Name:

Course: T.Y.B.A.F.
Roll No.: 142
Subject: Financial Accounting VII
Contact No.:
E-mail:
Academic Year: 2024-2025

Chapter 1: Final Accounts of Electricity Company

Illustration 17: (Pg 23)
Calculate return on equity from the following as per regulations
21 of central electricity regulatory commission
1. Commencement of operation 1 April,2017 st

2. Approved opening capital cost on 1 April 2017 = ₹300000

st

3. Addition capital expenditure

Years I II III
Capital expenditure 2000 600 400
(₹) 0. 0. 0

Solution:
Calculations of return on equity
Years I II III
I. Opening Equity 30% of 90,00 96,00 97,80
3,00,000 0 0 0
II. Additional Equity 30% 6,000 1,800 1,200
III. Closing Equity (I + II) 96,00 97,80 99,00
0 0 0
IV. Average Equity () 93,00 96,90 98,40
0 0 0
V. Return on Equity 13,02 13,56 13,77
(IV × 14%) 0 6 6

Illustration:18 (Pg 24)

Calculate interest on loan:
I. Commencement of Operations 1-4-
2011
II. Approved Opening Capital Cost on 1- 3,00,00
4-2018 0
III. Additional Capital Expenditure 20,000
IV. Repayment of Loan 16,000
V. W.A. Rate of Interest on Loan 7.4%

Solution:
Calculation of interest on loan
₹
I. Opening loan 70% of 2,10,0
300000 00
II. Additional loan 70% of 14,000
20000
III. Less: repayment of loan 16,000
IV. Net closing loan 2,08,0
00
V. Average loan 2,09,0
00
VI. W.A. Rate 7.4%
VII. Interest on loan 15,466

Format: (Pg 38 – 44)

APPENDIX
PART-I
Form of Balance Sheet
Name of the Company…….
Balance Sheet as at………
(Rupees in ---------)
Particulars Note Figures as at the end Figures as the end of
No. of the current the previous reporting
reporting period period
1 2 3 4
I. Equity and Liabilities
1. Shareholders' funds
A. Share capital
B. Reserves and surplus
C. Money received against share
warrants
2. Share application money
pending allotment
3. Non-current liabilities
A. Long-Term Borrowings
B. Deferred Tax Liabilities (Net)
C. Other Long-Term Liabilities
D. Long-Term Provisions
4. Current Liabilities
A. Short-Term Borrowings
B. Trade Payables
C. Other Current Liabilities
D. Short-Term Provisions

Total
II. Assets
1. Non-current assets
A. Property, Plant & Equipment and
Intangible Assets
i) Property, Plant & Equipment
ii)Intangible assets
iii) Capital work-in-progress
iv) Intangible assets under
development
B. non-current investments
C. Deferred tax assets (net)
D. Long-term loans and advances
E. Other non-current assets
2. Current Assets
A. Current investments
B. Inventories
C. Trade receivables
D. Cash and cash equivalents
E. Short-term loans and advances
F. Other current assets
Total

See accompanying notes to the financial statements.

₹
Note 1: Shares capital
Authorised
…. shares of ₹ …. each X
Issued X
…. shares of ₹…. each
Subscribed X
….. shares of ₹ …. each X
Less: calls in arrears by
Directors
XX X
Officers X
XX
Others
XX X
Add: forfeited shares X
X
Note 2: Reserves & Surplus X
Capital Reserves
Capital Redemption Reserve
Securities premium X
Debenture Redemption Reserve X
Revaluation Reserve X
Share option outstanding X
Other Reserves X
Surplus X
XX X
Balance b/d X
XX X
Add: Profit for the year X
XX X
X
XX X
Less: Appropriations X
XX

Note 3: Long Term Borrowings

Bonds / Debentures
Term loans
Banks
XX
Others X
XX X
Deferred payment liabilities
Deposits
Public Deposits X
XX X
Inter Corporate X
XX X
Loans & Advances from related parties
Long term maturities of finance lease obligations
Other loans and advances

Note 4: Other Long-Term Liabilities X

Trade Payables X
Other Payables X
Trade Deposits X
XX X
Security Deposits. X
XX X
X
Note 5: Long Term Provisions X
Provision for employee benefits X
Others:
Provisions for warranties X
X
Note 6: Short Term Borrowings X
Loans Repayable on Demand: X
i) Banks
XX
ii) other parties X
XX X
Loans and Advances from Related parties
Deposits X
XX X
Other loans & advances
X
Note 7: Trade payables X
Sundry Creditors X
Bills payable X
Note 8: Other Current Liabilities
Current Maturities of Long-Term Debt
Current Maturities of finance lease obligations
Interest accrued but not due on borrowings X
Interest accrued and due on borrowings X
Income received in advance
Unpaid dividend X
Application money received for allotment of securities and X
due XX X
for refund X
Interest accrued on the above X
Unpaid, matured deposits X
Interest accrued thereon X
Calls in Advance X
Non-Trade Payables
Taxes payable

Note 9: short term provision X

Provision for employee benefits X
Provision for income tax X
Provision for equity dividends X
Provision for preference dividends X
Provision for corporate dividends tax X
X
X
X
X

X
X

X
X
X
X
X
X

X
X
X
X
X
 X

X
X
X
X
X
X
X
X
X
X

Note 10: Property, Plant & Equipment

Assets Original Addition Disposa Origina Total Depreciatio Depreciatio Total Net
Cost at s during l during l Cost depreciatio n for the n on Asset depreciatio at
the the year the at the n at the year disposed off n at the the
beginnin year end beginning end end
g
1 2 3 4 5 6 7 8 9 10
(2+3-4) (6+7-8) (5-
9)
Land
Building
Plant &
Machiner
y
Equipme
nt
Vehicles
Assets
under
lease

Note 11: Intangible Assets

Assets Original Addition Disposal Origina Total Depreciatio Depreciatio Total Net
Cost at s during s during l cost depreciatio n for the n on Assets Depreciatio at
the the year the year at the n at the year disposed off n at the the
beginnin end beginning end en
g d
1 2 3 4 5 6 7 8 9 10
Goodwill
Brands
Trade
Marks
Computer
Software
Mast
beads &
publishing
Titles
Mining
Rights
Copy
rights &
patents
Receipts
Formulae
Model
Designs
Prototype
s
Licenses
&
Franchise

Notes 12: non-current investment

Trade Investment XX
Investment in property XX
Investment in Equity shares XX
Investment in Preference shares XX
Investment in Government securities XX
Investment in Trust securities XX
Investment in Debentures / Bonds XX
Investment in Mutual Fund XX
Investment in Partnership firms XX
Other Non-current Investment XX
XX
Note 13: Long Term Loans and Advances
Capital Advances XX
Security Deposits XX
Loans & Advances to Related Parties Other loans XX
and advances XX
Advance Tax XX
CENVAT Credit Receivables XX
VAT Credit Receivables XX
Service Tax XX
Credit Receivables XX

Note 14: Other Non-Current Assets XX

Long Term Trade Receivables XX
Others XX
Discount on issue of Debentures XX
Amalgamation Adjustment Account XX

Note 15: Current Investments

Investment in: XX
Equity shares XX
Preference shares XX
Government securities XX
Trust securities XX
Debentures XX
Bonds XX
Mutual funds XX
Partnership firms XX
Other Investments

Note 16: Inventories XX

Raw Materials XX
W.I.P. XX
Finished Goods XX
Stores & spares XX
Loose Tools XX
Others
XX
Note 17: Trade Receivables XX
Sundry Debtors XX
Less: Provision for Doubtful Debts XX
Bills Receivables
Note 18: Cash & Cash Equivalent XX
Cash & Cash Equivalent XX
Bank balance XX
Cheques / Drafts on hand XX
Cash Balance XX
Other bank balances XX
Margin money deposits XX
Security against borrowings XX
Guarantees & other commitments XX

Note 19: Short Term Loans & Advances XX

Loans & Advances to Related parties XX
Prepaid expenses XX
Tax Refund Receivable XX

Note 20: Other Current Assets XX

Non-Trade Receivables XX
Unamortised Expenditure XX
Unbilled Revenue

Part II-Form of Statement of Profit and Loss

Name of the Company……….
Profit and loss statement for the year ended………

(Rupees in )
Particulars Note Figures for the Figures for the
No. current reporting previous reporting
period period
I. Revenue from operations xxx xxx
II. Other Income xxx xxx
III. Total Income (I+II) xxx xxx
IV. Expenses: Cost of materials consumed xxx xxx
Purchases of Stock-in-Trade
Changes in inventories of finished goods
work-in-progress and Stock-in-Trade
Employee benefits expenses xxx xxx
Finance costs
Depreciation and amortization expenses
Other expenses
Total expenses xxx xxx
V. Profit before exceptional and xxx xxx
extraordinary items and tax (III-IV)
VI. Exceptional Items xxx xxx
VII. Profit before extraordinary items and xxx xxx
tax(V-VI)
VIII Extraordinary items xxx xxx
.
IX. Profit before tax (VII-VIII) xxx xxx
X. Tax expenses:
Current tax xxx xxx
Deferred tax xxx xxx
XI. Profit (Loss) for the period from xxx xxx
continuing operations (VII-VIII)
XII. Profit/(loss) from discontinuing xxx xxx
operations
XIII Tax expenses of discontinuing xxx xxx
. operations
XIV Profit/(loss) from Discontinuing xxx xxx
. operations (after tax) (XII-XIII)
XV. Profit (Loss) for the period (XI+XIV) xxx xxx
XVI Earning per equity share:
.
Basic xxx xxx
Diluted xxx xxx

