Y9 SYJC Board Practical Book 30-01-2017 PDF

ACCOUNTING AND OFFICE MANAGEMENT
PAPER III (Y9)
ADVANCED
COSTING AND
AUDITING
(XII Practical)
Vocational Education and Training, Directorate of Maharashtra
1
Vocational Education and Training, Directorate of Maharashtra
HSC Vocational Education Revised Course Syllabus
under the guidance of
NATIONAL SCHOOL DEVELOPMENT CORPORATION
(NSDC)
organized by
Sectorial Skill Council
considering
National Occupation Standard level 3 & 4
for the newly Revised Course
H.S.C. VOCATIONAL
ACCOUNTING AND OFFICE MANAGEMENT
PAPER III (Y9)
ADVANCED COSTING AND AUDITING
PRACTICAL
2
COMMITTEE OF BOOK WRITERS
Mr. R. D. Shinde, Convener

Assistant DVETO, Thane
Mr. Suresh Kokitkar, Co-ordinator
Bhausaheb Hiray Jr. College, Tardeo, Mumbai
Mr. Yashwant Kadam
Sathaye College, Vile Parle East, Mumbai
Mr. Mayuresh V. Pathare
Maharshi Dayanand College of Arts, Science, Comm., Parel, Mumbai
Mr. Babu Paul
Patuck Jr. College, Santacruz East, Mumbai
Mr. Julian Rebello
Thomas Baptista Junior College, Vasai West, Mumbai
Mrs. Velmina Mathew
Patuck Jr. College, Santacruz East, Mumbai
Mrs. Janhavi Padhye
Maharshi Dayanand College of Arts, Science, Comm., Parel, Mumbai
Mr. Bhupendra D. Mistry
T. S. Bafna Junior College, Malad West, Mumbai
Mrs. Mary Rodrigues
Radhikabai Meghe Junior College, Airoli, Navi Mumbai
Mr. Prakash Thackre
Bhausaheb Hiray Jr. College, Tardeo, Mumbai
Mr. Shridhar Prabhu
Narsee Monjee College of Commerce & Eco. Vile Parle W, Mumbai
3
PREFACE
The subject of Cost Accounting plays major role in the life of every entrepreneur and
businessman to run their business profitably as they have to face cut throat competition
in the market.
 The chapters in this book have been explained with simplicity and are student
friendly. It covers both the theory and practical aspect, at length, to give
confidence, clarity to students in their chosen vocation.
We are thankful to the Director of Vocational Education Mr. Meshram, Ex-Director of
Technical Education, Mr. Bhutange, for taking a bold step in revision of the syllabus,
designing it to be in tune with the latest developments, guiding and motivating teachers
personally at the various workshops held in different places. We are also grateful to our
Director of Vocational Education Mr. Meshram, Ex-Director, Mr. Bhutange, for putting
in place an expert committee for designing the syllabus meticulously.
We thank Coordinators and Experts of the syllabus committee
Shri T.M.Wadile (Coordinator), Shri Ashtikar Shrikant (Coordinator) and Experts Shri
Sohoni S.D., Shri Dudgekar S.R., Shri Ravi Shamraj, Shri Aradhye K.P., Shri Jogalekar
Mahesh, Shri Sohani Yogesh, Shri Bandewar P.S. and Shri Shirotikar R.B.
We are thankful to the Principals of Colleges for cooperating and making Teachers
available in writing and compiling the book. We thank the Principals of M.D.College,
Parel, Bhausaheb Hiray Junior College, Tardeo, Sathaye College, Vile Parle, Patuck Jr.
College, Santacruz, Thomas Baptista Junior College, Vasai, Narsee Monjee College of
Commerce and Economics, Vile Parle, T.S.Bafna Junior College, Malad, Radhikabai
Meghe Junior College, Airoli.
Special thanks to Shri. Khatavkar DVETO, Shri. Shinde, Assistant DVETO, Thane,
Shri. Vinod Gaware, Assistant Principal, +2 Voc., Sathaye College, and Shri. Mayuresh
Pathare, Maharshi Dayanand College, Parel for special efforts and compilation work of
the book.
I, personally thanks all Book Writing Committee Members, without whose timely and
enthusiastic cooperation, it would have been just difficult to complete this mission..
Thanks to all. We welcome suggestions for the betterment of the book.
SHRI SURESH KOKITKAR
CO-ORDINATOR
4
INDEX
CHAPTER PAGE
NUMBER NAME OF CHAPTER NUMBER
1 CONTRACT COSTING 6 - 25
2 BUDGET & BUDGETORY

27 – 67
CONTROL
RECONCILIATION OF COST
3 & FINANCIAL STATEMENT 69 – 117
4 MARGINAL COSTING 119 – 163
5 STANDARD COSTING 165 - 189
6 VOUCHING 191 - 222
VERIFICATION &
7 VALUATION OF ASSETS &
LIABILITIES 224 – 255
8 AUDIT REPORTS
257 – 288
5
CHAPTER -1
CONTRACT COSTING
Practical of Contract Costing
Week No. 1
Practical No. 1
Title / Aim Items charged to Contract Account
Objectives To find Items charged to Contract
Account
Requirement Demonstration Model / Computer /
Chart / images
Raw Material Stationery,
Environment Requirement Lab./Class Room/Godown
Activity Teacher explains Items charged to
Contract Account
Procedure With the help of chart students find
out Items charged to Contract Account
Skill to be achieved as per objectives To acquire knowledge about Items
charged to Contract Account
Skill evaluation criteria To assess the correctness of Items
charged to Contract Account found by
the students
Practice required to acquire the master To acquire knowledge of Items
skill charged to Contract Account
National/International Bench Marking As per Accounting & Costing
/NOS (If Any) standards
Interactive session FAQS/ANS To solves queries from students
regarding Items charged to Contract
Account
ASSIGNMENT for Practice/ To collect information regarding Items
Reporting/Data Storage charged to Contract Account
Live upload/Presentation
References Theory lesson of Contract Costing
6
Week No. 1
Practical No. 2
Title / Aim Work Certified in Contract Costing
Objectives To find Work Certified in Contract
Costing
Requirement Demonstration / Model / Computer /
Chart / images
Activity Teacher explains Work Certified in
Contract Costing
Procedure With the help of chart students find
out Work Certified in Contract
Costing
Skill to be achieved as per objectives To acquire knowledge about Work
Certified in Contract Costing
Skill evaluation criteria To assess the correctness of Work
Certified in Contract Costing found
by the students
Practice required to acquire the master To acquire knowledge ofWork
skill Certified in Contract Costing
regarding Work Certified in Contract
Costing
ASSIGNMENT for Practice/ To collect information regarding Work
Reporting/Data Storage Certified in Contract Costing
7
Table for practical
CALCULATING % OF WORK CERTIFIED TO CONTRACT PRICE

Work Certified % of Completion
(1) Rs. 40,000 40,000 X 100 = 10%
4,00,000
(2) Rs. 2,50,000 2,40,000 X 100 = 60%
4,00,000
(3) Rs. 3,60,000 3,60,000 X 100 = 90%
4,00,000
(4) Rs. 4,00,000 4,00,000 X 100 = 100%
4,00,000
8
Week No. 2
Practical No. 3
Title / Aim Profit transfer to Profit and loss
account
Objectives To calculate notional profit
Chart / images
Raw Material Stationery
Activity Teacher explains Profit transfer to
Profit and loss account (Notional
Profit)
Procedure With the help of chart students find out
Profit transfer to Profit and loss
account (Notional Profit)
Skill to be achieved as per objectives To acquire knowledge about Profit
transfer to Profit and loss account
(Notional Profit)
Skill evaluation criteria To assess the correctness of Profit
transfer to Profit and loss account
(Notional Profit)found by the students
Practice required to acquire the master To acquire knowledge ofProfit transfer
skill to Profit and loss account (Notional
Profit)
regarding Profit transfer to Profit and
loss account (Notional Profit)
ASSIGNMENT for Practice/ To collect information regarding Profit
Reporting/Data Storage transfer to Profit and loss account
Live upload/Presentation (Notional Profit)
9
Table for practical
% of Work Certified to Contract Price Transfer to Profit and Loss Account

(1) Up to 25% Nil
1
(2) 25-50 / 3 × Notional Profit × Cash Received
Work Certified
2
/ 3 × Notional Profit × Cash Received
(3) 50-90
Work Certified
(4) Nearing Completion Estimated Profit x Cash Received

Contract Price
(5) 100
Entire Profit
10
Week No. 2 to 4
Practical No. 4 to 7
Title / Aim Preparation of Contract Account
(Complete & Incomplete Contract)
Objectives To prepare Contract Account
Chart / images
Activity Teacher explains how to prepare
Contract Account (Complete &
Incomplete Contract)
Procedure With the help of chart students prepare
Contract Account (Complete &
Incomplete Contract)
Skill to be achieved as per objectives To acquire knowledge about
preparation of Contract Account
Skill evaluation criteria To assess the correctness of Contract
Account (Complete & Incomplete
Contract) prepared by the students
Practice required to acquire the master To acquire knowledge ofContract
skill Account (Complete & Incomplete
Contract)
regarding Contract Account (Complete
& Incomplete Contract)
ASSIGNMENT for Practice/ To collect information regarding
Reporting/Data Storage Contract Account (Complete &
Live upload/Presentation Incomplete Contract)
11
1. Write up the Contract Account from the following Particulars:
Particulars Rs.
Direct Materials 32,400

Wages 21,600
Special Plant 16,000
Stores issued 5,760
Loose Tools 3,000
Tractor Expenses (fuel, wages of driver and Expenses of workers ) 6,840
Contract Price 80,000
The Contract was completed in 20 weeks, the special plant was returned subject
of depreciation of 20% on original cost. The value of loose tools and stores
returned were Rs. 2,000 and Rs. 800 respectively. The written down value of
tractor used for the contract was Rs.39,000 and depreciation was to be charged
to this contract at 20% per annum on this value. Provide 7% for administrative
expenses on works cost.
12
Solution:
Dr. Contract Account Cr.
Particulars Rs. Particulars Rs.

To Materials 32,400 By Contractee’s Account 80,000
To Wages 21,600 (Contract Price)
To stores consumed 4,960
(5,760-800)
To Loose Tools 1,000
(3,000-2,000)
To Depreciation-special Plant 3,200
(20% of 16,000)
To Tractor Expenses 6,840
To Depreciation- Tractor 3,000
(See Note-1)
To Administrative Expenses 5,110
(7% of 73,000)
To Profit &Loss Account 1,890
(See Note-2)
80,000 80,000
Notes: (1) Depreciation on Tractors is taken at 20% p.a. (i.e.52 weeks on

39,000 for 20 weeks i.e. 7,800 x 20/52 = Rs. 3,000
(2) Since the contract is 100% complete entire profit is taken to Profit &Loss
Account Similarly, the full price of the contract is credited to the Contract
Account and debited to the Contractee’s Account as the contract is 100%
complete.
2. Following expenses were incurred by a contractor on a contract which

started on 1st January, 2016:
Rs.
Materials 1,20,000
Wages 1,50,000
Other Expenses 45,000
Plant at cost 1,50,000
Work Certified 3,60,000
13
Work Uncertified 1,80,000
Material on hand (on 31st Dec.16) 33,000
Plant Value at close 1,29,000
Cash received from Contractee 3,00,000
Materials returned to store 6,000
Prepare Contract Account and Work- in-progress, assuming that the

contract price was Rs. 10,50,000. How will work –in-progress appear in
the Balance sheet of the contractor?
Solution:
Contract Account
For the year ended 31st Dec 2016
Dr. Cr.
To Material 1,20,000 By Materials Returned 6,000
To Wages 1,50,000 By Work in progress:
To Other Expenses 45,000 Work Certifed 3,60,000
To Plant 1,50,000 Work Uncertified 1,80,000
To Notional Profit 2,43,000 By Materials in hand 33,000
By Plant (close) 1,29,000

7,08,000 7,08,000
To Profit & Loss A/c* 67,500 By Notional Profit 2,43,000
To Work-in-progress 1,75,500
2,43,000 2,43,000
Working Notes :- a) Calculation of Percentage of Work Certified

= Work Certified X 100 / Contract Price
= Rs. 3,60,000 X 100 / Rs. 10,50,000
= 34.29 %
b) Calculation of Net Profit Transferred to Profit & Loss A/c (25% to 50% - 1/3)
= 1/3 X Notional Profit X Cash Received / Work Certified
= 1/3 X Rs. 2,43,000 X Rs. 3,00,000 / Rs. 3,60,000 = Rs. 67,500/-
14
3. The following was the expenditure on a contract for Rs. 6,00,000
commenced in April.
Rs.
Materials 1,20,000
Wages 1,64,000
Plant 20,000
Overheads 8,600
Cash received on account of the contract up to 31st December was
Rs. 2,40,000 being 80% of the work certified. The value of materials in
hand was Rs. 10,000. The plant had undergone 20% depreciation.
Prepare contract account.
Solution:
Dr. Contract Account
Cr.
Rs. Rs.
To Material 1,20,000 By Work Certified 3,00,000*
To Wages 1,64,000 By Materials in hand 10,000
To Plant 20,000 By Plant in hand 16,000
To Overheads 8,600
To Notional Profit 13,400
3,26,000 3,26,000
By Notional Profit 13,400
To Profit & Loss 7,147
(2/3XRs13,400X80/100)
To Balance c/d 6,253
13,400 26,800
Working Note :-
Calculation of Work Certified = Rs. 2,40,000 = Rs. 3,00,000
80 %
4. A firm of builders, carrying out large contracts kept in a contract ledger

separate accounts for each contract. The following particulars relate to a
certain contract carried out during the year ended 30th June, 2016.
15
Rs.
Work certified by Architects 71,500
Cash received from the Contractee 65,000
Materials sent to site 32,250
Labour engaged on site 27,000
Plant installed at site 5,650
Value of plant at 30th June (closing) 4,100
Cost of work not yet certified 1,700
Establishment charges 1,625
Direct expenditure 1,200
Wages accrued due 900
Materials, closing balance 700
Materials returned to store 200
Direct expenses accrued due 100
Contract price 1,00,000
You are required to prepare an account, showing the profit on
the contract up to 30th June.
Solution:
Dr. Contract Account for the year ended 30th June Cr.
Rs. Rs.
To Material 32,250 By Work –in-progress:
To Labour engaged 27,400 Work Certified 71,500
Wages O/S 900 Work uncertified 1,700
Direct expenditure 1,200 73,200
” O/S 100 By Materials returned 200
Plant installed 5,650 By Plant on hand 4,100
Establishment 1,625 By Materials on hand 700
Notional Profit 9,075
78,200 78,200
To P & L A/c 5,500 9,075
(Rs9,075 X 2/3 X By Notional Profit
65,000/ Rs.71,500)
To Balance c/d 3,575
9,075 9,075
16
5. On 1st January, 2017 Amar & Co. undertook a contract for Rs. 20,00,000.
He incurred the following expenses during the year:
Rs.
Material issued from stores 2,00,000
Material purchased for the contract 1,80,000
Plant installed at cost 1,40,000
Wages paid 4,00,000
Wages accrued due on 31st Dec. 1,60,000
Direct expenses paid 40,000
Direct expenses accrued due on 31st Dec. 10,000
Establishment 26,000
Of the plant and materials charged to the contract, the Plant which
cost. Rs. 8,000 and the materials costing Rs. 6,000 were lost. Some of the
materials costing Rs. 8,000 were sold for Rs. 10,000. On 31st December,
the plant which cost Rs. 2,000 was returned to the stores, and a part of the
plant which cost Rs.800 was damaged, rendering itself useless.
The work certified was Rs. 9,60,000 and 80% of the same was
received in cash. The cost of work done, but uncertified was Rs. 4,000.
Charge 10% p.a. depreciation on plant and prepare the Contract Account
for the year ended 31st December, by transferring to the profit and loss
account the portion of the profit, if any, which you think is reasonable,
show also the particulars relating to the contract in the balance sheet of the
contractor as on 31st Dec.
17
Solution :-
Dr. Contract Account for the year ended 31st December, 2017
Cr.
Rs. Rs.
To Material(Stores) 2,00,000 By Work Certified 9,60,000
To Materials (Purchase) 1,80,000 By work uncertified 4,000
To Wages 4,00,000 By P&L A/c Plant Lost 8,000
To Direct expenses 40,000 Materials Lost 6,000
To Plant 1,40,000 By Sale of materials 10,000
To Establishment 26,000 By Plant returned less
To Wages accrued 1,60,000 Depreciation 1,800
To Direct expenses 10,000 By Plant damaged 800
accrued By Plant on hand 1,16,280
To Profit &Loss 2,000 By Profit &Loss A/c 51,120
(Materials)
11,58,000 11,58,000
Extracted Balance Sheet as on 31st December

Liabilities Amount Assets Amount Amount
Wages O/S 1,60,000 Plant Cost 1,40,000
Direct Exp O/S 10,000 Less:- Loss & Damaged 8,800
1,31,200
Less:- Plant Returned 2,000
1,29,200
Less: Depreciation 12,920 1,16,280
Work in progress 9,64,000
Less :- Cash Received 7,68,000 1,96,000
Profit & Loss A/c (Loss) 51,120

Add:- Plant & Material Lost 14,000
Add:- Plant Damaged 800
65,920
Less:- Profit on Materials 2,000 63,920
6. The following is the summary of the entries in a Contract Ledger as on

31st December 2016 in respect of Contract No. 75:
Particulars Rs.
Materials (Direct) 1,80,000
Materials (From stores) 39,000
Wages 1,03,800
Direct Expenses 40,200
18
Establishment Charges 48,000
Plant 2,05,200
Sale of Scrap 10,920
Sub- contract Cost 43,200
You are given the following information:

(1) Accruals on 31-12-2016 are: Wages Rs. 4,800 and Direct Expenses Rs. 6,600.
(2) Depreciation on plant up to 31-12-2016 is Rs. 51,300
(3) Included in the above of the material used since certification is Rs. 12,480.
(4) Materials on site on 31-12-2016 cost Rs. 60,000
(5) Work Certified was Rs. 3,75,000
Prepare Contract Account No. 75 and show that profit or loss should be taken
into account for the year ended 31st December 2016
Solution :-
Contract No. 75 Account For 2016
To Materials (Direct) 1,80,000 By Sale of Scrap 10,920

To Materials (From stores) 39,000 By Work in Progress c/f
To wages 1,03,800 Work certified 3,75,000
Add: Accrued 4,800 1,08,600 Work uncertified
To Direct Expenses 40,200 (See Note) 27,480
Add: Accrued 6,600 46,800 Materials on hand 60,000
To Establishment Charges 48,000 Plant at site
To Plant 2,05,200 (2,05,200-51,300) 1,53,900 6,16,380
To Cost of Sub- contract Cost 43,200 By Profit and Loss A/c (Loss) 43,500
6,70,800 6,70,800
19
Working Notes :-
(1) Value of Uncertified Work is calculated as follows:
Particulars Rs.
Wages since certification 6,000

Other expenses since certification 9,000
Material Used since certification 12,480
Value of Uncertified Work 27,480
(2) The Contract Account shows a loss and hence the total amount of loss is
transferred to the profit and loss Account in accordance with the Convention of
conservatism.
(3) Cost of plant is debited to Contract A/c so its W.D.V after deducting
depreciation is credited in contract A/c
7. The following details are available from the books of account ( for the year ended 31st
March, 2016) of a contractor with respect to contract (No. 119) he has undertaken for a
manufacturing organization:
Rs.
Materials sent to site 5,11,800
Labour engaged in site 4,66,100
Cost of plant installed at site 1,00,000
Direct expenses 24,000
Establishment expenses 29,000
Material returned to stores 2,120
Work certified 10,70,000
Cost of work not certified 31,000
Materials in hand (as on 31st March,2016) 12,220
Accrued Wages(as on 31st March, 2016) 11,160
20
Accrued direct expenses 1,330
Value of plant (as revalued on 31st March, 2016) 88,000
The contract price agreed upon with the contractee is Rs. 13,00,000. Payment of Rs.
9,90,000 has been received from the contractee. You are required to prepare the
Contract Account No. 119, computing and incorporating in the said account the profit
to be taken to the Profit and Loss Account for the year ended 31st March, 2016
8. Mr. Ram undertook a contract for the construction of building on 1st January, 2016,
the contract price being Rs. 30,00,000
The following details are available for the year 2016:
Material purchased Rs. 4,80,000
Material issued from stores Rs. 6,00,000
Labour employed on site Rs. 1,80,000
Plant installed on site Rs. 2,40,000
Direct Expenses Rs. 1,20,000
Proportionate establishment charges Rs. 30,000
Cash Received (80% of work certified) Rs. 12,00,000
Work uncertified Rs. 3,00,000
Materials returned to stores Rs. 30,000
Materials in hand at the end Rs. 12,000
Wages outstanding Rs. 36,000
Direct expenses accrued Rs. 48,000
Prepare the Contract Account and show the amount that would appear in the Balance
Sheet. A part of plant costing Rs. 40,000 was stolen at the beginning of the year and the
Insurance Co. paid Rs. 24,000. Plant is depreciated @ 20% p.a.
9. M/s. Airobus builders undertook a contract for a contract price of Rs. 1,20,00,000 and
commenced the work on 1st July, 2016
The following particulars are available for 9 months ended 31st March, 2017.
Rs.
Materials issued from stores 8,00,000
21
Materials bought directly 41,00,000
Wages paid 38,00,000
Direct Expenses 6,00,000
Establishment charges 3,00,000
Plant 13,00,000
Sub-contract charges 2,00,000
Scrap sold 60,000
Work certified 1,00,00,000
The following further information was available:
a) Outstanding wages and direct expenses were Rs. 20,000 and Rs. 40,000
respectively on 31st March, 2017.
b) Materials at site at the end of the year is valued at Rs. 2,40,000.
c) Value of work uncertified Rs. 4,00,000 on 31st March, 2017.
d) Included in wages is the salary paid to a supervisor@Rs. 60,000 p.m. who had
devoted half of time on this contract.
e) Working life of the plant is estimated to be 5 years at the end of which it is
estimated to realize Rs. 1,00,000 as scrap value. The plant was purchased
exclusively for this contract only.
Prepare contract account for the year ended 31st March, 2017.
10. M/s. Bricks Construction began to trade on 1st April, 2016. The following the
expenditure on the contract for Rs. 6,00,000 :
Rs.
Material issued to Contract 5,10,000
Plant used for Contract 1,50,000
Wages incurred 8,10,000
Other expenses incurred 50,000
Cash received on account to 31st March, 2017 amounted to Rs. 12,80,000 being 80%
of the work certified, of the plant and materials charged to the contract, plant which
cost Rs. 60,000 and materials which cost Rs. 25,000 were lost. On 31st March, 2017
plant which cost Rs. 25,000 was returned to stores; the cost of work done but
uncertified was Rs. 10,000 and materials costing Rs. 23,000 were in hand on site.
Charge 15% depreciation on plant, keep in reserve ½ profit received and prepare
contract account from the above particulars.
22
11. M/s Air craft builders undertook a contract for a contract price of
Rs.60,00,000 and commenced the work on 1st July 2003 The following
particulars are available for 9 Months ended 31-03-2004.
Particulars Rs.
Materials issued from stores 4,00,000
Materials bought directly 20,50,000
Wages paid 19,00,000
Direct expenses 3,00,000
Establishment charges 1,50,000
Plant 6,50,000
Sub contract charges 1,00,000
Scrap Sold 30,000
Work certified 50,00,000
The following further information was available :

(a) Outstanding wages and direct expenses were Rs. 10,000 and Rs. 20,000
respectively on 31-3-2004
(b) Materials at site at the end of the year is valued at Rs. 1,20,000
(c) Value of work uncertified Rs. 2,00,000 on 31-03-2004
(d) Included in wages is the salary paid to a supervisor @Rs. 30,000 p.m who
had devoted half of the time on this contract.
(e) Working life of the plant is estimated to be 5 year at the end of which it is
estimated to realize Rs. 50,000 as scrap value. The plant was purchased
exclusively for this contract only.
(f) Prepare contract account for the year ended 31-03-2004.
23
12. The following is the summary of the entries in a Contract Ledger as on 31st
December 2003 in respect of Contract No. 51:
Particulars Rs.
Materials (Direct) 60,000
Materials (From stores) 13,000
Wages 34,600
Direct Expenses 13,400
Establishment Charges 16,000
Plant 68,400
Sale of Scrap 3,640
Sub- contract Cost 14,400
You are given the following information:

(1) Accruals on 31-12-2003 are : Wages Rs. 1600 and Direct Expenses Rs.
2,200.
(2) Depreciation on plant upto 31-12-2003 is Rs. 17,100
(3) Included in the above of the material used since certification is Rs. 4,160.
(4) Materials on site on 31-12-2003 cost Rs. 20,000
(5) Work Certified was Rs. 1,25,000
Prepare Contract Account No. 51 and show that profit or loss should be taken
into account for the year ended 31st December 2003
13. The following information relates to building contract for Rs. 10,00,000 for
which 80% of the value of work-in progress as certified by the architect is
being paid by the contractee
I year IIyear III year
Rs. Rs. Rs.
Materials issued 1,20,000 1,45,000 84,000
Direct wages 1,10,000 1,55,000 1,10,000
Direct expenses 5,000 17,000 6,000
Indirect expenses 2,000 2,600 500
Work certified 2,35,000 7,50,000 10,00,000
Uncertified work 2,800 8,000 -----
Plant issued 14,000 Nil -----
Materials at sit 2,000 5,000 8,000
24
The value of the plant at the end of I,II and III year was Rs. 11,200 Rs. 7,000 Rs.
3,000 respectively Prepare contract account for these three years, taking into
account such profit as you think proper on incomplete contract.
14. You are required to prepare a Contract Account showing the profit on
contract to 30th April form the following particulars Also show how the
values would appear in the next Year’s Contract Account.
Rs.
Contract Price 1,00,000
Materials sent to site 32,250
Labour engaged on site 27,400
Plant installed at site 5,650
Work certified 71,500
Cash received from contractee 65,000
th
Value of plant (30 April) 4,100
Cost of work done but not certified 1,700
Direct expenditure 1,200
Cost of establishment 1,625
th
Wages outstanding on 30 April 900
th
Materials in hand on 30 April 700
th
Direct expenses outstanding on 30 April 100
Materials returned to store 200
15. Show how you would deal with plant in Contract Account with the
following information .
Plant issued to contract on 1st March, costing Rs. 1,00,000. Plant costing Rs.
5,000 was transferred to ‘A’ Contract on 30th August Plant costing Rs. 4,000
was stolen and another costing Rs. 3,000 was destroyed by fire. The plant
was insured against fire to the full value. Plant costing Rs. 5,000 was sold for
Rs. 4,000. Plant at the end of December was valued by charging depreciation
@10% p.a. on 31st December.
25
26
CHAPTER 2
BUDGETS AND BUDGETARY CONTROL

I) CASH BUDGET :-
PRACTICALS ON CASH BUDGET
Week No.: 4
Practical No. 8A
Title / Aim: Preparation of cash Budget.
Objectives(Specific): To prepare Cash Budget for three months with the given
information.
Requirement :- Calculator, Print out, Stationery, Computer& Projector.
Raw Material:- Print out, Stationery, Format & List of information.
Environment Requirement :- Lab / Classroom / Visit.
Activity / Sequence / Procedures :- Teacher gives the list of different information about
Sales, Purchase, Wages, Expenses & Collection & Payments terms to prepare Cash Budget. (
Refer Table No.1 as below)
Sub Topics Cash Budget of 3 Months.
Skill to be achieved As per Calculate correctly the Cash Flow & Cash Balance for
objectives: next three months.
Skill evaluation Criteria: Correct Cash Balance.
Practice Required to acquire the Continuous practice of calculation of Cash Balance with
master skills: different types of Problems.
National / International Bench As per National and International Accounting Standards
Marking / NOS (if any): and Auditing Standards
Interactive session FAQs / Ans : Teacher will explain about different types of skills to
calculate cash balance for different months.
ASSIGNMENT for: Practices / To collect different items & information of different
Reporting/ Data Storages/ Live organisations to calculate Cash Balance & Cash Budget.
uploads / Presentation
References / Links with Theory Theory Lesson – Topic No. 2 – Budget & Budgetary
session/ Topics / Acts/ Rules / Control.
NOCs:
27
TABLE NO. 1
Ashalata Co. Ltd Expects to have cash in hand Rs. 10,000/- on 1st April 2016. The Budgeted
figures are as under:-
Particulars Feb March April May June

Sales 50,000 60,000 80,000 1,00,000 70,000
Purchases 30,000 40,000 60,000 70,000 50,000
Wages 5,000 6,000 8,000 10,000 6,000
Office Expenses 2,000 3,000 3,000 4,000 3,000
Selling Expenses 1,000 2,000 2,000 3,000 3,000
You are given the following information:-
i) 50% sales are on cash and 50% on credit basis. The debtors get 2 months credit.
ii) The company gets one month’s credit on purchases.
iii) Wages and office expenses are paid in the same month.
iv) Selling expenses are paid in the following month.
Prepare cash budget for April, May and June.
SOLUTION :-
Working Notes:-
i) 50% of sales, being cash sales, are recovered in the month of sales and remaining 50%
are recovered after 2 months of sales. Thus sales of April Rs. 80,000/- will be
recovered as-
In April-(50% Cash Sales)-Rs. 40,000/-
In June- (50% after 2 months)-Rs. 40,000/-
ii) As credit on purchases is of one month, the payment for purchases will be in the next
month.
iii) Selling expenses are also to be paid in the following month.
In the Books of Ashalata Co. Ltd.

