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Training and Capacity Building of STCCS - Programme on CAS & MIS
Duration : 3 days Target Group: Cooperative Auditors, Supervisors and Inspectors
Objectives : At the end of the programme, the participants will
be able to
���� Explain the need & urgency for adopting CAS in PACS.
���� Narrate the salient features of Common Accounting System.
���� List out the various books of account, registers and ledgers
and their inter connectivity.
���� State the various General Ledger heads, their sources,
significance and use in the preparation of financial statements.
���� Explain the flow of accounting under the CAS from preparation
of vouchers to generation of final accounts.
���� Demonstrate the writing of books under CAS.
���� List out the various MIS that could be generated from CAS and
their utility.
Programme Schedule
Session No.
Session Timing
Topic Resource
Person
1 2 3 4
Day I
Registration of participants, Inauguration, etc.
Tea Break
1 An Introduction to Common Accounting System
2 Heads of Account and Work Flow under CAS
Lunch Break
3 Books of Accounts and Registers under CAS
Tea Break
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Session No.
Session Timing
Topic Resource
Person
1 2 3 4
4 Maintenance of Books of Accounts
Day II
Recap of previous day learning points by participants
5 Preparation of Financial Statements
Tea Break
6 Preparation of Financial Statements (continued)
Lunch Break
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Conversion of the present Profit & Loss A/c & Balance Sheet as per CAS pattern
Tea Break
8 An Introduction to MIS under CAS
Day III
Recap of previous day learning points by participants
9 Asset Classification, Provisioning Norms & Preparation of Annexure VIII
Tea Break
10 Ratio Analysis and Interpretation of Ratios for Internal Control
Lunch Break
11 Ratio Analysis and Interpretation of Ratios for Internal Control (continued)
Tea Break
12 Concise Structure of Balance Sheet & Cash Flow Statement
Action Planning, Assessment of Impact of the Programme, Valediction,
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Session1
Session Title: An Introduction to Common Accounting System I Session Objectives: At the end of the session the participants will:
� Describe the concept of Common Accounting System
� Explain the need, advantages, salient features and components of CAS
� Explain the Rules of Double Entry System of Book Keeping
� Explain the Similarities and the Differences between CAS and the existing
system in their states
II Duration of the session: 90 minutes III Key topics to be covered:
Key topics Time
allocation Methodology to
be adopted Slides to be used
Introduction, Objectives of the Session
5 minutes Two Slides
What is CAS?, Purpose of CAS & Major Components of CAS
5 minutes Interactive
Lecture & Guided Discussion
Three Slides
Accounting System, Classification of Accounts, Accounting Rules
20 minutes
Interactive Lecture & Guided
Discussion
Eight Slides
Accounting Concepts, Accounting Principles
15 minutes
Interactive Lecture & Guided
Discussion
Four Slides
Similarities & Differences with the Existing System in the State
5 Minutes Interactive
Lecture & Guided Discussion
Four Slides
Deficiencies in the Existing System
5 Minutes Interactive
Lecture & Guided Discussion
Two Slides
Work Book exercise 20 minutes Questionnaire at
the end of chapter in RM
Caselets on Accounting Rules & Recap
10 minutes Case Exercise
Summarising key points of discussion
5 minutes Recapitulation
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IV Performance aids required : 1. Black or white board, chalk pieces or
white board marker pens, 2. duster, 3. OHP with transparencies or PC with LCD
projector, or Laminated Flip chart containing the slides and copies of handout.
V Compulsory Reading by Trainees: Handout No.1 of the “Handout-
cum-Work Book” provided to them.
VI Session guide
1) Introduce yourself and explain the objectives of the session – Flash Slide Nos. 1 & 2
2) Ask the participants whether they have heard the word “CAS” in their
earlier Training Programme. Most of the participants would say “yes”.
Then ask them to expand “CAS”. Write their reply on the Board.
3) Then ask the participants – Why CAS? List out the responses of the
participants on the Board. Explain the need for introducing CAS, purpose
and the purpose of CAS – Flash Slide Nos. 3, 4 & 5.
4) Ask the participants – What is an Accounting System? Write the
responses on the Board or Flip Chart. Explain Accounting System and its
features – Flash Slide Nos. 6 & 7.
5) Ask the participants – What is Accounting? Explain the meaning of
Accounting – Flash Slide No. 8
6) Ask the participants – How an entrepreneur starts a business and runs the
same? Some would say that he identifies the activity to be started, brings
the capital, buys land, construct factory, installs machinery, hires workers,
borrows money from friends / banks, buys raw material (on credit as well
as on cash basis), converts them into finished products, sells them (credit
sales and cash sales) and so on. List out all these points in the board.
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7) Then group these activities into three – activities relating to properties
(purchase of land, machinery, equipments, furniture etc.), activities
relating to persons (lenders, creditors & debtors) and activities relating to
expenses & income (salary, wages, electricity charges, commission.
discount etc.). Flash Slide No.9.
8) Explain the three classes of accounts – Real Accounts, Personal Accounts
and Nominal Accounts – Flash Slide Nos.10 & 11. Give Examples for
each account.
9) Explain the Rules of Accounting – Flash Slide Nos.12 & 13.