Notes to Accounts
₹
Note 1: Revenue from Operation
i) Sale of goods X
X
ii) Sale of services X
X
iii) Trading commission X
X
vi) Less Excise duty X
X
Note 2: Other Income
i) Interest income (in case of a company other than a X
finance company) X
ii) Dividend from subsidiary Company X
X
iii) Dividend from companies other than subsidiary X
company X
iv) Net Gain on sale of Investment X
X
v) Net Gain on sale of fixed assets X
X
vi) Other non-operating income X
X
X
X
Note 3: Cost of Material Consumed
Opening Stock of Materials X
X
Add: Purchases of Materials X
X
Add: Carriage X
X
X
X
Less: Closing Stock of Materials X
X
X
X
Note 4: Changes in Inventories
Inventory at the end of the year X
X
Inventory at the beginning of the year X
X
X
X
Note 5: Employee Benefit Expenses
Salaries & wages X
 X
Contribution to P.F. X
X
Contribution to other funds X
X
Expenses on ESOP X
X
Expenses on ESPP X
X
Employee welfare expenses X
X
X
X
Note 6: Finance Cost
Interest on Borrowings from Banks Interest on Borrowings X
from others X
Interest on Debentures X
X
Finance charge on lease financing X
X
Interest levied by Tax department X
X
Commitment charges X
X
Discount / issue expenses on Debentures written off X
X
Processing charges X
X
Net Gain / Loss on foreign currency transactions X
X
X
X
Note 7: Depreciation and amortisation Expenses
Buildings X
X
Plant & Machinery X
X
Vehicles X
X
Equipment X
X
Furniture X
X
Brands X
X
Computer software X
X

Note 8: Other Expenses

Stores & spares X
X
Power X
X
Fuel and oil X
X
Rent X
X
Insurance X
X
Repairs & maintenance X
 X
Building X
X
Machinery X
X
Furniture. X
X
Vehicles X
X
Equipment X
X
Rates & Taxes X
X
Miscellaneous Expenses X
X
Provision for Doubtful Debts X
X
Payment to Auditors for:
Audit work. X
X
Taxation work X
X
Company law matter X
X
Management Services. X
X
Other services X
X
Distribution expenses X
X
Sales commission X
X
Advertising X
X
Show room expenses X
X
Discount allowed X
X
Loss on foreign currency transactions X
X
Exceptional items:
Restructuring cost X
X
Disposal of Investment Disposal of fixed assets X
X
Disposal of fixed assets X
X
Litigation settlement X
X
Reversal of provision X
X
Write down of stock X X
X X
Extra Ordinary Items:
Loss from attachment of property X
X
Loss from earthquake. X
X
Profit from Insurance claim. X X
X X
 X
X
Note 9: Surplus
Balance at the beginning X
X
Add: Net profit for the year X
X
Less: Transfer to Reserves X
X
Interim dividend X
X
Provision for dividend:
Equity X
X
Preference X X
X X
Dividend Distribution Tax X
X
Balance at the end transferred to Balance sheet X
X

Chapter 2: Final Account for Co-operating

Society(Consumer Co-operative Societies)

Illustration 1: (Pg 56)

You are required to prepare Trading and Profit & loss Account for
the year ended 31.3.2022 and a Balance Sheet as on that date
from the Trial Balance for the year ended 31.3.2022 and
adjustments given in respect of Khar Consumers Co-operative
Society, Bombay.
Trial Balance
Dr. ₹ Cr. ₹
Share Capital -- 50,000
Calls in arrears 5,000 --
Reserve Fund -- 7,500
Development Fund -- 2,500
Opening Stock of Consumer's Goods 55,000 --
Furniture 24,000 --
Education Fund -- 4,000
Creditors for Purchases -- 10,000
Sundry Debtors 15,000 --
Commission Payable -- 2,000
Salaries 35,500 --
Commission 8,700 --
Rent & Taxes 10,000 --
Postage 1,350 --
Traveling & Conveyance 1,200 --
Printing & Stationery 1,500 --
Dividend paid for 2021-22 4,500 --
Audit Fees 2,000 --
Interest on Investment -- 5,000
Profit & Loss Appropriation Account -- 30,000
Balance
Equipment 10,000 --
Admission Fees -- 250
Purchases 8,00,000 --
Carriage & Coolie Charges 20,000 --
Investments 50,000 --
Sales -- 10,30,00
0
Cash in hand 12,500 --
Cash at Bank 85,000 --
11,41,2 11,41,2
50 50

Adjustments:
1. Outstanding Rent payable on 31.3.2022 was ₹ 500.
2. Outstanding salary payable on 31.3.2022 was ₹ 1,000.
3. Of the salaries paid ₹ 1,500 was as an advance to employee on
31.3.2022.
4. Interest accrued on investments ₹ 1,000.
5. Directors recommend 10% Dividend to its shareholders and
transfer of ₹ 500 to Development Fund.
6. Charge 5% Depreciation on furniture.
7. Closing stock of consumers goods is valued at cost ₹70,000.
8. Provide ₹ 100 for Education Fund.
Solution:
Khar Consumers Co-operative Society
Trading A/c
For the year ended 31.3.2022
Particulars ₹ Particulars ₹
To Opening Stock of Consumers' 55,000 By Sales 10,30,00
Goods 0
To Purchase of Goods 8,00,000 By Closing Stock of Consumers 70,000
Goods
To Carriage and Collie Charges 20,000
To Gross Profit transferred to Profit & 2,25,000
Loss A/c
11,00,0 11,00,0
00 00

Profit and Loss A/c for the year ended 31.3.2022

Particulars ₹ Particulars ₹
To Salaries 35,500 By Gross Profit 2,25,00
0
2,25,0
00
+ Outstanding 1,000 By Interest on
36,500 Investment 5,000
Less: Advance 1,000 35,500 Add: Accrued 1,000
6,000
To Commission 8,700
To Rent & Taxes 10,000
Outstanding + 500 10,500
To Postage 1,350
To Travelling & Conveyance 1,200 By Admission 250
Fees
To Printing & Stationery 1,500
To Audit Fees 2,000
To Contribution to Education 100
Fund
To Depreciation on Furniture 1,200
To Net Profit transferred to Profit
& Loss
Appropriation A/c
1,69,70
0
2,31,2 2,31,2
50 50

Plan for Disposal of Surplus Fund

(Memorandum) Profit & Loss Appropriation A/c
Particulars ₹ Particulars ₹
To Dividend Paid 4,500 By Last year’s Balance 30,000
To Dividend proposed the current 4,500 By Net Profit of the current 1,69,70
year year 0
To Reserve Fund 42,425
25% of 1,69,700
To Transfer to Development Fund 500
To Balance carried forward to
Balance Sheet 1,47,77
5
1,99,7 1,99,7
00 00

Khar Consumer Co-operative Society Ltd.

Balance sheet as on 31.3.2022
Liabilities ₹ Assets ₹
Share Capital: Cash & Bank
Balance:
Authorized…. Shares of ₹ …. ? Cash on Hand 12,500
each
Subscribed.... Shares of ₹ .... Bank Balance 85,000
each 50,00
0
Less: Calls in Arrear (5,00 45,000 Investments 50,000
0)
Reserve Fund & Other Loans Nil
Funds:
Reserve Fund: Sundry Debtors 15,000
Balance 7,500 Salary Advance 1,500
Development Fund Current Assets
Balance 2,500 Stock 70,000
Education Fund 4,000 Fixed Assets
Add: Transfer 100 4,100 Furniture 24,00
0
Staff Provident Fund Nil Less: Depreciation (1,20 22,800
0)
Secured Loans Nil Equipment 10,000
Unsecured Loans Nil Other Items
Deposits Nil Prepaid Insurance Nil
Current Liabilities & Interest Accrued 1,000
Provisions Nil
Creditors 10,00
0
Outstanding Expenses
Rent 500
Commission 2,000
Salary 1,000 13,500
Profit & Loss A/c (25,500 + 1,95,20
1,69,700) 0
2,67,8 2,67,8
00 00

i) Current year's appropriation will be implemented next year

after approval by AGM.
il) Last year's dividend paid is deducted from surplus available
iii) Contingent Liability: Dividend recommended by Directors 10%
(AS 4 Revised)

Illustration 2: (Recommendation of dividend) (Pg 58)

From the following Trial Balance and the adjustments given in
respect of Jayashree Consumer Co-operative Society, Malkapur,
prepare the Final Accounts for the year ended 31.3.2022.
Trial Balance
As on 31.3.2022
Debit Credit
₹ ₹
Opening Stock of Fertilizers and Machinery 10,000 --
Share Capital -- 75,000
Deposits from Members -- 90,000
Printing and Stationery 3,000 --
Investment in Shares of District Co- 60,000 --
operative Bank
Investment in Shares of Co-operative
Purchases and Sales Society 36,000 --
Loan from Bank (Unsecured) -- 92,000
Loan to Members 1,35,00 --
0
Interest earned on Loan given to Members -- 45,000
Purchases of Fertilizers and Machinery 3,70,00 --
0
Sales of Fertilizers and Machinery -- 4,50,00
0
Office Equipment’s 25,000 --
Office Rent 5,000 --
Salaries 25,000 --
Travelling Expenses 5,000 --
Carriage Inward 3,500 ---
Freight 1,500 --
Interest paid 8,000 --
Reserve Fund -- 1,86,00
0
Cash in hand 51,000 --
Cash at Bank 2,00,00 --
 0
9,38,0 9,38,0
00 00