CASH BUDGET FOR QURTER ENDED JUNE, 2016
Particulars April, 2016 May, 2016 June, 2016
Opening Balance 10,000 22,000 26,000
ADD:- CASH RECEIPTS
Cash Sales 40,000 50,000 35,000
Credit Sales 25,000 30,000 40,000
Total [A] 75,000 1,02,000 1,01,000
ADD:- CASH PAYMENTS
Purchases 40,000 60,000 70,000
Wages 8,000 10,000 6,000
Office Expenses 3,000 4,000 3,000
Selling Expenses 2,000 2,000 3,000
Total (B) 53,000 76,000 82,000
Closing Balance (A-B) 22,000 26,000 19,000
28
Week No.: 4
Practical No. 8B
information.
NOCs:
TABLE NO. 2
From the following details of Ratnaprabha Co. Ltd. Prepare cash budget for the month of July,
August & September, 2016
i. Cash in hand 1/7/2016- Rs. 252,000/-
ii. 10% of the Sales are cash sales.
iii. 50% of Credit Sales are recovered inone month when 5% discount is offered and
remaining 50% are collected in 2 months.
29
iv. Creditors for purchases offer one month’s credit.
v. Wages are paid fortnightly.
vi. Other expenses are paid in the same month.
vii. Dividend is expected to be received in August Rs. 5000/-
viii. A new machinery of Rs. 30,000 will be purchased in July on payment of Rs. 10,000
and the balance to be paid in September.
Particulars May June July August September
Sales 1,00,000 1,20,000 1,50,000 1,60,000 1,80,000
Purchases 60,000 80,000 90,000 1,10,000 1,20,000
Wages 20,000 20,000 30,000 40,000 50,000
Other 10,000 10,000 10,000 15,000 15,000
Expenses
SOLUTION :-
Working Notes:-
i) The receipts from sales will be as under:-
e.g. month July- sales Rs. 1,50,000/- 10% Cash sales i.e. Rs. 15,000/- Received in
July itself and 90% credit sales i.e. Rs. 1,35,000/- to be received as 50% of Rs.
1,35,000/- = Rs. 67,500/- in August at 5% discount (i.e. 67500-3375)= Rs. 64,125/-
Remaining 50% i.e. Rs. 67,500 in September.
ii) Purchases will be paid for in next month.
iii) Wages are paid fortnightly i.e. 50% of the wages of the month to be paid in the same
month while remaining 50% to be paid in the next month.
In the Books OfRatnaprabhaCo.ltd

CASH BUDGET FOR QUARTER ENDED September, 2016
Particulars July, 2016 August, 2016 September, 2016

Opening Balance 25,000 11,300 10,425
ADD :- CASH RECEITS
(i)Cash Sales (10% of Sales) 15,000 16,000 18,000
(ii)Credit Sales
(a)50% of previous month’s sales 51,300 64,125 68,400
@ 5% discount
(b) 50% of sales of 1 month before 45,000 54,000 67,500
the previous month
(iii)Dividend - 5,000 -
Total (A) 1,36,300 1,50,425 1,64,325
LESS :- CASH PAYMENTS
(i)Creditors for Purchase 80,000 90,000 1,10,000
(ii) Wages
(a)50% of Current month 15,000 20,000 25,000
(b)50% of previous month 10,000 15,000 20,000
(iii) Other Expenses 10,000 15,000 15,000
(iv) New Machinery Purchased 10,000 - 20,000
Total (B) 1,25,000 1,40,000 1,90,000
Closing Balance (A-B) 11,300 10,425 (-) 25675
Note:- At the end of September, There is a cash shortage of Rs. 26,675/-. The company must
plan for some source of cash for the same.
30
Week No.: 4
Practical No. 8C
information.
NOCs:
31
TABLE NO. 3
Following are the income and expenditure of ALFA Co. Ltd. For the month of March to
August 2016.
Months Sales Purchase Wages Mfg. Office Exp. Selling Exp.

Exp.
March 60,000 36,000 9,000 4,000 2,000 4,000
April 62,000 38,000 8,000 3,000 1,500 5,000
May 64,000 33,000 10,000 4,000 2,500 4,500
June 58,000 35,000 8,500 3,000 2,000 3,500
July 56,000 39,000 9,000 4,000 1,000 4,500
August 60,000 34,000 8,000 3,000 1,500 4,500
You provided with the following information:-

1) Plant costing Rs. 16,000 is due for delivery in July payable 20% on delivery and the
balance after three months.
2) Advance tax of Rs. 10,000 each is payable in March and June.
3) Period of credit allowed to suppliers is 2 months and to customers is 1 month.
4) Lag in payment of manufacturing expenses is half month.
5) Lag in payment of all other expenses is 1 month.
You are required to prepare cash budget for three months starting on 1st May 2015 when there
was a cash balance of Rs. 15,000/-
SOLUTION :-
In The books of ALFA Co. Ltd.
Cash Budget for the Quarter ended31st July 2015
Particulars May June July
Opening Cash Balance 15,000 20,750 12,150
ADD :- CASH RECEITS 62,000 64,000 58,000
(i) Collection from debtors - - -
Total (A) 77,000 84750 70,150
LESS :- CASH PAYMENTS :-
1) Payment to Creditors 36,000 38,000 33000
2) Payment of Wages 10,000 8,500 9,500
3) Payment of mfg. exp. 3,750 6,400 3,750
4) Payment of off. exp. 1,500 4,000 2,000
5) Payment of Selling exp. 5,000 2,500 3,500
6) Advance payment of machine - 3,200 -
7) Advance payment of income - 10,000 -
tax
Total (B) 56,250 72,600 51,750
Closing Balance (A-B) 20,750 12,150 18,400
32
Week No.: 4
Practical No. 8D
information.
Activity / Sequence / Procedures :- Teacher gives different information about Sales,

Purchase, Wages, Expenses & Collection & Payments terms, repayment of Loan & purchase
of debentures and Bonds to prepare Cash Budget. ( Refer Table No.4 as below)
Skill evaluation Criteria: Correct Cash Balance and recording payments in the
respective months.
NOCs:
33
TABLE NO. 4
From the following data of Saileela Co. Ltd. Prepare cash budget for the month of
September, October and November.
Particulars July August September October November
Purchases 50,000 60,000 80,000 1,00,000 1,20,000
Wages 10,000 10,000 11,000 15,000 15,000
Electricity 5,000 6,000 6,000 8,000 10,000
Rent 3,000 3,000 3,000 4,000 5,000
Other Expense 7,000 8,000 9,000 10,000 10,000
Sales 1,00,000 1,40,000 1,60,000 2,00,000 2,10,000
Other information-
1) The payment for purchase is made at 5% discount in the following month.
2) Wages, electricity and rent are paid in the following month.
3) Other expenses are paid in the same month.
4) 30% of the sales are recovered in the immediate next month.
5) The installments for repayments of bank loan are to be paid in September and
November of Rs. 10,000/- each.
6) Debentures of Rs. 20,000/- are to be purchased in October.
7) The company has purchased 10% Govt. Bonds of Rs. 1,00,000/- in last year on which
interest is payable in September.
8) Cash balance on 1st September Rs. 30,000/-
SOLUTION :-
Working Notes:-
i) The payment for purchases will be made as under:-
Purchases made Amount Rs. Discount Payment Paid in

in the month of
August 60,000 3,000 57,000 September
September 80,000 4,000 76,000 October
October 1,00,000 5,000 95,000 November
ii) Collection from sales will be as under:-
Sales In Amount (Rs) 30% received in 70% received in

August 1,40,000 42,000 in August 98000 September
September 1,60,000 48,000 in September 1,12,000 October
October 2,00,000 60,000 in October 1,40,000 November
November 2,10,000 63,000 in November 1,47,000 December
34
In the books of Saileela Co. Ltd.
Cash Budget for the three month ended on 30th November, ______
Particulars September October November

Opening Balance 30,000 91,000 1,37,000
(+) Receipts
(i)Cash Sales 48,000 60,000 63,000
(ii) Recovery from debtors 98,000 1,12,000 1,40,000
(iii) Interest on Govt. Bonds 10,000 - -
Total (A) 1,86,000 2,63,000 3,40,000
(-) Payments
1) Purchases 57,000 76,000 95,000
2) Wages 10,000 11,000 15,000
3) Electricity 6,000 6,000 8,000
4) Rent 3,000 3,000 4,000
5) Other Exp. 9,000 10,000 10,000
6) Repayment of Bank loan 10,000 - 10,000
7) Debenture Purchase - 20,000 -
Total (B) 95,000 1,26,000 1,42,000
Closing Balance (A-B) 91,000 1,37,000 1,98,000
35
Week No.: 4
Practical No. 8E
information.
Purchase, Wages, Expenses, payment of dividend, capital expenditure etc. ( Refer Table
No.5 as below)
Skill to be achieved As per Calculate correctly the Cash Flow & Cash Balance for next
objectives: three months.
respective months.
Practice Required to acquire Continuous practice of calculation of Cash Balance with
the master skills: different types of Problems.
National / International As per National and International Accounting Standards and
Bench Marking / NOS (if Auditing Standards
any):
Interactive session FAQs / Teacher will explain about different types of skills to
Ans : calculate cash balance for different months.
ASSIGNMENT for: To collect different items & information of different
Practices / Reporting/ Data organisations to calculate Cash Balance & Cash Budget.
Storages/ Live uploads /
Presentation
References / Links with Theory Lesson – Topic No. 2 – Budget & Budgetary
Theory session/ Topics / Control.
Acts/ Rules / NOCs:
36
TABLE NO. 5
From the following forecasts of income and expenditure of Aarya Co. Ltd. Prepare a cash
budget for the three months commencing 1st June, when the bank balance was Rs. 1,00,000/-
Months Sales Purchases Wages Factory Adm and Selling

(Rs) (Rs) (Rs.) Expenses Expenses
April 80,000 41,000 5,600 3,900 10,000
May 76,500 40,500 5,400 4,200 14,000
June 78,500 38,500 5,400 5,100 15,000
July 90,000 37,000 4,800 5,100 17,000
August 95,000 35,000 4,700 6,000 13,000
A sales commission of 5% on sales, due two months after sales, is payable in addition to
selling expenses. Plant valued at Rs. 65,000 will be purchased and paid for in August. The
dividend for the last financial year of Rs. 15,000/- will be paid in July. There is a two Months
credit period allowed to customers and received from suppliers.
SOLUTION :-
In the books of Aarya Co. Ltd.
Cash Budget
For Three months to 31st August 2015
Particulars June July August
Opening Balance 10,000 1,11,400 1,03,075
(+) Receipts
Sundry debtors 80,000 76,500 78,300
Total (A) 1,80,000 1,87,900 1,81,575
(-) Payments
a)Sundry creditors 41,000 40,500 38,500
b) Wages 5,400 5,400 4,800
c) Factory Expenses 4,200 5,100 5,100
d) Adm& Selling exp 14,000 15,000 17,000
e) Sales Commission 4,000 3,825 3,925
f) Purchase of plant - - 65,000
g) Payment of - 15,000 -
Dividend
Total (B) 68,600 84,825 1,34,325
Closing Balance (A- 1,11,400 1,03,075 47,250
B)
37
II) SALES BUDGET
Week No.: 5
Practical No. 9A
Title / Aim: Preparation of Sales Budget.
Objectives(Specific): To prepare Sales Budget for the current year with the given
information.
Activity / Sequence / Procedures :- Teacher explains about sales Department with different
products and different regions and also explains quantitative and financial information of
sales department.
( Refer Table No.6 as below)
Sub Topics Sales Budget for current year with quantity and value.
Skill to be achieved As per Calculate correctly estimated quantity of sales and value for
objectives: each regions and for each product..
Skill evaluation Criteria: Preparation of correct sales budget with correct quantity
&value of sales for each product and each region.
Practice Required to acquire Continuous practice by preparing different problems of Sales
the master skills: budget.
any):
Ans : calculate quantity and value of sales for each product
separately and value of sales with the help of past
information.
ASSIGNMENT for: To collect different items & information from different
Practices / Reporting/ Data organizations about sales and estimation of sales.
Presentation
Acts/ Rules / NOCs:
38
TABLE NO. 6
Ponds company produces and sells three items:- (a) Snow cream (b) Talcum Powder and (c)
Cold Cream. The Company has dividend its market into two zones:- Zone A and Zone B. The
actual figures for the previous year sales were as under;
ZONE A ZONE B
PRODUCTS UNITS RATE (Rs.) UNITS RATE (Rs.)
Snow Cream 4,00,000 12.00 2,50,000 12.00
Talcum Powder 2,50,000 15.00 3,50,000 15.00
Cold Cream 3,00,000 16.00 3,00,000 16.00
For the current year, it is estimated that Sale of Snow cream will go up by 10% in zone B and
of Cold cream by 25000 units in zone A. The Company plans to advertise Talcum powder in
the T.V. network. The budgeted figures for talcum powder are to be increased by 20% in both
the zones.
The Prices of the two creams are to be maintained but for talcum powder, a bonus cut
of Rs. 1 will be announced.
You are required to prepare quantitative cum financial budget for sales in the current
year.
SOLUTION :-
In the books of Ponds Co. ltd.
Sales Budget
Products Snow Cream Talcum Powder Cold Cream TOTOL

Sales Price Rs. 12 Rs. 14 (Rs.15 – Re.1) Rs. 16 AMOUNT
Units Amount Units Amount Units Amount (Rs.)
Zone A 4,00,000 48,00,000 3,00,000 42,00,000 3,25,000 52,00,000 1,42,00,000
Zone B 2,75,000 33,00,000 4,20,000 58,80,000 3,00,000 48,00,000 1,39,80,000
TOTAL 6,75,000 81,00,000 7,20,000 1,00,80,000 6,25,000 1,00,00,000 2,81,80,000
39
Week No.: 5
Practical No. 9B
Objectives(Specific): To prepare Sales Budget for the next year with the given
information.
Activity / Sequence / Procedures :- Teacher explains about sales Department with different
products and different areas . Also explains changes in the quantity due to change in the
price and aggressive marketing( Refer Table No.7 as below)
Sub Topics Sales Budget for next year on account of change in price
and marketing strategy.
Skill to be achieved As per Calculate correctly estimated quantity of sales and value
objectives: for each City and for each product..
Skill evaluation Criteria: Preparation of correct sales budget with correct quantity &
value of sales for each product and each City.
Practice Required to acquire Continuous practice by preparing different problems of
the master skills: Sales budget.
National / International As per National and International Accounting Standards
Bench Marking / NOS (if and Auditing Standards
any):
Ans : calculate quantity and value of sales for each product
separately and value of sales with the help of past
information.
Practices / Reporting/ Data organizations about sales and estimation of sales.
Presentation
Acts/ Rules / NOCs:
40
TABLE NO.7
Emami Co. Produces two types of products “Fair” and “Handsome” and sells them in the
markets of Jaipur and Pali. The following information is made available for the current year.
Market Product Budgeted Scale Actual Scales
Jaipur Fair 400 units @ Rs.9 500 units @ Rs.9
Handsome 300 Units @ Rs. 21 200 Units @Rs. 21
Pali Fair 600 units @ Rs.9 700 Units @Rs. 9
Handsome 500 units @ Rs.21 200 Units @Rs. 21
Market research reveals that product ‘Fair’ is popular as it is under priced. It is observed that
even if price of product ‘Fair’ is increased by Re. 1, it will find ready market. On the other
hand ‘Handsome’ is over-priced and market would absorb more units if its selling price is
reduced to Rs. 20. Management has agreed to give effect to the above price changes. On the
above basis, the following estimates have been prepared by sales manager.
(% Change in Sales)
Product Jaipur Pali
Fair +10% +5%
Handsome +20% +10%
With the help of an intensive advertisement campaign, the following additional sales above the
estimated sales of sales manager are possible.
Product Jaipur Pali
Fair 60 Units 70 Units
Handsome 40 Units 50 Units
You are required to prepare a sales budget incorporating the above estimates.
SOLUTION :-
In the Books of Emami Co.
Sales Budget
Area Product Current Year Budget Current Year Actual Budget For Next Year
Units Rate Amount Units Rate Amount Units Rate Amount
Fair 400 09 3600 500 09 4500 500 10 5000
Jaipur Handsome 300 21 6300 200 21 4200 400 20 8000
TOTAL 700 - 9900 700 - 8700 900 - 13000
Fair 600 09 5400 700 09 6300 700 10 7000
Pali Handsome 500 21 10500 200 21 4200 600 20 12000
TOTAL 1100 - 15900 900 - 10500 1300 - 19000
Fair 1000 09 9000 1200 09 10800 1200 10 12000
Total Handsome 800 21 16800 400 21 8400 1000 20 20000
TOTAL 1800 - 25800 1600 - 19200 2200 - 32000
41
Week No.: 5
Practical No. 9C
Objectives(Specific): To prepare Sales Budget for four quarters with the given
information.
Activity / Sequence / Procedures :- Teacher explains about Estimated sales and cost of
producing different products( Refer Table No.8 as below)
Sub Topics Sales Budget for next year with cost of production and gross
margin.
Skill to be achieved As per Calculate correctly cost of production and value of sales for
objectives: each quarter and also gross margin..
Skill evaluation Criteria: Preparation of correct sales budget with correct value, cost
of production and gross margin.
any):
Ans : calculate value of sales , cost of production and gross
margin with the help of given information.
Practices / Reporting/ Data organizations about sales and cost of production.
Presentation
Acts/ Rules / NOCs:
42
TABLE NO.8
An estimate shows that there is a market foe 10,00,000 units of electric bells. Anchor company
can achieve the market of 1,50,000 bells per year out of which probable sale will be 45,000,
40,000, 20,000 and 45,000 bells in respective quarters. The selling price is Rs. 30/- per unit,
with a manufacturing cost as follows:-
Direct Material 17.50

Direct Labour 7.50
Variable Overhead Cost 2.50
Fixed Overhead 1,00,000
Prepare a sales budget for the year showing cost of production and gross profit by calendar
quarters. Assume no change in the inventory levels during the year.
SOLUTION :-
In the books of Anchor Co. Ltd.
Sales Budget with Cost of Sales & Net Profit Budget for the year ended _____
Particulars Qurter I Qurter II Qurter III Qurter IV Total

Sales in units 45,000 40,000 20,000 45,000 1,50,000
Total sales in @ Rs. 13,50,000 12,00,000 6,00,000 13,50,000 45,00,000
30
Cost of production :-
Direct Material 7,87,500 7,00,000 3,50,000 7,87,500 26,25,000
Direct Labour 3,37,000 3,00,000 1,50,000 3,37,500 11,25,000
Variable Overhead 1,12,500 1,00,000 50,000 1,12,500 3,75,000
Fixed Overhead 25,000 25,000 25,000 25,000 1,00,000
Total Cost of 12,62,500 11,25,000 5,75,000 12,62,500 42,25,000
Production
Gross Profit 87,500 75,000 25,000 87,500 2,75,000
43
Week No.: 5
Practical No. 9D
Objectives(Specific): To prepare Sales Budget for different products and different
regions with the given information.
Activity / Sequence / Procedures :- Teacher explains ratio of sales for different products and
different zones ( Refer Table No.9 as below)
Sub Topics Sales Budget for next year with different proportions of sales
to different products and different zones.
Skill to be achieved As per Calculate correctly sales for each products and zones to
objectives: prepare sales budget for next financial year.
Skill evaluation Criteria: Preparation of correct sales budget with correct value of sales
for each products and zones.
any):
Ans : calculate value of sales, usage of ratio to calculate sales foe
different products and zones with the help of given
information.
Practices / Reporting/ Data organizations about sales foe different products and zones.
Presentation
References / Links with Theory Lesson – Topic No. 2 – Budget & Budgetary Control.
Theory session/ Topics /
Acts/ Rules / NOCs:
44
TABLE NO.9
The actual sales of Evershine Co. Ltd. For the year 2014-15 are Rs. 5,00,000/-. It budget 20%
rise in sales during 2015-16. The company sells three products P, Q & R and expects that their
ratio in sales will be 5:4:3. The company has divided the market in four zones-East, West,
South and North, each zone achieving the sales in the ratio of 4:3:2:1 respectively of each
product. Prepare sales budget for 2015-16.
SOLUTION :-
Budgeted sales for 2015-16 Rs. 6,00,000 share of each product in sales.
P (5/12 × 6,00,000) Rs. 2,50,000
Q (4/12 × 6,00,000) Rs. 2,00,000
R (3/12 × 6,00,000) Rs. 1,50,000
In the books of Evershine Co. Ltd.
Sales Value Budget for 2015-16
Region / P (Rs.) (5/12) Q (Rs.) (4/12) R (Rs.) (3/12) Total (Rs.)

Product
East (4/10) 1,00,000 80,000 60,000 2,40,000
West (3/10) 75,000 60,000 45,000 1,80,000
South (2/10) 50,000 40,000 30,000 1,20,000
North (1/10) 25,000 20,000 15,000 60,000
TOTAL 2,50,000 2,00,000 1,50,000 6,00,000
Note:-Total Sales of P, Q & R are divided into 4 regions in the ratio of 4:3:2:1 e.g. P’s total
sales Rs. 2,50,000/- of which sales of cost region 4/10 × 2,50,000= Rs. 1,00,000/-
45
Week No.: 5
Practical No. 9E
Objectives(Specific): To prepare Sales Budget for different products assigned to
different Zonal managers under different zones with the given
information.
Activity / Sequence / Procedures :- Teacher explains change in the sales due to change in
selling price. for different products and different zones ( Refer Table No.10 as below)
Sub Topics Sales Budget for next year with different proportions of
sales to different products and different zones.
Skill to be achieved As per Calculate correctly sales for each products and zones to
objectives: prepare sales budget for next financial year due to change
in the price by using changes in percentage.
Skill evaluation Criteria: Preparation of correct sales budget with correct value of
sales for each products and zones.
any):
Ans : calculate value of sales, usage of percentage to calculate
sales for different products and zones with the help of
given information.
Practices / Reporting/ Data organizations about sales for different products and zones
Storages/ Live uploads / under different managers.
Presentation
Acts/ Rules / NOCs:
46
TABLE NO.10
The sales of Orchid Co. Ltd, for the calendar year 2014 comprise of
Product x-20000 units at the S.P. of Rs. 100 per unit
Product y-30000 units at the S.P. of Rs. 15 per unit
The company decides to increase the sales of X by 50% and of Y by 70% in the year
2015 by reducing the selling prices by Rs. 10/- and Rs. 20 per unit respectively.
The company has appointed Ramesh, Suresh and Mahesh, three Zonal Managers, To
achieve this sales figure, who have been given the target of 50%, 30% and 20% of sales of both
the products respectively.
Prepare sales budget for the year 2015.
SOLUTION :-
Working Notes:-
i) The budgeted sales for 2015 will be as under.
a) Product X= (20000+50% increase)= 30000 units
b) Product Y= (30000+70% increase)= 51000 units
ii) The budgeted selling price will be as under.

a) Product X= (Rs. 100-10) = Rs. 90 Per unit
b) Product Y= (Rs. 150-20) = Rs. 130 Per unit
iii) The Share of Ramesh, Suresh and Mahesh is total sales will be
Product X (units) Product Y (units)
Ramesh 50% 15,000 25,500
Suresh 30% 9,000 15,300
Mahesh 20% 6,000 10,200
Total 100% 30,000 51,000
In the books of Orchid Co. Ltd.

Sales budget for the year 2015
Product X Product Y Product Z
Managers Units Price Amount Units Price Amount Units Amount
Ramesh 15,000 90 13,50,000 25,500 130 33,15,000 40,500 46,65,000
Suresh 9,000 90 8,10,000 15,300 130 19,89,000 24,300 27,99,000
Mahesh 6,000 90 5,40,000 10,200 130 13,26,000 16,200 18,66,000
Total 30,000 27,00,000 51,000 66,30,000 81,000 93,30,000
47
ADDITIONAL PRACTICAL PROBLEMS
Week No.: 5
Practical No. 10 A
information.
Purchase, rent, Expenses and cash balance required. ( Refer Table No.11 as below)
objectives: three months.
respective months.
any):
Presentation
Acts/ Rules / NOCs:
48
TABLE NO.11
Prepare cash budget of Neelam Co. Ltd. For April, May and June 2017 using the following
information.
Months Sales Purchase Wages Expenses

January 90,000 55,000 20,000 5,000
February 90,000 50,000 18,000 6,000
March 85,000 52,000 22,000 6,000
April 1,00,000 60,000 24,000 7,000
May 95,000 55,000 20,000 6,000
June 90,000 45,000 18,000 5,000
Other Information:-
1) 10% of the purchases and 20% of sales are for cash.
2) The average collection period of the company is ½ month and credit purchases are paid
off regularly after one month.
3) Wages are paid half monthly and rent of Rs. 500 included in expenses is paid monthly.
4) Cash and bank balance as on 1st April was Rs. 25000 and the company wants to keep it
at the end of every month below Rs. 25,000 (but not less than Rs. 14000) The excess
cash being put in fixed deposit in multiples of Rs. 1000.
49
Week No.: 5
Practical No. 10 B
Objectives(Specific): To prepare Cash Budget for six months with the given
information.
Purchase, wages , production & selling Expenses and capital expenditure. ( Refer Table
No.12 as below)
objectives: Six months.
respective months.
any):
Presentation
Acts/ Rules / NOCs:
50
TABLE NO.12
A newly started company “Deepika Enterprises” wishes to prepare cash budget for the period
of first six months starting from 1st January, using the following information:
Months Sales Purchases Wages Production Selling &

(Rs.) (Rs.) (Rs.) Expenses Distribution Expenses
(Rs.) (Rs)
January 30,000 30,000 5,300 3,200 1,800
February 42,000 30,000 6,000 3,500 2,000
March 44,000 31,000 5,600 3,300 2,000
April 46,000 32,000 5,800 3,600 1,900
May 48,000 34,000 5,800 3,800 2,000
June 50,000 36,000 6,000 4,000 2,000
Cash balance on 1st Jan is expected Rs. 10,000. A new machine is to be installed at Rs. 30,000.
On credit to be repaid by two equal installments in March and April.
51
Week No.: 5
Practical No. 10 C
Objectives(Specific): To prepare Cash Budget for six months with the given
information.
Purchase, wages , manufacturing, selling Expenses and office expenses and capital
expenditure. ( Refer Table No.13 as below)
objectives: Six months.
respective months.
any):
Presentation
Acts/ Rules / NOCs:
52
TABLE NO.13
Following are the income and expenditure forecasts for the month of March to August 2016
Regarding Aishwarya Co. Ltd.
Months Sales Purchases Wages Mfg Exp. Office Selling

Expenses Expenses
March 60,000 36,000 9,000 4,000 2,000 4,000
April 62,000 38,000 8,000 3,000 1,500 5,000
May 64,000 33,000 10,000 4,500 2,500 4,500
June 58,000 35,000 8,500 3,500 2,000 3,500
July 56,000 39,000 9,500 4,000 1,000 4,500
August 60,000 34,000 8,000 3,000 1,500 4,000
Further Information:-
1) Sales and Purchases all are on credit.
2) The period of credit allowed by suppliers is 2 months and that allowed to customer is
one month.
3) Plant costing Rs. 16,000 is due for delivery in July payable 10% on delivery and the
balance after Three Months.
4) Advance installment of Rs. 5000 each are payable in March and June.
5) Time lag in payment of mfg. exp. Is half month, while the lag in payment of all other
expenses is one month.
You are required to prepare cash budget for the month of May, June, July and August
assuming that the opening balance of May is Rs. 8000.
53
Week No.: 6
Practical No. 11 A
Objectives(Specific): To prepare Cash Budget for four months with the given
information.
Activity / Sequence / Procedures :- Teacher gives different information about Sales and
Purchase, calculation of cash balance required , issue of shares and debentures. ( Refer Table
No.14 as below)
objectives: four months.
respective months.
any):
Presentation
Acts/ Rules / NOCs:
54
TABLE NO.14
From the following information prepare a cash budget of Varun Company Ltd. For the period
from January to April.
Months Expected Sales Expected Purchases

January 60,000 48,000
February 40,000 80,000
March 45,000 81,000
April 40,000 90,000
Wages will be paid to workers Rs. 5000 per month. Cash Balance on 1st January is assumed to
be Rs. 8000/- . It has been decided by the management that –
a) In case of deficit within the limit of Rs. 10,000 arrangement can be made with the bank.
b) In case of deficit exceeding Rs. 10,000/- but within the limit of Rs. 42,000/-, issue of
debentures to be made.
c) In case of deficit exceeding Rs. 42000/-, issue of equity shares is to be preferred.
55
Week No.: 6
Practical No. 11 B
Objectives(Specific): To prepare Cash Budget for four months with the given
information.
Activity / Sequence / Procedures :- Teacher gives different information about Sales and
Purchase, capital expenditure, dividend payment, bank loan taken to calculate cash balance (
objectives: six months.
respective months.
any):
Presentation
Acts/ Rules / NOCs:
56
TABLE NO.15
From the following information prepare a cash budget of Megastar Co. ltd. The Balance in
hand on 1st January 2017 is Rs. 72,500/-
Month Sales (Rs.) Purchase Wages Selling Production Admn

