.79 27.6005

Total Reserves and Surplus 146122.67 115206.16 30916.51 26.8358

TOTAL SHAREHOLDERS FUNDS 147509.19 116504.41 31004.78 26.6125

Deposits 932522.16 770968.99 161553.17 20.9546

Borrowings 91630.96 162896.76 -71265.8 -43.7491

Other Liabilities and Provisions 58770.37 47994.99 10775.38 22.4511

TOTAL CAPITAL AND 1230432.68 1098365.15 132067.53 12.0240

LIABILITIES

ASSETS

Cash and Balances with Reserve 46031.19 35283.96 10747.23 30.4593

Bank of India

The Balances of Banks Money at 87097.06 83871.78 3225.28 3.8455

Call and Short Notice

Investments 281286.54 249531.48 31755.06 12.7259

Advances 733729.09 645289.97 88439.12 13.7053

Fixed Assets 8877.58 8410.29 467.29 5.5562

Other Assets 73411.21 75977.67 -2566.46 -3.3779

TOTAL ASSETS 1230432.68 1098365.15 132067.53 12.0240

Absolute variation = Current year's figure - Previous year's figure

Percentage increase = Absolute change / the amount of the previous year 100
Key findings from the report of the ICICI bank

1. There has been an increase in the equity share and capitalization of the banks as compare tothe
previous year. This will be beneficial for the business and will strengthen thanks to the large capital. Large
capital reserves help them improve their creditworthiness in the marketplace.When a business issues
shares for investors to acquire and sell, they allow them to earn a share from its profits, as well as take part
in the equity.

2. Reserves as well as surplus are the total value of earned earnings retained as a part of Shareholders
Equity. They are used by the business for specific uses like purchasing fixed assets,payments for legal
settlements, debts to be paid back or dividends and dividends, etc. There is a 27% growth in reserve and
surplus that can be beneficial for the business.

3. Deposits for any bank are essential and since ICICI is one of the largest banks operating in ourcountry,
it enjoys large number of deposits made by clients and as can be seen from the balance sheet, there's about
20% more deposits.

4. The reduction is massive in borrowings by the bank, which is very laudable, and proves the financial
strength the bank. There is 43% decrease which makes it clear that bank does not depend on the borrowings
to certain amount.

5. ICICI bank is quite involved in investing in various ways and that's why you can witness the rapid
increase in investment every year. Even in this year's year with a 12-% increase ininvestments.

6. The most significant assets on the bank's balance sheet are advances. These advances that constitute the
credit that the bank extends to its customers is an important portion of the bank's assets. The banks have
seen more than 13% increase in advances made by the bank when compared to the same time last year. It
shows that the bank is in good shape and is fundamentally sound as well.

Conclusion

In a comparative balance sheet, financial, liability, and property equity figures are for " or moretime
periods of the same business," " or greater than two companies within the same industry" in
addition to " or larger subsidiaries of the exact company" are presented together on one page to be easy to
comprehend and analyze. Investors and stakeholders can quickly compare the financial efficiency to last
year's performance when looking at a comparison balance sheet that includes two columns with the amounts
for each balance sheet item.

Ans.3a.

Introduction:

Dual-effect business transactions are the outcomes of every operation recorded in a book of accounts based
on the concept of duality. To put it in another way you can find some variations with every transaction
recorded in the accounts of funds. It's not a lot to be impressed by in the Account except a few observations
made about marketers, people, and other objects.

Concept and its application

Subcategories exist of existing Accounts that include tangible and intangible, nominal, and personal
accounts are the three main categories of accounts in accounting. Three of the most common types of
personal debts are natural, consultant and fake personal accounts.

Different types of accounts

Personal Account: Business transactions done through other entities, individuals, or banks and logged in
their own personal account which is in the books and accounts of the organization is known as a "personal
account.

Example: Timothy Ltd. has the account of a bank in Andhra Bank and City Bank and uses both banks for
his business transactions. In this case, two separate Bank Books will be maintained;one specifically for
Andhra Bank and the other for City Bank and show both the bank balances in the financial statements of
his.
Real Account: Real accounts are well-known as being permanent accounts. These accounts are not wiped
out after the conclusion of the account but remain in existence and are being carried forward to the following
accounting period. So, accounts that are real will always carry a balanceforward and will never end up with
an unbalanced balance to begin with it.