Adjustments:
1. Closing Stock of Fertilizers and Machinery as on 31.3.2022
was ₹ 70,000.
2. Outstanding office rent ₹ 1,000
3. Office Equipment’s are to be depreciated @ 5%.
4. Audit Fees are to be paid of ₹ 6,500
5. Directors Recommend a Dividend to Members @ 10%.
6. Contribute to Education Fund ₹ 100.
Solution:
Jayashree Consumers Co-operative Society
Trading A/c for the year ended 31.3.2022
Particulars ₹ Particulars ₹
To Opening Stock 10,000 By Sales 4,50,00
0
To Purchases 3,70,00 By Closing 70,000
0 Stock
To Carriage Inward 3,500
To Freight 1,500
To Gross Profit transferred to Profit & 1,35,00
Loss A/c 0
5,20,0 5,20,0
00 00

Jayashree Consumers Co-operative Society

Profit and Loss Account for the year ended 31.3.2022
Particulars ₹ Particulars ₹
To Printing and Stationery. 3,000 By Gross Profit 1,35,00
transferred to 0
To Office Rent 5,00 Profit & Loss a/c 45,000
0
+ Outstanding 1,00 6,000 By Interest
0
To Salaries 25,000
To Travelling Expenses 5,000
To Interest 8,000
To Depreciation on 1,250
Office Equipment’s
To Contribution to Education Fund 100
To Outstanding Audit Fees 6,500
To Net Profit transferred to Profit & Loss
Appropriation A/c
1,25,15
0
1,80,0 1,80,0
00 00

Plan for Disposal of Surplus fund

(Memorandum) Profit and Loss Appropriation A/c
Particulars ₹ Particulars ₹
To Reserve Fund 31,288 By Current year's Net 1,25,15
Profit 0
To Proposed Dividend 7,500
To Balance transferred to
Balance Sheet 86,362
1,25,1 1,25,1
50 50
Jayashree Consumers Co-operative Society
Balance Sheet as on 31.3.2022
Liabilities ₹ Assets ₹
I. Share Capital: I. Cash & Bank
Balances:
Authorized....Shares off .... each Cash on Hand 51,000
?
Subscribed.... Shares of ₹ .... each Bank Balance 2,00,00
75,000 0
II. Reserve Funds & II. Investments
Other Funds: Shares of Co-op. Bank 96,000
Reserve Fund: III. Loans and
Advances:
Balance 1,86,00 Loans to Members 1,35,00
0 0
Ill. Loans from Banks: 92,000 IV. Sundry Debtors Nil
Deposit from Members 90,000 V. Current Assets
IV. Current Liabilities Outstanding Stock
Expenses 70,000
Education Fund 100 VI. Fixed Assets
Rent 1,00 Equipment 25,00
0 0
Audit Fees 6,50 7,600 Less: Depreciation 1,250 23,750
0
V. Profit & Loss A/c 1,25,15
0
5,75,7 5,75,7
50 50

Note: Contingent Liability: Dividend recommended 10% (AS 4

Revised)

Format: (Pg 49-52)

Form N
[See Rule 62(1)]
Balance Sheet
Liabilities Assets
Instructions in Figures Figure Figures Figure Instructions in
accordance with for the s for for the s for accordance with
which liabilities Previou the Previou the which assets
should be made out s Year Curre s year Curre should be made
nt nt out
year year
(1) (2) (3) (4) (5) (6) (7) (8)
₹ ₹ ₹ ₹
I.Contributed by I. Share I. Cash and I. Fixed deposit
Government Capital Bank and
and by co-operative Authorized:sh Balance call deposits
societies, are of ₹… each A) Cash in with Central
and different Subscribed: hand Banks and other
classes o f (distinguishing B) Cash at approved
individualmembers s between the Bank: bankers should
hall b e various classes i) Current be shown under
shown separately. of capital and Accounts the heading
Terms of stating the ii) Saving “Investments”
redemption or particulars Bank and not under
conversion of specified below, Account the heading
any redeemable in respect of iii) Call “Cash and Bank
preference each class). Deposits on Balance”
shares s h o u l d be Shares of each Banks
mentioned. Less: calls in
arrears
Add: calls in
advance
I.A.
Subscriptions
towards
shares
II. a) Statutory II. Reserves II. II. The Nature of
Reserve Funds and Funds and Investment each
other reserve funds Other funds: s: investment and
shall be shown a) Statutory a)Governme the mode of
separately. Reserve Funds nt Securities valuation (cost
b) Additions and b) Building b) Other or market
deductions since last Funds Trustee value) should
balance sheet to be c) Special Securities be mentioned. If
shown under each of Development c) Non- the value of any
specified head. Fund Trustee security is less
c) Funds in the d) Bad and Securities than the market
nature of reserves Doubtful Debts d) Shares of value, a remark
and funds created Reserve other Co- to that effect
out of any profits for e) Investment operative should be made
specific purposes Depreciation Societies against each
should be shown Fund e) Shares, item.
separately. f) Dividend Debentures
Equalization or Bonds of
Fund companies
g) Bonus registered
Equalization under the
Fund Companies
h) Reserve for Act
overdue f) Fixed
interest Deposits
i) Other Funds
III. Staff Provided III. Staff III. 1. III. Quated and
Fund any other Provident Investment unquoted
insurance or Bonus Fund of staff securities
Funds maintained for Provident should be
the benefit of the fund shown
employees should be 2. Advances separately,
shown separately. against Staff loans due by
Provident societies and
Fund. individual
members
should be
shown
separately.
IV. The name of the IV. Secured IV. Loans & IV. In case of
security Loans: Advances: Central Banks
should be specified in a) Debentures 1. a) Loans and other
each b) Loans, b) Overdrafts federal
case. Where loans overdrafts and c) Cash societies, loans
have been cash credits Credits: due by societies
guaranteed by from banks i) against and individual
Government or c) loans from pledge of members
State Co-operative or government goods should be
Central d) other ii) against shown
Banks, a mention secured loans hypothecatio separately.
thereof n of goods
should also be made iii) clean
together (of which
with the maximum overdue₹…)
amount of 2. Loans due
such guarantee. by Managing
Loans from (a) Committee
Government, (b) Members ₹
State Co- Loans due by
operative Secretary
Bank orCentral and other
bank. State Bank of employees ₹
India and …
other Banks should
be shown
separately.
V. Unsecured V. Sundry
Loans: Debtors
a) Loans, cash a) Credit
credits and Sales
overdraft from b) Advances
Central Banks c) Others
b) From
Government
c) From others
d) Bills Payable
VI. Deposits from VI. Deposits: VI. Current VI. Mode of
societies and a) Fixed Assets: Valuation and
individuals should be Deposits a) Stores and stock shall be
shown separately. b) Recurring spare parts stated and the
deposits b) Loose amount in
c) Thrift or tools respect of raw
Saving deposits c) Stock-in- materials partly
d) Current trade finished goods
deposits d) Works in and stores
e) Deposits at Progress required or
Call consumption
f) other should be
deposits stated
g) Credit separately.
balance in cash Mode of
credit and valuation of
overdrafts works in
accounts progress shall
be stated.
VII. Current VII. Fixed VII. Under each
Liabilities and Assets: head the
Provisions: a) Land and original cost
a) Sundry Building and additions
creditors b) there to and
b) Outstanding Leaseholds deductions
Creditors: c) Railways there from
i) for purchases siding made during
ii) for expenses d) Plants and the year and
including Machinery the
salaries of staff, e) Loose total depreciatio
rent, etc. tools, n written of or
c) Advance, tackiest and provided upto
recoveries for other the end of the
 the portion for equipment year should be
which value has f) Deadstock stated.
still to be given g) Furniture
viz. unexpired and fittings
subscriptions, h) Live-stock
premiums, i) Vehicles
commission etc. etc.
VIII. Unpaid VIII.
Dividends Miscellaneo
us
Expenses
and Losses:
a) Goodwill
b)
Preliminary
expenses
c) Expenses
concerned
with the
issue of
shares and
dentures
including
underwriting
charges,
brokerage,
etc.
d) Deferred
revenue
expenditure
IX. Interest IX. Other
accrued due Items:
but … not a) Prepaid
paid expenses
b) Interest
accrued but
not due
c) other
items (to be
specified)
X. Other X. Profit &
liabilities (to Loss A/c:
be specified) Accumulated
losses not
written off
from the
reserve or
any other
funds
XI. Contingent XI. Profit & XI. Current
liabilities which have Loss A/c Losses
not been provided for Profits for last
should also be year
mentioned in the Less:
balance sheet by way appropriations
of a foot-note. Add: Current
profits

Form N
Profit & Loss Account
Last Expenditure This year’s Last Income This year’s
year’s figures ₹ year’s figures ₹
figures np figures np
Rs, np ₹ np
1. Interest: 1 Interest
. Received:
a) Paid ₹ a) On loans &
advances
b) Payable ₹ b) On
Investment
2. Bank Charges 2 Dividend
. received on
shares
3. Salaries and Allowances of staff 3 Commission
.
4. Contribution to staff provided 4 Miscellaneous
fund . Income
5. Salary and Allowance of Managing a) Share
Directors transfer fees
b) Rent
6. Attendance fees and Travelling c) Rebate in
expenses of Directors and Income
Committee Members d) Sales of
forms
e) Other Income
7. Travelling expenses of staff 5 Land, Income
. and
8. Rent, Rates and taxes Expenditure
accounts
9. Postage, telegram and telephone
Charges
10 Printing & Stationery
.
11 (Contingencies) General expenses
.
12 Audit fees
.
13 Bad debts written off or provision
. made for bad debts
14 Depreciation on fixed assets
.
15 Land, Income and Expenditure
. Account
16 Other Items
.
17 Net profit carried to Balance
. Sheet