(Rs.) (Rs.) Exp (Rs.) Exp (Rs.) Exp. (Rs.)
January 72000 25000 10000 4000 6000 1500
February 97000 31000 12100 5000 6300 1700
March 86000 25500 10600 5500 6000 2000
April 88000 30600 25000 6700 6500 2200
May 10250 37000 22000 8500 8000 2500
June 108700 38800 23000 9000 8200 2500
Assume that 50% of sales are cash sales. Assets are to be purchased in the month of February
and April. Therefore, provision is to be made for the payment of Rs. 8000 and Rs. 25000 for
the same.
An application has been made to the bank to grant the loan of Rs. 30,000 and it is hoped that it
will be received in the month of may. It is anticipated that a dividend of Rs. 35000 will be paid
in June. Debtors are allowed one month credit sales commission @ 3% on sales is to be paid.
Creditors (for goods and overheads) grant one month credit.
57
Week No.: 6
Practical No. 11 C
Objectives(Specific): To prepare Sales Budget for different products assigned to
different Zonal managers under different zones with the given
information.
Activity / Sequence / Procedures :- Teacher explains calculation of sales for each zone
under two different executives for each product.( Refer Table No.16 as below)
Sub Topics Sales Budget for next year with different proportions of
sales to different products and different zones.
Skill to be achieved As per Calculate correctly sales for each products and zones under
objectives: two executives to prepare sales budget for next financial
year.
Skill evaluation Criteria: Preparation of correct sales budget under two executives
with correct value of sales for each products and zones.
any):
Ans : calculate value of sales, usage of ratios to calculate sales
for different products and zones with the help of given
information.
Practices / Reporting/ Data organizations about sales for different products and zones
Storages/ Live uploads / under different managers.
Presentation
Acts/ Rules / NOCs:
58
TABLE NO.16
The budgeted sales of Suncity Co. Ltd. For the year 2016 are as under,
Product A-10000 units, Selling Price Rs. 10/-, Per Unit
Product B-9000 Units, Selling price Rs. 5/- Per unit.
Company has made three zones of the market viz. Upper, Lower and middle zone and each
zone will have two marketing executives. The total sales of product A will be achieved by
Three zones in the ratio of 2:1:1 and by the two marketing executives equally. The total sales
of product B will be divided among three zones equally to be achieved by two marketing
executives in the ratio 2:1
Prepare sales budget for the year 2017.
59
Week No.: 6
Practical No. 12 A
Objectives(Specific): To prepare Sales Budget for three months for different zones
with the given information.
Activity / Sequence / Procedures :- Teacher explains calculation of sales for each zone for
three monts.( Refer Table No.17 as below)
Sub Topics Sales Budget for three months for different zones.
Skill to be achieved As per Calculate correctly sales for each zones under for three
objectives: months.
Skill evaluation Criteria: Preparation of correct sales budget correct value of sales
for each zones for three months.
any):
Ans : calculate value of sales for each zone with the help of
given information.
Practices / Reporting/ Data organizations about sales for different zones.
Presentation
Acts/ Rules / NOCs:
60
TABLE NO.17
With the help of following information prepare sales budget of product ‘PQR’ of “Aashirwad
Co. Ltd.” for three months Jan, Feb & March 2016.
January February March

ZONE Quantity Rate Amount Quantity Rate Amount Quantity Rate Amount
East 25000 3.00 75000 26000 3.00 78000 28000 2.90 81200
West 22000 3.20 70400 23000 3.20 73600 25000 3.00 75000
South 24000 3.10 74400 25000 3.00 75000 25000 3.00 75000
North 20000 3.25 65000 18000 3.25 58500 20000 3.20 64000
Central 26000 3.00 78000 23000 3.10 71300 22000 3.20 70400
61
Week No.: 6
Practical No. 12 B
Objectives(Specific): To prepare Sales Budget for four quarter for different products
with the given information.
Activity / Sequence / Procedures :- Teacher explains calculation of sales for each products
four quarters with quantity and value.( Refer Table No.18 as below)
Sub Topics Sales Budget for four quarters for different products.
Skill to be achieved As per Calculate correctly sales for each product for four quarters.
objectives:
Skill evaluation Criteria: Preparation of correct sales budget correct value of sales for
each quarter for each product.
any):
Ans : calculate value of sales for each product for each quarter
with the help of given information.
Practices / Reporting/ Data organizations about sales for different product for different
Storages/ Live uploads / periods.
Presentation
Acts/ Rules / NOCs:
62
TABLE NO.18
Merico Industries manufactured and sells two products viz., Sin and cos. During the year 2016
it plans to sell following quantities of each product.
Products Ist Quarter IInd IIIrd IVth Total

Quarter Quarter Quarter
Sin 100000 250000 230000 78000 6,58,000
Cos 110000 90000 75000 85000 3,60,000
Each product is sold on seasonal basis. Sin product tends to sell better in summer while the
product Cos sells better in writer. The company plans to sale product. Sin throughout the year
at a price of Rs. 15/- per unit and product Cos at a price of Rs.25/- per unit.
Prepare sales budget from the above information.
63
Week No.: 6
Practical No. 12 C
Objectives(Specific): To prepare Sales Budget for the current year for two products
and two regions with the given information.
Activity / Sequence / Procedures :- Teacher explains calculation of sales for each products
for each zone with the changes in quantity and price.( Refer Table No.19 as below)
Sub Topics Sales Budget for current year different products.
Skill to be achieved As per Calculate correctly sales for each product for current year
objectives: by making changes in quantity and price.
Skill evaluation Criteria: Preparation of correct sales budget with correct value and
quantity of sales for each product for each zone.
any):
Ans : calculate value of sales for each product for each zone by
changing the price and quantity with the help of given
information.
Presentation
Acts/ Rules / NOCs:
64
TABLE NO.19
Dove Co. Ltd. Produces and sells two item (1) Shampoo and (2) Shower-gel. The company has
divided its market into two zones-East and West. The figures of previous years sales were as
under.
EAST ZONE WEST ZONE

PRODUCTS UNITS RATE (Rs.) UNITS RATE (Rs.)
SHAMPOO 2,00,000 75.00 1,25,000 75.00
SHOWER-GEL 1,50,000 80.00 1,50,000 80.00
For the current year, it is estimated that sale of shampoo will go up by 10% in west zone and of
shower-gel get by 12500 units in east zone. The company plans to telecast an advertisement on
T.V. for shower-gel. The budgeted figures for shower-gel are to be increased by 20% in both
the zones.
The price of shampoo is to be maintained same but for shower-gel a discount of Rs. 2 will be
announced.
You are required to prepare sales budget for the current year.
65
Week No.: 6
Practical No. 12 D
Objectives(Specific): To prepare Sales Budget for first quarter with the given
information.
Activity / Sequence / Procedures :- Teacher explains calculation of sales for first quarter
with change in the price and quantity.( Refer Table No.20 as below)
Sub Topics Sales Budget for first quarter.
Skill to be achieved As per Calculate correctly sales quantity and value for first
objectives: quarter.
Skill evaluation Criteria: Preparation of correct sales budget with correct quantity
and value by changes in value and quantity for quarter.
any):
Ans : calculate value of sales for each product for the first
quarter with the help of given information.
Presentation
Acts/ Rules / NOCs:
66
TABLE NO.20
Godrej Co. Ltd submits the following figures of their soap “Godrej No.1” for the first quarter
of 2017.
Months Sales in Units

January 30000
February 25000
March 35000
Selling price per unit Rs. 20/-

Target of 1st Quarter 2015
Sales quantity increase by 10%
Sales price increase by 10%
Prepare sales budget for the Second quarter of 2017.
67
68
Chapter 3
Reconciliation of Cost and Financial Records

Week No.: 7
Practical No. 13 A
Title / Aim: Preparation of Reconciliation Statement from Cost &Financial
Records
Objectives(Specific): Preparation of reconciliation Statement when disagreements are
given.
Activity / Sequence / Procedures :- Teacher gives the list of disagreements along with the
profit as per cost account ( Refer Table No.1 given below)
Sub Topics Reconciliation statement
Skill to be achieved As per Calculate correctly the profit/Loss as per financial

objectives: account when profit as per cost account & disagreements
are given.
Skill evaluation Criteria: Calculation of Correct profit/loss as per financial account
Practice Required to acquire the Solving few more problems of reconciliation statement.
master skills:
Interactive session FAQs / Ans : Teacher will explain how to prepare reconciliation
statement when profit as cost accounts is given.
ASSIGNMENT for: Practices / To solve more number of problems of preparation of
Reporting/ Data Storages/ Live reconciliation statement from text book & reference
uploads / Presentation book.
References / Links with Theory Theory Lesson – Topic No. 3 – reconciliation of cost &
session/ Topics / Acts/ Rules / Financial Records
NOCs:
69
Table no 1
The profit as per cost accounts for the year ended 31/3/2016 is Rs.55,000/-.
while same is shown by financial account is Rs 50750/- .
The following details are ascertained on comparison of the cost & Financial
account.
Rs.
Incomes tax provided in financial books 2000
Bank interest credited in financial account 350
Depreciation charged in financial book 5700
Depreciation charged in cost account 6100
Administrative overheads charged in cost account 1450
Administrative Overheads charged in Financial account 1200
Obsolescence loss charged in financial account 3500
Interest on investment not included in cost A/C 2000
Stores adjustment (Cr.in financial account) 500
Loss due to depreciation in stock value 2250
(charged in financial A/C only)
Prepare to reconciliation statement
Reconciliation Statement as on 31/3/2016
Particular Amount Rs. Amount Rs.
Profit as per Cost Accounts 55,000
Add:
(Overheads over charged and Incomes under
charged in cost account.) ------
1) Bank interest not charged in cost A/C 350
2) Administrative overhead over charged 250
3) Depreciation over charged in cost A/C
Cost Depreciation 6100 -
Financial Depreciation 5700 400
4)Interest on investment not charged in cost 2,000
5)Stores adjustments. 500 03,500
58,500
70
Less :-
(Overheads under charged and income over
charged in cost account)
1)Income tax not charged in cost A/C 2,000
2)Oblescenses loss not changed cost A/C 2,250
3) Loss on the value of stores 3,500 07,750
50,750
71
Week No.: 7
Practical No. 13 B
Title / Aim: Preparation of Reconciliation Statement
Objectives(Specific): Preparation of Reconciliation statement when profit as per
Financial Account is given.
Activity / Sequence / Procedures :- Teacher explains the chart of preparation of

Reconciliation & solves problem
Sub Topics Reconciliation Statement
Skill to be achieved As per Preparation of Reconciliation Statement starting from

objectives: profit as per financial account.
Skill evaluation Criteria: Calculating Correct profit /loss as per cost records.
Practice Required to acquire the Solving few more problems of reconciliation statement
master skills: when profit as per financial account is given.
Interactive session FAQs / Ans : Teacher will explain how to prepare Reconciliation
statement when profit as per financial account is given.
ASSIGNMENT for: Practices / To solve more number of problems given in the text book
Reporting/ Data Storages/ Live or reference book.
References / Links with Theory Theory Lesson – Topic No. 3 – Reconciliation Statement
session/ Topics / Acts/ Rules / of Cost &Financial Accounts.
NOCs:
72
Table No. 2
The profit as per financial accounts for the year ended 31/3/2016 is Rs.88,000/-. Profit
for the same period shown by cost account is Rs.91500 . The following details are
ascertained on comparison of the cost & Financial account.
Rs.
Incomes tax provided in financial books 6,000
Bank interest credited in financial account 3,500
Depreciation charged in financial book 4,800
Depreciation charged in cost account 6,100
Administrative overheads charged in cost account 1,550
Administrative Overheads charged in Financial account 1,100
Obsolescence loss charged in financial account 2,500
Interest on investment not included in cost A/C 2,200
Stores adjustment (Credit in financial account) 900
Loss due to depreciation in stock value 3,350
Prepare reconciliation statement
Reconciliation Statement as on 31st March, 2016

Profit as per Financial Accounts 88,000
Add:
1) Income tax taken in financial account 6,000
2) Obsolescence loss charged in financial
account 2,500
3) Loss due to depreciation in stock value
charged in Financial account 3,350 11,850
99,850
Less :-
1) Bank interest credited in financial account. 3,500
2)More depreciation taken in cost account 1,300
3)Over recovery of administrative overhead in
73
cost account. 450
4) Interest on investment credited in financial
account. 2,200
5)Stores adjustment (credit of financial
account) 900 08,350
Profit as per Cost Account 91,500
74
Week No.: 7
Practical No. 14 A
Objectives(Specific): To prepare Reconciliation statement starting with loss as per cost
account.
Loss as per cost account ( Refer Table No.3 as below)

objectives: account when Loss as per cost account & disagreements
are given.
Skill evaluation Criteria: Calculation of Correct profit/loss as per financial account
Practice Required to acquire the Continuous practice of preparation of reconciliation
master skills: statement of few more Problems.
statement when Loss as cost accounts is given.
Reporting/ Data Storages/ Live reconciliation statement.
NOCs:
75
Table 3
The Loss as per cost accounts for the year ended 31/3/2016 is Rs.95,000/-. Loss
for the same period shown by financial account is Rs 95750/-. . The following
details are ascertained on comparison of the cost &Financial account.
Rs.
Incomes tax provided in financial books 4,000
Bank interest credited in financial account 4,500
Depreciation charged in financial book 5,800
Depreciation charged in cost account 7,100
Administrative overheads charged in cost account 2,550
Administrative Overheads charged in Financial account 2,100
Obsolescence loss charged in financial account 1,500
Interest on investment not included in cost A/C 1,800
Stores adjustment (Cr.in financial account) 1,200
Loss due to depreciation in stock value 4,500
Prepare to reconciliation statement
Reconciliation Statement as on 31st March, 2016

Loss as per Cost Accounts 95,000
Add:
1) Income tax taken in financial account 4,000
2) Obsolescence loss charged in financial
account 1,500
3) Loss due to depreciation in stock value
charged in Financial account 4,500 10,000
1,05,000
Less :-
1) Bank interest credited in financial account. 4,500
2)More depreciation taken in cost account 1,300
76
3)Over recovery of administrative overhead in
cost account. 450
4) Interest on investment credited in financial
account. 1,800
5)Stores adjustment (credit of financial
account) 1,200 09,250
Loss as per Financial Account 95,750
77
Week No.: 7
Practical No. 14 B
Objectives(Specific): To prepare Reconciliation statement starting with Loss as per
Financial Account.
Loss as per Financial account ( Refer Table No.4 given below)
Skill to be achieved As per Calculate correctly the profit/Loss as per Cost account
objectives: when profit as per cost account & disagreements are
given.
Skill evaluation Criteria: Correct profit/loss as per Cost account
statement when Loss as per Financial account is given.
NOCs:
78
Table no 4
The net loss shown by financial accounts of a company amounted to Rs.89600/-

for the year ended 31/3/2016 .while the profits as per cost accounts for that
period were Rs.82,950/- on reconciliation the following differences were noticed.
1) Opening stock over valued in financial account 2000/-
2) Closing stock over valued in cost account 1800/-
3) Closing stock of finished goods over valued in financial A/C 1500/-
4) Bad debt charge only financial account 2000/-
5) Interest paid (changed only financial A/C) 850/-
6) Dividends received 2000/-
7) Rent charged only cost A/C 8000/-
8) Preliminary expenses written of f 16000/-
(not charge in cost A/C)
9) Overheads over charge in cost A/C 4500/-
Prepare reconciliation statement.
79
Solution
Reconciliation statement as on 31/3/2016

Loss as per Financial Accounts 89,600
Add:
1) Overvaluation of closing stock of finished 1,500
goods in cost account
2) Dividend received credited in financial
account 2,000
3) Rent charged in cost account only 8,000
4) Over recovery of O/H in cost account 4,500 16,000
Less :- 1,05,600
1) Overvaluation of opening stock in
financial account 2,000
2) Overvaluation of closing stock in cost
account 1,800
3) Bad debts charged only in financial account 2,000
4) Interest paid charged in financial
account. 850
5) preliminary expenses written off recorded
in Financial account 16,000 22,650
Loss as per Cost Account 82,950
80
Week No.: 8
Practical No. 15 A
Title / Aim: Preparation of Cost sheet, & Reconciliation Statement
Objectives(Specific): To prepare Reconciliation statement when Financial Trading ,
profit & Loss Account is given.
Activity / Sequence / Procedures :- Teacher explains how to prepare Cost sheet &
Reconciliation Statement
Skill to be achieved As per Preparation of Cost Sheet , & Reconciliation Statement

objectives: when financial trading & profit & Loss Account is given
Skill evaluation Criteria: Correct preparation of cost sheet & Reconciliation
statement.
Practice Required to acquire the Solving few more problems in the classroom.
master skills:
Interactive session FAQs / Ans : Teacher will explain how to prepare cost sheet &
Reconciliation Statement.
ASSIGNMENT for: Practices / To Solve more problems given in text book & reference
Reporting/ Data Storages/ Live books
NOCs:
81
Table no 5
The Financial Profit and Loss account of Rahul manufacturing co. for the year ended on 31st
march 2016 is given below :
Profit and Loss Account for the year ended 31/03/2016
Particulars Amount Particulars Amount

(Rs.) (Rs.)
To Materials used 45,000 By Sales 1,25000
To Carriage inwards 2000
To Direct Wages 29,000
To Works expenses 9,000
To Administrative exp. 7750
To Selling & Distribution
Expenses 4,500
To Debenture Interest 900
To Net Profit 26,850
1,25,000 1,25,000
a) The amount charged in cost accounts in respect of overhead charges are as follows :
Works overhead Rs. 5,750
Administrative Expenses Rs. 2,295
Selling & Distribution Expenses Rs. 3,320
No charge has been made in Cost account in respect of Debenture interest.
Your are required to reconcile the profits shown by the two sets of Accounts.
82
Solution :- Cost Sheet for the year ended 31/03/2016
Particulars Amount Amount

Direct material 45,000
Direct wages 29,000
carriage inward 2000
Prime cost 76,000
Works O/H 5,750
Factory Cost/Works Cost 81,750
Office & Administrative O/H 2,295
Cost of Production 84,045
Selling & distribution O/H 3,320
Cost of Sales 87,365
profit 37,635
Sales 1,25,000
Reconciliation statement as on31/03/2016
Profit as per cost account 37,635

Less 1. under recovery of works O/H in cost
account 3,250
2. Under recovery of office & administrative O/H
in Cost account 5,455
3. Under recovery of selling & distribution O/H
In cost account 1,180
4. Debenture interest debited in P&L account only
Profit as per financial account 900 10,785
26,850
=============
83
Week No.: 8
Practical No. 15 B
Title / Aim: Preparation of Cost sheet , Trading & Profit & Loss Account &
Reconciliation Statement
Objectives(Specific): To prepare Reconciliation statement ,cost sheet & Trading
&profit &loss account.
Activity / Sequence / Procedures :- Teacher explains how to prepare Cost sheet ,Trading &
Profit & Loss Account & Reconciliation Statement
Skill to be achieved As per Preparation of Cost Sheet ,Trading& profit &Loss

objectives: Account & Reconciliation Statement .
Skill evaluation Criteria: Correct preparation of cost sheet ,Trading& profit &
Loss Account & Reconciliation statement.
master skills:
Interactive session FAQs / Ans : Teacher will explain how to prepare cost sheet ,Trading
& Profit & Loss Account & Reconciliation Statement.
NOCs:
84
Table no 6
The sanjay Manufacturing Co. supplies you the following information and asks you to prepare
a statement showing the profit per cycle sold. Wages and materials are to be charged at actual
cost, works overheads at 100% on wages and office overhead at 75% of works overhead. You
are also required to prepare a statement Reconciling the profit as shown by cost account with
the profit as shown by financial account for the period ending on 31st march 2016.
There were no cycles in stock or in course of manufacturing. The number of cycles sold during
the year were 800.
Details are as under Rs.
Materials per cycle 200
Wages per cycle 120
Selling price per cycle 700
Prepare the necessary statement showing the actual profit for the year as per financial books if
the actual works expenses were Rs. 80,500 and office expenses Rs. 65,650.
Solution:
In the books of sanjay manufacturing Co.
Cost sheet for the period ending on 31st march, 2016
Particulars Total (800 cycle) Per cycle (Rs.)

(Rs.)
Materials 1,60,000 200
Wages 96,000 120
Prime Cost 2,56,000 320
Works overhead (100% on Direct wages) 96,000 120
Works Cost 3,52,000 440
Office overhead (75% on Works overhead) 72,000 90
Total Cost 4,24,000 530
Profit 1,36,000 170
Sales 5,60,000 700
Trading &Profit and Loss AccountFor the year ending on 31st march 2016
85
(Rs.) (Rs.)
To Materials 1,60,000 By Sales 5,60,000
To Wages 96,000
To Office expenses 65,650
To Net Profit 1,57,850
5,60,000 5,60,000
Particulars Amount
(Rs.)
Net Profit As Per Cost Book 1,36,000
Add :- 1. Over recovery of works overheads (96,000- 80,500) 15,500
2. Over recovery of office overheads (72,000 -65650 ) 6,350
Profit as per Financial Accounts 1,57,850
86
Week No.: 8
Practical No. 16 A
Title / Aim: Preparation of Reconciliation Statement when Trading & Profit
& loss account is given
Objectives(Specific): To prepare Cost Sheet & Reconciliation statement.
Activity / Sequence / Procedures :- Teacher explains how to prepare Cost Sheet &
Reconciliation statement.
Skill to be achieved As per Preparation of cost sheet & Reconciliation Statement.

objectives:
Skill evaluation Criteria: Correct preparation of t ,cost sheet & Reconciliation
statement.
master skills:
Interactive session FAQs / Ans : Teacher will explain how to prepare cost sheet &
Reconciliation Statement.
NOCs:
87
Table no 7
Mahalaxmi ltd kolhapur made a profit of Rs.48,800 during the year 2016 as per their costing
system, whereas their Final Accounts disclose a profit of Rs.30,000 . From the following
Profit and Loss Account for the year ended 31st march 2016 as per the financial books, you are
required to prepare a Reconciliation Statement showing the causes for this difference :
In the books of Mahalaxmi ltd
Trading &Profit and Loss Account for the year ended 31/3/2016
Particulars (Rs.) Particulars (Rs.)
To Opening stock 2,00,000 By Sales 3,50,,000
To Purchases 1,60,000 By Closing stock 1,60,000
To Direct wages 40,000
To Factory expenses 30,000
To Gross profit c/d 80,000
5,10,000 5,10,000
To Administrative expenses 20,000 By Gross Profit b/d 80,000
To Selling expenses 30,000
Net Profit 30,000
80,000 80,000
Costing records show the following :-
a)Raw material consumed Rs. 1,70,000
b) Direct Labour Rs. 46,000
c) Factory overheads Rs. 26,000
d) Administrative overheads calculated at 10% of the works cost.
e) selling overheads are 10% of sales
prepare cost sheet for the year ended 31/3/2016 & reconciliation statement as on 31/3/2016
88
Solution Cost Sheet for the year ended 31/3/2016
Raw material consumed 1,70,000
Direct Labour 46,000
Prime cost ------------ 2,16,000
Factory O/H 26,000
Works cost / Factory cost 2,42,000
Office & administrative O/H 24,200
Cost of Production 2,66,200
Selling O/H 35,000
Cost of Sales 3,01,200
Profit 48,800
Sales 3,50,000

Profit as per Cost account 48,800
Add: 1)Over recovery of office & administrative O/H in 4,200
cost Account
2)Over recovery of selling O/H in cost account 5,000
3)Over recovery of Direct labour in cost account 6,000 15200
64,000
Less: 1) under recovery of factory O/H in Cost account
2)Differnce in material consumed 4000
30,000
Profit as per financial account ----------------------- 34,000
30,000
89
Week No.: 8
Practical No. 16 B
Title / Aim: Preparation of cost sheet, trading & profit & loss account &
Reconciliation Statement .
Objectives(Specific): To prepare Financial Trading & profit & Loss Account , Cost
sheet & Reconciliation Statement.
Activity / Sequence / Procedures :- Teacher explains how to prepare financial Trading &
profit & Loss Account ,Cost sheet & Reconciliation Statement .
Skill to be achieved As per Preparation of financial trading & profit & loss Account
objectives: ,cost sheet & Reconciliation Statement .
Skill evaluation Criteria: Correct preparation of Trading & Profit & Loss Account
,cost sheet & Reconciliation statement.
master skills:
Interactive session FAQs / Ans : Teacher will explain how to prepare Trading& Profit &
Loss Account ,cost sheet & Reconciliation Statement.
NOCs:
90
Table 8
From the following particulars prepare (a) Trading &profit and Loss Account for the year
ended 31/3/2016; (b) Statement showing the cost of manufacturing, calculating factory
overhead at 25% on prime cost and office overhead at 75% on factory overhead ; (c) a
statement reconciling the profits shown by the cost accounts with that shown by Profit and
Loss Account.
Rs.
Stock, 1st January 2015
Raw materials 4,000
Finished goods 8,000
Stock, 31st march 2016
Raw materials 6,000
Purchases of Raw materials 24,000
Wages 10,000
Sales 65,000
Works expenses 7,750
Office expenses 6,100
Solution Trading & profit & loss account for the year ended 31/3/2016

To opening stock By Sales 65000
Raw material 4000
Finished goods 8000
To purchase of material 24000
To wages 10,000
To works expenses 7,750 By closing stock
To office expenses 6,100 Raw material 6,000
To Net profit c/d 13,150 Finished goods 2,000
73,000 73,000
========== =========
91
Cost sheet for the year ended 31/3/2016
Particulars Amount Amount Amount
Opening stock of Raw material 4,000

Add Purchase of raw material 24,000
Less Closing stock of Raw material 6,000
Raw material consumed 22,000
Add Direct wages 10,000
Prime Cost 32,000
Add Works O/H (25% of prime cost ) 8,000
Works Cost 40,000
Add Office O/H(75% of factory O/H) 6,000
Cost of Production 46,000
Add Opening stock of finished goods 8000
Less Closing stock of finished goods 2,000 6,000
52,000
Cost of Sales / Total Cost 13,000
Add Net Profit 65,000
Net Sales / Selling Price
Reconciliation statement as on31/03/2016
Profit as per cost account 13,000

Add over recovery of works O/H in cost account 250
250
13,250
Less under recovery of office O/H in cost account 100

------------------- 100
Profit as per financial account 13,150
=============
92
Week No.: 9
Practical No. 17 A
Objectives(Specific): To prepare cost sheet, Trading & profit & loss account &
Reconciliation statement from the given information.
Activity / Sequence / Procedures :- Teacher explains how to prepare cost sheet, Trading &
profit & loss account & Reconciliation statement ( Refer Table No.9 given below)

objectives: account , as per cost account & to prepare reconciliation
statement.
Skill evaluation Criteria: Preparation of reconciliation statement
statement cost sheet & Trading & profit & loss account.
NOCs:
93
Table no 9
M/s Smita chemical Industries, Mumbai manufacturers product ‘A’ and ‘B’. From the
information given below, you are ask to prepare statement of reconciling the profit as per Cost
Account and Financial Accounts.
Particulars Product ‘A’ Product ‘B’
Number of units produced and sold 80 60
Direct material consumed (RS.) 52,000 42,000
Productive wages (Rs.) 46,000 39,000
Selling price per units (Rs.) 3,000 4,000
Works overheads are charged at 80% of productive wages and Office overhead at 25%
of Works cost. Actual Works expenses amounted to Rs. 75,000 and Office expenses to Rs.
65,000. There were no opening and closing stock.
Solution cost sheet for the year ended 31/3/2016
Particulars Per unit Amount Per unit Amount Total
Product A Product A Product B Product B
Direct material 650 52,000 700 42,000 94,000
+Direct Wages 575 46,000 650 39,000 85,000
=Prime cost 1225 98000 1350 81,000 1,79,000
+Factory O/H 460 36,800 520 31,200 68,000
=Factory cost 1685 1,34,800 1,870 1,12,200 2,47,000
+Office O/H 421.25 33,700 467.5 28,050 61750
=Cost of Production 2106.25 168500 2337.5 1,40,250 3,08,750
+Profit 893.75 71,500 1662.5 99750 1,71,250
Sales 3000 2,40,000 4000 2,40,000 4,80,000
94
Trading & profit & Loss account for the year ended 31/3/2016
Particulars Amount particulars Amount
To Direct material By Sales
Product a 52,000 Product a 2,40,000
Product b 42,000 94,000 Product b 2,40,000 4,80,000
To Direct wages
Product a 46,000
Product b 39,000 85,000
To Factory expenses 75,000
To office expenses 65,000
To net profit c/d 1,61,000
4,80,000 4,80,000
========== ==========
Reconciliation statement as on 31/3/2016
Profit as per cost account 1,71,250
Less: 1)under recovery of factory O/H in cost
account 7,000
2)Under recovery of office O/H in cost account
3,250
Profit as per financial account --------------------- 10,250
1,61,000
95
Week No.: 9
Practical No. 17 B
Objectives(Specific): To prepare Reconciliation statement from disagreements given.
profit as per cost account & financial account

objectives: account starting with profit as per cost account &
disagreements are given.
Skill evaluation Criteria: Correct profit/loss as per financial account
statement when profit as cost accounts is given.
NOCs:
96
Table no. 10
The net profit of the sagar Co. pune .cost books showed a net profit of Rs. 1,72,400 for the
same period. A scrutiny of the figures from both the sets of accounts revealed the following
facts.
Rs.
1) Works overhead under recovered in cost accounts 4,150
2) Administrative overhead over recovered in cost accounts 1,900
3) Depreciation charged in financial accounts 15,200
4) Depreciation charged in cost accounts 13,850
5) Interest on Investment not recorded in cost accounts 9,000
6) Loss due to obsolescence in financial accounts 6,700
7) Bank interest and transfer fess 1, 750
8) Income Tax 38,300
9) Stores adjustment (credit in financial accounts) 4750
10) Depreciation loss in stock values charged in financial accounts 5,750
Prepare a Reconciliation Statement between profit as shown by financial and cost
accounts.
Solution :-
In the books of M/S _______
Reconciliation statement as on ……………
Profit as per Cost Books 1,72,400