10) Explain Accounting Concepts, Accounting Principles in detail – Flash Slide
Nos. 14, 15, 16 & 17.
11) Ask the participants about the features of the existing accounting system
in their society or in their state. List them on the board. Then compare the
features of the present accounting system with the features of Common
Accounting System. Explain what the participants have to do when they
switch over to CAS – Flash Slide Nos. 18, 19, 20 & 21.
12) Then ask the participants – How they are valuing the closing stock,
investments etc.? Whether they are making adequate provision for Non
Performing Assets (overdues)? Are they adjusting entries to account
accrued income or outstanding expenses? Are they accounting
depreciation on fixed assets and dead stock? List out their responses.
Flash Slide Nos. 22 & 23 and explain the deficiencies in the existing
system.
13) Administer the Common Exercise on CAS and ask the participants to list
out the accounts involved in each transaction.
14) Discuss the answers and clarify the doubts.
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15) On completion of Case Exercise is complete ask the participants to
attempt the Work Book Exercise.
16) On completion of the Work Book Exercise, discuss the answers to the
questions. If anybody is getting a wrong answer, discuss where exactly,
the participant has gone wrong.
17) Once the Work Book Exercise is over, sum up the learnings.
VII Learnings from the session:
a. The purpose of CAS is to ensure uniformity in accounts maintenance.
b. CAS adopts standard accounting concepts and principles to ensure
quality and transparency in maintenance of accounts.
c. It follows Double Entry System of Book Keeping.
d. The formats for vouchers, various books of accounts, registers and
financial statements are standardized under CAS.
e. The ultimate aim of CAS is to present a true and fair picture of the
financial position of the PACS to its members and other stake holders.
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Work Book Answers
1.8.1 Answer the following briefly.
1. What is accounting system?
Accounting System means a set of instructions, guidelines, rules, regulations and
procedures based on which record of transactions carried out by an organization
are maintained. Transaction, for this purpose, means financial transactions, i.e.
only those transactions which can be measured in terms of money.
2. Explain the need for an Accounting system.
a) To keep a systematic record
b) To ascertain the results of the operations
c) To ascertain the financial position of the business
d) To facilitate rational decision making
e) To satisfy the requirements of law
3 What is Common Accounting System? Explain its advantages?
Standard Accounting System developed under Revival Package for adoption by
the PACS in the country. Advantages: Uniform Accounting System for the
societies, Standardised Books & Registers, Standardised formats for Financial
Statements – easy to consolidate at district level, state level and country level,
preparation of MIS statements, Analysis of MIS Statements for meaningful
review, internal control etc.
4. Explain the major components of CAS.
Under the CAS, PACS are required to maintain the following:
⇒ A common set of vouchers in the prescribed form for different types of
transactions.
⇒ Uniform and standardized set of Books of Accounts.
⇒ Uniform / standard formats for financial statements, viz., Trading A/c, Profit &
Loss A/c and Balance Sheet
⇒ Uniform set of Registers relating to accounting transactions
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5. What is Double Entry System of Book Keeping?
Every business transaction involves two parties viz., giver of the benefit and
receiver of the benefit. The transaction affects both in opposite direction and the
same needs to be recorded. Recording this dual effect of money transfer is called
Doubt Entry System of Book Keeping.
6. Explain the various rules of Double Entry System of Book Keeping.
Personal Account: Debit the Receiver and Credit the Giver
Real Account: Debit What Comes In and Credit What Goes Out
Nominal Account: Debit all Expenses and Losses and Credit all Incomes Gains
7. Indicate the features of CAS adopted for PACS.
a) Adoption of Double Entry System of Booking
b) Introduction of Voucher System for booking transactions
c) A common set of vouchers in the prescribed form for different types of
transactions.
d) Uniform and standardized set of Books of Accounts / standardized formats
for vouchers / financial statements / Registers
8. Explain the basic concepts followed in accounting.
i. Going Concern Concept
ii. Business Entity Concept
iii. Consistency Concept
iv. Accounting Period Concept
v. Money Measurement Concept
vi. Dual Aspect Concept
vii. Matching Cost and Revenue Concept
9. Explain the concept of accrual system.
Income and Expenses are recorded as and when they become due and not as
and when they are actually received and paid.
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10. Name the Financial Statements of PACS.
� Trial Balance
� Trading Account
� Profit and Loss Account and Statement of Appropriation of profits
� Balance Sheet
11. Explain the important accounting principles.
� Double entry system of book keeping is to be followed i.e. for every debit,
there will be a corresponding credit.
� Distinction is to be made between capital expenditure and revenue
expenditure
� Transactions are recorded on historical cost basis i.e. they are recorded at
the price at which they were carried out and are not to be revalued with
the passage of time.
� Investments / stock of goods must be valued at cost price or market price
whichever is lower.
� Sundry debtors are to be valued only at the realizable amounts.
� Expenses and Incomes are to be treated on accrual basis.
� Provision is to be made for bad and doubtful debts in accordance with the
norms and observations made by auditors.
� Depreciation is to be provided following either straight line or diminishing
balance method consistently.
� Provisions for PF, Gratuity etc are to be made on actuarial basis.
� Distinction is to be made between provision and creation of reserves.
� Prudential (IRAC) norms are to be adopted.