Note: (1) In the case of marketing societies, consumer societies

and similar other societies which have undertaken trading
activities, the Profit and Loss Account shall be divided into two
parts showing separately the Trading Account and the Profit and
Loss Account. (2) In case of producers' societies, processing
societies, forest laborers’ societies and other societies which have
undertaken production activities, the manufacturing account shall
also be prepared in addition.
 Chapter 3: Final Account for Co-operative Society (Co-
operative Housing Society)

Illustration 13: (Pg 111)

Trail Balance as on 31.3.2022
₹ ₹
Cash 324.35 Member’s contribution 1,68,000.0
for 0
Bank Balance with MSCB 3,751.00 Maintenance
Dues from Members (Including Advance 1298,393.0 Interest on Bank 130.00
2,690) 0 Interest from Members 1,63,348.0
0
Prepaid Insurance 2,582.00 Share Capital 500.00
Prepaid Subscription to. Hsg. 900.00 Repairs Fund 1,54,145.7
federation. Reserve Fund 0
1,11,200.0
0
Building 247,000.00 Entrance Fees 28,243.50
Electricity Charges 5,890.00 Loans: Mayuresh 29,330.00
Repairs & Maintenance 3,765.00 : Mahesh 45,119.0
Salary 17,900.00 Accounting Charges
Printing & Stationery 3,422.50 Payable 4,800.00
Electrical Lamps 2,067.00 Consultancy Fees 4,750.00
Payable
Conveyance 10,487.00 Audit Fees Payable 1,618.00
Postage & Telephone 3,227.00 Education Fund 120.00
Payable
Accounting Charges 4,800.00 Salary Payable 1,350.00
Lease Rent 714.00 Electricity Charges 400.00
Audit Fees 1,618.00 Payable
Education Fund 120.00 Professional Charges 500.00
Subscription to Hsg. Federation 300.00 Payable
Members Contribution
Property Tax 15,730.00 Towards Flat 2,47,000.0
0
Interest on Loans 600.00 Income & Expenditure 6,73,088.6
A/c 5
Non Agril. Tax 2,071.00
Insurance 3,086.00
Professional Charges 4,750.00
Misc. Expenses 145.00
16,33,642. 16,33,642.
85 85

Prepare income & expenditures A/c for the year ended 31 march st

2022 and balance sheet as on that date

Solution:
Lake View Co-op Housing Society ltd. Mumbai
Balance sheet as at 31.3.2022
Liabilities ₹ Assets ₹
SHARE CAPITAL CASH & BANK
Share Capital 500.00 MEMBERS
RESERVE FUND & OTHER Cash 324.35
FUNDS Mumbai Dist.
Major Repair Fund 1,54,145.7 Central Bank 3,751.00 4,075.35
0 SUNDRY
RESERVE FUND DEBTORS
Opening Balance 1,11,200. Outstanding
00
Add: Entrance Fees 28,243,5 1,39,443.5 Dues from
0 0 Members 12,95,703.
00
LOAN & ADVANCES Advance
Consultancy
Mayuresh (Imprest) 29,330.0 Ratnaparkhi 2,690.00 12,98,393.
0 FIXED ASSETS 00
Loan from Mahesh 45,119.0 74,449.00 Building at Cost 2,47,000.0
0 OTHER ITEMS 0
CURRENT LIAB, & PROVISIONS Prepaid Insurance 2,582.0
Accounts Writing Charges Payable Prepaid
4,800.00 Subscription of
Consultancy Fee Pay. Hsg Federation 900.00 3,482.00
(Ratnaparkhi) 4,750.00
Statutory Audit Fees Payable
1,618.00
Education Fund Payable
120.00
Salary to Employees Payable
1,350.00
Electricity Charges Payable
400.00
Professional Charges Payable 13,538.00
500.00
MEMBER'S CONTRIBUTION
TOWARDS FLATS
Contr. of Members for Building 2,47,000.0
0
INCOME & EXPENDITURE A/C
Opening Balance 6,73,088.
65
Add: Surplus During the Year
2,50,785. 9,23,874.1
50 5
TOTAL 15,52,950. 15,52,950.
35 35

Lake view co-op housing society ltd. Mumbai

Income & expenditure A/c for period 01.04.2017 to
31.03.2022
Expenditure ₹ Income ₹
PROPERTY EXPENSES BY CONTRIBUTION
Electricity Charges 5,890.00 FROM MEMBERS
Building Repairs & Maintenance 3765.00 Maintenance / Service 168000.00
Charges
TO ESTABLISHMENT & ADMINISTRATIVE BY INTEREST
EXPENSES Interest from Bank 130.00
Salary to Employees 17900.00 Interest from
Printing & Stationary 3422.50 Members 163348.00
Electrical Lamps 8 Accessories 2067.00
Conveyance 10487.00
Postage, Telephone & Telegram 3227.00
Accounting Writing Charges 4800.00
Lease Rent 714.00
Statutory Audit Fees 1618.00
Education Fund 120.00
Subscription to V.N. Association 300.00
Property Tax 15730.00
Interest on Loan (Mr. Khambete) 600.00
Non-Agricultural Tax 2071.00
Insurance 3086.00
Professional Charges 4750.00
Miscellaneous Expenses 145.00
Excess of Income Over
Expenditure 250785.50
TOTAL 3,31,478. 3,31,478.
00 00

Note:
As per section 79 (1 A) (c) by introduced by Amendment Act,
2013 and Bye law No. 147, every Co-operative Housing Society
has to prepare plan for disposal of surplus fund and it is reported
in the annual report for approval by members in the AGM. The
plan for disposal shows transfer to reserve fund, provision for
dividend etc. In view of this provision the adjustment regarding
transfer to reserve fund and provision for dividend cannot be
given effect to in the said financial statements but the effect will
have to be given in the next Financial Year after its approval in
the AGM.
Alternatively
Plan for disposal of surplus funds
Particulars ₹ Particulars ₹
To reserve fund 25% of 62,696 = By Balance b/d 6,73,088 =
250785=50 38 By Surplus during 65
the 2,50,785 =
50
To balance c/d 8,61,177 = year
77
9,23,874 = 9,23,874 =
15 15

Illustration 14: (Pg 113)

Following trial balance is taken from the books of:
Adarsha Co-op Hsg. Society
Trial balance as on 31.3.2022
Debit Balance ₹ Credit Balance ₹
Cash Capital contribution 20800.00
Bank 131023.01 Members contribution
Buildings 22916500.0 Towards land and 22916500.0
0 building 0
Furniture 11784.00 Sinking fund 141663.00
Fire Extinguishers 24933.00 Reserve fund 28404.00
Water Pump 7034.00 Repair and Maint. Fund 394022.00
Garbage Trolley 1596.00 Lease rent fund 334800.00
Water Tank 1306.00 Expenses payable 20412.00
Investment: TDS Payable 542.00
Sinking Fund 31975.00 Creditors 1466708.00
Reserve Fund 25197.00 Income and 2662908.51
expenditure
Repairs Fund 79542.00 A/c
Maintenance Fund 15704.00 Contribution from
member
Other Investments 4905.00 Property Tax 182760.00
Deposits 33480.00 Water charges 153600.00
Prepaid Insurance 15830.00 Lift maintenance 44880.00
Prepaid Education Fund 240.00 Service charge 235200.00
Insurance 21120.00
Debtors 4838248.00 Well water 10560.00
Electricity Charges 170260.00 Interest from bank 8818.00
Building Repairs 64497.00 Interest from 447460.00
members
Rent, Rates & Taxes 178227.00 Donation for cultural
Water Charges 153600.00 Programs 6912.00
Salary 16250.00 Other income 3642.00
Printing & Stationery 11754.50 Bank charges 1136.00
Conveyance 673.00
Electrical Repairs 6127.00
Postage 2641.00
Education Fund 240.00
Subscription to Hsg. 300.00
Federation
Sundry Expenses 950.00
Security Charges 127229.00
Lift Maintenance 48353.00
Fire Insurance 20762.00
Accounting Charges 18000.00
Structural Audit 16854.00
Audit Fees 3177.00
Meeting Expenses 5245.00
Bank Charges 475.00
Legal Charges 114052.00
Expenses on Cultural 3884.00
Programme
29102847. 29102847.
51 51