Add :-
1. Administration overhead over recovered in cost sheet 1,900
2. Interest on Investment not recorded in cost account 9,000
3. Bank Interest & transfer fees 1,750
4. Stores adjusted (credit in financial account) 4,750 17,400
1,89,800
Less :-
1. Work overhead under recovered in cost account 4,150
2. Under recovery of depreciation charges 1,350
3. Loan due to obsolescence 6,700
4. Depreciation loss in stock values charged in financial
accounts 5,750
5. Income tax – Profit as per financial records 38300 56,250
Profit as per financial records 1,33,550
97
Week No.: 9
Practical No. 18 A
Objectives(Specific): To prepare Reconciliation statement from disagreements given.
profit as per financial account
Skill to be achieved As per Calculate correctly the profit/Loss as per cost account &
objectives: disagreements are given.
Skill evaluation Criteria: Calculation Correct profit/loss as per cost account
statement when profit as financial accounts is given.
NOCs:
98
Table no 11
The net profit of the Shruti Co. Mumbai appeared as Rs. 65,000 as per financial account . A
scrutiny of the figures from both the sets of accounts revealed the following facts.
Rs.
1) Income Tax provided in financial accounts 18,000
2) Bank Interest credited in financial accounts 850
3) Works overhead under recovered in cost accounts 2,450
4) Depreciation charged in financial accounts 4,000
5) Depreciation charged in cost accounts 7,000
6) Administrative expenses over recovered in cost accounts 1 950
7) Loss due to obsolescence in financial accounts 3,700
8) Interest on Investment not included in cost accounts 5,100
9) Stores adjustment (credit in financial accounts ) 3,400
10) Depreciation loss in stock values charged in financial A/c 3,900
Prepare Reconciliation Statement.
99
Week No.: 9
Practical No. 18 B
Title / Aim: Preparation of cost sheet & Reconciliation Statement
Objectives(Specific): To prepare Reconciliation statement from trading &profit & loss
account & additional information given.
Activity / Sequence / Procedures :- Teacher explains how to prepare cost sheet &
reconciliation statement ( Refer Table No.12 as below)
Skill to be achieved As per Calculate correctly the profit/Loss as per cost account &
objectives: to reconcile profits /losses of both the accounts.
Skill evaluation Criteria: Calculation Correct profit/loss as per cost account
statement when trading & profit & loss account
&additional information is given.
NOCs:
100
Table no 12
The Financial Profit and Loss account of Tanvi manufacturing co. for the year ended on 31st
march 2016 is given below :
Trading &Profit and Loss Account for the year ended 31/3/2016

(Rs.) (Rs.)
To Materials used 50,000 By Sales 2,00,000
To Carriage inwards 8,000
To Direct Wages 35,000
To Administrative exp. 12,000
To Selling & Distribution
Expenses 9,500
To Debenture Interest 5,500
To Net Profit 60,000
2,00,000 2,00,000
The amount charged in cost accounts in respect of overhead charges are as follows :
Works overhead Rs. 18,250
Administrative Expenses Rs. 14,500
Selling & Distribution Expenses Rs. 9,500
No charge has been made in Cost account in respect of Debenture
Your are required to prepare cost sheet & reconcile the profits shown by the two sets of
Accounts.
101
Week No.: 10
Practical No. 19 A
Objectives(Specific): To prepare cost sheet, Trading & profit & loss account &
reconciliation statement .
Activity / Sequence / Procedures :- Teacher explains how to prepare cost sheet, Trading &
profit & loss account & reconciliation statement. ( Refer Table No.13 given below)

objectives: account,profit/loss as per cost account & to prepare
reconciliation statement.
Skill evaluation Criteria: Calculation of Correct profit/loss as per financial
account& cost accounts.
Practice Required to acquire the Continuous practice of preparation of cost shee trading &
master skills: profit & loss account & reconciliation statement offew
more Problems.
statement .
NOCs:
102
Table no 13
From the following particulars prepare :-
a) Statement of cost of manufacture calculating factory overhead at 25% of prime cost and
the office overhead at 75% on factory overhead.
b) A statement of profit as per the Cost Account.
c) The Profit and Loss Account in financial books.
d) Reconciliation statement between the profit shown by cost account with profit shown
by financial accounts.
Selling price is fixed at cost plus 25%
Stock on 1/4/2015 Rs.
Raw materials 35,000
Stock on 31st march 2016
Purchase of Raw materials 2,04,000
Direct wages 92,000
Sales 5,00,000
103
Week No.: 10
Practical No. 19 B
Objectives(Specific): To prepare cost sheet ,Trading & profit &loss account &
reconciliation statement
Activity / Sequence / Procedures :- Teacher gives table no 14 & explains how to solve it (

objectives: account profit as per cost account &to prepare
Skill evaluation Criteria: Preparation of Correct reconciliation statement
statement .
NOCs:
104
Table no 14

Purchase of Raw materials 2,25,,000
Direct wages 1,13,000
Sales 5,50,000
105
Week No.: 10
Practical No. 20 A

statement .
NOCs:
106
Table no 15
M/s Shreya electricals ltd. , Mumbai manufacturers product ‘CFL’ and LED bulbs’. From the
information given below, you are ask to prepare statement of reconciling the profit as per Cost
Account and Financial Accounts.
Particulars CFL’ LED’
Number of units produced and sold 1800 2000
Direct material consumed (RS.) 95,000 87,000
Productive wages (Rs.) 80,000 76,000
Selling price per units (Rs.) 120 150
Works overheads are charged at 80% of productive wages and Office overhead at 25% of
Works cost. Actual Works expenses amounted to Rs. 59,000 and Office expenses to Rs.
107
Week No.: 10
Practical No. 20 B
Activity / Sequence / Procedures :- Teacher gives table no 16& explains how to solve it (
Refer Table No.16 given below)

statement .
NOCs:
108
Table no 16
M/s RIYA electronics ltd , Mumbai manufactures product ‘LCD’ and LED TELIVISIONS’.
From the information given below, you are ask to prepare statement of reconciling the profit as
per Cost Account and Financial Accounts.
Particulars LCD’ LED’
Number of units produced and sold 2,200 2000
Direct material consumed (RS.) 10,20,000 12,87,000
Productive wages (Rs.) 8,90,000 11,76,000
Selling price per units (Rs.) 16,000 38,00,000
Works overheads are charged at 80% of productive wages and Office overhead at 25%
of Works cost. Actual Works expenses amounted to Rs. 4,90,000 and Office expenses to Rs.
3,80,000 There were no opening and closing stock.
109
Week No.: 11
Practical No. 21 A

statement .
NOCs:
110
Table no 17
M/s maruti engineers ltd, Mumbai manufacturers product ‘tool a’ and tool b’. From the
information given below, you are asked to prepare statement of reconciling the profit as per
Cost Account and Financial Accounts.
Particulars Tool A TOOL B
Number of units produced and sold 2,500 2,000
Direct material consumed (RS.)(Pu) 1,00 170
Productive wages (Rs.) 80 76
Selling price per units (Rs.) 330 400
Works overheads are charged at 80% of productive wages and Office overhead at 25% of
Works cost. Actual Works expenses amounted to Rs. 85,000 and Office expenses to Rs.
111
Week No.: 11
Practical No. 21 B

statement .
NOCs:
112
Table no 18
Sales 6,50,000
113
Week No.: 11
Practical No. 22 A

statement .
NOCs:
114
Table no 19
Sales 6,05,000
115
Week No.: 11
Practical No. 22 B

statement .
NOCs:
116
Table no 20
Selling price is fixed at 1/3 on sales

Sales 7,25,000
117
118
Chapter 4
MARGINAL COSTING
week No. 12
Practical No. 23 A
Title / Aim To prepare marginal cost statement.
Objectives To Calculate Marginal cost & profit.(Table 1)
Sales—Marginal cost = contribution—fixed cost
= profit.
Requirement Demonstration model/Computer/Chart/
images
Environment Requirement Lab./Class Room/ Industry.
Activity Teacher explains marginal cost ,Contribution,
fixed cost and profit.
Procedure Student will Learn to calculate marginal cost,

contribution, and profit.
Skill to be achieved as per objectives Students are able to calculate marginal cost,
contribution and profit.
Skill evaluation criteria To assess the correctness of calculation of

marginal cost, contribution and profit.
Practice required to acquire the master skill Learn the proforma of marginal cost & profit
statement.
National/International Bench Marking As per Accounting & Costing standards
/NOS (If Any)
Interactive session FAQS/ANS To solves queries from students regarding the
calculation of marginal cost & statement.
ASSIGNMENT for Practice/ Reporting/Data Write the formula of contribution and profit.
Storage Prepare a chart of Marginal cost & profit
Live upload/Presentation statement.
References Theory lesson of Marginal Costing
119
TABLE 1
From the following information of Mr. Akash Co. Ltd. Solapur.
Prepare Profit and Marginal cost statement.
Direct material per unit Rs. 10/-
Direct labour per unit Rs. 4/- Variable overheads per unit Rs. 2/-
Production - 20,000 units, Total fixed cost Rs. 1,00,000/-
Selling price per unit Rs. 25/
SOLUTION :- Statement of Profit and Cost
PARTICULARS AMOUNT (Rs.) AMOUNT (Rs.)

Sales (20,000 x 25) 5,00,000
Less: Marginal Cost
Material (20,000 x 10) 2,00,000
Labour (20,000 x 4) 80,000
Variable overheads (20,000 x 2) 40,000 3,20,000
Contribution 1,80,000
Less: Fixed Cost 1,00,000
Net Profit
80,000
120
Week No. 12
Practical No. 23 B
Title / Aim To prepare marginal cost statement.
Objectives To Calculate Marginal cost & profit.(Table 2)
Sales—Direct expenses =Contribution—fixed
expenses – profit.
images
Activity Teacher explains marginal cost, Direct expenses ,
Contribution, fixed cost and profit.
Procedure Student will Learn to calculate marginal cost,

contribution, and profit.
Skill to be achieved as per objectives Students are able to calculate marginal cost,
contribution and profit.
Skill evaluation criteria To assess the correctness of calculation of

marginal cost, contribution and profit.
Practice required to acquire the master skill Learn the proforma of marginal cost & profit
statement.
/NOS (If Any)
calculation of marginal cost & statement.
ASSIGNMENT for Practice/ Reporting/Data Write the formula of contribution and profit.
Storage Prepare a chart of Marginal cost & profit
Live upload/Presentation statement.
121
TABLE 2
From the following data M/s Sunil Manufacturing Co. ltd. Pune, Prepare a profit statement
under Marginal cost.
Selling price per unit Rs. 100/- , Direct materials per unit Rs. 25/-
Direct labour per unit Rs. 15/- , Direct overhead per unit Rs. 10/-
Total units sold 10,000 units., Fixed expenses Rs. 3,50,000.
Solution :-
PARTICULARS AMOUNT (Rs.) AMOUNT (Rs.)
Sales (10,000 x100) 10,00,000
Less: Marginal Cost
Material (10,000 x 25) 2,50,000
Labour (10,000 x 15) 1,50,000
Direct overheads (10,000 x 10) 1,00,000 5,00,000
Contribution 5,00,000
Less: Fixed Cost 3,50,000
Net Profit
1,50,000
122
Week No. 12
Practical No. 24 A
Title / Aim To calculate P/v Ratio.
Objectives To Calculate P/v ratio from the given data.(Table
3)
P/v ratio= (Sales—Variable cost) /Sales.
images
Activity Teacher explains Sales, Variable cost,
contribution and formula of P/v. ratio.
Procedure Student will Learn to calculate P/v. ratio.

Skill to be achieved as per objectives Students are able to calculate P/v. ratio.
Skill evaluation criteria To assess the correctness of calculation of P/v.

ratio.
Practice required to acquire the master skill Practice more exercises for practice.
/NOS (If Any)
calculation of p/v. ratio.
ASSIGNMENT for Practice/ Reporting/Data Write the formula of p/v. ratio.

Storage Prepare a chart of P/v. ratio.
123
TABLE 3
From the following data find out P/V Ratio.
Sales Rs. 1,00,000/-
Variable cost Rs. 75,000/-
Sales - Variable cost
Profit volume Ratio = x 100
Sales
Rs.1,00,000 - Rs.75,000
= x 100
Rs. 1,00,000
Rs. 25,000
= x 100
Rs. 1,00,000
= 25 %
OR
Contribution
Profit volume Ratio = x 100
Sales
Rs. 25,000
= x 100
Rs. 1,00,000
= 25 %
Contribution = Sales - Variable cost

= Rs.1,00,000 - Rs.75,000
= Rs. 25,000
124
Week No. 12
Practical No. 24 B
Objectives To Calculate P/v ratio from the given data.(Table
3)
P/v ratio= (Sales—Variable cost) /Sales.
images
Activity Teacher explains Sales, Variable cost,
contribution and formula of P/v. ratio.
Procedure Student will Learn to calculate P/v. ratio.

Skill to be achieved as per objectives Students are able to calculate P/v. ratio.
ratio.
/NOS (If Any)

125
TABLE 4
From the following data find out P/V Ratio .
Sales price per unit Rs. 100.
Variable price per unit Rs. 75.
Profit volume Ratio = (Selling price per unit - variable price per unit) x 100
Selling price per unit
= (Rs.100 – Rs. 75) x 100
Rs. 100
= 25 %
126
Week No. 13
Practical No. 25 A
Objectives To Calculate P/v ratio if two periods sales and
profit is given from the given data.(Table 5)
P/v ratio= Change in the profit /Change in sales x
100
images
Activity Teacher explains Change in Sales & Change in
profit of two years and formula of P/v. ratio.
Procedure Student will Learn to calculate P/v. ratio from

two years sales and profit.
Skill to be achieved as per objectives Students are able to calculate P/v. ratio from two
years sales & profit.

ratio.
/NOS (If Any)

127
TABLE 5
When given two years sales & two years profit, then following formula used for profit volume
ratio.
Changes in profit.
Profit volume Ratio = X 100
Changes in sales
find out changes in profit & sales
Changes in profit = Difference two years profit.
Changes in sales = Difference two years sales.
The sales & profit during two years were
Year Sales (Rs.) Profit (Rs.)
2005 150000 30000
2006 200000 50000
Calculate P/V Ratio

Changes in profit
Profit volume Ratio = X 100
Changes in sales
(Rs.50,000 – Rs.30,000)
= X 100
(Rs.2,00,000 – Rs.1,50,000)
Rs.20,000
= x 100
Rs.50,000
= 40 %
128
Week No. 13
Practical No. 25 B
Title / Aim To calculate Contribution, BEP, Margin of safety
& profit.
Objectives To Calculate contribution, margin of safety, BEP
and profit from the given data (Table6)
Contribution = Sales – variable cost
BEP = Fixed cost /p/v. ratio
Margin of safety = Sales – BEP sales.
images
Activity Teacher explains contribution , BEP , Margin of
safety & profit.
Procedure Student will Learn to calculate contribution, BEP

, Margin of safety & profit.
Skill to be achieved as per objectives Students are able to calculate contribution, BEP ,
Margin of safety & profit.

ratio.
Practice required to acquire the master skill Practice more exercises for acquiring skill.
/NOS (If Any)
calculation of contribution, BEP, margin of
safety & Profit.
ASSIGNMENT for Practice/ Reporting/Data Write the formula of contribution , BEP, Margin
Storage of safety & profit.
Live upload/Presentation Prepare a chart of contribution, BEP, Margin of
safety and profit.
129
Table 6
From the following information relating to Pritam & company. You are required to find out :
a) Contribution
b) Break – even – point
c) Margin of safety
d) Profit
Total fixed cost Rs. 45,000/-
Total Variable cost Rs. 1,00,000/-
Total Sales Rs. 1,50,000/-
Units Sold 50,000 units
Solution :-
a) Contribution = Sales - Variable Cost
= Rs.1,50,000 – Rs.1,00,000
= Rs. 50,000/-
Fixed cost x Sales
b) Break even point =
(BEP) Contribution
Rs.45,000 x Rs.1,50,000
=
Rs. 50,000
= Rs.1,35,000/-
OR
Fixed cost
BEP =
1- Variable cost
Sales
45,000
=
1 - 1,00,000
1,50,000
= Rs.1,35,000/-
130
C) Margin of safety = Sales - Break even point
= Rs. 1,50,000 – Rs.1,35,000
= Rs.15,000
D) Profit = Contribution - fixed cost
= Rs.50.000 – Rs.45,000
= Rs. 5,000
131
Week No. 13
Practical No. 26 A
& profit.
and profit from the given data (Table7)
BEP in sales = Fixed cost /p/v. ratio
BEP in units = Fixed cost/ contribution per unit.
images
safety & profit.


ratio.
/NOS (If Any)
safety & Profit.
safety and profit.
132
TABLE 7
From the following information relating to M/s Priti Co. Ltd. You are required to find out :
1) Contribution
2) Break -even point in sales
3) Margin of safety
4) Profit.
5) Break even points in units
Fixed cost Rs. 15,000/-
Variable cost Rs. 35,000/-
Sales Rs. 1,00,000/-
Units sold - 10,000 Units.
Solution
a) Contribution = Sales - Variable cost
= Rs.1,00,000 – Rs. 35,000
= Rs.65,000
Fixed cost x Sales

b) Break Even Point =
(BEP) Contribution
Rs.15,000 x Rs.1,00,000
=
Rs. 65,000
= Rs. 23,076.92 i.e. Rs.23,077
c) Margin of safety = Sales - Break-even point

= Rs.1,00,000 – Rs. 23,077
= Rs. 76,923/-
d) Profit = Contribution - Fixed Cost
= Rs.65,000 – Rs.15,000
= Rs.50,000
e) Break even point in units = BEP SALES = Rs. 23,077
Selling Price Rs.10
= 2,307.7 Units
i.e. = 2,308 Units
133
Week No. 13
Practical No. 26 B
& profit.
and profit from the given data (Table 8)
BEP in sales = Fixed cost /p/v. ratio
BEP in units = Fixed cost/ contribution per unit.
images
safety & profit.


ratio, contribution, BEP, & Margin of safety..
/NOS (If Any)
safety & Profit.
safety and profit.
134
TABLE 8
M/s Akash & co. Ltd. Mumbai furnishes to 31st March 2006.
1) Sales Rs. 2,00,000/-
2) Fixed expenses Rs. 50,000/-
3) Profit Rs. 40,000/-
Calculate :
a) Contribution
b) PIV Ratio (Profit Volume Ratio)
c) Break even point
d) Margin of safety
e) Profit when sales are Rs. 3,00,000/-
Solution :-
a) Contribution = Sales - Variable Cost
= Rs.2,00,000 – Rs.1,10,000
= Rs.90,000/-
OR
Contribution = fixed cost + profit
= Rs.50,000 + Rs.40,000 = Rs.90,000/-
Contribution
b) P/V Ratio = x 100
Sales
Rs. 90,000
= x 100
Rs.2,00,000
= 45 %
Fixed cost
c) Break even point =
(BEP) PIV Ratio
Rs.50,000 Rs. 50,000 100
= = x =
45 % 1 45
i.e. = Rs. 1,11,111.11
d) Margin of safety = Sales - Break Even Point Value
= Rs.2,00,000 – Rs.1,11,111
= RS.88,889
135
e) Profit when sales are Rs. 3,00,000
Profit = Contribution - fixed cost
= Rs.1,35,000 – Rs.50,000
= Rs. 85,000
Contribution = Sales (P/V Ratio)
= Rs.3,00,000 on 45%
= Rs. 3,00,000 x 45/100
= Rs. 1,35,000/-
136
Week No. 14
Practical No. 27 A
Title / Aim To calculate P/v. ratio, BEP & Margin of safety
Objectives To Calculate P/v. ratio, margin of safety & BEP
from the given data (Table 9)
P/v. ratio = Contribution/sales
BEP = Fixed cost/ P/v. ratio
images
Activity Teacher explains P/v. ratio , BEP , Margin of
safety & effect of change in selling price and
variable cost on these values..
Procedure Student will Learn to calculate P/v. ratio,, BEP ,
Margin of safety.
Skill to be achieved as per objectives Students are able to calculate P/v. ratio, BEP&
Margin of safety.

ratio, margin of safety & BEP.
/NOS (If Any)
calculation of P/v. ratio, BEP, margin of safety .
ASSIGNMENT for Practice/ Reporting/Data Write the formula of P/v. ratio,, BEP, Margin of
Storage safety.
Live upload/Presentation Prepare a chart of P/v. ratio, BEP, Margin of
safety.
137
TABLE 9
From the following information of the book of Mr. Sunil Co. Ltd. 31st March, 2017.
1) Sales Rs. 50,000/-
2) Variable cost Rs. 30,000/-
3) Fixed cost Rs. 15,000/-
1) Find out
i) PIV Ratio (Profit Volume Ratio)
ii) Break even point
iii) Margin of safety
2) Also calculate the revised PIV Ratio Break Even Point & Margin of Safety
a) Decrease of 10% in selling price.
b) Increase of 10% in variable cost
Solution :-
Contribution
1) P/V Ratio = x 100
Sales
Rs. 20,000
= x 100 = 40%
Rs. 50,000
OR

P/V Ratio = x 100
Sales
Rs. 50,000 – Rs.30,000
= x 100
Rs.50,000
Rs. 20,000
= x 100 = 40 %
Rs. 50,000
Fixed cost
b) Break even point =
P/V Ratio
138
Rs. 15,000 Rs. 15,000 100
= = x
40 % 1 40
= Rs. 37, 500
c) Margin of safety = Sales - Break even point (BEP)

= Rs.50,000 – Rs.37,500 = Rs. 12,500
2) Revised P/V Ratio , BEP & M.S.

a) Decrease of 10% in selling price
Sales Rs. 50,000 on 10% = Rs. 5000
= Rs.50,000 – Rs. 5,000
= Rs. 45,000 selling price.

a) P/V Ratio = x 100
Sales
Rs.45,000 – Rs.30,000
= x 100
Rs. 45,000
= 33.33 % i.e 1/3
Fixed cost
b) BEP =
PIV Ratio
Rs. 15,000 Rs. 15,000 3

= = x
1/3 1 1
= Rs.45000/-
c) Margin of safety = Sales - BEP

= Rs.45,000 –Rs. 45000
= Nil.
139
b) Increase of 10% in variable cost
Rs.30,000 on 10 % = Rs. ,3000 = Rs.30,000 +Rs. 3,000 = Rs. 33,000

a) PIV Ratio = x 100
Sales
Rs. 50,000 – Rs. 33,000
= --------------------------------------- x 100
Rs. 50,000
Rs. 17,000
= ------------------------- x 100
Rs.50,000
= 34 %
Fixed cost
b) Break even point (BEP) = -------------------------
PIV Ratio
Rs. 15,000 Rs. 15,000 100
= ---------------- = ------------------ x -------
34/100 1 34
= Rs. 44,117.64 i.e. = Rs. 44,118/-
c) Margin of safety = Sales - BEP

= Rs.50,000 – Rs.44,118
= Rs.5,882
140
Week No. 14
Practical No. 27 B
Title / Aim To calculate P/v. ratio, BEP , Margin of safety,
profit & sales.
Objectives To Calculate P/v. ratio, margin of safety & BEP
from the given data (Table 10)
images
Activity Teacher explains P/v. ratio , BEP , Margin of
safety, profit when sales are given & sales when
profits are given..
Margin of safety, sales & Profit.
Skill to be achieved as per objectives Students are able to calculate P/v. ratio, BEP&
Margin of safety, sales & profit.

ratio, margin of safety , BEP, sales & profit.
/NOS (If Any)
calculation of P/v. ratio, BEP, margin of safety ,
sles& profit.
Storage safety.
Live upload/Presentation Prepare a chart of P/v. ratio, BEP, Margin of
safety.
141
TABLE 10
From the following information calculate
a) P/V Ratio
b) Break even point
c) Margin of safety
d) Profit when sales are Rs. 10,00,000/-
e) Sales when profit of Rs. 40,000/-
Total sales Rs. 8,00,000/-
Selling price per unit - 60/-
variable cost per unit - 30/-
fixed cost Rs. 3,25,000/-
Selling price per unit - variable price per unit
a) P/V Ratio = -------------------------------------------------------- x 100
60 – 30
= ------------------ x 100
60
OR
C
P/V Ratio = ---------- X 100
S
30
= ------- X 100
60
= 50%
Fixed Cost
b) Break even point (BEP) = ---------------------- x 100
P/V Ratio
Rs. 3,25,000 Rs. 3,25,000 100
= ------------------ = ----------------- x --------
50/100 1 50
= Rs.6,50,000/-
c) Margin of safety = Sales - Break even point

= Rs. 8,00,000 – Rs.6,50,000
142
= Rs. 1,50,000/-
d) Profit when sales are Rs. 10,00,000/-

Profit = Contribution - fixed cost
= Rs.5,00,000 - Rs.3,25,000
= Rs.1,75,000
Contribution =Sales (PIV Ratio)
= Rs.10,00,000 on 50 %
= Rs.5,00,000/-
e) Sales when profit are Rs. 40,000/-

Fixed cost + profit
Earning sales = ------------------------------
P/V Ratio
Rs. 3,25,000 + Rs. 40,000
= -------------------------------------
50 %
Rs. 3,65,000 100
= ------------------- x -------
1 50
= Rs. 7,30,000/-
143
Week No. 14
Practical No. 28 A
Title / Aim To calculate P/v. ratio, BEP , profit & sales.
Objectives To Calculate P/v. ratio, BEP, profit & sales from
the given data (Table 11)
images
Activity Teacher explains P/v. ratio , BEP , profit when
sales are given & sales when profits are given..

sales & Profit.
Skill to be achieved as per objectives Students are able to calculate P/v. ratio, BEP& ,
sales & profit.

ratio,, BEP, sales & profit.
/NOS (If Any)
calculation of P/v. ratio, BEP, , sales & profit.
ASSIGNMENT for Practice/ Reporting/Data Write the formula of P/v. ratio,, BEP,
Storage Prepare a chart of P/v. ratio, BEP,
144
TABLE 11
A Company producing a single articles salesRs. 10 per unit.
Sales Rs. 10 per unit.
Variable cost Rs. 6 per unit.
Fixed cost Rs. 4000
Calculate :-
a) PIV Ratio
b) Break-Even point
c) The sales to earn profit Rs. 5,000/-
d) Profit at sales of Rs. 30,000/-
Solution :
Selling price per unit - Variable cost per unit

a) PIV Ratio = ----------------------------------------------------------- x 100
Rs.10 - Rs.6
= ------------------- x 100
Rs.10
Rs. 4
= ----------- x 100
Rs. 10
= 40 %
Fixed cost
b) Break even point = ----------------
PIV Ratio
Rs. 4000
= -------------
40/100\
= Rs. 10,000/-
c) The sales to earn profit Rs. 5,000/-

Fixed Cost + Profit
Earning sales = ---------------------------
P/V Ratio
145
Rs. 4,000 + Rs.5,000
= -----------------------------
40 %
Rs. 9,000 100
= -------------- x -------
1 40
= Rs. 22,500
d) Profit at sales of Rs. 30,000/-

Profit = contribution - fixed cost
= Rs. 12,000 - Rs.4,000
= Rs. 8,000
Contribution = Sales (PIV Ratio)

= Rs. 30,000 on 40%
= Rs. 12,000
146
Week No. 14
Practical No. 28 A
Title / Aim To calculate P/v. ratio, BEP , profit & sales.
Objectives To Calculate P/v. ratio, BEP, ,sales & profit .from
images
sales are given & sales when profits are given..

sales & Profit.
sales & profit.

ratio,, BEP, sales & profit.
/NOS (If Any)
calculation of P/v. ratio, BEP, , sales & profit.
147
TABLE 12
From the following particulars , calculate
a) PIV Ratio
b) Sales required to Break even point.
c) Sales required to earn profit of Rs. 3,20,000/-
d) Profit at sales of Rs. 10,00,000/-
Selling price per unit Rs. 80/-
Direct materials Rs. 20/-
Direct labour Rs. 14/-
Variable overheads- 100 % of direct labour cost.
Fixed expenses Rs. 1,28,000/-
Solution :
Selling price per unit - variable cost per unit
a) PIV Ratio = ----------------------------------------------------------- x 100
Rs.80 - (Rs.20 + Rs.14 + Rs.14)
= ------------------------------------------- x 100
80
32
= ------- x 100 = 40 %
80

= Rs. 80 - (Rs.20+Rs.14+Rs.14) - Rs. 48 = Rs. 32
Fixed Cost
b) Break even point (BEP) = ------------------
PIV Ratio
Rs. 1,28,000
= -----------------------
40 %
= Rs.3,20,000/-
Fixed cost + Profit
c) Earning Sales = --------------------------
P/V Ratio
Rs. 1,28,000 + Rs.3,20,000
= ---------------------------------------
148
40/100
4,48,000 100
= ------------------- x ----------
40 1
= Rs.11,20,000/-
d) Profit = Contribution - Fixed cost

= Rs.4,00,000 - Rs.1,28,000
= Rs.2,72,000/-
Where :-
Contribution = Sales X (PIV Ratio)
= Rs.10,00,000 X 40 %
= Rs.4,00,000/-
149
Week No. 14
Practical No. 28 B
Title / Aim To calculate P/v. ratio, BEP & units to be sold to
earn a given profit.
Objectives To Calculate P/v. ratio, BEP, ,sales & profit .from
images
Activity Teacher explains P/v. ratio , BEP , units to be
sold to earn a given profit.

units to be sold for a given profit.
units to be sold for a given profit.

ratio,, BEP,& units to be sold.
/NOS (If Any)
calculation of P/v. ratio, BEP & units to be sold
for a given profit.
150
TABLE 13
The following data is given below :
1) Sales price Rs. 20 per unit.
2) Variable cost (factory) Rs. 11 per unit.
3) Variable cost (selling) Rs. 3 per unit.
4) Fixed cost (factory) Rs. 5,40,000 per year.
5) Fixed cost (selling) Rs. 5,52,000 per year.
Calculate :
a) P/V Ratio
b) Break even point in units
c) No. of units that must be sold to earn a profit of Rs. 60,000/-
Solution :
Sales - Variable Cost
a) P/V Ratio = ----------------------------- x 100
Sales
Rs.20 - (Rs.11+Rs.3)
= --------------------------- x 100
Rs. 20
Rs. 6
= ----------- x 100
Rs. 20
= 30 %
fixed cost
b) Break even points in units = ---------------------------------
contribution per unit
Rs.10,92,000
= -------------------- = 1,82,000 units
6
= Rs.20 – Rs.14
= Rs.6
Fixed cost + Profit
c) Sales in units = --------------------------------
Contribution per units
151
( Rs. 10,92,000 + Rs.60,000 )
= --------------------------------------
Rs 6
= Rs.11,52,000
6
= 1,92,000 Units
152
Week No. 15
Practical No. 29
Title / Aim To calculate P/v. ratio, Fixed cost, BEP, profit &
sales.
Objectives To Calculate P/v. ratio, Fixed cost, BEP, ,sales &
profit .from the given data (Table 14)
P/v. ratio = Change in profit / Change in sales.
BEP = Fixed cost / P v Ratio.
images
sales are given & Sales when profits are given.