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1.8.2 Say True or False (by using tick mark ���� on the appropriate answer)
Sl. No Statement / Observation Answer
1 Every transaction will have a debit and a credit for the same
amount. True
2 Standardisation of formats of financial statements is not
envisaged under CAS. False
3 CAS envisages adoption of a common set of account heads
in consonance with financial statements. True
4 Income receivable and expenses payable are to be
recognized irrespective of actual receipt or payment of cash. True
5 Accounting transactions are to be recorded on timely basis
in a chronological order. True
6 An accounting transaction does not always have two
sides/elements. False
7 Financial statements are not prepared on historical cost
basis. False
8 Investments are not to be valued at cost price or market
price whichever is lower. False
9 The rule for Personal Account is Debit what comes in and
Credit what goes out. False
1.8.3 Fill up the blanks in the following statements :
Sl. No Statement / Observation
1 Under double entry system, each debit will have a Credit
2 Financial statements are prepared on Historical
cost basis.
3 Accounting transactions are to be recorded on timely basis and entries are
to be made in Chronological order.
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1.8.4 Indicate the class of account (Personal, Real & Nominal)
No. Particulars Class of Account
1 Sheela Personal
2 District Central Cooperative Bank Personal
3 Salary to Salesman Nominal
4 Paid up Capital Personal
5 Land & Building Real
6 Interest Received Nominal
7 Interest Paid Nominal
8 Purchase of goods Real
9 Sale of goods Real
9 Depreciation Nominal
10 Furniture & Fixtures Real
11 Interest Receivable on Loans Personal
12 Interest Accrued on Borrowings Personal
13 Reserve Fund Personal
14 Stock of fertilizers Real
15 Stationery purchased Nominal
16 Rent paid Nominal
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Session 2
Session title: Accounts Heads under Common Accounting System (CAS)
I Session Objectives:
At the end of the session, the participants will be able to:
� State the various Heads of Account and their purposes
� List out the different types of vouchers
� Explain how to prepare the vouchers for different types of transactions
� Explain the various items of work involved in accounting process
II Duration of the session : 90 minutes
III Key Topics to be covered
Key topics Time in minutes
Methodology Material to
be used
Introduction and objective 5 Slide No. 1
Various account heads under CAS and their purposes
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Guided discussion and participatory lecture
Slides
Nos. 2 to 6
Logical flow of work - Preparation of Vouchers
10 Guided Discussion Slides
Nos. 7 to10
Work Book Exercise 20 Guided Discussion on the answers
Hands on practice for Preparation of Vouchers
30 Guided Interaction on the Preparation of Vouchers
Summarising and closing 5 Recapitulation
IV Performance aids required:
Black or White Board with Chalk piece or white Board Marker Pens & dusters
OHP with transparencies OR Computer (PC) supported by LCD Projector (or)
laminated Flip chart containing the slides and copies of hand-out to be used.
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V Compulsory Reading by Trainees: Handout No.2 of the “Handout-cum-
Work Book” provided to them.
VI Session Guide
i. Introduce yourself and start the session by explaining the objectives of the
session. (Flash slide No. 1)
ii. Ask the participants the question “What are the broad groups of accounts
prescribed under CAS?” List the responses of participants, summarise
them and flash slide No. 2.
iii. Ask next question “what are the general ledger head of accounts under
liabilities items “. List the responses, summarise them and flash slide No.
3.
iv. Ask next question “what are the general ledger head of accounts under
assets items “. List the responses, summarise them and flash slide No. 4.
v. Ask next question “what are the items under income and expenditure of P
& L Account”. List the responses, summarise them under income and
expenditure heads and flash slide No. 5.
vi. Ask next question “what is a trading account and what items generally
appear on both sides of trading account “. List the responses from the
participants, summarise them and flash slide No. 6
vii. Ask next question “what is a voucher and various types of vouchers being
used in PACs. List the responses from the participants, summarise them
and flash slide No. 7
viii. Ask next question “Narrate various processes involved in accounting –
where it starts and where it ends “. List the responses of the participants
and summarise them and flash slide No. 8 & 9.
ix. Ask the participants to complete the workbook exercise given at the end of
Chapter - 2. After completion of the workbook exercise, handover a copy
of the answer sheet to the participants & ascertain whether the answers of
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the participants tally with the answers given in the answer sheet & clarify
any difference of any participant. ( 20 minutes)
x. Ask the participants to prepare the vouchers on the blank vouchers
proformae given in the practice book. Time allocation – 25 minutes and 5
minutes for matching with the solved voucher slides.
xi. Lastly summarise the discussions step by step and thank the participants
to close the session.
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Work Book – Answers.
2.6.1 Fill up the blanks
i. In CAS, the account heads fall under the following five main groups viz.,
Assets, Liabilities, Income, Expenditure & Trading A/C .
ii. Reserve Fund is created to tide over a difficult financial period.
iii. Agriculture Credit Stabilisation Fund (ACSF) is created to provide
conversion facilities for crop loans to Medium Term Conversion Loan in
case of failure of crops due to natural calamities
iv. Building Fund is created for construction / expansion / alteration /
renovation of society’s own Building.
v. Common Good Fund is maintained for providing facilities of common
nature for the members of the society.