Adjustments:
Provide depreciation on
Furniture at 10%
Fire Ext. at 15%
Water Pump at 15%
Garbage trolley at 15%
Water Tank 15%
You are required to prepare Income & Expenditure /e for the year
ended 31 March, 2022 and Balance sheet as on that date.
st
Solution:
Adarsha co. op. Housing society ltd Mumbai
Balance sheet as on 31.03.2022
Liabilities ₹ Assets ₹
I. SHARE CAPITAL I. CASH & BANK 131023.01
Contr. From Members 20800.00 II. INVESTMENTS
Investment-Sinking
Members Contribution Fund 31975.00
Cont. towards Land & 22916500.0 Investment- Reserve
Building 0 Fund 25197.00
II. RESERVE FUND AND
OTHER FUNDS Investment- R&M fund 79542.00
Sinking Fund 141663.00 Maintenance Fund 15704.00
Reserve Fund 28404.00 Other Investment 4905.00
Repairs & Maintenance
Fund 394022.00 ADVANCE / DEPOSIT
Lease Rent Fund 334800.00 Deposits 33480.00
III. CURRENT LIABILITIES III. SUNDRY DEBTORS
TDS Payable 542.00 Outstanding Debtors 4838248.00
SUNDRY CREDITORS IV. FIXED ASSETS
22916500.0
Creditors 1466708.00 Building at cost 0
Expenses Payable 20412.00 Furniture & Fixture
IV. INCOME & 3591.0
EXPENDITURE A/c Opening balance 0
2662908. Add: Addition during the 8193.0
Opening Balance 51 year 0
Add: Surplus during the 146129.5 11784.
year 0 2809038.01 00
1178.0
Less: 10% Depreciation 0 10606.00
Fire Extinguisher
7214.0
Opening Balance 0
Add: Addition during the 17719.
year 00
24933.
00
3740.0
Less: 15% Depreciation 0 21193.00
Water Pump
7034.0
Opening Balance 0
1055.0
Less: 15% Depreciation 0 5979.00
Garbage Trolley
1596.0
Opening Balance 0
Less: 15% Depreciation 239.00 1357.00
Water Tank
1306.0
Opening Balance 0
Less: 15% Depreciation 196.00 1110.00
OTHER ITEMS PREPAID
EXPENSES
15830.
Prepaid Insurance 00
Prepaid Education Fund 240.00 16070.00
 28132889. 28132889.
TOTAL 01 TOTAL 01

Adarsha Co. Op. Housing Society Ltd Mumbai

Income & Expenditure A/c for the period 01/04/2017 to
31/03/2022
Expenses ₹ Income ₹
BY CONTRIBUTION FROM
TO PROPERTY EXPENSES MEMBERS
Electricity Charges 170260.00 Property Tax 182760.00
Building Repairs & Maintenance 64497.00 Water Charges 153600.00
Rent, Rates & Taxes 178227.00 Lift Maintenance 44880.00
To Establishment & Administrative
Expenses Service Charge 235200.00
Water Charges 153600.00 Insurance 21120.00
Salary 16250.00 Well Water 10560.00
Printing & Stationery 11754.50 BY INTEREST
Conveyance 673.00 Interest from Bank 8818.00
Electrical Repairs & Maintenance 6127.00 15% Interest from Members 447460.00
Postage 2641.00 BY OTHER INCOME
Education Fund 240.00 Conr. & Donations for Jashan 6912.00
Subscription to Hsg. Federation 300.00 Other Income 3642.00
Sundry Expenses 950.00 Bank Charge 1136.00
Security Charges 127229.00
Lift Maintenance Charges 48353.00
Fire Insurance Premium 20762.00
Accounts Writing Charges 18000.00
Structural Audit 16854.00
Statutory Audit Fees 3177.00
Meeting Expenses 5245.00
Bank Charges 475.00
New Water Line Connection 0.00
Legal & Professional Charges 114052.00
Cultural Programme Expenses 3884.00
Depreciation 6408.00
TO INCOME & EXPENDITURE
Excess of Income Over Expenditure 146129.50
1116088. 1116088.
TOTAL 00 TOTAL 00

Plan for Disposal of Surplus Fund

Particulars ₹ Particulars ₹
To Transfer to Reserve 36532.38 By Balance b/d 2662908.5
Fund 1
To Balance c/d 2772505.6 By Surplus for the 146129.50
3 year
2809038. 2809038.
01 01

Format: (Pg 96-99)

Form N
[See Rule 62(1)]
Balance Sheet
Liabilities Assets
 Instructions in Figures Figure Figures Figure Instructions
accordance with for the s for for the s for in
which liabilities Previo the Previo the accordance
should be made out us Curre us Curre with which
Year nt year nt assets
year year should be
made out
(1) (2) (3) (4) (5) (6) (7) (8)
₹ ₹ ₹ ₹
I.Contributed by I. Share I. Cash and Bank I. Fixed
Government Capital Balance deposit and
and by co-operative Authorized:s A) Cash in hand call
societies, hare of ₹… B) Cash at Bank: deposits
and different each i) Current Accounts with
classes o f Subscribed: ii) Saving Bank Central
individualmembers (distinguishing Account Banks and
shall b e between the iii) Call Deposits on other
shown separately. various classes Banks approved
Terms of of capital and bankers
redemption or stating the should be
conversion of particulars shown
any redeemable specified under the
preference below, in heading
shares s h o u l d be respect “Investmen
mentioned. of each class). ts” and not
Shares of each under the
Less: calls in heading
arrears “Cash and
Add: calls in Bank
advance Balance”
I.A.
Subscription
s towards
shares
II. a) Statutory II. Reserves II. Investments: II. The
Reserve Funds and Funds and a)Government Nature of
other reserve funds Other funds: Securities each
shall be shown a) Statutory b) Other Trustee investment
separately. Reserve Funds Securities and the
b) Additions and b) Building c) Non-Trustee mode of
deductions since Funds Securities valuation
last balance sheet c) Special d) Shares of other (cost or
to be shown under Development Co-operative market
each of specified Fund Societies value)
head. d) Bad and e) Shares, should be
c) Funds in the Doubtful Debts Debentures or Bonds mentioned.
nature of reserves Reserve of companies If the value
and funds created e) Investment registered under the of any
out of any profits for Depreciation Companies Act security is
specific purposes Fund f) Fixed Deposits less than
should be shown f) Dividend the market
separately. Equalization value, a
Fund remark to
g) Bonus that effect
Equalization should be
Fund made
h) Reserve for against
overdue each item.
interest
i) Other Funds
III. Staff Provided III. Staff III. 1. Investment of III. Quated
Fund any other Provident staff Provident fund and
insurance or Bonus Fund 2. Advances against unquoted
Funds maintained Staff Provident Fund. securities
for the benefit of should be
the employees shown
should be shown separately,
separately. loans due
by societies
and
individual
members
should
be shown
separately.
IV. The name of the IV. Secured IV. Loans & IV. In case
security Loans: Advances: of Central
should be specified a) Debentures 1. a) Loans Banks and
in each b) Loans, b) Overdrafts other
case. Where loans overdrafts and c) Cash Credits: federal
have been cash credits i) against pledge of societies,
guaranteed by from banks goods loans due
Government or c) loans from ii) against by societies
State Co-operative government hypothecation of and
or Central d) other goods individual
Banks, a mention secured loans iii) clean members
thereof (of which overdue₹ should be
should also be made …) shown
together 2. Loans due by separately.
with the maximum Managing Committee
amount of Members ₹ Loans
such guarantee. due by Secretary and
Loans from (a) other employees ₹…
Government, (b)
State Co-
operative
Bank orCentral
bank. State Bank of
India and
other Banks should
be shown
separately.
V. Unsecured V. Sundry Debtors
Loans: a) Credit Sales
a) Loans, cash b) Advances
credits and c) Others
overdraft from
Central Banks
b) From
Government
c) From others
d) Bills Payable
VI. Deposits from VI. Deposits: VI. Current Assets: VI. Mode of
societies and a) Fixed a) Stores and spare Valuation
individuals should Deposits parts and stock
be shown b) Recurring b) Loose tools shall be
separately. deposits c) Stock-in-trade stated and
c) Thrift or d) Works in Progress the amount
Saving in respect
deposits of raw
d) Current materials
deposits partly
e) Deposits at finished
Call goods and
f) other stores
deposits required or
g) Credit consumptio
 balance in n should be
cash credit stated
and overdrafts separately.
accounts Mode of
valuation of
works in
progress
shall be
stated.
VII. Current VII. Fixed Assets: VII. Under
Liabilities a) Land and Building each head
and b) Leaseholds the original
Provisions: c) Railways siding cost and
a) Sundry d) Plants and additions
creditors Machinery there to
b) Outstanding e) Loose tools, and
Creditors: tackiest and other deductions
i) for equipment there from
purchases f) Deadstock made
ii) for g) Furniture and during the
expenses fittings year and
including h) Live-stock the total
salaries of i) Vehicles etc. depreciatio
staff, rent, etc. n written of
c) Advance, or provided
recoveries for upto the
the portion for end of the
which value year should
has still to be be stated.
given viz.
unexpired
subscriptions,
premiums,
commission
etc.
VIII. Unpaid VIII.
Dividends Miscellaneous Exp
enses and Losses:
a) Goodwill
b) Preliminary
expenses
c) Expenses
concerned with the
issue of shares and
dentures including
underwriting
charges, brokerage,
etc.
d) Deferred revenue
expenditure
IX. Interest IX. Other Items:
accrued due a) Prepaid expenses
but … not b) Interest accrued
paid but not due
c) other items (to be
specified)
X. Other X. Profit & Loss
liabilities (to A/c:
be specified) Accumulated losses
not written off from
the reserve or any
other funds
XI. Contingent XI. Profit & XI. Current Losses
liabilities which Loss A/c
have not been Profits for last
provided for should year
also be mentioned Less:
in the balance sheet appropriations
by way of a foot- Add: Current
note. profits
Note: Under Rule 62, the Form N prescribes format of profit &
loss Account and Balance Sheet. However, the format of Receipt
& Disbursement A/c is not prescribed.
Income and Expenditure A/c
For the year ended _______
Expenditure Rs Income Rs
. .
To Members Contribution By Member's Contribution
towards: towards:
Municipal property tax X Property Tax
Water Charges X XX
Electricity Charges X Water Charges
Lease Rent X XX
Insurance X Repairs and Maint XX
Common Expenses X Electricity Charges
Salary and Bonus X XX
Security Charges X Administration Cost
Repairs (Building) X XX
Repairs (Lift) X Employee Costs
Repairs (Plumbing) X XX X
Repairs (General) X Common Expenses X
Repairs (Inter com) X XX X
Non-Agreement Tax X Insurance X
To Pest Control Expenses X XX X
To Printing & Stationary X Parking Charges X
To Conveyance X XX X
To Postage & Telephone X Non-occupancy Charges XX X
To Accounting and X Interest from Members XX X
Professional Fees X By Sale of Scrap X
To Government Audit Fees X By Interest from Bank X
To Contribution to Education X By Donations Received X
Fund X By Penal Interest
To Meeting Expenses X By Non-Occupancy Charges X
To Misc. Expenses X By Interest on the defaulted X
To Bank Charges X Charges
To Membership / Subscription X
fees X
To Depreciation: X
Building XX X
Furniture XX X
Water Pump XX X
Fire Extinguishers XX X
Garbage Trolleys XX X
Water Tank XX X
X
Surplus: X
Reserve Fund 25% XX X
Transfer to B/s 75% XX X
X
X
X
X
X
X
 X -
X X
X X
X
X