Sales & profit.
Skill to be achieved as per objectives Students are able to calculate P/v. ratio, BEP,
Sales & profit.
ratio,, BEP, profit & sales.
National/International Bench Marking /NOS (If As per Accounting & Costing standards
Any)
calculation of P/v. ratio, BEP , profit & Sales.
153
TABLE 14
The following figures are available from the books of Priti Traders Solapur.
Year Sales Rs. Profit Rs.

2014 2,00,000 20,000
2015 3,00,000 40,000
Calculate :
a) P/V Ratio
b) Fixed Cost
c) Break even point
d) Profit at sales Rs. 80,000/-
e) Sales to earn profit Rs. 15,000/-
Solution :
Changes in profit
a) PIV Ratio = ------------------------- x 100
Changes in sales
(Rs 40,000 – Rs.20,000)
= ------------------------------------- x 100
(Rs.3,00,000 – Rs.2,00,000)
Rs.20,000
= -------------------------- x 100
Rs.1,00,000
= 20 %
b) Fixed cost = Contribution - Profit

= Rs.60,000 - Rs.40,000
= Rs.20,000

2015 = Rs. 3,00,000 on 20%
= Rs.60,000
Fixed cost
c) Break even point = -------------------
P/V Ratio
154
20,000
= -----------------
20/100
= Rs. 1,00,000
d) Profit = ( Given Sales X P/V Ratio) - Fixed Cost

= (Rs. 80,000 X 20%) – Rs. 20,000
= Rs.16,000 – Rs.20,000
= Rs.- 4,000 Loss
Fixed Cost + Profit

e) Earning Sales = ------------------------------
P/V Ratio
Rs. 20,000 + Rs. 15,000
= ------------------------------------
20 %
Rs. 35,000
= ---------------
20 %
= Rs. 1,75,000/-
155
Week No. 15
Practical No. 30
Title / Aim To calculate P/V ratio, Fixed cost, BEP, profit &
sales.
Objectives To Calculate P/v. ratio, Fixed cost, BEP, ,sales &
profit .from the given data (Table 15)
images
Activity Teacher explains P/v. ratio , BEP & profit when
sales are given.

& profit.
Skill to be achieved as per objectives Students are able to calculate P/v. ratio, BEP,
& profit.
ratio,, BEP,& profit.
/NOS (If Any)
calculation of P/v. ratio, BEP & profit
References Theory lesson of standard Costing
156
TABLE 15
From the below given details calculate :
a) P/V Ratio
b) Fixed cost
c) Break even point
d) Profit at sales Rs. 1,20,000/-
Year Sales Rs. Total Cost Rs.
2015 40,000 36,000
2016 60,000 52,000
Solution :-
Changes in profit
a) P/V Ratio = ------------------------ x 100
Changes in sales
Rs.8,000 - Rs. 4,000
= ------------------------------- x 100
Rs. 60,000 – Rs. 40,000
Rs.4,000
= -------------------- x 100
Rs. 20,000 \
= 20 %
b) Fixed cost = Contribution - profit
= Rs.12,000 – Rs.8,000
= Rs. 4,000
2016 = Rs. 60,000 on 20%
= Rs.12,000
Fixed cost
c) Break even point = P/V Ratio
Rs. 4,000
= 20/100
= Rs.20,000
d) Net Profit = ( Given Sales X P/V Ratio ) - fixed cost
= ( Rs. 1,20,000 X 20% ) – Rs. 4,000
= Rs. 24,000 – Rs. 4,000
= Rs. 20,000/-
157
Week No. 16
Practical No. 31
Title / Aim To calculate P/v. ratio, Variable cost, BEP, profit
& sales.
Objectives To Calculate P/v. ratio, variable cost, BEP, ,sales
& profit .from the given data (Table 16)
images
sales are given.

sales & profit.
Skill to be achieved as per objectives Students are able to calculate P/v. ratio, BEP
sales& profit.

ratio,, BEP, sales,& profit.
/NOS (If Any)
calculation of P/v. ratio, BEP , sales & profit
Storage safety.
Live upload/Presentation Prepare a chart of P/v. ratio, BEP,
References Theory lesson of standard Costing
158
TABLE 16
The sales and profit during two years were :
Year Sales Rs. Profit Rs.
2012 1,25,000 25,000
2013 1,50.000 35,000
you are required to calculate :
i) Break even point
ii) PIV Ratio
iii) Sales required to earn profit of Rs. 50,000/-
iv) The profit made when sales are Rs. 3,00,000/-
v) Variable costs of the two years.
vi) Margin of safety in 2003.
Solution :-
Changes in profit
i) PIV Ratio = ------------------------ x 100
Changes in sales
(Rs.35,000 – Rs.25,000)
= ---------------------------------- x 100
(Rs.1,50,000 – Rs.1,25,000)\
Rs.10,000
= ------------------ x 100
Rs.25,000
= 40 %
Fixed Cost
ii) Break even point = -------------------
P/V Ratio
Rs.25,000
= ----------------
40/100
Rs.25,000 100
= --------------- x ------
1 40
= Rs.62,500
Fixed cost = Contribution - Profit
= Rs.60,000 - Rs.35,000
= Rs.25,000
159
2013 = Rs.1,50,000 on 40 %
= Rs.60,000
Fixed cost + Profit
iii) Earning Sales = -----------------------------------
P/V Ratio
Rs.25,000 + Rs.50,000
= -------------------------------
40/100\
Rs.75,000 100
= ---------------- x -------
1 40
= Rs.1,87,500/-
iv) Profit = Contribution - fixed cost
= Rs.1,20,000 - Rs. 25,000
= Rs.95,000
= Rs.3,00,000 on 40%
= Rs.1,20,000/-
v) Variable cost = Sales - Contribution
2002 = Rs.1,25,000 – Rs. 50,000
= Rs.75,000
2003 = 1,50,000 - 60,000
= 90,000
OR
Variable cost = Sales - Fixed cost - profit
2002 = Rs.1,25,000 – Rs.25,000 – Rs.25,000
= Rs.75,000
2003 = RS.1,50,000 – Rs.25,000 – Rs.35,000
= Rs.90,000
vi) Margin of safety = Actual Sales - Break even point
= Rs.1,50,000 – Rs. 62,500
= Rs.87,500
160
Week No. 16
Practical No. 32
Title / Aim To calculate P/v. ratio, Variable cost, BEP, profit
& sales.
Objectives To Calculate P/v. ratio, variable cost, BEP, ,sales
& profit .from the given data (Table 17)
images
sales are given.

sales & profit.
Skill to be achieved as per objectives Students are able to calculate P/v. ratio,
BEP,sales& profit.

ratio,, BEP, sales,& profit.
/NOS (If Any)
calculation of P/v. ratio, BEP , sales & profit
Storage safety.
Live upload/Presentation Prepare a chart of P/v. ratio, BEP,
161
TABLE 17
From the following information you are required to calculate :
a) PIV Ratio
b) Fixed cost
c) Break even point
d) Profit at sales Rs. 3,60,000/-
Year Sales Rs. Total Cost Rs.
2015 1,20,000 1,08,000
2016 1,80,000 1,56,000
Solution :-
Changes in profit
a) PIV Ratio = ------------------------ x 100
Changes in sales
(Rs.24,000 – Rs.12,000)
= ---------------------------------- x 100
(Rs.1,80,000 – Rs.1,20,000)\
Rs.12,000
= ------------------ x 100
Rs.60,000
= 20 %
b) Fixed cost = (Sales of 2016 x P/V Ratio) – profit of 2016
= (Rs.1,80,000X20%) – Rs 24,000
= Rs.12,000
Fixed Cost
c) Break even point = ----------------------
P/V Ratio
Rs.12,000
= -----------------
20 %
= Rs.60,000
d) Profit at sales of Rs. 3,60,000 = (Sales x P/V Ratio) - Fixed Cost

= (Rs.3,60,000 x 20 %) – Rs. 12,000
= Rs.72,000 - Rs. 12,000
= Rs. 60,000
162
Table 18
The cost and price structure of a product of Vaccha LTD. are as follows:
Rs.
Selling price 100 per piece
Variable manufacturing cost 30 per piece
Fixed Cost : Manufacturing 7,50,000 per year
Administration 1,20,000 per year
Selling 1,30,000 per year
The company has to pay to its agents a commission of 20% on sales. Compute:
a) B.E.P. in the above situation
b) P/V Ratio
c) If the company wants to have a profit of Rs. 2,00,000, what should be the level
of sales?
d) If the company wants to reduce the price to Rs. 87.50 per piece, what should be
the level of sales to maintain the same level of profit?
Table 19
OMEGA Ltd., furnishes to you the following information relating to the half year
ended 30th June, 2017 :
Rs.
Fixed expenses 2,70,000
Sales value 9,00,000
Profit 1,80,000
During the second half of the year, the company has projected a loss of Rs. 60,000
. Calculate:
i) The break-even point and margin of safety for the six months ending 30th June,
2017.
ii) Expected sales value for the second half of the year assuming that the P/V ratio and
fixed expenses remain constant in the second half year also.
iii) The break-even point and margin of safety for the whole of 2017.
Table 20
The Queen Industries specialize in the manufacture of small capacity motors. The cost
structure of a motor is as under:-
Material Rs. 200
Labour Rs. 320

Variable Overheads 75% of labour
cost
Fixed overheads of the company amount to Rs. 9.60 lakhs per annum. The sale price
of the motor is Rs. 920 each.
(a) Determine the number of motors that have to be manufactured and sold in a year in
order to break-even.
(b) How many motors have to be made and sold to make a profit of Rs. 4 lakh per year
?
(c) If the sale price is reduced by Rs. 60 each, how many motors have to be sold to
break-even?
163
164
CHAPTER NO 5
STANDARD COSTING
Week No. 17
Practical No. 33
Title / Aim To calculate material cost variance.
Objectives To find the difference between standard Cost
material and actual Cost of material (Table 1)
Material Cost Variance = Standard Cost of
Material – Actual cost of material
images
Environment Requirement Lab./Class Room/ Warehouse
Activity Teacher explains method of calculating Material
cost variance
Procedure As per given method student will learn to calculate

material Cost variance.
Skill to be achieved as per objectives Students are able to calculate material Cost
Variance.
Skill evaluation criteria To assess the correctness of Calculation of

material Cost variance in their journal
Practice required to acquire the master skill Practice more problems in the Journal.
/NOS (If Any)
Interactive session FAQS/ANS To solves queries from students regarding
materials Cost variances.
ASSIGNMENT for Practice/ Reporting/Data Give practice problems.

Storage Prepare a chart of Material cost Variance.
References Theory lesson of Standard Costing
165
TABLE 1
From the data given below, compute material cost variance.
Types of Standard Actual

Materials Qty. Price Total Qty. Price Total
Kg. Rs. Rs. Kg. Rs. Rs.
Material X 12 1.50 18 10 2.40 24
Material Y 4 3.50 14 2 6 12
Total 16 --- 32 12 --- 36
Solution :-
Material Cost Variance = Standard cost of materials – Actual cost of materials
Material X = ( SQ X SP) – ( AQ X AP)
= (12 X 1.50) – ( 10 X 2.40) = Rs. 6.00 Adverse
Material Y = (4 X 3.50) – (2 X 6) = Rs.2.00 Favorable
Total Material Cost variance = Rs.4.00 Adverse .
166
Week No. 17
Practical No. 34
Title / Aim To calculate material Price variance.
To find the difference between standard Price
material and actual Price of material(Table 2)
Objectives
Material Price Variance = Actual
Quantity x (Standard price – Actual Price)
Demonstration model/Computer/Chart/
Requirement
images
Activity
Teacher explains method of calculating
Material Price variance
Procedure
As per given method student will learn to
calculate material Price variance.
Skill to be achieved as per objectives
Students are able to calculate material Price
Variance.
To assess the correctness of Calculation of
Skill evaluation criteria
material Price variance in their journal
Practice more problems of Material Price
Practice required to acquire the master skill
Variance.
National/International Bench Marking /NOS
As per Accounting & Costing standards
(If Any)
Interactive session FAQS/ANS
To solves queries from students regarding
materials Price variances.
ASSIGNMENT for Practice/ Reporting/Data Give practice problems. Prepare a chart of
Storage Live upload/Presentation material Price Variance.
167
TABLE 2
From the data given below, compute material price and cost Variance

Material X 10 1.50 15 9 2.00 18.00
Material Y 6 3.00 18 5 3.50 17.50
Total 16 --- 33 14 --- 35.50
Solution :-
Material price Variance = Actual Quantity X (Standard Price – Actual Price)
Material X = 9 X ( 1.50 – 2.00)
= 9 X 0.50 =Rs. 4.50
Adverse
Material Y = 5 X ( 3.00 – 3.50 )
= 5 X 0.50 =Rs.2.50
Adverse
Total material price Variance = Rs.7.00 Adverse .
Material cost Variance = Standard Cost of material – Actual cost of materials

Material X = (10 X 1.50) – (9 X 2.00)
= 15 – 18 = Rs. 3.00
Adverse
Material Y = ( 6 X 3) – ( 5 X 3.50)
= 18 - 17.50 = Rs. 0.50
Favorable
Total Material cost Variance = Rs. 2.50 Adverse .
168
Week No. 18
Practical No. 35
Title / Aim To calculate material usage variance.
Objectives To find the difference between standard
Quantity of material for actual output and
actual Quantity of material used. (Table 3)
Material usage variance = Standard Price x (
Standard Quantity – Actual Quantity)
Requirement Demonstration model / Computer / Chart /
images
Activity Teacher explains method of calculating
Material Usage variance
Procedure As per given method student will learn to
calculate material Usage variance.
Skill to be achieved as per objectives Students are able to calculate material Usage
Variance.
material Usage variance in their journal
Practice required to acquire the master skill Practice more problems of Material Usage
Variance.
/NOS (If Any)
material Usage variances.
Storage Prepare a chart of material Usage variance.
169
TABLE 3
From the data given below, compute material usage, price and cost variance.

Material X 10 1.50 15 10 1.75 17.50
Material Y 8 3.00 24 7 4.00 28.00
Total 18 --- 39 14 --- 45.50
Solution :-
Material usage Variance = Standard Price X ( Standard Quantity – Actual Quantity)
Material X = 1.50 X ( 10 -10) = Rs. NIL
Material Y = 3 X ( 8- 7) = Rs.3.00 Favorable
Total material usage Variance = Rs.3.00 Favorable
Material cost Variance = Standard cost of material – Actual cost of materials

Material X = ( 10 X 1.50) – ( 10 X 1.75)
= 15 – 17.50 = Rs.2.50 Adverse
Material Y =(8X3)–(7X4)
= 24 – 28 = Rs. 4.00 Adverse
Total material Cost Variance = Rs. 6.50 Adverse
Material Price variance = Actual Quantity X ( Standard price – Actual price )

Material X = 10 X ( 1.50 – 1.75)
=10 X .25 = Rs. 2.50 Adverse
Material Y = 7 X ( 3 – 4)
=7X1 = Rs.7.00 Adverse
Total material price Variance =Rs. 9.50 Adverse
170
Week No. 18
Practical No. 36
Title / Aim To calculate Material Mix Variance.
Objectives To find the difference between standard Mix

of material for actual Output and actual Mix
of material used. (Table 4)
Material Mix Variance = Standard Price per
unit X (Standard Mix Quantity of Actual
Output – Actual Mix Quantity).
Requirement Demonstration model / Computer/Chart/
images
Raw Material Stationery, Calculator.

Material Mix variance
Procedure As per given method students will learn to

calculate material Mix variance.
Skill to be achieved as per objectives Students are able to calculate material Mix
Variance.

material Mix variance in their journal
Practice required to acquire the master skill Practice more problems of Material Mix
Variance.
National/International Bench Marking /NOS As per Accounting & Costing standards

(If Any)

material Mix variances.
ASSIGNMENT for Practice/ Reporting/Data Give practice problems. Prepare a chart of

Storage Live upload/Presentation material Mix Variance.
171
TABLE 4
From the data given below, compute material mix, price, usage and cost variances.

Material X 10 1.50 15.00 9 1.75. 15.00
Material Y 8 3.00 24.00 9 4.00 36.00
Total 18 --- 39.00 14 --- 51.00
Solution :-
Material Mix Variance = Standard Price X (Standard Quantity – Actual Quantity)
Material X = 1.50 X ( 10 – 9 )
= 1.50 X 1 = Rs. 1.50 Favorable
Material Y = 3 ( 8 – 9 )
=3X1 = Rs. 3.00 Adverse
Total material Mix Variance = Rs. 1.50 Adverse
Material Cost variance = Standard cost of material - Actual cost of material

Material X = ( 10 X 1.50 ) – ( 9 X 1.75 )
= 15 – 15.75 = Rs. 0.75 Adverse
Material Y =(8X3)–(9X4)
= 24 – 36 = Rs.12.00 Adverse
Total material cost Variance = Rs.12.75 Adverse
Material Price Variance = Actual quantity X ( Standard Price – Actual price )

Material X = 9 X ( 1.50 – 1.75)
= 9 X .25 = Rs. 2.25 Adverse
Material Y =9X(3–4)
Total material price Variance = Rs.11.25 Adverse
Material Usage Variance

= Standard Price X ( Standard Quantity – Actual Quantity)
Material X = 1.50 X ( 10 – 9 )
= 1.50 X 1 =Rs. 1.50 Favorable
Material Y =3X(8–9)
Total material Usage Variance = Rs. 1.50 Adverse
172
Week No. 19
Practical No. 37
Title / Aim To calculate material Yield variance.
Objectives To find the difference between standard
Yield of material for actual Output and actual
Yield of material.(Table 5).
Material Yield Variance = Standard Price per
unit x (Standard Quantity – Standard Mix
Quantity for Actual Production)
images
Material yield variance
Procedure As per given method student will learn to
calculate material yield variance.
Skill to be achieved as per objectives Students are able to calculate material yield
Variance.
material Yield variance in their journal
Practice required to acquire the master skill Practice more problems of Material yield
Variance.
National/International Bench Marking /NOS As per Accounting & Costing standards
(If Any)
material yield variances.
Storage Live upload/Presentation Prepare a chart of Material Yield Variance.
173
Table 5
From the following data, calculate material Yield, cost, price, usage and mix variance.
Standard Mix Actual Mix
Material A 400 units @ Rs.24 320 Units @ Rs.13
Material B 200 units @ Rs.20 280 units @ Rs.20
Standard Loss allowed is 10 % of input. Actual output is 550 units.
Solution :-
Material Yield Variance = Standard Cost per unit X ( Standard Quantity – Standard Mix )
Material Standard Actual

Qty Price Total Qty Price Total
A 400 Rs.24 Rs.9,600 320 Rs.13 Rs. 4,160
B 200 Rs.20 Rs.4,000 280 Rs.20 Rs. 5,600
Total Input 600 Rs.13,600 600 Rs.9,760
Less:- Loss 60 50
Output 540 550
Standard Cost per unit = Standard cost Standard mix

Standard Out put
= 13,600 = Rs.25.185
540
Material Yield variance = Rs. 25.185 X ( 550 – 540)

= Rs.25.185 X 10 = Rs. 251.85 Favorable
Material cost variance = (Standard Material Cost – Actual Material Cost)

Standard cost of material for actual output
= Rs.13,600 X 550 = Rs. 13,851.85
540
Cost of Actual Material Consumed = Rs. 9760
Material cost Variance = Rs.13,851.85 – Rs.9,760 = Rs.4,091.85 Favorable
Material Price Variance = Actual Quantity X (Standard Price – Actual price)

Material A =320 ( Rs.24 – Rs.13 ) =Rs. 3520 Favorable
Material B = 280 ( Rs.20 – Rs.20 ) = Rs. NIL .
Total Material Price Variance =Rs. 3,520 Favorable
Material Usage Variance = Standard price X ( Standard Quantity for

Actual output – Actual Quantity)
Material A = Rs. 24 X [(400 X 550/540) – 320]
= Rs. 24 X 87.407 =Rs. 2097.77 Favorable
174
Material B = Rs.20 X [(200 X 550/540) – 280]
= Rs.20 X,76.296 =Rs. 1525.92 Adverse .
Total Material Usage Variance = Rs. 571.85 Favorable
Material Mix Variance = Standard Unit Price ( Standard quantity – Actual

Quantity)
Material A = Rs. 24 ( 400 – 320) =Rs. 1920 Favorable
Material B = Rs. 20 ( 200 – 280 ) =Rs. 1600 Adverse
Total material Mix Variance =Rs. 320 Favorable
175
LABOUR VARIANCE :-
Week No. 19
Practical No. 38
Title / Aim To calculate Labour cost variance.
Objectives To find the difference between standard Labour
cost and actual Labour cost(Table 6)
Labour cost Variance = Standard cost of Labour –
Actual cost of labour
images
Raw Material Stationery, Calculator
Activity Teacher explains meaning of standard Labour cost
and actual Labour cost
Procedure As per given exercise student will calculate Labour

cost variance.
Skill to be achieved as per objectives Students are able to calculate Labour cost variance.
Skill evaluation criteria To assess the correctness of calculation of Labour
cost variance.
Practice required to acquire the master skill Solving more number of exercises
/NOS (If Any)
Interactive session FAQS/ANS To solves queries from students regarding Labour
and Labour cost variances.
ASSIGNMENT for Practice/ Reporting/Data Problem solving on labour Cost Variance.

Storage Prepare a chart of Labour cost variance.
176
TABLE 6
The books of M/s. Aditya Machine Tools Co. Ltd. give the following information regarding
labour cost.
Standard Hours = 5000
Standard Rate per hours = 4 Rs.
Actual Hours paid = 4700
Actual rate paid per hour = 4.50 Rs.
Calculate the labour Cost Variance.
Solution :-
Labour cost Variance = Standard cost of Labour – Actual cost of labour
= (Standard Time X Standard Rate) – ( Actual Time X Actual Rate)
= ( 5,000 hours X Rs.4 ) – ( 4,700 hours X Rs. 4.50 )
= Rs. 1,150 Adverse
177
Week No. 20
Practical No. 39
Title / Aim To calculate Rate of Pay variance.
Objectives To find the difference between standard Rate of
labour and actual Rate of labour.(Table 7) Labour
Rate Variance = Actual Hours worked x
( Standard Rate – Actual Rate)
Requirement Demonstration model/Computer/Chart/images

Activity Teacher explains meaning of standard Rate of
Labour and actual rate of labour.
Procedure As per given exercise student will calculate

Labour Rate of Pay Variance.
Skill to be achieved as per objectives Students are able to calculate Labour Rate of Pay
Variance.
Skill evaluation criteria To assess the correctness of calculation of labour

rate of Pay variance.
Any)
calculation of Labour rate of Pay variance.
ASSIGNMENT for Practice/ Reporting/Data Problem solving on labour Rate of Pay variance.
Storage Live upload/Presentation Prepare a chart of labour rate of pay variance.
178
Table 7
The books of M/s. Aditya Machine Tools Co. Ltd. give the following information regarding
labour cost and rate of pay variance.
Standard Rate per hours = Rs.40
Actual rate paid per hour = Rs.45
Solution :-
Labour Rate of Variance = Actual time X ( Standard Rate – Actual Rate )

= 5,700 hours ( Rs.40 – Rs.45 )
= Rs. 28,500 Adverse
Labour cost Variance = Standard cost of labour – Actual cost of labour
= ( 6,000 hours X Rs.40) – ( 5,700 hours X Rs.45 )
= Rs.16,500 Adverse
179
Week No. 20
Practical No. 40
Title / Aim To calculate Labour efficiency variance.
Objectives To find the difference between standard Time of
labour for actual output and actual time of Labour
spent.(Table 8) Labour Efficiency Variance =
Standard rate x( Standard Time—Actual time)
images
Activity Teacher explains meaning of standard Time of
Labour and actual time oflabour.

Labour Efficiency Variance.
Skill to be achieved as per objectives Students are able to calculate LabourEfficiency

variance.

Efficiency variance.
/NOS (If Any)
calculation of Labour Efficiency Variance.
ASSIGNMENT for Practice/ Reporting/Data Problem solving on labour efficiency Variance.

Storage Live upload/Presentation Prepare a chart of Labour Efficiency variance.
180
TABLE 8
The books of M/s. Aditya Machine Tools Co. Ltd. give the following information calculate
labour efficiency, cost and rate variance.
Standard Rate per hours = Rs.40
Actual rate paid per hour = Rs.45
Solution :-
Labour Efficiency Variance

= Standard Rate X ( Standard Time – Actual time)
= Rs.40 X ( 4,000 hours – 4,300 hours )
Labour Cost Variance

= Standard Cost of Labour – Actual Labour cost.
= ( 4,000 hours X Rs.40 ) – ( 4,300 hours X Rs.45 )
Labour Rate of Pay Variance

= Actual Time X ( Standard Rate – Actual Rate)
= 4,300 hours X ( Rs. 40 – Rs. 45)
181
Week No. 21
Practical No. 41
Title / Aim To calculate Labour Mix variance.
Objectives To find Labour Mix variance.(Table 9) Labour
Mix Variance = (Actual Hours x Standard Rate of
actual mix) – (Actual Hours x Standard Rate of
standard mix)

images
Activity Teacher explains meaning of Labour Mix
variance.

Labour Mix Variance.
Skill to be achieved as per objectives Students are able to calculate labour Mix
variance.

Mix variance.
Any)
calculation of Idle time variance.
ASSIGNMENT for Practice/ Reporting/Data Problem solving on Labour Mix Variance.