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vi. Recapitalisation Assistance received from Govt. of India for the revival of
the society is to be credited to “Recapitalisation Assistance Fund –
Contribution from GOI”.
vii. Types of Deposit Schemes are Savings Deposit, Recurring Deposit,
Fixed Deposit, Reinvestment Deposit , Other Deposit , etc.
viii. Borrowings from the District Central Cooperative Bank / SCB constitute
the main source for lending funds by PACS
ix. Societies avail Fertilizer Cash Credit Limit from DCCB for purchase of
fertilizer.
x. Provision for Standard Assets has to be made at @ 0.25% of the total
standard loans.
xi. Provision for Loss Assets has to be made @ 100 % of the total loss assets
xii. Purchase of fixed assets like tables, chairs, almirahs, fans etc., are to be
classified under the head of a/c ’Furniture & Fixture’.
xiii. Voltage stabiliser purchased for computer should be debited to
‘Computers & Electrical Installations A/C’.
xiv. Interest paid / payable for the broken period on Fixed Deposits, Savings
Bank Deposits Recurring Deposits, Daily Savings Deposits, Special
Deposits etc., are debited to ‘Interest on Deposit A/C’.
xv. Bonus paid to staff of the society is debited to ‘Salary & Allowance A/C’.
xvi. The account used for debiting expenses relating to xeroxing of agenda
papers is ‘Management Expenses A/C’.
xvii. The amount of electricity charges paid to the Electricity Board is debited to
‘Rent, Taxes, Electricity A/C’.
xviii. The cost of printing of books, forms, pamphlets & purchase of stationery
items are debited to ‘Printing & Stationery A/C’.
xix. If an asset has become unusable, it should be written off.
xx. ‘Depreciation Chart’ is prepared for calculation of depreciation on fixed
assets.
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xxi. ‘Fixed Assets’ are physically verified to ensure that there is no shortage
of assets vis-à-vis assets as per dead stock register.
xxii. Locker Rent, Fee-based Income, Custom hiring etc., are credited to
‘Other Miscellaneous Income’.
xxiii. ‘Bank Reconciliation’ statements are prepared to reconcile the balances
with DCCB/SCB in deposit accounts.
xxiv. Steps for preparing Voucher are: i. Voucher Preparation, ii. Voucher
Authorisation, iii. Disbursement/collections and iv. Voucher Posting.
xxv. ‘Contra voucher’ ( CV ) is used to record all cash deposits and
withdrawals from the current account or savings bank account maintained
with the DCCB / SCB / Other Banks.
xxvi. Cash Withdrawal Forms ( CWF ) are used by customers for withdrawing
money from Savings Bank Account.
xxvii. ‘Pay – In – Slips’ (PIS) are used by customer for depositing money into
Savings Bank Account etc.
xxviii. ‘Pay – In – Slips’ (PIS) are used by customer for repaying the loan
amount and for paying interest on the loan amount.
xxix. ‘Receipt Vouchers’ (RV) are used for receipt of share capital from
members, admission fees, membership fees etc., from new members.
xxx. ‘Receipt Vouchers’ (RV) are used for receipt of cash on account of sale
of inputs like seed, fertilisers, pesticides, sale of PDS items and service
charges from customers for the services rendered to them
xxxi. ‘Payment Voucher’ (PV) is used for disbursement of loans and advances
in cash.
2.6.2 Choose the correct answer
i. Purchases Voucher is prepared to book - (d) Credit Purchases
ii. Sales Voucher is prepared to book - (c) Credit Sales
iii. (b) Journal Voucher is prepared to book transactions not involving cash
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iv. Journal Voucher is used to record those transactions that cannot be
passed through any other voucher type
v. Debit Note is used for recording - (d) Purchases Returns
vi. Credit Note is used for recording - (a) Sales returns
2.6.3 Say True or False
i. The Account “Travelling & Conveyance expenses” is meant for debiting all
expenses incurred on traveling by the Board of Directors. (False)
ii. The account “Depreciation in value of investments” is meant for making
provision for decrease/ diminution in value of land and building. (False)
iii. Profit on sale of Capital assets is credited to Capital Reserve (True)
Solution to Case Exercise on Common Accounting System
Voucher Preparation
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The Alalpur Service Cooperative Society Limited, Alalpur
RECEIPT VOUCHER
No. 1 Dated : 31 March 2007
S. No. Head of Account Cash Book /
Ledger Flio No.
Debit (Rs.)
Credit (Rs.)
1 Cash A/c 110
2 Admission Fees A/c 10
3 Paid up Capital A/c – Individual 100
Being the amount of Admission Fees and Share Capital received from Shri
Mohanlal who was admitted as a member vide Board Resolution No. XXX
dated dd-MM-YYYY
_____________________________________________________________
Received Rupees One Hundred and Ten only. _______________________
Place : ________________ ______________________
Signature of the Receiver
Authorised Signatory ______________________________________________
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The Alalpur Service Cooperative Society Limited, Alalpur
RECEIPT VOUCHER
No. 2 Dated : 31 March 2007
S. No.
Head of Account
Cash Book / Ledger Flio No.
Debit (Rs.)
Credit (Rs.)