X
X

X
X
X
X

X
X
X
X

Chapter 4: Investment Account

Illustration: 26 (Ex-interest / Cum Interest) (Pg 162)
During the year ended 31st March 2022, Mr. Ravi bought and sold
the following 12% Debentures of 100 each of ABC Ltd. Interest
being payable by ABC Ltd. on 1st April and 1 October each year.
st

Date Particulars
1/6/21 Bought 1,050 debentures at₹ 95 ex-
interests
1/9/21 Bought 350 debentures at ₹90 cum-
interest
1/12/2 Sold 700 debentures at₹ 95 ex-
1 interests
1/2/22 Bought 500 debentures at₹ 96 ex-
interests
Books are closed on 31st March every year. Market price on 31st
March 2022 was ₹ 90 per debenture. You are required to prepare
investment in 12% debenture in ABC Ltd. account for the year
ended 31st March 2022.
Solution:
In the Books of Ravi
Investment in 12% Debentures in ABC Ltd. (Interest
1 April and 1 October)
st st

Date Particulars No. of Interes Amt Date Particulars N.V. Intere Amt.
Deb. t st

2021 2021

1/6/2021 To Bank 1,050 2100 99750 1/10/2021 By Bank 8400

 (Purchase) (Int.)

1/9/2021 To Bank 350 1750 29750 1/12/2021 By Bank 700 4200 66500
(Purchase) (Sale)

1/12/202 To P/L A/c 1750 31/03/202 By Bal c/d 120 7200 10800
1 2 0 0

1/02/202 To Bank 500 2,000 48,000 31-3-2022 By P/L A/C 4750

2 (Purchase)

31/3/22 To P/L A/c 13,950

Total 1900 19800 17925 Total 190 1980 17925

0 0 0 0

Working Note:
Purchase on 1.6.2021 ex-interest
Ex interest purchase price 1,050 x 95
99,750
Interest due on 1,05,000 for 2 months 1,05,000 x 12/100 x 2/12
2,100
(from 1 April to 1 June)
st st

Sept 1 2021
st

Cum Interest Purchase Price 350 x 90

31,500
Interest due on 35,000 from 1** April to 1** Sept. for 5 Months
35,000 x 12/100 x 5/12
1,750
Purchase Price
29,750
1 Oct 2021 Interest due for 6 months on 14,000 x 12/100 x 6/12
st

8,400
(1,050 + 300 = 1,400 debenture)
1 Dec. 2021 Sale Ex-Interest price
st

Ex-interest Sale Price 700 × 95

66500
Ex-interest due on 70,000 from 1st Oct to 1st Dec for 2 months
1400
70,000×12/100×2/12
P/L on Sale of Debenture
Cost of Debenture sold (129500×1,400) ×700
64750
Selling Price
66,500
Profit
1750
1 Feb. 2022 Purchase Ex-Interest
st

Ex interest purchase price = 500 × 96

48,000
Interest due on 50,000 for 4 months
From 1st Oct 2021 to 1 Feb,2022 50,000×12/100×4/12
st

2,000
Interest due on Closing Balance of 1,200 deb. due
From 1st Oct 2021 to 31st March 2022 for 6 months:
1,20,000×12/100×6/12
7,200

Illustration: 27 (Valuation of Investments) (Pg 163)

Bangalore Investments hold 1,200 - 6% debentures of ₹100 each
in Minerva Ltd. as of 1st April, 2021 at a cost of ₹1,40,000.
Interest is payable on 30th June and 31st December each year.
Other details are as under:
Date Details ₹

01.06.20 400 Debentures are purchased cum- 4080

21 interest at 0

31.08.20 400 Debentures are purchased ex- 3840

21 interest at 0

30.11.20 600 Debentures are sold cum-interest 6450

21 for 0

31.12.20 800 Debentures are sold ex-interest for 7730

21 0
Prepare Investment Account valuing closing balance on 31st
March, 2022 at cost or market price, whichever is lower. The
debentures are quoted at par on 31st March, 2022.
Solution:
In the Books of Bangalore Investments
6% Debentures in Snow Ltd. Account
(Interest: 30th June, 31st December)
Date Particulars W Nominal Incom Capital Date Particulars W Nominal Incom Capita
N Value ₹ e N Value ₹ e l

2021 2021

April To Balance b/d 1 120000 1800 1,40,0 June By Bank A/c 3 4800
1 00 30

June To Bank A/c 2 40000 1000 39800 Nov By Bank A/c 5 60000 1500 63000
1 30

Nov 1 To Bank A/c 4 40000 800 38400 NOV3 By Profit & 6 2460
0 Loss A/c

Dec.3 By Bank 7 80000 2400 77300

1 A/c

Dec.3 By Profit & 8 9980

1 Loss A/c
 Dec.3 By Bank A/c 9 1800
1

2022 2022

Mar.3 To Profit & Loss 7800 Mar.3 By balance 10 60000 900 60000
1 A/c (balancing 1 c/d
figure)

Mar.3 By Profit & 11 5460

1 Loss A/c

200000 1140 21820 200000 1140 21820

0 0 0 0

Working Note
1. Accrued Interest on Opening Balance for 3 months (January to
March):
₹1,20,000×6/100×3/12)
₹1800
2. (i) Price Paid:
₹40,800
(ii) Purchased After Due Date:
Accrued Interest for 5 months (January to May):
(₹40,000×6/100×5/12)
₹1,000
(iii) Purchased Cum-Interest, so Cost: (₹40,800−1000)
₹39,800
3. Interest amounts up to 30 June received (160000 x 6/100 x
th

6/12) ₹4800
4.
i) Price Paid ₹
38400

ii) Purchased after due date; so accrued interest for 4 months (40000 x 6/100 x ₹
(July to October) 4/12) 800

iii) Purchased ex-interest ₹

38400

5.
i) Price Received ₹
64500

ii) Sold after due date; so, interest due for 5 months (July to (60000 x 6/100 x ₹
November) 5/12) 1500

iii) Sold cum-interest; so, credit to capital (₹ 64500 – 1500) ₹

63000

6.
Loss on Sale:

Sale Proceeds ₹
63000

Less: Cost on ₹
Investments Sold 65460

Loss on Sale ₹
2460

7.
i) Price Received ₹
77300

ii) Sold after due date; so, interest due for 6 months (July to (80000 x 6/100 x ₹
December) 6/12) 2400

iii) Sold ex-interest ₹

77300

8.
Loss on Sale:

Sale Proceeds ₹
77300

Less: Cost on ₹
Investments Sold 87280

Loss on Sale ₹
9980

9. Interest amount upto 31 December received

st
(60000 x 6/100
x 6/12) ₹1800
10.
Accrued Interest on closing balance for 3 months (January (₹ 60000 x 6/100 x
to March) 3/12) ₹ 900

11.
Loss on Valuation
31.3.2022

Market Price (at par) ₹

60000

Cost of Investments ₹
65460

Loss on Valuation on ₹ 5460

31.3.2022

Cost of Investment Sold

Date Particulars Face Cost
Value ₹ ₹

1.4.2021 Opening 120000 14000

Balance 0

1.6.2021 Purchased 40000 39800

30.6.202 Balance 160000 17980

1 0

1.11.202 Purchased 40000 38400

 1

200000 21820 (212800 / 200000) x 60000 =

0 65460

30.11.20 Sold 60000 65460

21

140000 15274 (152740 / 140000) x 80000 =

0 87280

31.12.20 Sold 80000 87280

21

31.12.20 Balance 60000 65460

21

Format: (Pg 149-151)

Investment Account
(fixed interest-bearing securities)
For the year ending ____ (due date of the interest _____)
Dat Particulars Nominal Incom Capital Dat Particular Nominal Incom Capital
e Value e Or Cost e Value e Or Cost

1 To balance b/d xx xx xx 3 by bank (sale ex- xx xx xx

(opening balance) interest)

1 to bank purchase, xx xx xx 4 by bank (sale cum xx xx xx

(ex-interest) interest)

2 to bank (cum xx xx xx 5 by P&L a/c (loss xx

interest) on sale)

5 to p& l a/c (profit xx 6 by bank (interest xx

on sale) received)

8 to P&L a/c xx 7 by balance c/d xx

(transfer of (accrued interest)
interest

9 by balance c/d xx
(value at the end)

10 by P&L a/c (loss in xx

valuation)

xx xx xx xx xx xx

RECORDING OF TRANSACTIONS OF FIXED INCOME EARNING

SECURITIES

1. Purchase (ex- interest)

Enter N.V. in NV column on debit side.
Enter cost of purchase in capital column.
Enter accrued interest in income column.