Storage Live upload/Presentation Prepare a chart of Labour Mix Variance.
182
Table 9
From the following data, calculate Labour cost, price,efficiency& Mix Variance.
Standard Labour:
40 Semi-skilled workers @ Rs.75 per hour for 50 hours.
20 skilled workers @ Rs.125 per hour for 50 hours.
The actual Labour force:

44 Semi-skilled workers @ Rs.80 per hour for 50 Hours.
16 skilled workers @ Rs.120 per hour for 50 hours.
Solution :-
Labour Mix Variance

= ( Standard time X Standard Rate) – ( Actual Hours X Standard Rate)
Semi – Skilled = (40 X50X 75) - ( 44 X50 X 75) = Rs. 15,000 Adverse
Skilled = (20 X50 X 125) –( 16X50X 125) = Rs. 25000 Favorable
Total Labour Mix Variance = Rs. 10,000 Favorable
Labour Cost Variance = Stand Cost of Labour – Actual cost of Labour

Semi-Skilled = (40 X 50 X 75) – (44 X 50 X 80)
= 1,50,000 – 1,76,000 = Rs.26,000 Adverse
Skilled = (20 X 50 X 50) – (16 X 50 X 120)
= 1,25,000 – 96,000 = Rs. 29,000 Favorable
Total Labour cost Variance = Rs. 3000 Favorable

= Actual time X ( Standard Rate – Actual Rate)
Semi-skilled = 44X50 ( 75- 80) = Rs. 11,000 Adverse.
Skilled = 16 X 50 ( 125 – 120 ) = Rs. 4000 Favorable
Total Labour Rate of Pay Variance = Rs. 7,000 Adverse

= Standard Rate( Standard Time – Actual Time)
Semi- skilled = 75( 40 X 50 – 44 X 50 )
= 75 ( 2000 – 2200) = Rs. 15000 Adverse
Skilled = 125( 20 X50 – 16 X 50 )
= 125 ( 1000 - 800) = Rs. 25000 Favorable
Total Labour Efficiency Variance = Rs. 10,000 Favorable
183
Week No. 21
Practical No. 42
Title / Aim To Calculate Labour Idle Time.
Objectives To Calculate Idle time Variance.(Table 10)
Idle Time Variance = Idle Time x Standard Rate.
Requirement Demonstration model/Computer/Chart/ images

Activity Teacher explains formula for calculating Idle
Time Variance.
Procedure Student will Learn formulae for calculating Idle

Time Variance.
Skill to be achieved as per objectives Students are able to calculate Idle Time variance
by using formula.
Skill evaluation criteria To assess the correctness of formula of Idle time

variance.
Practice required to acquire the master skill Learn the formulas for calculating Idle time
Variance.
Any)
formula for Calculating Idle Time variance.
ASSIGNMENT for Practice/ Reporting/Data Write the formula of Idle time variance.
Storage Live upload/Presentation
184
Table 10
From the following information calculate Labour cost, rate, efficiency and Idle time variance.
Standard rate of Labour per hour Rs.15
Standard Time 1600 hours.
Actual Hours 1500 , out of which hours not worked ( Abnormal Idle time) are 50.
Actual rater per hour Rs.18 per Hour
Solution :-
Labour Cost Variance
= Standard cost of Labour – Actual cost of Labour
= ( 1,600 hours X Rs.15 ) – ( 1,500 hours X Rs.18)
= Rs. 24,000 – Rs. 27,000
= Rs.3,000 Adverse

= Actual time X ( standard Rate – Actual Rate )
= 1500 hours ( Rs.15 – Rs.18)
= Rs. 4,500 Adverse

= Standard Rate X ( Standard Time – Actual time)
= Rs. 15 X ( 1,600 hours – 1,450 hours )
= Rs.2,250 Favorable
Idle Time Variance

= Abnormal idle time X Standard Rate
= 50 hours X Rs. 15
= Rs. 750 Adverse
Table 11
A company manufacturing 'FOOD MIX' operates a standard costing system. The standard cost
of one the products of the company shows the following materials standards :
Material Quantity (Kgs.) Standard price Total (Rs.)
Per Kgs. (Rs.)
X 80 150 12,000
Y 20 100 2,000
Z 100 40 4,000
Material cost per unit (Total) 18,000
The standard input mix is 100 kgs. and the standard output of the finished product is 90 kgs.
185
The actual results for the period are :-
Material used :-
X 4,80,000 kgs. @ Rs. 160/- per kg.
Y 80,000 kgs. @ Rs. 104/- per kg.
Z 4,40,000 kgs. @ Rs. 42/- per kg.
Actual output of the finished product is = 8,40,000 kgs.
You are required to calculate the material cost variances.
Table 12
ABC Company manufactures product PQR by mixing three raw materials. For every 100 kgs.
of PQR, 125 kgs.of raw materials are used. In April, 2017, there was an output of 11,200 kgs
of PQR. The standard and actual particulars of April,2017 are as follows :-
Raw Material Standard Actual
Mix (%) Price per kg (Rs.) Mix (%) Price per kg (Rs.)
Raw Material X 50 20 60 21
Raw Material Y 30 10 20 8
Raw Material Z 20 5 20 6
Calculate All Variances.
Table 13
Deven Ltd. is operating a standard costing technique. Standards for one batch revealed the
following :-
Material Quantity Price (Rs.) Total Cost (Rs.)
T 60 8.00 480
P 50 4.80 240
G 90 8.00 720
Input 200 1,440
Loss 20
Output 180
In a particular period, when five batches were produced, records revealed the following data
Material Quantity Price (Rs.) Total Cost (Rs.)
T 360 9.00 3,240
P 320 6.00 1,920
G 520 6.00 3,120
Input 1,200 8,280
Loss 300
Output 900
You are required to calculate the material cost variances.
186
Table 14
The Standard specification for a batch of 1,000 kgs. of output in a factory is as under :-
Material Input (Kgs.) Standard Price per Kg.
A 500 Rs. 8.00
B 400 Rs. 6.00
C 200 Rs. 4.00
D 100 Rs. 2.00
In October, 2017 the factory obtained the production of 19,500 kgs. of output for which 20
batches consisting of standard input of materials were issued to the shop floor in the
following ratio at the actual prices indicated against each.
Material Ratio of Material Issued Standard Price per Kg.
A 60% Rs. 10.00
B 20% Rs. 5.00
C 10% Rs. 4.50
D 10% Rs. 1.50
Calculate Material Variances.
Table 15
Namo Ltd. produces an article by blending two basic raw materials. It operates a Standard
Costing system and the following standards have been set for raw materials:-
Material Standard Mix. Standard Price per Kg.
P 40% Rs. 40.00
M 60% Rs. 30.00
The standard loss in processing is 15%
During April, 2017 the company produced 3,400 Kgs. of finished output. The position of
stocks and purchases of the Month of April, 2017 is as under :-
Material Stock on 1/4/2017 Stock on 30/4/2017 Purchase during April, 2017
Kgs. Kgs. Kgs. Cost (Rs.)
P 70 10 1,600 68,000
M 80 100 2,400 60,000
Calculate the material cost variances.
Table 16
50 skilled workmen, 20 semi-skilled workmen and 30 unskilled workmen were to work for 30
weeks to get a contract job completed. The standard weekly were Rs. 600, Rs. 360 and Rs.240
respectively. The job was actually completed in 32 weeks by 40 skilled, 25 semi-skilled and 35
unskilled workmen who were paid Rs. 650, Rs. 400 and Rs. 200 respectively as weekly wages.
Find out the labour cost variance, labour rate variance, labour mix variance and labour
efficiency variance.
187
Table 17
The following standards have been set to manufacture a product :-
Direct Materials Rs.
4 units of A at Rs. 8 per unit 32.00
6 units of B at Rs. 6 per unit 36.00
30 units of C at Rs. 2 per unit 60.00
128.00
Direct Labour 6 hrs. @ Rs. 16 per hour 96.00
Total Standard Prime Cost 224.00
The company manufactured and sold 3,000 units of the product during the year. Direct material
costs were as follows :-
12,500 units of A at Rs. 8.80 per unit
18,000 units of B at Rs. 5.60 per unit
88,500 units of C at Rs. 2.40 per unit
The company worked 17,500 direct labour hours during the year. For 2,500 of these hours, the
company paid at Rs. 24 per hour while for the remaining the wages were paid at the standard
rate. Calculate materials price and usage variances and labour rate and efficiency Variance.
Table 18
A company produces a single product from a single material. It operates a standard cost system
and furnishes you the following information :-
Particulars Standard Actual
Production 16,000 12,000
Material :- Total Quantity --- Kgs. 32,000 26,000
Total Amount (Rs.) 64,000 54,600
Labour :- Total hours 4,800 4,000
Total Amount (Rs.) 6,000 6,000
You are required to compute the following Variances :-
(a) Material price variance

(b) Material usage variance
(c) Labour rate variance
(d) Labour efficiency variance
Table 19
From the following details, compute All Labour Variances.
Type Standard Data (1,500 Units) Actual Data (1,800 units)

Hours Rate Total (Rs.) Hours Rate Total (Rs.)
Skilled Men 900 Rs. 30 27,000 744 Rs. 40 29,760
Skilled Women 360 Rs. 20 7,200 279 Rs.15 4,185
Unskilled 540 Rs. 10 5,400 837 Rs. 10 8,370
1,800 39,600 1,860 42,315
188
Table 20
Amit Shah Ltd. manufactures product Giga which requires 4 hours of skilled men, 6 hours of
semi-skilled men and 10 hours of unskilled men - per unit at Rs. 20, 12, & 8 per unit
respectively. During January 2017, the production department reported output of 2,500 unit of
product Giga. The labour cost incurred was as detailed below.
Type Hours paid for Rate per hour
Skilled 9,000 Rs. 28.00
Semi-skilled 17,000 Rs. 11.00
Unskilled 30,000 Rs. 6.00
56,000
The total hours paid for included 1000 Idle hours due to machine break down etc., Out of
which 500 hours pertained to skilled men, 400 hours pertained to semi-skilled men, and
balance to unskilled men.
Required :-
(1) Calculate Labour Cost Variances.
(2) Recalculate the labour cost variances, given that the break up of 1000 Idle hours is not
given
189
190
CHAPTER 6
VOUCHING
Cash Memo
Week No. 22
Practical No. 43 A
Title / Aim To prepare Cash Memo.
Objectives To prepare Cash Memo from given information.
Requirement Demonstration model/Computer/Chart/ Voucher

Activity Teacher explains how to prepare Cash Memo
from given information.
Procedure Student will Learn to prepare Cash Memo.

Skill to be achieved as per objectives Students are able to prepare Cash Memo Voucher
in blank format of Voucher..
Skill evaluation criteria To assess the correctness of Cash Memo

Voucher.
Practice required to acquire the master skill Learn the skill of preparation of Cash Memo
Voucher at Cash Sale of Goods.
Any)
preparation of Cash Memo.
ASSIGNMENT for Practice/ Reporting/Data Prepare Cash Memo Vouchers for different
Storage Live upload/Presentation transactions of Goods sold on cash basis.
References Theory lesson of Vouching
191
CASH MEMO
Name & Address Of Seller :- Transaction No. :- ________________
________________________________________Cash Memo No. :- ________________
_________________________________________Date :- __________________________
Name & Address Of Purchaser :- C.S.T. No. :- _____________________
________________________________________V.A.T. No. :- _____________________
___________________________________________
SR.. PARTICULARS QUANTITY RATE AMOUNT

NO. RS. PS. RS. PS.
Rupees in words___________________________-
_____________________ Total
E. & O. E. Authorised Signature
192
Credit Memo
Week No. 22
Practical No. 43 B
Title / Aim To prepare Credit Memo.
Objectives To prepare Credit Memo from given information.

Activity Teacher explains how to prepare Credit Memo
Procedure Student will Learn to prepare Credit Memo.

Skill to be achieved as per objectives Students are able to prepare Credit Memo
Voucher in blank format of Voucher..
Skill evaluation criteria To assess the correctness of Credit Memo

Voucher.
Practice required to acquire the master skill Learn the skill of preparation of Credit Memo
Voucher at Credit Sale of Goods.
Any)
preparation of Credit Memo.
ASSIGNMENT for Practice/ Reporting/Data Prepare Credit Memo Vouchers for different
Storage Live upload/Presentation transactions of Goods sold on Credit basis.
193
CREDIT MEMO
Name & Address Of Seller :- Transaction No. :- ________________
____________________________________ Credit Memo No. :- _______________
_____________________________________ Date :- __________________________
Name & Address Of Purchaser :- C.S.T. No. :- _____________________
_____________________________________ V.A.T. No. :- _____________________
_____________________________________ Credit Period :- ___________________
SR.. PARTICULARS QUANTITY RATE AMOUNT

NO. RS. PS. RS. PS.
Rupees in words________________________________________________
Total
E. & O. E. Authorised Signature
194
Credit Note
Week No. 22
Practical No. 43 C
Title / Aim To prepare Credit Note.
Objectives To prepare Credit Note from given information.

Activity Teacher explains how to prepare Credit Note
Procedure Student will Learn to prepare Credit Note.

Skill to be achieved as per objectives Students are able to prepare Credit Note Voucher
Skill evaluation criteria To assess the correctness of Credit Note Voucher.

Practice required to acquire the master skill Learn the skill of preparation of Credit Note
Voucher at required transaction..
Any)
preparation of Credit Note.
ASSIGNMENT for Practice/ Reporting/Data Prepare Credit Note Vouchers for different
Storage Live upload/Presentation appropriate transactions.
195
CREDIT NOTE
(Name of the Concern) Transaction No._______________

_______________________ Credit Note No. _______
_______________________ Date _________________________
To_____________________
_______________________
Dear Sir,
We have Credit your Account by Rs. _______________________
(Rupees______________________________________________________)
For the reason given below.
Invoice No. & Particulars Amount

Date Rs. Ps.
TOTAL
Prepared by Checked by Authorised Signature
196
Debit Note
Week No. 22
Practical No. 43 D
Title / Aim To prepare Debit Note.
Objectives To prepare Debit Note from given information.

Activity Teacher explains how to prepare Debit Note from
given information.
Procedure Student will Learn to prepare Debit Note.

Skill to be achieved as per objectives Students are able to prepare Debit Note Voucher
Skill evaluation criteria To assess the correctness of Debit Note Voucher.

Practice required to acquire the master skill Learn the skill of preparation of Debit Note
Any)
preparation of Debit Note.
ASSIGNMENT for Practice/ Reporting/Data Prepare Debit Note Vouchers for different
197
DEBIT NOTE
(Name of the Concern) Transaction No._______________

_______________________ Debit Note No. _______
_______________________ Date _________________________
To_____________________
_______________________
Dear Sir,
We have Debit your Account by Rs. ________________________
(Rupees______________________________________________________)
For the reason given below.
Invoice No. & Particulars Amount

Date Rs. Ps.
TOTAL
Prepared by Checked by Authorised Signature
198
EXPENSE / DEBIT / PETTY CASH VOUCHER
Week No. 22
Practical No. 44 A
Title / Aim To prepare Expense Voucher.
Objectives To prepare Expense Voucher from given
information.

Activity Teacher explains how to prepare Expense
Voucher from given information.
Procedure Student will Learn to prepare Expense Voucher.

Skill to be achieved as per objectives Students are able to prepare Expense Voucher in
blank format of Voucher..
Skill evaluation criteria To assess the correctness of Expense Voucher.

Practice required to acquire the master skill Learn the skill of preparation of Expense
Any)
preparation of Expense Voucher.
ASSIGNMENT for Practice/ Reporting/Data Prepare Expense Voucher for different

199
EXPENSE / DEBIT / PETTY CASH VOUCHER
________________________________________
_________________________________________
EXPENSE VOUCHER
Voucher No.- _____________
Date:- _____________
Transaction No. _____________
Pay to Mr./Ms./Mrs./M/S._____________________________________________
Towards__________________________________________________________
_________________________________________________________________
Sr. No. Debit Accounts Amount (Rs.)
Total
Amount in Words Rupees_____________________________________________
__________________________________________
Cashier’s Signature Receiver’s Signature Manager’s Signature Authorised Signature
200
RECEIPT
Week No. 22
Practical No. 44 B
Title / Aim To prepare Receipt.
Objectives To prepare Receipt from given information.

Activity Teacher explains how to prepare Receipt from
given information.
Procedure Student will Learn to prepare Receipt.

Skill to be achieved as per objectives Students are able to prepare Receipt in blank
format of Voucher..
Skill evaluation criteria To assess the correctness of Receipt.

Practice required to acquire the master skill Learn the skill of preparation of Receipt at
required transaction..
Any)
preparation of Receipt.
ASSIGNMENT for Practice/ Reporting/Data Prepare Receipt for different appropriate

Storage Live upload/Presentation transactions.
201
RECEIPT
RECEIPT
_________________________________________________
_________________________________________________
( NAME & ADDRESS OF THE CONCERN )
Transaction No.:- ___________ Receipt No.:- _____________
Form No.:- _______________ Date:- ___________________
RECEIVED WITH THANKS FROM, _____________________________________
___________________________________________________________________, THE
SUM OF RUPEES ______________________________________________
_________________________________________________________, BY CASH /
DEMAND DRAFT / PAY ORDER / CHEQUE, AS PER DEMAND DRAFT / PAY
ORDER / CHEQUE NO. ________________ DATED __________________ DRAWN
ON ________________________________________________________ TOWARDS
_________________________________________________________.
AMOUNT :- RS. __________ AUTHORISED SIGNATURE
( FOR, )
( SUBJECT TO REALISATION OF D.D. / P.O. / CHEQUE )
202
INVOICE
Week No. 22
Practical No. 44 C
Title / Aim To prepare Invoice.
Objectives To prepare Invoice from given information.

Activity Teacher explains how to prepare Invoice from
given information.
Procedure Student will Learn to prepare Invoice.

Skill to be achieved as per objectives Students are able to prepare Invoice in blank
format of Voucher..
Skill evaluation criteria To assess the correctness of Invoice.

Practice required to acquire the master skill Learn the skill of preparation of Invoice at
required transaction..
Any)
preparation of Invoice.
ASSIGNMENT for Practice/ Reporting/Data Prepare Invoice for different appropriate

203
INVOICE
___________________________________________
___________________________________________
(Name & Address of Seller)
INVOICE NO. :- ________________ Date:- _________________
PURCHASE ORDER NO. :- ________________ Dated:- _________________
NAME & ADDRESS OF PURCHASER :- ________________________________________
________________________________________
SR. No. PARTICULARS QUNTITY RATE Rs. Ps.
AUTHORISED SIGNATURE
E. & O.E.
204
SALARY STATEMENT
Week No. 22
Practical No. 44 D
Title / Aim To prepare Salary Statement.
Objectives To prepare Salary Statement from given
information.
Requirement Demonstration model/Computer/Chart/ Format.

Activity Teacher explains how to prepare Salary
Statement from given information.
Procedure Student will Learn to prepare Salary Statement.

Skill to be achieved as per objectives Students are able to prepare Salary Statement in
blank format.
Skill evaluation criteria To assess the correctness of Salary Statement.

Practice required to acquire the master skill Learn the skill of preparation of Salary Statement
at required transaction..
Any)
preparation of Salary Statement.
ASSIGNMENT for Practice/ Reporting/Data Prepare Salary Statement for different appropriate
205
Q. No. :- _____________________________________________ SEAT NO. :-
( Name & Address Of The Concern )
SALARY STATEMENT FOR THE MONTH ENDED __________________
CODE OF NAME OF DESIGNATION PAY–SCALE NET
Sr. GROSS SALARY DEDUCTIONS SIGNATURE
No. EMPLOYEE EMPLOYEES Basic Dearness House City TOTAL Professional Income Contribution Contribution TOTAL SALARY Of
Pay Allowance Rent Compensatory GROSS Tax Tax To Employees To DEDUCTION EMPLOYEES
Allowance Allowance SALARY Credit Provident With
[A] Society Fund [B] [A-B] Revenue
(Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) Stamp
1
SALARY STATEMENT :-
206
4
TOTAL
PREPARED BY CHECKED BY AUTHORISED SIGNATURE

( CLERK ) ( ACCOUNTANT ) ( For, )
Week No. 23
Practical No. 45
Title / Aim To prepare different Vouchers.
Objectives To prepare different Vouchers from given
information.
Requirement Demonstration model/Computer/Chart/ Voucher.

Activity Teacher explains how to prepare different
Vouchers from given information.
Procedure Student will Learn to prepare different Vouchers.

Skill to be achieved as per objectives Students are able to prepare different Vouchers in
blank format.
Skill evaluation criteria To assess the correctness of different Vouchers.

Practice required to acquire the master skill Learn the skill of preparation of different
Vouchers at required transaction..
Any)
preparation of different Vouchers.
207
ILLUSTRATION 1 :-
Prepare the appropriate vouchers for the transactions of M/S Tandel Export Pvt. Ltd. (Use
imaginary information whenever required)
01/01/2017 Cash sales Rs. 25,000/-
02/01/2017 Receipt from debtors Rs. 15,000/-
03/01/2017 Receipt from bills receivables Rs. 5,000/-
04/01/2017 Income received from investment Rs. 4,000/-
05/01/2017 Sale of old machinery Rs. 8,000/-
06/01/2017 Sale of investments Rs. 10,000/-
07/01/2017 Loan taken Rs. 20,000/-
08/01/2017 Bad debt recovered from Mahesh Rs. 4,000/-
09/01/2017 Wages paid to workers for December 2016 Rs. 85,000/-
10/01/2017 Payment to Mr. Rakesh (Creditor) on account Rs. 6,000/-
11/01/2017 Salaries for December 2016 paid Rs. 55,000/-
12/01/2017 Travelling Expenses paid Rs. Rs. 2,000/-
13/01/2017 Salesman Commission paid Rs. 9,000/-
14/01/2017 Insurance Premium paid Rs. 3,500/-
15/01/2017 Loans granted to staff Rs. 16,000/-
16/01/2017 Advertisement expenses paid Rs. 28,000/-
17/01/2017 Rent paid for January, 2017 Rs. 30,000/-
18/01/2017 Repairs to building Rs. 7,500/-
19/01/2017 Repairs to machinery Rs. 5,600/-
20/01/2017 Withdrew from Bank Rs. 13,500/-
21/01/2017 Petty cash paid for Canteen Rs. 150/-
22/01/2017 Goods purchased on credit basis Rs. 10,000/-
23/01/2017 Goods sold on credit basis Rs. 5,000/-
24/01/2017 Sales on higher purchase Rs.9,500/-
25/01/2017 Sales return of goods Rs. 8,700/-
26/01/2017 Purchase return of goods Rs. 7,000/-
27/01/2017 Goods purchased on cash basis Rs. 6,000/-
28/01/2017 Goods sold on cash basis Rs. 4,000/-
29/01/2017 Excess billing by creditor Mr. Rohan Rs.1,300/-
30/01/2017 Excess billing to Mr. Madan ( Debtor ) Rs.780/-
31/01/2017 Short billing to Mrs. Patel ( Debtor ) Rs. 890/-
208
Week No. 23
Practical No. 46 A
information.


blank format.

Any)
209
ILLUSTRATION 2 :-
Prepare Vouchers of M/s. Arvind & Sons, New Delhi with the help of under mentioned
transactions used imaginary information wherever is necessary :-
1) On 1st January, 2017 sold to Mamata Traders, Calcutta 40 packets of welding electrods @
Rs. 200 each Cash Memo No. 309.
2) On 7th January, 2017 sold to Rahul Trading Co. Ltd., Ajamgarh 40 kgs. Washer @ Rs. 20
per Kg. by Credit Memo No. 360.
3) Received cash Rs. 4,000 from Mayavati Trading Co., Ajmer on 8th January, 2017 by
Invoice No. 205.
4) On 25th January, 2017 sent Debit note to Jocky India Pvt Ltd, Karjat for excess amount of
Rs. 3,000 paid to them being supplied stationery by Invoice No. 12.
5) Returned by Parth Cloth Stores defective Cloth 10 metres @ Rs. 80 each on 11th March,
2017 which was purchased on 1st March, 2017 by Bill No. 15.
6) Paid Telephone Bill Rs. 100 on 20th March, 2017.
7) On 20th March, 2017 paid cash Rs. 7,000 to M/s. Narendra and Co., Surat as per their Bill
No. 505.
210
Week No. 23
Practical No. 46 B
information.


blank format.

Any)
211
ILLUSTRATION 3 :-
Prepare Basic Vouchers with the help of under mentioned transactions. Use imaginary
information wherever is necessary:
1) Sunshine Company sold 20 calculators to Dayanand College @ Rs.300 each on 15th
January, 2017 by a Cash Memo No. 110.
2) Hero Co. sold to Superb & Co. 15 Crompton Greeves ceiling fans (48 inch) @ Rs. 1,800
each on Credit by a Credit Memo No. 201 on 20th January, 2017.
3) Kalyani and Sons, Pune received a cheque of Rs. 40,000 from Sonal and Co., Mumbai by a
Receipt No. 402 on 21st March, 2017.
4) 1) Name and address of the seller: Pansare Agencies, Pune 46.
2) Invoice No.: 542, Date : 25th September, 2017.
3) Name of the Customer: Kirti College, Pune.
4) Order No. : 1007, Date : 10th September, 2017.
5) Details of Goods:
a) Material Management – Prof. Dhale, 20 Copies @ Rs. 50.
b) General Foundation Course – Prof. Rajratan, 40 Copies @ Rs. 48.
c) Auditing – Vyas, 10 Copies @ Rs.60.
6) Discount: 10%.
7) Packing Charges : Rs. 100.
8) Transport Expenses : Rs. 250.
5) Dayanand College returned 400 Journal Note-Books to M/s. Kiran Stores on 30th
September, 2017 which was purchased by Invoice No. 101, Dated 26th September, 2017
which was found defective (Rate Per Book Rs. 20)
6) Dayanand College returned on 30th September, 2017, 3 tables which were purchased @ Rs.
500 each on 20th September, 2017 by a Invoice No. 512, from Jay Furniture, Pune as goods
were not according to specifications.
7) Homi company paid Rs. 50 towards tea charges to Hotel Omega on 15th October, 2017.
212
Week No. 24
Practical No. 47 A
information.


blank format.

Any)
213
ILLUSTRATION 4 :-
Prepare Basic Vouchers with the help of following transactions. Use imaginary
information wherever is necessary :-
1) On 1st April, 2017, Vasant and Son’s, Jodhpur received Rs. 4,000 from Ganesh Talwar and
Co., Roha against a Bill No. 605.
2) On 2nd April, 2017, Manik Trading Co. purchased 100 Bajaj Fans @ Rs. 1,100 per piece by
cash from Lalan Electronics against Bill No. 320.
3) On 14th April, 2017 purchased 20 Tubelights @ Rs. 145 each from Pooja Electricals on
credit by Bill No. 260.
4) On 20th April, 2017 paid Rs. 100 as a Coolie Charges.
5) Informed to M/s. Gupta Traders by Debit Note No.110 for less quantity 20 meters cloth
received from them, Order place on 25th April, 2017 for 200 meters cloth @ Rs.100 per
meter.
6) 1) Name and address of the seller: Meena Agencies, Nashik 04.
2) Invoice No.: 6301, Date : 25th April, 2017.
3) Name of the Customer: Kiran High College, Sangli.
4) Order No. : 2008, Date : 10th April, 2017.
5) Description of Goods:
a) Std. Vth Balbharati 50 Copies @ Rs. 16 per copy.
b) Std. Xth Kumar Bharati 50 Copies @ Rs. 28 per copy.
c) Std. Vth English 50 Copies @ Rs. 14 per copy.
6) Discount: 10%.
7) Packing Charges : Rs. 50.
8) Transport Expenses : Rs. 100.
7) Suraj Co., Chandanpur has paid Rs. 800 as a Printing Expenses to Manmohan Printers on
10th May, 2017.
214
Week No. 24
Practical No. 47 B
information.


blank format.

Any)
215
ILLUSTRATION 5 :-
Prepare Following Vouchers :-
1) On 16th May, 2017 Mohan Book Stall, Gandhi Nagar sold files of Rs.1,600 by Cash
Voucher No. 333 to Rohan.
2) On 15th May, 2017 Mohan Book Stall, Gandhi Nagar sold books of Rs.1,300 by Credit
Voucher No. 423 to Roshan.
3) On 17th May, 2017 Mohan Book Stall paid Rs. 1,400 to Mr. Sujit as a Labour Charges by
Voucher No. 715.
4) M/s. Dinesh and Co., Mumbai has returned notebooks costing Rs. 2,000 to Mohan Book
Stall, Sangli on 20th May, 2017.
5) On 22th May, 2017 M/s. Mohan Book Stall, Sangli has paid Rs. 1,500 to Mr. Nayan as a
Transport Charges, Voucher No. 516.
216
Week No. 24
Practical No. 48 A
information.


blank format.

Any)
217
ILLUSTRATION 7 :-
Attempt any three from the following in the books of M/s. Rajesh Traders,
Vaman Road, Karjat:-
A) Cash/ Credit Memo:-
Sr. Voucher No. Period Name Particulars Quantity Rate
No. & Date (Months) (Rs.)
1. CM – 110 - M/s. Kathe & Sons Wheat 10 Bags 1,400
1st Jan., 17
2. CR – 240 2 M/s. Mane Traders Rice 5 Bags 1,000
2st Jan., 17
B) Expenses / Petty Cash Expenses Voucher :-

Sr. Voucher No. & Date Name Expenses Amount (Rs.)
No.
1. 25, 15th January, 17 Pramod Hotel Tea Bill 350
Pro. Anna Mogre
2. 40, 20th January, 17 Mr. Pote Hamali 150
C) Receipts :-
Sr. Receipts No. & Date Name Particulars Amount
No. (Rs.)
1. 725, 10th January, 17 M/s. Pethe & Sons Full Payment by 10,000
cheque
2. 835, 15th January, 17 M/s. Kishor & Advance Payment in 1,500
Sons cash
D) Prepare Salary Slip with the help of following informations:-

M/S Rajesh Traders, Karad for the month of March, 2017.
S. No. Name of the Employee Designation Pay Scale Basic Pay
1. Shri. Wagh O. K. Manager 2,900-5,000 4,350
2. Shri. Bagwe M. P. Factory Manager 2,500-4,200 2,900
3. Shri. Chande P. T. Accountant 2,200-3,700 2,500
4. Shri. Deshpande P. M. Clerk 1,800-3,800 1,950
5. Shri. Rane U. P. Salesman 1,800-3,600 1,900
Note :-
1) Dearness Allowance 80% of basic pay.
2) HRA Rs. 2,400 for 2,900-5,000 basic pay. HRA Rs. 1,200 for others p. m.
3) City Allowances Rs. 1,750 to all workers.
4) Deduction (to all workers) :
a) Professional Tax Rs. 200,
b) Income Tax Rs. 250
c) Co-op. Credit Society deduction Rs. 100.
218
Week No. 24
Practical No. 48 B
Title / Aim To prepare Salary Statement.
Objectives To prepare Salary Statement from given
information.
Requirement Demonstration model/Computer/Chart/ Format.

Activity Teacher explains how to prepare Salary
Statement from given information.
Procedure Student will Learn to prepare Salary Statement.

Skill to be achieved as per objectives Students are able to prepare Salary Statement
Voucher in blank format.
Skill evaluation criteria To assess the correctness of Salary Statement.