1 Cash A/c 5,000
2 Paid up Capital A/c – Individual 5,000
Being the amount of additional share capital received from Shri Sohanlal (M No.
) who was allotted 50 shares of Rs. 100/- each vide Board Resolution No. XXX
dated dd-mm-yyyy
_______________________________________________________________
Received Rupees Five Thousand only._________________________________
Place : ________________ _______________________
Signature of the Receiver
Authorised Signatory ___________________________
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The Alalpur Service Cooperative Society Limited, Alalpur
PAY-IN-SLIP Credit SB A/c No. New Account Date : 31 March 2007
0010350 Of Shri Moneylal
________________________________________________________________
Rupess Two Thousand only _________________________________________
As per details furnished overleaf. ______________________ Signature of Remitter
Amount Rs. 2,000/-
Accountant ____________________________
Entered By ____________________________
__________________________
Authorised Signatory L F No.
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No. : 4 Pass Book must accompany this withdrawal slip
The Alalpur Service Cooperative Society Limited, Alalpur
WITHDRAWAL SLIP
Date : 31 March 2007 Branch
Name : Lal Bahadhur A/c No. 0005678
PAY Self_________________________________
Rupees Five Thousand
only___________________________
____________________________________________ only.
Place:: _____________________
Date: : 31 March 2007
Folio: _____________________
Authorised Signatory ____________________________________________
Rs. 5,000/-
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The Alalpur Service Cooperative Society Limited, Alalpur No.5
PAY-IN-SLIP Credit SB / FD / RD / RID A/c No. Date 31 March 2007
Of Smt Sonia Mishra________________________________________________
Rupess Ten Thousand only__________________________________________
____________________________________________________________ only
As per details furnished overleaf. ________________________ Signature of Remitter
Rs. Ps. 1 0 0 0 0 0 0
Accountant ____________________________
Entered By ____________________________
______________________________
Authorised Signatory L F No.
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The Alalpur Service Cooperative Society Limited, Alalpur
JOURNAL VOUCHER
No. 6 Dated : 31 March 2007
S. No.
Head of Account Ledger Flio No.
Debit (Rs.)
Credit (Rs.)
1 Loans & Advances - KCC Loans
50,000
2 Borrowings from DCCBs A/c - KCC Credit Limit
50,000
Being the amount of KCC loan issued to the following members.
P K Yadav M No. 1435 KCC 156/08 Rs. 10,000
N D Das 1223 157/08 Rs. 11,000
R L Yadav 897 158/08 Rs. 8,000
S N Sinha 1021 159/08 Rs. 7,000
Smt Lakshmi Yadav 817 160/08 Rs. 14,000
________________________________________________________________
Rupees Fifty Thousand only
_____________________________________________________________
Place : ________________
Authorised /signatory ________________________________
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The Alalpur Service Cooperative Society Limited, Alalpur
PAYMENT VOUCHER
No. 7 Dated : 31 March 2007
S. No.
Head of Account
Cash Book / Ledger Flio No.
Debit (Rs.)
Credit (Rs.)
1 Furniture & Fixtures A/c 6,000
2 Cash a/c 6,000
Being the amount paid for purchase of a Wooden Table costing Rs.5,000/- and
Wooden Chair costing Rs. 1,000/- for office use vide President’s / Board of
Directors’ approval dated dd-mm-yyyy.
________________________________________________________________
Paid Rupees Six Thousand only
________________________________________________________________
Place : ________________ _____________________
Signature of Payee
Authorised Signatory ___________________________
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The Alalpur Service Cooperative Society Limited, Alalpur
PAYMENT VOUCHER
No. 8 Dated : 31 March 2007
S. No.
Head of Account
Cash Book / Ledger Flio No.
Debit (Rs.)
Credit (Rs.)
1 Sundry Debtors A/c – Others 1,000
2 Cash A/c 1,000
Being the amount of Tour Advance paid to the Secretary for attending Training
Programme on Business Development at ACSTI, Bhubaneswar.
________________________________________________________________
Paid Rupees One thousand only______________________________________
________________________________________________________________
Place : ________________ _____________________
Signature of Payee
Authorised Signatory __________________________
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The Alalpur Service Cooperative Society Limited, Alalpur
PURCHASES VOUCHER
No.9 Dated : 31 March 2007
S. No.
Head of Account
Purchase Register /
Sundry Creditors
L F No
Debit (Rs.)
Credit (Rs.)
1 Purchase of Fertilisers A/c 15,000
2 Sundry Creditors A/c 15,000
Being the amount of fertilisers purchased from the District Cooperative Marketing
Society on credit basis vide Bill No. Xxx dated dd-mm-yyyy
________________________________________________________________
Rupees Fifteen Thousand only
________________________________________________________________
Place : ________________
Authorised Signatory _____________________________________
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The Alalpur Service Cooperative Society Limited, Alalpur
PAYMENT VOUCHER
No. 10 Dated : 31 March 2007
S. No.
Head of Account
Cash Book / Ledger Flio No.
Debit (Rs.)
Credit (Rs.)