2. Purchase (cum-interest)
Enter N.V. in NV column.
Enter accrued interest in income column.
Enter price less accrued interest in capital column.

3. Sale (ex-interest)
Enter N.V. in NV column.
Enter accrued interest in income column.
Enter price received in capital column.

4. Sale (cum interest)

Enter N.V. in NV column.
Enter accrued interest in income column.
Enter price less accrued interest in capital column.

5. Profit
Enter profit on sale of security in capital column
Profit = Weighted Average Cost -Sale Price
Loss
Enter loss on sale in capital column.
Loss = Weighted Average cost -Sale Price.

6. Interest Received
Calculate interest received on due date and enter it in income
column

7. Interest Accrued
Calculate accrued interest and enter it in income column.

8. Transfer of Interest
Balance interest column and transfer the balance to P&L a/c

9. Value at the end

Value the securities at cost or M.V. whichever is lower and enter it
in capital column.

10. Loss on Valuation

Any loss on valuation i.e. cost loss M.V. at the year end and enter
it in capital column.
Loss = Cost - M.V. of investment at the year end.

Investment Accounting
(shares) for the year ending
Dat particulars Nominal Dividen Capital Dat Particulars Nominal Dividen Capital
e value Rs d or cost e value d or cost
Rs
 1 To Balance b/d xx xx 5 By bank xx xx
(opening balance) a/c(dividend
received)

2 To bank xx xx 6 By bank xx xx
a/c(purchase of a/c(sale ofshares)
share s)

3 To bonus xx 7 By profit &loss xx

shares(bonus a/c (loss on sale)
shares allotted)

4 To bank a/c(rights xx xx 8 By balance c/d xx xx

shares subscribed)

7 To P&L a/c(profit on xx 9 By p& l a/c(loss on xx

sale) valuation)

10 To P&L a/c(transfer xx
of dividend)

xx xx xx xx xx xx

Procedure Of Recording Shares

1. Record opening balance

i) face value in N.V. column
ii) Cost in capital column

2. Purchase of shares:
i) Record N.V. in NV column
ii) Record cost in capital column

3. Bonus shares
i) Record N.V. in NV column
ii) Do not enter anything in cost column

4. Rights shares
i. Record N.V. in NV column.
ii. Record cost in capital column.

5. Dividend Received
Record pre-acquisition dividend in capital column
Record post-acquisition dividend in dividend column

6. Sale of shares
iii. Record N.V. in NV column.
iv. Record amount received in capital column.

7. a) loss on sale
Record loss on sale in capital column on credit side
b) Profit on Sale
Record profit on sale in capital column on debit side

8. Balance
Record closing balance NV in NV column and cost in capital
columns.

9. Loss on valuation
Record loss on valuation of shares in hand in capital column on
credit side

10. Balance on dividend account

Transfer balance on dividend account to profit &loss account on
debit side of investment account.

Chapter 5: Mutual Funds

Illustration 16: (Pg 222)
Suraj Mutual Fund held the following securities as on 31 March
st

2022:
Company Market Value as on 31 March No. of Shares
st

Name 2022 held

(Value per share in Rs.) (Units)

Kaira 250 20000

Charu 320 30500

Meena 460 20050

Manju 980 5550

Apart from the above investments it also had Rs. 2500000 as

cash and Rs.1250000 as current assets. The total liabilities
amounted to Rs. 3750000 out of which external liabilities to
reserves and surplus was 2:1. Compute the Net Asset Value per
unit if the current outstanding units are 72500.
Solution:
Computation of Net Asset Value
Assets ₹

Investments

Kaira (250 x 20000) = 500000

0

Charu (320 x 30500) = 976000

0

Meena (460 x 20050) = 922300

 0

Manju (980 x 5550) = 543900

0

294220
00

Cash 250000
0

Current Assets 125000

0

331720
00

Less: External Liabilities (2/3 x 250000

3750000) 0

Net Assets 306720

00

Net Asset Value = Net Assets / No. of Units

= 30672000 / 72500
= Rs. 423.06

Illustration 17: (Pg 223)

Investors Mutual Fund is registered with SEBI and having its
registered office at Pune. The fund is in the process of finalizing
the annual statement of accounts of one of its Open-ended Mutual
Schemes. From the information furnished below you are required
to prepare a statement showing the movement of unit holders
fund for the financial year ended 31 March, 2022. st

₹ ‘000

Opening Balance of Net Assets 120000

0

Net Income for the year (Audited) 85000

850200 units issued during 2021- 96500

22

752300 units redeemed during 71320

2021-22

The par value per unit is Rs. 100.

SOLUTION:
Investors Mutual Fund
Statement of Movement of Unitholders’ funds for the year
ended 31 March 2022
st

Particulars ₹ ‘000

a) Opening Balance of net assets (unit holders funds) 120000

0

b) Add: Net income for the year 85000

c) Add: Par value of units issued during 2021-22 (850200 x 85020

100)

d) Less: Outflow on units redeemed during 2021-22 (752300 (75230

x 100) )

e) Add: Transfer from Reserve / Equalization Fund (Refer 15390

Working Note)

f) Closing balance of Net Assets (unit holders funds) 131018

0

Working Note:
Balance in Reserve / Equalization Fund
Particulars ₹ ‘0 ₹ ‘0
00 00

a) Units issued

i) Sale proceeds of units issued 9650

0

ii) Par value of units issued 8502

0

iii) Difference transferred (credit) 1148

0

b) Units Redeemed

i) Redemption Value 7132

0

ii) Par value of units redeemed 7523

0

iii) Difference transferred (credit) 3910

c) Balance in Reserve / 1539

Equalization Fund 0

Theory:
Q5(A) Explain the need of convergence with IFRS in India.
Answer: The convergence of Indian Accounting Standards (Ind
AS) with International Financial Reporting Standards (IFRS) is a
significant step towards harmonising accounting practices in India
with global standards. This convergence offers numerous
benefits, including:
* Enhanced Transparency and Comparability:
* IFRS-converged financial statements provide a common
language for financial reporting, making it easier for investors,
creditors, and other stakeholders to understand and compare the
financial performance of Indian companies with their global
counterparts.
* This increased transparency can boost investor confidence and
attract foreign investment, leading to greater capital inflows and
economic growth.
* Improved Access to Global Capital Markets:
* By adopting IFRS, Indian companies can more easily access
global capital markets, as their financial statements will be more
readily understood and accepted by international investors.
* This can lead to lower borrowing costs and increased access to
funding for Indian businesses.
* Reduced Costs and Improved Efficiency:
* Convergence can reduce the costs associated with preparing
multiple sets of financial statements for domestic and
international purposes.
* It can also streamline accounting processes and improve
efficiency for Indian companies.
* Enhanced Corporate Governance:
* IFRS emphasises principles-based accounting, which
encourages companies to adopt best practices in corporate
governance and financial reporting.
* This can lead to greater accountability and transparency in
Indian businesses.
* Improved Quality of Financial Reporting:
* IFRS is considered to be a high-quality set of accounting
standards, providing a robust framework for financial reporting.
* Convergence can help improve the quality of financial
reporting in India, leading to more reliable and informative
financial statements.
While the convergence process has faced some challenges, such
as the need for extensive training and education for accountants
and auditors, the long-term benefits are expected to outweigh the
costs. As India continues to integrate with the global economy,
the convergence of Ind AS with IFRS is a crucial step towards
ensuring the country's financial markets are competitive,
transparent, and globally recognised.

Q5(B) Enumerate advantages and disadvantages of a

mutual fund.
Answer: Mutual Funds: A Deep Dive into Advantages and
Disadvantages
Mutual funds offer a compelling investment avenue for individuals
seeking to grow their wealth. However, as with any investment
option, it's crucial to understand both the potential benefits and
drawbacks before making an informed decision.
Advantages of Mutual Funds
* Diversification: Mutual funds invest in a basket of securities,
such as stocks, bonds, or a mix of both. This diversification
spreads risk, reducing the impact of poor performance by
individual holdings within the fund.
* Professional Management: Investors entrust their money to
experienced fund managers who research, select, and manage
the fund's investments. This expertise can be particularly valuable
for investors with limited time or investment knowledge.
* Accessibility: Mutual funds are generally accessible to investors
with varying risk tolerances and investment goals. They cater to a
wide range of objectives, from capital appreciation to income
generation.
* Liquidity: Most mutual funds offer daily liquidity, allowing
investors to buy and sell shares readily.
* Affordability: Mutual funds often require a small initial
investment, making them accessible to a broad range of
investors.
* Transparency: Mutual funds are subject to regulatory oversight
and are required to disclose their investment holdings and
performance regularly.
Disadvantages of Mutual Funds
* Fees: Mutual funds typically charge fees, including management
fees, expense ratios, and sometimes sales loads. These fees can
erode investment returns over time.
* Market Risk: While diversification mitigates risk, mutual funds
are still subject to market fluctuations. The value of the fund can
decline, potentially leading to losses for investors.
* Lack of Control: Investors relinquish control over individual
investment decisions to the fund manager. This can be a
disadvantage for investors who prefer a more active role in
managing their portfolio.
* Tax Inefficiency: Frequent trading within a mutual fund can
generate capital gains distributions, which can be taxed as
ordinary income for investors.
* Potential for Underperformance: While professional
management is a key advantage, there's no guarantee that a
fund manager will outperform the market or achieve investment
objectives.
Conclusion
Mutual funds can be a valuable investment tool for individuals
seeking diversification, professional management, and
accessibility. However, it's essential to carefully consider the
associated fees, market risks, and potential for
underperformance. Conducting thorough research and selecting a
fund that aligns with your investment goals and risk tolerance is
crucial to maximising your investment returns.