Practice required to acquire the master skill Learn the skill of preparation of Salary Statement
at required transaction..
Any)
preparation of Salary Statement.
219
ILLUSTRATION 6 :-
Prepare a Salary Slip from the following information :-
Name of Company: Worlikar Co. Ltd., Mumbai for the month Jan., 2017
S. No. Name of the Employee Designation Pay Scale Basic Pay
1. Shri. Lele S. P. Chief Manager 2,200-4,000 2,500
2. Shri. Phadke C. L. Manager 2,000-3,200 2,300
3. Shri. Dhut D. A. Accountant 2,000-3,200 2,300
4. Shri. Pandre D. L. Accountant 2,000-3,200 2,000
5. Shri. Jadhav P. C. Clerk 1,400-2,600 1,480
6. Shri. Padake L. P. Clerk 1,400-2,600 1,400
7. Shri. Dadarkar M. A. Sales Manager 0,950-1,400 950
Note:
1) Dearness Allowance 90% of basic pay.
2) House Rent Allowance : for basic pay Rs. 2,000 and above Rs. 220 per month and other
Rs. 100 per month.
3) Professional Tax deductions Rs. 30 up to Rs. 1,500 basic pay, Rs. 40 up to Rs. 2,500 basic
pay and Rs. 50 above Rs. 2,500 basic pay.
4) P.F. Deduction at 10% of the basic pay.
220
EXERCISE 1 :-
Prepare salary sheet for the month of Dec 2015
SR. Name of the employee Designation Pay scale Basic

NO. Pay
1) Rajesh Patel Manager 10000-15000 12000
2) Riya Shah Assistant Manager 8000-12000 11000
3) Rahul Mehta Accountant 6000-8000 7500
4) Raj Gandhi Senior Clerk 4000-6500 5500
5) Ram Shankar Peon 2500-4000 3500
1) Dearness Allowance @113% of Basic Salary.
2) Professional tax Rs. 2500 p.a.
3) H.R.A. 30% of Basic Salary.
4) Other Allowance 10%of Basic Salary.
5) Contribution of P.F @10% of Basic Salary.
EXERCISE 2 :-
Prepare salary sheet for the month of Dec 2015
SR NO Name of the employee Designation Pay scale Basic Pay
1) YashDalal Manager 25000-30000 27500
2) VirajSavla Assistant Manager 20000-25000 22500
3) HarshilShiroiya Accountant 15000-20000 17500
4) Rishikesh Patel Senior Clerk 10000-15000 13500
5) Mithil Shah Peon 5000-10000 7500
1) Dearness Allowance @113% of Basic Salary.
2) Professional tax Rs. 2500 p.a.
3) H.R.A. 30% of Basic Salary.
4) Other Allowance 10%of Basic Salary.
221
5) Contribution of P.F @10% of Basic Salary.
EXERCISE 3 :-
Prepare Basic Vouchers for Harshil Traders, Vile Parle (West)
1/2/2017 Purchased of goods Rs. 50,000 @ 10% TD & 5% CD from Viraj Traders Goregaon (West).
4/2/2017 Purchased Machinery on credit form L&T Rs. 1, 00,000.
6/2/2017 Paid salaries Rs. 22,000 by cheque to Yash
7/2/2017 Received Electricity bill from Reliance Energy Rs. 4000
9/2/2017 Received Rs. 20,000 from Raj Traders by cheque toward Advance for New Consignment.
10/2/2017 Returned goods of Rs. 2000 (Gross) to Viraj Traders as they were defective.
15/2/2017 Mohit Bros. returned goods of Rs. 10,000 (Net)
20/2/2017 Distributed goods of Rs. 4000 as free sample.
222
223
CHAPTER 7
VERIFICATION & VALUATION OF ASSETS &

LIABILITIES
Difference between Verification and Valuation
Verification Valuation
1.It means proving the truth. 1.It means determination of value of

assets.
2.Physical check up of assets.
2.Value of assets is checked.
3.Consideration of depreciation is not
there. 3.Assets are properly depreciated or not
is seen.
4.whether there is any charge on the
assets is checked. 4.Market price od assets is taken into
consideration.
5.Auditor is held liable for Damages.
Difference between External liabilities and Internal liabilities

External liabilities Internal liabilities
1.It is concerned with external Debt 1.it is concerned with internal matter
such as creditors, loans Bank over such as shareholders fund capital,
draft, Debentures. Reserve funds & other funds raised by
firm.
2.these liabilities are paid out, only

2.At the time of Liquidation, Priority is
after external liabilities are settled fully.
given to external liabilities.
3.Internal liabilities are long term in
3.These liabilities are to be paid with a
nature.
specified period.
4.No interest or fixed amount is paid on
4.Fixed amount or interest is to be paid
such liabilities except on preference
on such liabilities.
shares.
224
DIFFERENCE BETWEEN VOUCHING & VERIFICATION
Sr. no. Vouching (VO) Verification (VE)
1 Meaning:
VO is comparing entries in the VE is checking existence,

books of accounts with possession and ownership of
documentary evidence in support assets and liabilities.
thereof.
2 Period:
VO is done for all entries during VE is done for assets/liabilities

accounting year. as on the balance sheet date.
3 Items checked:
VO covers income, expenses, VE covers done only assets and

assets purchased/sold, liabilities liabilities as on the last day of
incurred/paid during accounting accounting year.
year.
4 Aims and importance:
a. whether the transaction a. Whether asset/liability

actually occurred. actually exists.
b. Whether amount recorded in b. Whether asset or liability
the books is correct. is valued correctly at year
end.
c. Whether entries for income c. Whether assets is owned
and expenses pertain to and liability is owed as at
current year and legally year end and pertain to
valid. business.
d. Whether entries for assets d. Whether balance of assets
and liabilities pertain to or liabilities as at year end
current year and legally are correct, true and fair.
valid.
e. Whether accounting is e. Whether balance is proper.
proper. f. Whether asset/liabilities
f. Whether transaction are legally valid.
complies with Law,
Companies Act. g. Whether balance are
g. Whether transaction is disclosed as per Law,
225
disclosed as per Law, Schedule VI to Companies
Schedule VI to Companies Act.
Act.
Errors and Frauds: a. Detection of errors and

frauds in the year and
a. Detection of errors and
balance of assets and
frauds in recording
liabilities.
transaction. Eg. Errors of
commission errors of
omission or errors of
b. Ensures accuracy of ledger
principle.
balance and final
b. Ensures arithmetical
accounts.
accuracy of original books of
c. Detection of frauds by
entries.
way of misappropriation
c. Detection of frauds by way
or misuse of assets.
of manipulation of records.
Eg. Deliberate errors.
5 Audit techniques:
VO involves checking of vouchers, VE involves scrutiny of ledger,

supporting documents and entries physical verification, inspection
in books. of documents and confirmation
from third parties.
226
VERIFICATION AND VALUATION OF ASSETS AND LIABILITIES
PRACTICAL 1 :
VERIFICATION AND VALUATION OF ASSETS
Week No.: 25
Practical No. 49 A
Title / Aim: Verification and valuation of Assets
Objectives(Specific): To identify Correct value of Asset and ownership
Requirement :- Print out, Stationery & Computer
Raw Material :- Print out, Stationery
Environment Requirement :- Lab / Classroom / Visit
Activity / Sequence / Procedures :- Teacher shows the physical verification of assets,

depreciation, ascertainment of legal ownership and possession of asset & it is free from all
charges.
Sub Topics Verification of various Assets.
Skill to be achieved As per To ensure that the assets have been recorded
objectives: properly.
Skill evaluation Criteria: To find out whether there is an adequate internal
control regarding acquisition, utilization and
disposal of plant & machinery
Practice Required to acquire the Identify Expected useful life of the assets, Wear
master skills: and tear of the assets, Break-up value of the plant
& machinery
National / International Bench As per Accounting Standard and ICMA London.
Marking / NOS (if any):
Interactive session FAQs / Teacher will explain verification & valuation of Asset.
Answers
ASSIGNMENT for: To collect information Cost Price, Replacement Value,
Practices / Reporting / Data Market Value, Book Value, Realizable Value, Scrap
Storages / Live uploads / Value, Going Concern Value.
Presentation
References / Links with Theory Theory Lesson – Topic –
session / Topics / Acts/ Rules /
NOCs:
227
OBJECT OF VERIFICATION OF ASSETS
According to the ‘statement of Auditing Practices’ issued by ICAI “the auditor’s object
in regard to assets generally is to satisfy that :
1. T satisfy himself about the existence of the assets.

2. To see that the assets are valued on the basis of generally accepted
principles.
3. To verify that the assets are purchased for the business purpose.
4. To see that the ownership and possession of assets are with the company.
5. They are recorded in the accounts.
6. To see that the assets are disclosed at true and fair value in the Balance
Sheet.
7. They are not subjected to undisclosed encumbrances or lien.
8. Internal Check and Internal Control System.
SCOPE OF VERIFICATION
Verification includes confirmation of the following:
1. That the assets were in existence on the date of the balance sheet;
2. That the assets had been acquired for purpose of business only;
3. That the assets had been acquired under a proper authority;
4. That the right of ownership of the assets vested in the organization;
5. That the assets were free any charge ; and
6. That the assets were properly valued and disclosed in the balance sheet.
ADVANTEGES OF VERIFICATION
Careful verification of assets fetches the following advantages to the client:
1. It avoids manipulation of accounts.
2. It guard against improper use of assets.
3. It ensure proper recording and valuation of assets.
4. It exhibit true and fair view of the state of affairs of the company.
VALUATION
Verification of assets also includes their proper valuation. Correct
valuation of assets and liabilities is very important as the accuracy of the
balance sheet depends on it. Valuation of assets means determination of
the fair value of the assets shown in the balance sheet. Valuation of assets
does not means putting the value of the assets owned by the organization
as on the date of balance sheet. It is a critical examination of the value of
these assets.
The auditor should satisfy himself that the fixed assets have
been valued and disclosed in the financial statement according to the
228
generally accepted principles of accounting. He has to ensure that
valuation of assets is based on established practices which are in existence
in the business. Significance of proper valuation of assets and liabilities is
illustrated in the following diagram:
OBJECTS OF VALUATION
Valuation of assets and liabilities is done with a view to achieve the
following objects:
1. To know the correct financial position of the organization.
2. To know the manner in which capital of the organization is invested.
3. To know the goodwill of the firm.
4. To maintain accuracy of the balance sheet.
GENERAL PRINCIPALES OF VERIFICATION AND

VALUATION OF ASSETS
Primarily verification of assets is the responsibility of the management
is expected to have greater intimate knowledge of the assets of the
business as regards location, use, conditions etc. the auditor should
remember the following general principal of verification and valuation
of fixed assets:
1. Confirm that the assets were in existence on the date of the balance
sheet. Existence of assets should be verified by personal
inspection.
2. Ascertain whether the assets were purchased under proper
authority of proper sanction .
3. Ascertain whether the assets were purchased for the purpose of the
business only.
4. Confirm that the assets were in the name of the organization.
5. Verify whether the right of ownership vests with the organization.
6. Make it sure that no unauthorized charge has been created against
any assets and all the charges are duly registered and disclosed.
7. Ensure that the assets are shown in the book of accounts at proper
values.
8. Verify the valuation of assets.
9. See that the assets have been disclosed in the balance sheet with
regard to statutory requirement, relevant accounting standards and
the nature of business.
229
VERIFICATION AND VALUATION OF ASSETS AND LIABILITIES
PRACTICAL 2 :
VERIFICATION AND VALUATION OF PLANT AND MACHINERY
Week No.: 25
Practical No. 49 B
Objectives(Specific): To identify Correct value of plant & machinery and ownership

depreciation, ascertainment of legal ownership and possession of plant & machinery & it is
free from all charges.
Sub Topics Verification of plant and machinery.
disposal of plant & machinery
master skills: and tear of the assets, Break-up value of the plant
& machinery
Interactive session FAQs / Teacher will explain verification & valuation of plant &
Answers machinery
Presentation
References / Links with Theory Theory Lesson – Topic No. 2 –
NOCs:
230
Practical 2
VERIFICATION AND VALUATION OF PLANT AND MACHINERY
How would you verify plant and machinery

The auditor should consider the following points for verification and
valuation:
1. He should check the accrual invoice & it must be recorded in the books of
A/c
2. He should check the method of depreciation charge on plant & machinery
3. He should see that the method of depreciation adopted this followed
consistently year to year
4. He should check that all the expenditure incurred for purchasing fixed
assets to be capitalized for e.g. Machinery cost Rs. 1,00,000 incurred for
table so that cost of the machinery is to be Rs.1,10,000
5. He should physically examine all plant & machinery
6. Where any assets are sold check their entries & find out P&L on sale of
plant & machinery.
7. Any plant & machinery are sold as scrap should be authorised properly.
8. He should verify the opening balances from last year balance sheet.
9. He should see that assets is properly valued and disclosed in the balance
sheet
10. He should check that all the plant & machinery are free from mortgage.
231
PRACTICAL 3 :
VERIFICATION AND VALUATION OF FURNITURE
Week No.: 25
Practical No. 49 C
Objectives(Specific): To identify Correct value of furniture and ownership

depreciation, ascertainment of legal ownership and possession of furniture & it is free from all
charges.
Sub Topics Verification of furniture.
disposal of furniture
master skills: and tear of the assets, Break-up value of the
furniture
Interactive session FAQs / Teacher will explain verification & valuation of furniture
Answers
Presentation
References / Links with Theory Theory Lesson – Topic No.
NOCs:
232
Practical 3
VERIFICATION AND VALUATION OF FURNITURE
How would you verify furniture?

valuation:
1. Auditor should check fixed asset register

2. He should check the accrual invoice & it must be recorded in the books of
A/c
3. He should check the method of depreciation charge on furniture
5. He should check that all the expenditure incurred for purchasing fixed
assets to be capitalized for e.g. furniture cost Rs. 1,00,000 incurred for
table top so that cost of the furniture is to be Rs.1,10,000
6. He should physically examine all furniture
furniture.
8. Any furniture are sold as scrap should be authorised properly.
10.He should see that assets is properly valued and disclosed in the balance
sheet
11. He should check that all the furniture are free from mortgage.
233
PRACTICAL 4 :
VERIFICATION AND VALUATION OF BUILDING
Week No.: 25
Practical No. 50 A
Objectives(Specific): To identify Correct value of building and ownership

depreciation, ascertainment of legal ownership and possession of building & it is free from all
charges.
Sub Topics Verification of building.
disposal of building
master skills: and tear of the assets, Break-up value of the
building
Interactive session FAQs / Teacher will explain verification & valuation of building
Answers
Presentation
NOCs:
234
Practical 4
VERIFICATION AND VALUATION OF BUILDING
How would you verify building?

valuation:
1. When a building has been instructed on the freehold property the same to
be verified from builder’s bill. or architect’s certificate.
2. He should check the Agreement.
3. He should checks Stamp Duty and Registration Fees paid on Agreement.
4. Where the title deeds are deposited with the mortgager for a mortgage,
then a certificate from them is to be obtained for verification.
5. If the title deeds are deposited with the bankers or solicitors for safe
custody, he should get a certificate from them to confirm the fact.
6. If required, the auditor should ask the solicitor for the client to confirm the
validity of the title deeds relating to the property.
7. The auditor has to see that the conveyance of the property is on the name
of the clients and the same is properly registered.
8. The auditor has to ensure that the property is properly insured.
9. In case there is an appreciation in the value of land and building by
revaluation, the auditor has to verify the basis of revaluation and to
confirm that t same is properly disclosed in the balance sheet to comply
the generally accepted accountancy principles and also the provisions of
Companies Act.1956.
10.The auditor should see that separate accounts for the land and for building
are maintained . Because on land usually no depreciation is provided.
235
PRACTICAL 5 :
VERIFICATION AND VALUATION OF TOOL & EQUIPMENT
Week No.: 25
Practical No. 50 B
Objectives(Specific): To identify Correct value of tool & equipment and ownership

depreciation, ascertainment of legal ownership and possession of tool & equipment & it is free
from all charges.
Sub Topics Verification of tool & equipment.
disposal of tool & equipment
master skills: and tear of the assets, Break-up value of the tool &
equipment
Interactive session FAQs / Teacher will explain verification & valuation of tol &
Answers equipment
Presentation
References / Links with Theory Theory Lesson – Topic
NOCs:
236
Practical 5
VERIFICATION AND VALUATION OF TOOL & EQUIPMENT
How would you verify tool & equipment?

valuation:
Auditor should check fixed asset register

1. Auditor should check internal check and Internal control systems.
2. Auditor should check the accrual invoice & it must be recorded in the
books of A/c
3. He should check the method of depreciation charge on tool & equipment
tool & equipment.
6. Any tool & equipment are sold as scrap should be authorised properly.
8. He should see that assets is properly valued and disclosed in the balance
sheet
9. He should check that all the tool & equipment are free from mortgage.
10. He should check the written off value of tools and equipment and proper
entry in the books of account.
237
PRACTICAL 6:
VERIFICATION AND VALUATION OF CREDITOR
Week No.: 25
Practical No. 50 C
Title / Aim: Verification and valuation of liabilities
Objectives(Specific): To identify Correct value of liabilities
Activity / Sequence / Procedures :- Teacher shows the verification of liabilities,

Sub Topics Verification of trade creditors
Skill to be achieved As per To ensure that the liability have been recorded
control regarding acquisition raw material,
utilization & payment to trade creditors
Practice Required to acquire the Identify sufficient stock of raw material, spoilage &
master skills: payment to trade creditors
Interactive session FAQs / Teacher will explain verification of trade creditors
Answers
ASSIGNMENT for: To collect information
Practices / Reporting / Data
Storages / Live uploads /
Presentation
NOCs:
238
Practical 6
VERIFICATION AND VALUATION OF TRADE CREDITORS
Trade Creditor:
1. Scrutiny.—The auditor should ask for a schedule of creditor and check
the same with the purchase ledger already examined by him.
2. Internal control.---Auditor should check internal check and Internal
control systems.
3. Year end purchases.—He should ensure that all purchase made during
the year especially at the end of the year are included in the accounts of
the creditors.
4. Statements of account.—In case of suspicion about any creditor,
auditor with the consent of the client can ask the statement of account
to be sent and verify the same along with the scrutiny of ledger account
and reconcile the differences.
5. Check debits.—He should see the various debits given for discount,
good returned, etc, and confirm that the same are genuine.
6. Overdue creditor.—The auditor should ask for the reason for not
paying any overdue creditors.
7. Purchase Invoices Examine some purchase invoices and see that they
are relating to the year under audit.
8. Returns to suppliers.—Test check returns and see that they are
supported by credit notes of the suppliers.
9. Confirmation letters.—Obtain confirmation from the parties.
239
Practical 7
VERIFICATION AND VALUATION OF STOCK
Week No.: 26
Practical No. 51 A
Objectives(Specific): To identify Correct value of stock.
Activity / Sequence / Procedures :- Inventories should be valued at historical cost or net

realizable cost whichever is lower. And should identify the valuation of stock as per LIFO or
FIFO method.
Sub Topics Verification and valuation of stock.
Skill to be achieved As per

objectives:
Skill evaluation Criteria: Inventory in trade is shown in the balance sheet according
to schedule VI of the companies act.
Practice Required to acquire the Identify and determine of gross profit ratio and compare it
master skills: with the previous years ratio.

Interactive session FAQs / Teacher will explain verification & valuation of stock
Answers
ASSIGNMENT for: Physical verification is done by the management in respect
Practices / Reporting / Data of finished goods and raw material, the procedure of
Storages / Live uploads / physical verification is reasonable and any discrepancies
Presentation have been property dealt with

NOCs:
240
Practical 7
VERIFICATION AND VALUATION OF STOCK
How would you verify stock?
valuation:
1. He should check rough stock sheet

2. Check few items in details.
3. Check internal check system & internal control system for stock.
4. Check the method of valuation of stock i.e. LIFO, FIFO , & weighted average
5. Check that the stock is valued at market price or cost price whichever is less
Check last month purchase register & different item of purchase for valuation of
closing stock.
6. Visit on the date of balance sheet for valuation of closing stock.
7. Take help of expert person for valuation of closing stock if needed
8. Take certificate from proprietor, partner, Director for valuation of closing stock.
9. He should check that there should not be change in the method of valuation of
closing stock. If there is change in the valuation of closing stock that he must ask
explanation & verification for the same
10. Auditor should check the stock register properly.
11. Auditor should check that stock is free from hypnotization.
12. He should check dead stock properly
13. Check disposal of stock that it should be through proper channel.
14. Check defective stock separately . He should see that the defective stock should
be kept aside.
241
Practical 8
VERIFICATION AND VALUATION OF GOODWILL
Week No.: 26
Practical No. 51 B
Objectives(Specific): To identify Correct value of Goodwill.
Activity / Sequence / Procedures :- The valuation of goodwill depends upon assumption made
by the valuen. The goodwill is valued on the basic of avenge profit method, super profit
method, capitalization method, annuity method.
Sub Topics Verification and valuation of goodwill.
Skill to be achieved As per To Check Goodwill equal to total amount – net

objectives: wroth
Skill evaluation Criteria: Inventory in trade is shown in the balance sheet according
to schedule VI of the companies act.
Practice Required to acquire the Identify and determine of gross profit ratio and compare it
master skills: with the previous years ratio.

Interactive session FAQs / Teacher will explain verification & valuation of Goodwill
Answers
ASSIGNMENT for: Goodwill is calculated as the different between the net
asset acquired and the purchase price.
Presentation
NOCs:
242
Practical 8
VERIFICATION AND VALUATION OF GOODWILL
How would you verify Goodwill?

valuation:
Goodwill
a) Verify whether it is created in the books of accounts or it represents an additional
cost of the business purchased.
b) Examine the partnership deed or arrangement to ascertain the agreed method of

creation of good will or value of goodwill payable as part of the purchase consideration.
c) In case heavy expenditure is incurred in introduction of a new product ,goodwill is

created with that amount. Auditor should see that such amount is shown separately in
the balance sheet.
d) See that no current expenditure is debited to goodwill account.
e) See that the value placed on goodwill is reasonable and factual. Cost will be the
value of goodwill. There is no monetary requirement to depreciate goodwill. However,
if the company has a policy of writing off goodwill, it is to be been depreciated
accordingly.
f) Examine the reasonability of revaluation of goodwill.
g) Obtain a certificate from solicitors of the company to the effect that goodwill is not
subject to any encumbrances.
h) In the case of a limited company it should be ascertained that the amount of

appreciation adjusted in the value of goodwill has been credited to Capital reserved
A/C.
i) If the goodwill written off earlier is brought back in the book of accounts, adjust the
debit balance of P& L A/C. it should be investigated about the period and the bored
resolution regarding introduction of goodwill as am asset. Necessary approval of
shareholders to that effect should be checked.
243
Practical 9
VERIFICATION AND VALUATION OF DEBTORS
Week No.: 26
Practical No. 51 C
Objectives(Specific): To identify Correct value of Debtors.
Activity / Sequence / Procedures :- To check schedule of debtors and debtors ledger a/c
Sub Topics Verification and valuation of Debtors.
Skill to be achieved As per To check debtors more than 6 month and less than
objectives: 6 month.
Skill evaluation Criteria: Schedule of sundry debtors shown in the balance sheet
according to schedule VI of the companies act.
Practice Required to acquire the To verify sales registered for 3 month and debtors
master skills: control ledger and credit note.
Interactive session FAQs / Teacher will explain verification & valuation of Debtors.
Answers
ASSIGNMENT for: To collect Debtors confirmation letter from all costomer
Presentation
NOCs:
244
Practical 9
VERIFICATION AND VALUATION OF DEBTORS
How would you verify Sundry Debtors ?
valuation of Sundry Debtors
1. Auditor should collect balance Confirmation letter from the

Debtors as on balance sheet date.
2. He should scrutinize the ledger A/c of Debtors and some of the
ledger A/c are scrutinized in detail.
3. He should check properly goods return , cash received, discount
allowed, rebate allowed properly.
4. He should make proper provision of bad & doubtful Debts.
5. He should check age of the Debtors properly i.e. Debtors more
6th month & less than 6th month.
6. Auditor should see that proper action must be taken against the
debtors age having more than 6Th month.
7. Check advanced received from Debtors properly.
8. Classify the goods sent for consignment goods sent for approval, goods
distributed sample properly.
9. Check that all the debtors are free from dispute & exhibit.
10. Check sales register & respective ledger posting.
245
Practical 10
VERIFICATION AND VALUATION OF BILLS RECEIVEABLE
Week No.: 26
Practical No. 51 D
Objectives(Specific): To identify Correct value of bills receivable.
Activity / Sequence / Procedures :- To check schedule of bills receivable

Sub Topics Verification and valuation of bill receivable
Skill to be achieved As per Explain the meaning of different terms involved in the
objectives: bill transaction.
Skill evaluation Criteria: Schedule of bill receivable shown in the balance sheet
Practice Required to acquire the To verify the bills receivable registered and
master skills: debtors control ledger.
Interactive session FAQs / Teacher will explain bill receivable.
Answers
ASSIGNMENT for: To collect bills receivable confirmation letter .
Practices / Reporting / Data Record transactions relating to dishonour, retirement
Storages / Live uploads / and renewal of bill.
Presentation
NOCs:
246
VERIFICATION AND VALUATION OF BILL RECEIVEABLE
How would you verify Bill receivable?

valuation:
Bills Receivable
2. Examine the bills receivable book with the bills receivable not matured which are
in hand on balance sheet date.
3. Ask whether any bills are in the processes of collection, if so the details of the
same have to be verified with bank certificates.
4. If the bills receivable in hand are many , he should make a list of bills for his
convenience.
5. If there are any bills that have been discounted and un matured auditor has top
examine the details of the same very carefully because they are to be shown as
contingent liabilities in the balance sheet.
6. While examining the bills, the auditor has to pay special attention to see that they
are properly drawn, stamped and duly accepted by the drawe.
7. He has to check up whether any bill is overdue. If so, auditor should ask for the
details of the actions initiated etc. If there are any bills which are doubtful of
recovery , he should see whether adequate provision has been made for the
anticipated loss on account of bad depts..
8. He has to see that in case of dis honoured bills ; the same is not shown as bills
receivable. The auditor has also to check up whether noting formalities have been
properly coplied with or not.
9. If the auditor has visited his client after the balance sheet date , in this case many
of the bills due on balance sheet date might have matured or honoured. Hence , he
should vouch such bills with reference to cash book or pass book and reconcile the
balance.
247
Practical 11
VERIFICATION AND VALUATION OF LOANS AND ADVANCE
Week No.: 26
Practical No. 51 A
Objectives(Specific): To identify Correct value of loan and advances.
Activity / Sequence / Procedures :- enumerate the ways of lending money.

Sub Topics Verification and valuation of loan and advances
Skill to be achieved As per To know difference between loan and advances.

objectives:
Skill evaluation Criteria: Enlist the utility of granting loans and advances by
commercial banks. differentiate borrowing rates from
lending rates.
Practice Required to acquire the To verify purchase registered for 3 month and
master skills: creditors control ledger and debit note.
Interactive session FAQs / Teacher will explain loans and advances.
Answers
ASSIGNMENT for: Outline the procedure for grant of cash credit, point
out the nature of security provided for loans overdraft
and discounting of bills of exchange..
Presentation
NOCs:
248
Practical 11
VERIFICATION AND VALUATION OF LOANS AND ADVANCE
How would you verify of loans and advance ?

valuation:
Loan borrowed
1. Examine the partnership deed or Momorandum and Articles of association
to find out the powers of the client to borrow money.
2. Examine the loan agreement and correspondence relating to loans.
3. Check the cash received along with receipt issued and check op the same
in the cash book.
4. Scrutinizes the agreement made with the bank in case of overdraft.
5. Enquire into the details of the security given against loan in case the loan is
secured. Ensure that such a fact has been disclosed in the balance sheet.
6. Find out the reason of borrowing and see that it is in the interest of the
client.
7. See that the mortgage is registered with the registrar f Companies under
section 125 of the Companies Act 1956.
8. Verify the payment of interest and installments with the receipt issued by
the lender and confirm that they are paid in a accordance with the time
schedule mentioned in loan agreement.
9. Ensure that the provision of companies Act regarding the maximum
amount of loan that the Company can raise, have been complied with.
10.Ascertain the purpose for which loan is taken and see that it is utilized for
the right purpose.
11.Obtain confirmation letter from the parties.
249
Practical 12
VERIFICATION AND VALUATION OF SHARE CAPITAL
Week No.: 26
Practical No. 52 B
Objectives(Specific): To identify Correct value of share capital
Activity / Sequence / Procedures :- To understand procedure of issues of share

Sub Topics Verification and valuation of shares capital
Skill to be achieved As per Outline the accounting for forfeiture of shares and
objectives: reissue of forfeited shares under varying situations.
workout the amounts to be transferred to capital
reserve when forfeited shares are reissued; and prepare
share forfeited
Skill evaluation Criteria: Explain the basic nature of a joint stock company as a
form of business organisation and the various kinds of
companies based on liability of their members.
describe the types of shares issued by a company.
Practice Required to acquire the Explain the accounting treatment of shares issued at
master skills: par, at premium and at discount including
oversubscription.
Interactive session FAQs / Teacher will explain issue of share capital and debentures.
Answers
ASSIGNMENT for: Value of company , features prospect of company product,
evaluation of company performance, current demand for
Practices / Reporting / Data the product. Etc.
Presentation
NOCs:
250
Practical 12
VERIFICATION AND VALUATION OF SHARE CAPITAL
How would you verify of share capital ?

valuation:
SHARE CAPITAL

2. In the first year of the existence of the company, the auditor should
examine the Memorandum and Articles of Association of the
company.
3. He should check the prospectus to ascertain the details of capital.
4. Check the cash book, pass book of the company
5. He should verify the minutes book of directors and find out
allotment of share, calls made on shares etc.
6. Examine the agreement with vendors if some shares are allotted for
consideration other than cash.
7. Auditor should check underwriter agreement.
8. He should verify commission to underwriter with the help of share
capital amount.
9. He should check the TDS on commission.
251
Practical 13
VERIFICATION AND VALUATION OF INVESTMENT
Week No.: 26
Practical No. 52 C
Objectives(Specific): To identify Correct value of investment
Activity / Sequence / Procedures :- To check schedule of investment.

Sub Topics Verification and valuation of investment .
Skill to be achieved As per Disclose the current investment and long term investment.
objectives:
Skill evaluation Criteria: Schedule of investment shown in the balance sheet
Practice Required to acquire the Long term investment always valued at the cost
master skills: price.
Interactive session FAQs / Teacher will explain investment.
Answers
ASSIGNMENT for: Physical valuation of all investment as on date of balance
sheet.
Presentation
NOCs:
252
Practical 13
VERIFICATION AND VALUATION OF INVESTMENT
How would you verify of investment?

valuation:
INVESTMENT:
1. Auditor should check Investment Register.

2. When share or securities are purchased, the buyer gets brokers
bought note. The auditor should vouch with such a brokers
bought note.
3. The auditor should also verify the investments physically. Where
they are lying with bankers in safe custody, the auditor should
verify certificates for such factors.
4. Where shares are allotted but not received, the allotment letter
can be verified.
5. The investment should be in the name of the company or the
partners etc.
6. The auditor should also verify the entry of payment with entry in
the bank statements.
7. He should check the interest received on investment.
8. He should verify Dividend warrant received from company.
253
Practical 14
VERIFICATION AND VALUATION OF LEASEHOLD PROPERTY
Week No.: 26
Practical No. 52 D
Objectives(Specific): To identify Correct value of leasehold property
Activity / Sequence / Procedures :- To check the agreement for lease property.

Sub Topics Verification and valuation of leasehold property.
Skill to be achieved As per Stamp duty and registration paid on agreement.

objectives:
Skill evaluation Criteria: Read term and condition of agreement.

Interactive session FAQs / Teacher will explain leasehold property.
Answers
ASSIGNMENT for: Visit to stamp duty and registration department .
Presentation
NOCs:
254
Practical 14
VERIFICATION AND VALUATION OF LEASEHOLD PROPERTY
How would you verify of leasehold property?

valuation:
Leasehold property:
A leasehold property is an ownership of a temporary right to hold land
or property in which a lessee or a tenant holds rights of
real property by some form of title from a lessor or landlord. Although
a tenant does hold rights to real property, a leasehold property is
typically considered personal property.
1. Auditors should check agreement between licensor and licensee.