1 Insurance A/c 2,000
2 Savings Bank A/c with DCCB 2,000
Being the amount of insurance charges for the Master Policy for the period from
01 April to 31 March 2008 paid by means of a cheque drawn on the S B a/c with
DCCB
________________________________________________________________
Paid Rupees Two Thousand only
________________________________________________________________
Place : ________________ _____________________
Signature of Payee
Authorised Signatory ____________________________
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The Alalpur Service Cooperative Society Limited, Alalpur
RECEIPT VOUCHER
No. 11 Dated : 31 March 2007
S. No.
Head of Account
Cash Book / Ledger Flio No.
Debit (Rs.)
Credit (Rs.)
1 Cash A/c 2,000
2 Sale of Fertiliser A/c 2,000
Being the amount received by way of cash sale of fertilisers. ________________________________________________________________
Received Rupees Two Thousand only
________________________________________________________________
Place : ________________ _____________________
Signature of the Receiver
Authorised Signatory _______________________________
47
The Alalpur Service Cooperative Society Limited, Alalpur
RECEIPT VOUCHER
No. 12 Dated : 31 March 2007
S. No.
Head of Account
Cash Book / Ledger Flio No.
Debit (Rs.)
Credit (Rs.)
1 Cash A/c 30,000
2 Interest on Loans and Advances A/c 6,000
3 Loans & Advances A/c – KCC Loans 24,000
Being the amount of KCC loan and interest recovered from the following members Name M No. Account No. Principal Interest Ram Avatar Mishra 456 KCC 15/07 10,000 1,000
Ajay Narayan 564 881/07 1,000 1,000
N M Shukla 765 763/07 1,000 1,000
Naresh Yadav 387 1256/07 0 2,000
Rajendra Kumar 982 467/07 12,000 1,000
________________________________________________________________
Received Rupees Thirty Thousand only
________________________________________________________________
Place : ________________ _____________________
Signature of the Receiver
Authorised Signatory ____________________________
48
The Alalpur Service Cooperative Society Limited, Alalpur
PAYMENT VOUCHER
No. 13 Dated : 31 March 2007
S. No.
Head of Account
Cash Book / Ledger Flio No.
Debit (Rs.)
Credit (Rs.)
1 Borrowings from DCCB - KCC Credit Limit
30,000
2 Cash A/c 30,000
Being the amount remitted into the loan account No. 1507 with DCCB
________________________________________________________________
Paid Rupees Thirty Thousand only
________________________________________________________________
Place : ________________ _____________________
Signature of Payee
Authorised Signatory _____________________________
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The Alalpur Service Cooperative Society Limited, Alalpur
CONTRA VOUCHER
No. 14 Dated : 31 March 2007
S. No.
Head of Account Flio No. Debit (Rs.)
Credit (Rs.)
1 Cash A/c 22,000
2 Savings Bank A/c with DCCB 22,000
Being the amount withdrawn from the Savings Bank A/c with DCCB
________________________________________________________________
Rupees Twenty Two Thousand only
________________________________________________________________
Place : ________________
Authorised Signatory ____________________________
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The Alalpur Service Cooperative Society Limited, Alalpur
PAYMENT VOUCHER
No. 15 Dated : 31 March 2007
S. No.
Head of Account
Cash Book / Ledger Flio No.
Debit (Rs.)
Credit (Rs.)
1 Salary and Allowances A/c 26,000
2 Cash A/c 26,000
Being the amount of salary for the month of March 2007 paid to the staff ________________________________________________________________
Paid Rupees Twenty Six thousand only
________________________________________________________________
Place : ________________ _________________________
Signature of Payee
Authorised Signatory _________________________
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The Alalpur Service Cooperative Society Limited, Alalpur
RECEIPT VOUCHER
No. 16 Dated : 31 March 2007
S. No.
Head of Account
Cash Book / Ledger Flio No.
Debit (Rs.)
Credit (Rs.)
1 Savings Bank a/c with DCCB 700,000
2 Recapitalisation Assistance A/c - Contribution from GoI
700,000
Being the amount of recapitalisation assistance received from the Government of
India under Revival Package credited to Savings Bank Account
________________________________________________________________
Received Rupees Seven Lakh only
________________________________________________________________
Place : ________________ _____________________
Signature of the Receiver
Authorised Signatory ____________________________
52
The Alalpur Service Cooperative Society Limited, Alalpur
RECEIPT VOUCHER
No. 17 Dated : 31 March 2007
S. No.
Head of Account
Cash Book / Ledger Flio No.
Debit (Rs.)
Credit (Rs.)
1 Savings Bank a/c with DCCB 50,000
2 Recapitalisation Assistance A/c - Contribution from State Government
50,000
Being the amount of recapitalisation assistance received from the State
Government under Revival Package credited to Savings Bank Account
________________________________________________________________
Received Rupees Fifty Thousand only
________________________________________________________________
Place : ________________ _____________________
Signature of the
Receiver
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The Alalpur Service Cooperative Society Limited, Alalpur
PAYMENT VOUCHER
No. 18 Dated : 31 March 2007
S. No.
Head of Account
Cash Book / Ledger Flio No.
Debit (Rs.)
Credit (Rs.)