C. Write short notes

1. Tax saving schemes
Tax saving schemes are investment options that offer tax benefits
under the Income Tax Act of India. These schemes allow
individuals to reduce their taxable income and consequently their
tax liability. Some popular tax saving schemes include:
* Equity Linked Savings Schemes (ELSS): These are mutual funds
that invest primarily in equities and offer tax benefits under
Section 80C of the Income Tax Act. ELSS funds have a lock-in
period of 3 years.
* Public Provident Fund (PPF): PPF is a government-backed
savings scheme with a 15-year tenure. It offers tax benefits under
Section 80C and the interest earned on PPF is also tax-free.
* National Pension Scheme (NPS): NPS is a retirement savings
scheme that offers tax benefits under Section 80CCD of the
Income Tax Act. Contributions to NPS can be made by both
individuals and employers.
* Sukanya Samriddhi Yojana (SSY): SSY is a government-backed
savings scheme for the benefit of girl child. It offers tax benefits
under Section 80C and the interest earned on SSY is also tax-free.
* National Savings Certificate (NSC): NSC is a government-backed
savings certificate with a tenure of 5 years. It offers tax benefits
under Section 80C. These are just a few examples of tax saving
schemes available in India. The choice of tax saving scheme
depends on individual financial goals, risk appetite, and
investment horizon. It is advisable to consult with a financial
advisor before investing in any tax saving scheme.

2. Debentures Investment Account

A Debentures Investment Account is a specialised financial
account designed to hold and manage investments in debentures.
Debentures are debt instruments issued by companies to raise
capital. When you invest in a debenture, you are essentially
lending money to the company, and in return, you receive
periodic interest payments and the principal amount back at
maturity.
Key Features of a Debentures Investment Account:
* Holding Debentures: The primary function of this account is to
store and track your debenture holdings.
* Interest Payments: The account will automatically record and
credit the interest payments you receive from your debentures.
* Maturity Tracking: The account can track the maturity dates of
your debentures, ensuring you don't miss any repayments.
* Portfolio Diversification: You can hold a variety of debentures
from different issuers in your account, allowing you to diversify
your investment portfolio.
* Tax Reporting: The account can help you track the tax
implications of your debenture investments, making it easier to
file your taxes.
Benefits of a Debentures Investment Account:
* Convenience: Managing your debenture investments through a
dedicated account can be more convenient than tracking them
manually.
* Security: Your debentures are held securely in the account,
reducing the risk of loss or theft.
* Professional Management: Some debentures investment
accounts offer professional management services, which can be
beneficial for investors who lack the time or expertise to manage
their investments independently.
* Potential for Higher Returns: Debentures can offer higher
returns than traditional savings accounts or fixed deposits.
Risks Associated with Debentures Investment Accounts:
* Credit Risk: There is a risk that the company issuing the
debentures may default on its debt obligations, leading to a loss
of your investment.
* Interest Rate Risk: If interest rates rise, the value of your
existing debentures may decline.
* Liquidity Risk: Debentures can be less liquid than other
investments, making it difficult to sell them quickly if you need to
access your funds.
Overall, a Debentures Investment Account can be a valuable tool
for investors looking to diversify their portfolio and earn higher
returns. However, it is important to understand the risks
associated with debenture investments before investing.

3. Types of Mutual funds

Mutual funds are broadly classified into four main categories:
* Equity Funds: These funds primarily invest in stocks of
companies. They aim to generate capital appreciation over the
long term.
* Large-cap funds: Invest in large, established companies.
* Mid-cap funds: Invest in medium-sized companies.
 * Small-cap funds: Invest in small, emerging companies.
* Multi-cap funds: Invest across large, mid, and small-cap
companies.
* Sectoral funds: Focus on specific sectors like technology,
healthcare, or energy.
* Debt Funds: These funds invest in debt instruments like bonds,
debentures, and government securities. They generally aim to
provide regular income and moderate risk.
* Income funds: Invest in a mix of short-term and long-term debt
instruments.
* Short-term debt funds: Invest in short-term debt instruments,
offering higher liquidity.
* Long-term debt funds: Invest in long-term debt instruments,
potentially offering higher returns.
* Gilt funds: Invest exclusively in government securities.
* Hybrid Funds: These funds invest in a mix of equity and debt
instruments. They offer a balance of growth and stability.
* Balanced funds: Maintain a balanced allocation between equity
and debt.
* Aggressive hybrid funds: Have a higher allocation to equity.
* Conservative hybrid funds: Have a higher allocation to debt.
* Solution-Oriented Funds: These funds are designed to meet
specific investment goals, such as retirement planning or
children's education.
* Tax-saving funds (ELSS): Equity funds that offer tax benefits
under Section 80C of the Income Tax Act.
* Retirement funds: Designed to help investors save for
retirement.
* Children's education funds: Designed to help parents save for
their children's education.

4. Large Cap, Mid Cap, Small Cap

Large-Cap, Mid-Cap, and Small-Cap Funds: A Breakdown
When it comes to investing in equity mutual funds, understanding
the concept of market capitalisation is crucial. Market
capitalisation refers to the total market value of a company's
outstanding shares. Based on this metric, equity funds are
categorised into three primary types:
1. Large-Cap Funds:
* Investment Focus: These funds invest in large, well-established
companies with a substantial market capitalisation. These
companies are often leaders in their respective industries and
have a proven track record of profitability and growth.
* Risk Profile: Generally considered less risky compared to mid-
cap and small-cap funds due to the stability and established
nature of the companies they invest in.
* Return Potential: While less volatile, large-cap funds typically
offer moderate and consistent returns over the long term.
2. Mid-Cap Funds:
* Investment Focus: These funds invest in mid-sized companies
that are growing rapidly and have the potential to become large-
cap companies in the future.
* Risk Profile: Mid-cap funds carry moderate risk, as the
companies they invest in may be subject to greater market
fluctuations compared to large-cap companies.
* Return Potential: Mid-cap funds have the potential to generate
higher returns than large-cap funds, but they also come with
increased volatility.
3. Small-Cap Funds:
* Investment Focus: These funds invest in small, emerging
companies with high growth potential. These companies are often
in their early stages of development and may be relatively
unknown to the general public.
* Risk Profile: Small-cap funds are considered the riskiest among
the three categories due to the inherent volatility of small
companies.
* Return Potential: Small-cap funds have the highest potential for
significant capital appreciation, but they also carry the highest
risk of potential losses.
Key Considerations:
* Investment Goals: Your investment goals play a crucial role in
determining the appropriate fund category for you. If you are
seeking stability and moderate returns, large-cap funds may be
suitable. If you are willing to take on higher risk for potentially
higher returns, mid-cap or small-cap funds may be more
appropriate.
* Risk Tolerance: Assess your risk tolerance carefully before
investing in any equity fund. Small-cap funds are not suitable for
risk-averse investors.
* Investment Horizon: Consider your investment horizon. Small-
cap funds typically require a longer investment horizon to
weather market fluctuations and potentially generate higher
returns.

5. ELSS
Equity Linked Savings Schemes (ELSS): A Deep Dive
ELSS, or Equity Linked Savings Schemes, are a type of mutual
fund specifically designed to offer tax benefits under Section 80C
of the Income Tax Act of India. These schemes primarily invest in
equities, making them a potent tool for both tax savings and
wealth creation.
* Tax Benefits: The most significant advantage of ELSS is the tax
deduction it offers. Investments in ELSS up to a maximum of ₹1.5
lakhs per year can be claimed as a deduction from your taxable
income under Section 80C, reducing your tax liability.
* Equity Focus: ELSS funds primarily invest in equities and equity-
related instruments, making them suitable for investors seeking
long-term capital appreciation.
* Lock-in Period: ELSS funds have a mandatory lock-in period of 3
years. This means you cannot withdraw your investments before
the completion of 3 years from the date of investment.
* Diversification: ELSS funds invest in a diversified portfolio of
stocks, spreading investment risk and potentially mitigating
losses.
* Professional Management: ELSS funds are managed by
professional fund managers who research, select, and manage
the fund's investments.
How ELSS Works:
* Investment: You invest in an ELSS fund by purchasing units of
the fund.
* Tax Deduction: The amount invested in ELSS is eligible for tax
deduction under Section 80C, reducing your taxable income.
* Fund Management: The fund manager invests the money in a
diversified portfolio of stocks.
* Growth Potential: Over time, the value of the fund's investments
may grow, leading to capital appreciation.
* Lock-in Period: You cannot withdraw your investment before the
completion of the 3-year lock-in period.
* Redemption: After the lock-in period, you can redeem your units
and receive the proceeds.
ELSS funds offer a compelling investment option for individuals
seeking to save taxes and build wealth over the long term.
However, it is crucial to understand the associated risks and
carefully evaluate your investment goals and risk tolerance before
investing in ELSS.