2. He should check deposit received from licensee.
3. He should check the term and condition of agreement.
4. He should check stamp duty and registration amount paid on
agreement.
5. He should check the police verification form.
6. Auditor should check monthly compensation paid to licensor.
7. The auditor has to ensure that the property is property insured.
8. Auditor should take advice from advocate if he required.
9. Deposit from the licensee should be refunded at the end of lease
period.
10. Deposit received from the licensee should be shown sepretaly
liability side of the balance sheet
255
256
CHAPTER 8
AUDIT REPORT
CLEAN AUDIT REPORT OF SOLE TRADING CONCERN :-
Week No.: 27
Practical No. 53 A
Title / Aim: PREPARATION OF CLEAN AUDIT REPORT OF SOLE
TRADING CONCERN.
Objectives (Specific): To prepare Clean Audit Report Of Sole Trading Concern
Requirement :- Calculator, Print out, Stationery,
Activity / Sequence / Procedures :- Teacher gives the list of different audit report of Clean
Audit Report Of Sole Trading Concern
Sub Topics CLEAN AUDIT REPORT OF SOLE TRADING CONCERN.
Skill to be achieved As per Prepare correctly Clean Audit Report Of Sole Trading
objectives: Concern
Skill evaluation Criteria: Audit Report as per law.
Practice Required to acquire the Continuous practice of preparing Clean Audit Report Of
master skills: Sole Trading Concern
National / International Bench As per Accounting Standards and Auditing Standards
Interactive session FAQs / Ans : Teacher will explain about different types of Clean Audit
Report Of Sole Trading Concern
ASSIGNMENT for: Practices / To collect different information of different types of
Reporting/ Data Storages/ Live Sole Trading Concern to prepare Clean Audit Report Of
uploads / Presentation Sole Trading Concern.
References / Links with Theory Theory Lesson – Topic No.8 – Clean Audit Report Of
session/ Topics / Acts/ Rules / Sole Trading Concern
NOCs:
257
CLEAN AUDIT REPORT OF SOLE TRADING CONCERN
To,
The Proprietor of
T. P. Traders,
Antop Hill,
Mumbai – 400 037.
I have audited the annexed Balance Sheet of the T. P. Traders, Antop Hill,
Mumbai as at 31st March, 2017 and also the annexed Profit and Loss Account
of the firm for the year ended on that date and report that –
1. I have obtained all the information and explanation, which is to the

best of my knowledge and belief was necessary for the purpose of my
audit.
2. In my opinion proper books of accounts as required by law have been
kept by the Sole Trader.
3. The Balance Sheet, Profit and Loss Account with this report are in
agreement with the books of accounts and
4. In my opinion and best of my knowledge and according to the
explanation given to me, the accounts subjected to the notes thereon
gives the information required by the law, in the manner so required
and give a true and fair view –
i. In case of the balance sheet, the state of the affairs of the company
as at 31st March, 2017.
ii. In case of the profit and loss account, the profit for the year ended
on that date.
M/s. S. P. Kale & Co.

Chartered Accountants
Date:- 8th June, 2017 Sd/-
Place:- Mumbai [Proprietor]
258
Week No.: 27
Practical No. 53 B
Title / Aim: PREPARATION OF CLEAN AUDIT REPORT OF SOLE
TRADING CONCERN.
Objectives (Specific): To prepare Clean Audit Report Of Sole Trading Concern
Activity / Sequence / Procedures :- Teacher gives the list of different audit report of Clean
Sub Topics CLEAN AUDIT REPORT OF SOLE TRADING CONCERN.
Skill to be achieved As per Prepare correctly Clean Audit Report Of Sole Trading
objectives: Concern
Practice Required to acquire the Continuous practice of preparing Clean Audit Report Of
master skills: Sole Trading Concern
Interactive session FAQs / Ans : Teacher will explain about different types of Clean Audit
Report Of Sole Trading Concern
Reporting/ Data Storages/ Live Sole Trading Concern to prepare Clean Audit Report Of
uploads / Presentation Sole Trading Concern.
References / Links with Theory Theory Lesson – Topic No.8 – Clean Audit Report Of
NOCs:
259
To,
The partners of
U. P. Designers,
Kala Chowki,
Mumbai – 400 033.
I have audited the annexed Balance Sheet of the U. P. Designer, Kala

Chowki, Mumbai as at 31st March, 2017 and also the annexed Profit and Loss
Account of the firm for the year ended on that date and report that –

audit.
2. In my opinion proper books of accounts as required by law have been
kept by the Sole Trader.
gives the information required by the law, in the manner so required
and give a true and fair view –
on that date.
M/s. G. N. Rathod & Co.
260
QUALIFIED AUDIT REPORT SOLE TRADING CONCERN
Week No.: 27
Practical No. 54 A
Title / Aim: PREPARATION OF QUALIFIED AUDIT REPORT OF SOLE
TRADING CONCERN.
Objectives (Specific): To prepare Qualified Audit Report Of Sole Trading Concern
Activity / Sequence / Procedures :- Teacher gives the list of different audit report of
Qualified Audit Report Of Sole Trading Concern
Sub Topics QUALIFIED AUDIT REPORT OF SOLE TRADING
CONCERN.
Skill to be achieved As per Prepare correctly Qualified Audit Report Of Sole

objectives: Trading Concern
Practice Required to acquire the Continuous practice of preparing Qualified Audit Report
master skills: Of Sole Trading Concern
Interactive session FAQs / Ans : Teacher will explain about different types of Qualified
Reporting/ Data Storages/ Live Sole Trading Concern to prepare Qualified Audit Report
uploads / Presentation Of Sole Trading Concern.
References / Links with Theory Theory Lesson – Topic No.8 – Qualified Audit Report Of
NOCs:
261
To,
The partners of
P. U. Associate,
Worli,
Mumbai – 400 018.
I have audited the annexed balance sheet of the P. U. Associates, Worli,

Mumbai as at 31st March, 2017 and also the annexed profit and loss account
of the company for the year ended on that date and report that –
1. I have obtained all the information and explanation, which is to the best of
my knowledge and belief was necessary for the purpose of my audit.
2. In my opinion proper books of accounts as required by law have been kept
by the company so far as appears by the examination of the books.
3. The Balance Sheet, Profit and Loss Account dealt with this report are in
agreement with the books of accounts.
4. Subject to the reservations noted below, in my opinion and best of my
knowledge and according to the explanation given to me, the accounts
give the information required by the law, in the manner so required and
give a true and fair view –
i. In case of the balance sheet, the state of the affairs of the company as
at 31st March, 2017.
ii. In case of the profit and loss account, the profit for the year ended on
that date:-
No provision is made on debtors.
The provision for depreciation of Plant & Machinery is not
adequate.
Inadequate provision for taxation is made.
M/S. Y. BHANDARE & CO.

th
Date:- 18 July, 2017 Chartered Accountants
Place:- Mumbai Sd/-
[Proprietor]
262
Week No.: 27
Practical No. 54 B
Title / Aim: PREPARATION OF QUALIFIED AUDIT REPORT OF SOLE
TRADING CONCERN.
Objectives (Specific): To prepare Qualified Audit Report Of Sole Trading Concern
Activity / Sequence / Procedures :- Teacher gives the list of different audit report of
Qualified Audit Report Of Sole Trading Concern
Sub Topics QUALIFIED AUDIT REPORT OF SOLE TRADING
CONCERN.
Skill to be achieved As per Prepare correctly Qualified Audit Report Of Sole

objectives: Trading Concern
Practice Required to acquire the Continuous practice of preparing Qualified Audit Report
master skills: Of Sole Trading Concern
Interactive session FAQs / Ans : Teacher will explain about different types of Qualified
Reporting/ Data Storages/ Live Sole Trading Concern to prepare Qualified Audit Report
uploads / Presentation Of Sole Trading Concern.
References / Links with Theory Theory Lesson – Topic No.8 – Qualified Audit Report Of
NOCs:
263
To,
The partners of
Bhole & Sons,
Shivaji Park,
Mumbai – 400 028.
I have audited the annexed balance sheet of the Bhole & Sons, Shivaji
Park, Mumbai as at 31st March, 2017 and also the annexed profit and loss
account of the company for the year ended on that date and report that –
give the information required by the law, in the manner so required and
give a true and fair view –
that date:-
Reserve for doubtful debt on debtor is inadequate.
Method of valuation of stock-in-trade is not proper.
M/S. V. PANDYE & CO.

th
Place:- Mumbai Sd/-
[Proprietor]
264
CLEAN AUDIT REPORT OF PARTNERSHIP FIRM
Week No.: 28
Practical No. 55 A
Title / Aim: Preparation of Clean Audit Report of Partnership Firm
Objectives(Specific): To prepare Clean Audit Report of Partnership Firm
Sub Topics Clean Audit Report of Partnership Firm.
Skill to be achieved As per Prepare correctly the Audit Report of Partnership Firm
objectives:
Skill evaluation Criteria: Correct Audit Report of Partnership Firm.
Practice Required to acquire the Prepare at least four Clean Audit Report of
master skills: Partnership firm
National / International Bench As per Partnership Act
Interactive session FAQs / Ans : Teacher will explain about different types Audit Report
of Partnership Firm
ASSIGNMENT for: Practices / To collect different information of different Partnership
Reporting/ Data Storages/ Live firm to prepare clean Audit Report of
uploads / Presentation Partnership Firm.
References / Links with Theory Theory Lesson – Topic No. 8 – Clean Audit Report of
session/ Topics / Acts/ Rules / Partnership Firm
NOCs:
265
To,
The partners of
S. K. Traders,
Wadala,
Mumbai – 400 031.
I have audited the annexed Balance Sheet of the S. K. Traders, Wadala,

audit.
2. In my opinion proper books of accounts as required by law and
partnership deed have been kept by the firm.
gives the information required by the Partnership Act, 1932, in the
manner so required and give a true and fair view –
i. In case the of balance sheet, the state of the affairs of the company
on that date.
M/s. C. L. Rodrique & Co.

266
Week No.: 28
Practical No. 55 B
Title / Aim: Preparation of Clean Audit Report of Partnership Firm
Objectives(Specific): To prepare Clean Audit Report of Partnership Firm
Sub Topics Clean Audit Report of Partnership Firm.
Skill to be achieved As per Prepare correctly the Audit Report of Partnership Firm
objectives:
Skill evaluation Criteria: Correct Audit Report of Partnership Firm.
Practice Required to acquire the Prepare at least four Clean Audit Report of
master skills: Partnership firm
National / International Bench As per Partnership Act
Interactive session FAQs / Ans : Teacher will explain about different types Audit Report
of Partnership Firm
Reporting/ Data Storages/ Live firm to prepare clean Audit Report of
uploads / Presentation Partnership Firm.
session/ Topics / Acts/ Rules / Partnership Firm
NOCs:
267
To,
The partners of
Yash Raj Traders,
Fort,
Mumbai – 400 001.
I have audited the annexed Balance Sheet of the Yash Raj Traders, Fort,
audit.
partnership deed have been kept by the firm.
gives the information required by the Partnership Act, 1932, in the
on that date.
M/s. P. L. MALKAR & Co.

268
QUALIFIED AUDIT REPORT OF PARTNERSHIP FIRM
Week No.: 28
Practical No. 56 A
Title / Aim: Preparation of Qualified Audit Report of Partnership Firm
Objectives(Specific): To prepare Qualified Audit Report of Partnership Firm

Activity / Sequence / Procedures :- Teacher gives the list of different information Qualified
Audit Report of Partnership Firm as per Partnership Act.
Sub Topics Qualified Audit Report of Partnership Firm
Skill to be achieved As per Prepare correctly Qualified Audit Report of Partnership

objectives: Firm
Skill evaluation Criteria: Correct Qualified Audit Report of Partnership Firm.
Practice Required to acquire the Continuous practice preparation Qualified Audit Report
master skills: of Partnership Firm
National / International Bench Qualified Audit Report of Partnership Firm as per
Marking / NOS (if any): Partnership Act.
Interactive session FAQs / Ans : Teacher will explain about different types Qualified
Audit Report of Partnership Firm.
Reporting/ Data Storages/ Live firm to prepare Qualified Audit Report of
uploads / Presentation Partnership Firm..
References / Links with Theory Theory Lesson – Topic No. 8 prepare Qualified Audit
session/ Topics / Acts/ Rules / Report of Partnership Firm.
NOCs:
269
To,
The partners of
R. J. Traders,
Dadar,
Mumbai – 400 014.
I have audited the annexed balance sheet of the R.J. Traders, Dadar,
Mumbai as at 31st March, 2017 and also the annexed profit and loss account
of the company for the year ended on that date and report that –
partnership deed have been kept by the company so far as appears by the
examination of the books.
give the information required by the Partnership Act, 1932, in the
that date:-
The provision for depreciation of Plant & Machinery is not
adequate
M/S. PHIRKE & CO.

Date:- 18th July, 2017 Chartered Accountants
Place:- Mumbai Sd/-
[Proprietor]
270
Week No.: 28
Practical No. 56 B
Title / Aim: Preparation of Qualified Audit Report of Partnership Firm
Objectives(Specific): To prepare Qualified Audit Report of Partnership Firm

Audit Report of Partnership Firm as per Partnership Act.
Sub Topics Qualified Audit Report of Partnership Firm
Skill to be achieved As per Prepare correctly Qualified Audit Report of Partnership

objectives: Firm
Skill evaluation Criteria: Correct Qualified Audit Report of Partnership Firm.
master skills: of Partnership Firm
National / International Bench Qualified Audit Report of Partnership Firm as per
Marking / NOS (if any): Partnership Act.
Audit Report of Partnership Firm.
Reporting/ Data Storages/ Live firm to prepare Qualified Audit Report of
uploads / Presentation Partnership Firm..
session/ Topics / Acts/ Rules / Report of Partnership Firm.
NOCs:
271
To,
The partners of
Ram & Shyam Traders,
Matunga,
Mumbai – 400 019.
I have audited the annexed balance sheet of the Ram & Shyam Traders,
Matunga, Mumbai as at 31st March, 2017 and also the annexed profit and loss
partnership deed have been kept by the company so far as appears by the
examination of the books.
give the information required by the Partnership Act, 1932, in the
that date:-
No provision is made on debtors.
Method of valuation of stock-in-trade is not proper
M/S. J. K. BHATIA & CO.

Place:- Mumbai Sd/-
[Proprietor]
272
CLEAN REPORT AUDITORS REPORT OF CO-OP SOCIETY
Week No 29
Practical No. 57 A
Title / Aim: Preparation of Clean Audit Report of Co-Op Societies
bjectives(Specific): To prepare Clean Audit Report of Co-Op Societies
Audit Report of Co-Op Societies as per Co-Op Societies Act.
Sub Topics Clean Audit Report of Co-Op Societies
Skill to be achieved As per Prepare correctly the Clean Audit Report of Co-Op
objectives: Societies
Skill evaluation Criteria: Correct Clean Audit Report of Co-Op Societies
Practice Required to acquire the Prepare at least four Clean Audit Report of Co-Op
master skills: Societies
National / International Bench As per CO-OP SOCIETIEs Act
Interactive session FAQs / Ans : Teacher will explain about different types Clean Audit
Report of Co-Op Societies
ASSIGNMENT for: Practices / To collect different information of different co-op
Reporting/ Data Storages/ Live Societies to prepare Clean Audit Report of Co-Op
uploads / Presentation Societies
session/ Topics / Acts/ Rules / Co-Op Societies
NOCs:
273
To,
The members of
Omkar Co-operative Society Ltd.,
Prabhadevi,
Mumbai – 400 025.
I have audited the annexed balance sheet of the above Omkar Co-operative
Society Ltd., as at 31st March, 2016 and also the annexed Income and
Expenditure account of the company for the year ended on that date and report
that –
2. In my opinion proper books of accounts as required by the Maharashtra Co-
operative Act, 1960 and by rules and bye-laws of that society kept by the
society as far as appears from my examination of the books.
3. The Balance Sheet, Profit and Loss Account dealt with by this report are in
4. In my opinion and best of my knowledge and according to the explanation
given to me, the account subjected to the notes thereon give the information
required by Co-operative Act and rules 1960, in the manner so required and
give a true and fair view
i. In case of the balance sheet, the state of the affairs of the society as at
31st March, 2016.
ii. In case of the Income and Expenditure account, the Surplus for the
year ended on that date.
M/s. N. B. PAREKH & CO.

Date:- 19th July, 2016 Chartered Accountant
Place:- Mumbai Sd/-
[Proprietor]
274
Week No:- 29
Practical No. 57 B
Title / Aim: Preparation of Clean Audit Report of Co-Op Societies
bjectives(Specific): To prepare Clean Audit Report of Co-Op Societies
Sub Topics Clean Audit Report of Co-Op Societies
Skill to be achieved As per Prepare correctly the Clean Audit Report of Co-Op
Skill evaluation Criteria: Correct Clean Audit Report of Co-Op Societies
Practice Required to acquire the Prepare at least four Clean Audit Report of Co-Op
master skills: Societies
National / International Bench As per CO-OP SOCIETIEs Act
Interactive session FAQs / Ans : Teacher will explain about different types Clean Audit
Report of Co-Op Societies
ASSIGNMENT for: Practices / To collect different information of different co-op
Reporting/ Data Storages/ Live Societies to prepare Clean Audit Report of Co-Op
session/ Topics / Acts/ Rules / Co-Op Societies
NOCs:
275
To,
The members of
Bhakti Sagar Co-operative Society Ltd.,
Parel,
Mumbai – 400 012.
I have audited the annexed balance sheet of the above Bhakti Sagar Co-operative
that –
4. In my opinion and best of my knowledge and according to the explanation
given to me, the account subjected to the notes thereon give the information
required by Co-operative Act and rules 1960, in the manner so required and
give a true and fair view
i. In case of the balance sheet, the state of the affairs of the society as at
31st March, 2016.
ii. In case of the Income and Expenditure account, the surplus for the year
ended on that date.
M/s. CHITALE & CO.

Date:- 20th July, 2017 Chartered Accountant
Place:- Mumbai Sd/-
[Proprietor]
276
QUALIFIED REPORT AUDITOR REPORT OF CO-OPERATIVE SOCIETY
Week No.: 29
Practical No. 58 A
Title / Aim: Preparation of Qualified Audit Report of Co-Op Societies
Objectives(Specific): To prepare Qualified Audit Report of Co-Op Societies

Sub Topics Qualified Audit Report of Co-Op Societies
Skill to be achieved As per Prepare correctly Qualified Audit Report of of Co-Op

Skill evaluation Criteria: Correct Qualified Audit Report of Co-Op Societies
master skills: of Co-Op Societies
National / International Bench Qualified Audit Report of Co-Op Societies as per Co-Op
Marking / NOS (if any): Societies Act.
Audit Report of Co-Op Societies.
ASSIGNMENT for: Practices / To collect different information of different of Co-Op
Reporting/ Data Storages/ Live Societies to prepare Qualified Audit Report of Co-Op
session/ Topics / Acts/ Rules / Report of Co-Op Societies
NOCs:
277
To,
The members of
Vaibhav Co-operative Society Ltd.,
Naigoan, Dadar T.T.
Mumbai – 400 014.
I have audited the annexed balance sheet of the above Vaibhav Co-operative
that –
knowledge and according to the explanation given to me, the account subject
to the notes thereon give the information required by Co-operative Act and
rules 1960, in the manner so required and give a true and fair view
i. In case of the balance sheet, the state of the affairs of the society as
ii. In case of the Income and Expenditure account, the surplus for the
year ended on that date.
a) The expenses of repairs and maintenance of the building is very
much excessive.
b) The society maintenance bills are not kept properly.
c) The provision for depreciation on building is not adequate.
M/s. Y. S. SURVE & CO.

Chartered Accountant
Date:- 10th July, 2017 Sd/-
278
Week No.: 29
Practical No. 58 B
Title / Aim: Preparation of Qualified Audit Report of Co-Op Societies
Objectives(Specific): To prepare Qualified Audit Report of Co-Op Societies

Sub Topics Qualified Audit Report of Co-Op Societies
Skill to be achieved As per Prepare correctly Qualified Audit Report of of Co-Op

Skill evaluation Criteria: Correct Qualified Audit Report of Co-Op Societies
master skills: of Co-Op Societies
National / International Bench Qualified Audit Report of Co-Op Societies as per Co-Op
Marking / NOS (if any): Societies Act.
Audit Report of Co-Op Societies.
ASSIGNMENT for: Practices / To collect different information of different of Co-Op
Reporting/ Data Storages/ Live Societies to prepare Qualified Audit Report of Co-Op
session/ Topics / Acts/ Rules / Report of Co-Op Societies
NOCs:
279
To,
The members of
Asmita Co-operative Society Ltd.,
Sion,
Mumbai – 400 037.
I have audited the annexed balance sheet of the above Asmita Co-operative
that –
knowledge and according to the explanation given to me, the account subject
to the notes thereon give the information required by Co-operative Act and
rules 1960, in the manner so required and give a true and fair view -
i. In case of the balance sheet, the state of the affairs of the society as at 31st
March, 2017.
ii. In case of the Income and Expenditure account, the surplus for the year
ended on that date.
a) Major repairing work is not properly authorized.
b) Income from the use of society ground is not properly recorded.
c) The society did not provide interest on investment properly.
M/s. D. Y. PETHE & CO.

Chartered Accountant
Date:- 12th July, 2017 Sd/-
280
CLEAN AUDIT REPORT OF JOINT STOCK COMPANY
Week No 30
Practical No. 59 A
Title / Aim: Preparation of Clean Audit Report Joint Stock Company
bjectives(Specific): To prepare Clean Audit Report of Joint Stock Company
Clean Audit Report Joint Stock Company
Sub Topics Clean Audit Report of Joint Stock Company
Skill to be achieved As per Prepare correctly the Clean Audit Report of Joint Stock
objectives: Company
Skill evaluation Criteria: Correct Clean Audit Report of Joint Stock Company
Practice Required to acquire the Prepare at least four Clean Audit Report of Joint Stock
master skills: Company
National / International Bench As per Joint Stock Company Act
Interactive session FAQs / Ans : Teacher will explain about different types Clean Joint
Stock Company
ASSIGNMENT for: Practices / To collect different information of different Joint Stock
Reporting/ Data Storages/ Live Company to prepare Clean Audit Report of Joint Stock
uploads / Presentation Company
session/ Topics / Acts/ Rules / Joint Stock Company
NOCs:
281
To,
The members of
Sonal Company Ltd.,
Wadala,
Mumbai – 400 031.
We have audited the annexed Balance Sheet of the Sonal Company Ltd.,
Wadala, Mumbai as at 31st March, 2016 and also the annexed Profit and Loss
Account of the company for the year ended on that date and report that
1. We have obtained all the information and explanation, which is to the

best of our knowledge and belief were necessary for the purpose of
our audit.
2. In our opinion proper books of accounts as required by law have been
kept by the company.
4. In our opinion and best of our knowledge and according to the
explanation given to us, the accounts subjected to the notes thereon
gives the information required by the Companies Act, 1956, in the
on that date.
M/s. Chitale & Company

Date:- 19th August, 2016 Sd/-
Place:- Mumbai [Partner]
282
Week No 30
Practical No. 59 B
Title / Aim: Preparation of Clean Audit Report Joint Stock Company
bjectives(Specific): To prepare Clean Audit Report of Joint Stock Company
Clean Audit Report Joint Stock Company
Sub Topics Clean Audit Report of Joint Stock Company
Skill to be achieved As per Prepare correctly the Clean Audit Report of Joint Stock
objectives: Company
Skill evaluation Criteria: Correct Clean Audit Report of Joint Stock Company
Practice Required to acquire the Prepare at least four Clean Audit Report of Joint Stock
master skills: Company
Interactive session FAQs / Ans : Teacher will explain about different types Clean Joint
Stock Company
Reporting/ Data Storages/ Live Company to prepare Clean Audit Report of Joint Stock
uploads / Presentation Company
NOCs:
283
To,
The members of
Ujwal Company Ltd.,
Bhandup,
Mumbai – 400 072.
We have audited the annexed Balance Sheet of the Ujwal Company Ltd.,
Bhandup, Mumbai as at 31st March, 2017 and also the annexed Profit and
Loss Account of the company for the year ended on that date and report that
1. We have obtained all the information and explanation, which is to the

best of our knowledge and belief were necessary for the purpose of
our audit.
2. In our opinion proper books of accounts as required by law have been
kept by the company.
4. In our opinion and best of our knowledge and according to the
explanation given to us, the accounts subjected to the notes thereon
gives the information required by the Companies Act, 1956, in the
on that date.
M/s. Marathe & Company

Date:- 12th August, 2017 Sd/-
Place:- Mumbai [Partner]
284
QUALIFIED AUDIT REPORT OF JOINT STOCK COMPANY
Week No 30
Practical No. 60 A
Title / Aim: Preparation of Qualified Audit Report Joint Stock Company
bjectives(Specific): To prepare Qualified Audit Report of Joint Stock Company
Qualified Audit Report Joint Stock Company
Sub Topics Qualified Audit Report of Joint Stock Company
Skill to be achieved As per Prepare correctly the Qualified Audit Report of Joint
objectives: Stock Company
Skill evaluation Criteria: Correct Qualified Audit Report of Joint Stock Company
Practice Required to acquire the Prepare at least four Qualified Audit Report of Joint
master skills: Stock Company
Interactive session FAQs / Ans : Teacher will explain about different types Qualified Joint
Stock Company
Reporting/ Data Storages/ Live Company to prepare Qualified Audit Report of Joint
uploads / Presentation Stock Company
References / Links with Theory Theory Lesson – Topic No. 8 – Qualified Audit Report of
NOCs:
285
To,
The members of
Kanan Company Ltd.,
Prabhadevi,
Mumbai – 400 025.
I have audited the annexed balance sheet of the Kanan Company Ltd.,
Prabhadevi, Mumbai as at 31st March, 2016 and also the annexed profit and
loss account of the company for the year ended on that date and report that –
give the information required by the Companies Act, 1956, in the manner
so required and give a true and fair view –
that date:-
The provision for depreciation of fixed assets is not adequate.
The trading profit of the company is overstated to the extent of
Rs. 10,000/- owing to a change in the basis of valuation of stock-
in-trade; and
A sum of Rs. 12,000 has been advanced to director of the
company in contravention of Section 295 of the Companies Act,
1956.
M/s. R. J. PALAV & CO.
Place:- Mumbai Sd/-
[Proprietor]
286
Week No 30
Practical No. 60 B
Title / Aim: Preparation of Qualified Audit Report Joint Stock Company
bjectives(Specific): To prepare Qualified Audit Report of Joint Stock Company
Qualified Audit Report Joint Stock Company
Sub Topics Qualified Audit Report of Joint Stock Company
Skill to be achieved As per Prepare correctly the Qualified Audit Report of Joint
objectives: Stock Company
Skill evaluation Criteria: Correct Qualified Audit Report of Joint Stock Company
Practice Required to acquire the Prepare at least four Qualified Audit Report of Joint
master skills: Stock Company
Interactive session FAQs / Ans : Teacher will explain about different types Qualified Joint
Stock Company
Reporting/ Data Storages/ Live Company to prepare Qualified Audit Report of Joint
uploads / Presentation Stock Company
References / Links with Theory Theory Lesson – Topic No. 8 – Qualified Audit Report of
NOCs:
287
To,
The members of
Raj Auto Company Ltd.,
Parel,
Mumbai – 400 012.
I have audited the annexed balance sheet of the Raj Auto Company Ltd.,
Parel, Mumbai as at 31st March, 2017 and also the annexed profit and loss
give the information required by the Companies Act, 1956, in the
that date:-
The trading profit of the company is overstated to the extent of
Rs. 40,000/- owing to a change in the method of depreciation on
Building; and
M/s. Parekh & Company

th
Place:- Mumbai Sd/-
[Proprietor]
288

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ACCOUNTING AND OFFICE MANAGEMENT

PAPER III (Y9)

Vocational Education and Training, Directorate of Maharashtra

Mr. R. D. Shinde, Convener

We thank Coordinators and Experts of the syllabus committee

Thanks to all. We welcome suggestions for the betterment of the book.

SHRI SURESH KOKITKAR

2 BUDGET & BUDGETORY

4 MARGINAL COSTING 119 – 163

5 STANDARD COSTING 165 - 189

6 VOUCHING 191 - 222

CALCULATING % OF WORK CERTIFIED TO CONTRACT PRICE

% of Work Certified to Contract Price Transfer to Profit and Loss Account

(4) Nearing Completion Estimated Profit x Cash Received

Direct Materials 32,400

Particulars Rs. Particulars Rs.

Notes: (1) Depreciation on Tractors is taken at 20% p.a. (i.e.52 weeks on

2. Following expenses were incurred by a contractor on a contract which

Prepare Contract Account and Work- in-progress, assuming that the

To Material 1,20,000 By Materials Returned 6,000

To Wages 1,50,000 By Work in progress:

To Other Expenses 45,000 Work Certifed 3,60,000

To Plant 1,50,000 Work Uncertified 1,80,000

To Notional Profit 2,43,000 By Materials in hand 33,000

By Plant (close) 1,29,000

To Profit & Loss A/c* 67,500 By Notional Profit 2,43,000

Working Notes :- a) Calculation of Percentage of Work Certified

Prepare contract account.

4. A firm of builders, carrying out large contracts kept in a contract ledger

Extracted Balance Sheet as on 31st December

Profit & Loss A/c (Loss) 51,120

6. The following is the summary of the entries in a Contract Ledger as on

You are given the following information:

Particulars Rs. Particulars Rs.

To Materials (Direct) 1,80,000 By Sale of Scrap 10,920

(1) Value of Uncertified Work is calculated as follows:

Wages since certification 6,000

Materials sent to site 5,11,800

Labour engaged in site 4,66,100

Cost of plant installed at site 1,00,000

Direct expenses 24,000

Establishment expenses 29,000

Material returned to stores 2,120

Work certified 10,70,000

Cost of work not certified 31,000

Materials in hand (as on 31st March,2016) 12,220

Accrued Wages(as on 31st March, 2016) 11,160

Value of plant (as revalued on 31st March, 2016) 88,000

The following details are available for the year 2016:

Material purchased Rs. 4,80,000

Material issued from stores Rs. 6,00,000

Labour employed on site Rs. 1,80,000

Plant installed on site Rs. 2,40,000

Direct Expenses Rs. 1,20,000

Proportionate establishment charges Rs. 30,000

Cash Received (80% of work certified) Rs. 12,00,000

Work uncertified Rs. 3,00,000

Materials returned to stores Rs. 30,000

Materials in hand at the end Rs. 12,000