1 Term Deposit with DCCB A/c - Other than Reserve Fund
750,000
2 Savings Bank a/c with DCCB 750,000
Being the amount of assistance received from the State government and the
Government of India earlier credited to Savings Bank A/c now withdrawn and
invested in Term Deposit
________________________________________________________________
Paid Rupees Seven Lakh and Fifty Thousand only
________________________________________________________________
Place : ________________ _____________________
Signature of Payee
Authorised Signatory ____________________________
54
The Alalpur Service Cooperative Society Limited, Alalpur
PAYMENT VOUCHER
No. 19 Dated : 31 March 2007
S. No.
Head of Account
Cash Book / Ledger Flio No.
Debit (Rs.)
Credit (Rs.)
1 Term Deposit with DCCB – Other than Reserve fund
3,000,000
2 Savings Bank A/c with DCCB 3,000,000
Being the amount withdrawn from the Savings Bank A/c with DCCB and invested
in Term Deposits with DCCB.
________________________________________________________________
Paid Rupees Thirty Lakh only
________________________________________________________________
Place : ________________ _________________________
Signature of Payee
Authorised Signatory __________________________
55
Session No. 3 Session Title: Books of accounts and Registers under CAS I Session Objectives : At the end of the session the participants will:
� Explain the rules of Double Entry System of Book Keeping
� Explain the utility and purpose of various books of accounts and registers
prescribed for PACS under CAS.
� Write the books of accounts prescribed under CAS
II Duration of the session: 90 minutes III Key topics to be covered:
Key topics Time
allocation Methodology to
be adopted Slides to be
used
Introduction and objectives
5 minutes
One slide
Meaning of accounting &Double entry system of book keeping
10 minutes
Guided & participatory interaction
Three slides
Utility and purpose of various books of accounts and registers
15 minutes
Guided & participatory interaction
Five slides
Difference between ledgers and registers, step by step guidance to familiarize with writing of books/registers
10 minutes
Guided & participatory interaction
Three slides
Work Book exercise 20
minutes
Questionnaire at the end of chapter
in RM
Hands on practice on writing books/registers
25 minutes
Case Exercise
Summarising key points of discussion
5 minutes
Recapitulation
IV Performance aids required : 1. Black or white board, chalk pieces or
white board marker pens, 2. duster, 3. OHP with transparencies or PC with LCD
projector, or Laminated Flip chart containing the slides and copies of handout.
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V Compulsory Reading by Trainees: Handout No.3 of the “Handout-cum-
Work Book” provided to them
VI Session guide 1. Introduce yourself and highlight the objectives of the session. To recapitulate
the learnings from the first phase training programme on book keeping and
accounting ask the participants – What is the meaning of accounting? List the
answers and summarise the same as under by flashing slide No. 2
“Accounting is the science and art of recording and classifying business
transactions in a systematic manner for preparing financial statements to
determine profit or loss financial position of the concern.”
2. Ask the next question “How many accounting systems are there? Write
down the responses and ask the next question - “what are the basic
differences between double entry system and single entry system”. List the
responses under two columns and summarise the responses (flash slide No. 3)
Ask next question “how many types of accounts are there in accounting
system”. List the answers, summarise the responses by telling that there are 3
types of accounts viz., Personal Account, Real Account and Nominal
Account. Ask next question “what are the rules followed for passing entry for
each type of account”. List the answers and summarise the same –
• debit the receiver and credit the giver in case of Personal Account
• debit what comes in and credit what goes out in case of Real Accounts
• debit all expenses or losses and credit all incomes or gains in case of
Nominal Accounts (flash slide No. 4)
3. Ask questions “where the business transactions etc. are recorded “what
are the sources for preparation of financial statements and MIS returns”?
and what documents are accepted by court of law in case of dispute? . The
57
answer would be Books of accounts. Then flash the slide No. 5 to make the
participants understand the utility/ purpose of books of accounts.
4. Put the next question “What type of books are prescribed for PACS under
CAS” – The answer would be two types of books i.e. Related to Financial
statements (Books of primary entry and books of secondary entry) and Not
related to financial statements (control and other registers). Ask the participants
to indicate the names of subsidiary ledgers relating to Liability items and
asset items. List the responses and Flash slide Nos. 6, 7, 8 & 9.
5. Put next question “what are the difference between ledgers and registers
and subsidiary ledger and General Ledger” List the answers, summarise them
and tell the participants that:
• Ledgers are linked to financial statements and registers are not
• Ledgers contain details of financial transactions whereas registers contain non-financial information
• All registers are not ledgers.
• Subsidiary ledgers are details version of General Ledger accounts whereas General ledger is the summarized version of Subsidiary ledger/s
• Vouchers are first posted in subsidiary ledgers, whereas postings in GL are made from day book.
(Flash slide No. 10)
6. Explain step by step procedure followed for writing books of accounts
and Flash slide No. 11 &12
7. Ask the participants to complete the workbook exercise given at the end of
Capter - 3. After completion of the workbook exercise, handover a copy of the
answer sheet to the participants. (20 minutes)
8. Ask the participants to write Cash Book, Bank Book and subsidiary
ledgers from the vouchers prepared in previous session. Time allocation – 20
minutes and 5 minutes for matching the books written with the solved ones to be
flashed on the screen from the slides.
58
9. At the end summarise the discussions step by step and thank the participants
for giving attention to close the session
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WORKBOOK – ANSWER SHEET 3.6.1 Answer the following briefly.
i. What is the difference between Double entry and Single entry system ?