Examples of accounts that are real include: machinery account; land account, furniture, money account,
banks accounts bank accounts, creditor's account, and capital account. The accounts you see are typically
listed on the balance sheet and are also known as “balance sheet's accounts.

Nominal account: The nominal accounts are commonly referred to as temporary accounts.These
accounts cannot be carried into the next accounting period. They are closed at conclusion of that accounting
period. In the new period of accounting, these accounts start with nobalance brought forward, they start
with a zero balance. Each expense account is only to be used for the period of the accounting and the same
goes for the revenue or income made.

Examples of nominal accounts are stationery and printing expenses rent paid, salary paid, income earned,
interest paid, etc. You can therefore see that they're items in the income and expenditure report or the trading
profit and loss account. Therefore, they are also known as income statement accounts.

Particulars Type of Account

It was a start-up with cash at Rs150000. A cash account is a Real Account the CapitalAccount is
Personal Accounts, therefore both of
them could be affected.

Purchased items for cash in the amount ofRs Purchase’s account is Nominal Account And cash
25000 account is real account, and both could beaffected.

Sold goods to C with credit worth Rs All sales transactions are Nominal
20000 Accounts and, consequently, they will be affected.

Cash for salary payment of R15000 A cash account is real, and the earnings account canbe
described as a Nominal account, and as the
result, each of the variants will be affected.
Paying cash into the bank account at Bank and cash bills are real bills, and, as a
Rs100000 consequence, the actual Account may be affected.

Conclusion

Before we can grasp the Golden rules of Accounting, we must first understand the various types of debts
found in the international. The class of account applies to all types of standard ledgers regardless of their
design. To put it in another way, each account is a member of one of the groups that were indexed
previously.

Ans.3b.

Introduction

The term accounting refers to any economic description of a business transaction. Tokeep track of these
transactions, a debit and credit system was developed. The debit, in accounting terms, is an item that can
either increase the value of an asset account or decreases its value. This technique can also be utilized to
reduce a liability and equity accounts. Most often, the left side of an accounting record is utilized. Credit is
intended to increase the value of an obligation, or to increase equity stability since that's what its name
implies. A weight reductionis applied to accounts that contain either expenditures or assets. Accessed
through the proper aspect of accounting.

Concept and application:

A debit is a line on the left-hand side of the balance sheet. When subtracting a sale or equity account, debits
are a way to decorate an account's asset amount. In the correct place on thereport, a credit is an
account that has been entered. Cash owed for expenses and assets are
depleted due to credits. Also, debits and credits figure prominently in accounting's goldenstandards. Three
of the most fundamental accounting standards are:

Personal account: The receiver is debited, and the giver receives credit. This class includes accounts like
loans, debtors etc.

Real Account: Incoming money is debited, and outgoing cash is creditable. Some examples of such debts
are money and stability of the bank, assets in inventory and sales, purchases, and so on.

Nominal accounts: It is a credit account that will be credited with all earnings as well as profits and debit
all the losses and costs. Some examples of these kinds of cash owed include the following: income, interest,
Dividend, and depreciation.

Journal Entries:

1. Started business with cash Rs150000:

Cash A/c ------ Dr 1, 50,000
To Capital A/c 1, 50,000

2. Purchased goods for cash Rs 25000:

Purchases A/c -------Dr 25,000
To Cash A/c 25,000

3. Sold goods to C on credit Rs 20000:

C’s A/c ------ Dr 20,000
To Sales A/c 20,000

4. Paid salary for Cash Rs15000:

Salary A/c------- Dr 15,000
To Cash A/c 15,000
 5. Deposited Cash into the bank account
Rs100000:Bank A/c Dr 1, 00,000
To Cash A/c 1, 00,000

Conclusion:

To safeguard the integrity of every transaction of an entity, they must keep a record of these. If there is
an entry like that, the company has a record of the transactions that occurred and should be retained as
a document. There are rules of thumb in Accounting that deal withsituations where a journal entry
is missed. This method can be applied to any kind of account. However, prior to making any changes, it is
essential to establish the type of account.