In double entry two aspects of transaction are recorded and in single entry
only one aspect of transaction is recorded. In other words, in double entry
system two accounts are affected in reverse direction whereas in single entry
system only one account is affected
ii. State the difference between a Subsidiary Ledger and a General ledger.
Subsidiary ledger is the detailed version of General Ledger Account whereas
General Ledger is the summarized version of Subsidiary ledger accounts
iii. Name the books / registers / ledgers involved in recording
transactions relating to borrowing from DCCB under KCC.
Bank book or cash book, ST(SAO) Borrowing ledger, Day Book and General
Ledger
iv. Why should the society charge depreciation on assets?
To spread the expenditure under revenue head by writing off a part of the
cost of the asset every year till the cost is reduced to its scrap value
v. Name the books / registers / ledgers involved in recording
transactions relating to investments.
Cash book or Bank Book, Investment Ledger, Investment Maturity Register,
Day Book and General Ledger
vi. Why is it necessary to obtain acknowledgement of debt from
borrowing members?
To make them aware about their outstanding dues to the society.
67
vii. List the items that are treated as Sundry Debtors.
Credit sales, dues recoverables from various parties
viii. List the items that are treated as Sundry Creditors
Credit purchases and dues payable to various parties
ix. Identify the items in your society which need to be insured.
Furniture, fixtures, land, building, stock, vehicles, cash etc. as may be
applicable to individual society
3.6.2 Indicate the purpose of books /registers
Sl.
No.
Name of the Book /
Ledger / Register Purpose
1 Cash Book For keeping record of only cash transactions
2 Day Book
For grouping all cash and transfer transactions
General Ledger Head of account-wise at one
place before posting to General Ledger
3 Sales Register For keeping record of daily sales of different
items
4 Investment Ledger For keeping record of investment transactions
5 Depreciation Chart For working out depreciation on various
depreciable assets
6 Membership Register To keep detailed profile of individual member/s
7 Sundry Creditors
Ledger
To keep record of credit purchases and dues
payable to various parties
8 Monthly Interest
Payment Register
To keep record of interest paid on monthly basis
on deposits
9 Due Date Register
To take timely action so as to prevent losses viz.,
payment of maturity value of term deposits,
repayment of instalments/dues to creditors in
case of borrowings, to renew insurance policy
68
before policy expiry date in case of insurance
policy etc.
10 Balancing Register To satisfy correct status or integrity or
authenticity of account/s
3.6.3 Say True or False. Please tick ���� the correct answer.
i. The PACS is not considered as a business organization - False
ii. Different Accounting policies should be followed from one period to
another - False
iii. Revenues and costs are recognized on receipt basis - False
iv. General Ledger postings are made from voucher - False
v. When society pays salary to the staff, Salary and Allowance A/c is
credited in its books - False
vi. Share capital ledger is the detailed version of share capital account in
general ledger - True
vii. When sales take place, the stock of the item sold increases and when
purchase takes place the stock decreases - False
viii. Locker facility is a subsidiary activity of PACS which yields revenue. -
True
ix. The sum total of individual balances in SB ledger on any date should tally
with the balance shown by SB deposit account in General Ledger.- True
x. Insurance policy should be renewed before expiry of the current policy. -
True
xi. Due Date Register for Fixed Deposit indicates the date and amount to be
repaid on a particular date. –True
3.6.4 Fill up the blanks
i. Arithmatical accuracy under double entry system is ensured by
preparation of Trial balance
69
ii. Shyam deposits money in his SB account. His account will be credited in
the books of society.
iii. Society deposits money with DCCB. In the books of the Society Cash
Account will be credited. .
iv. General Ledger is called the book of final entry.
v. Subsidiary ledger is the detailed version of General Ledger Account.
vi. SB Account ledger is the detailed version of Savings Deposit Account in
the G L
vii. Fixed Deposit Ledger is the detailed version of Fixed Deposit account in
the G L
viii. If member has seven fixed deposits maturing on different dates, the
number of folios to be opened in the Fixed Deposit Ledger is Seven.
ix. The Originating entry in Sundry Debtors Account is always a Debit entry
x. Sundry Debtors is an Asset account and appears on Assets side of
balance sheet.
xi. The Originating entry in Sundry Creditors Account is always a Credit entry
xii. The type of expenditure incurred for purchasing assets is called Capital
expenditure.
xiii. The resolutions passed in the Board Meeting are indicated in the Minutes
Book.
xiv. Opening and closing of accounts is a continuous process.
xv. Revival package brings PACS under the ambit of Income Recognition
and Assets Classification norms. (prudential norms)
70
Solution to Case Exercise on Common Accounting System
Writing of Books of Accounts
71
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80
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Session No. 4 Session Title: Maintenance of Books of Final Entry I Session Objectives: At the end of the session the participants will:
� Explain the purpose of maintaining General Ledger
� List out the steps involved in posting
� Explain the need for preparing Trial Balance
� Demonstrate preparation of Trial Balance
II Duration of the session: 90 minutes III Key topics to be covered:
Key topics Time
allocation Methodology to
be adopted Slides to be used
Introduction, Objectives of the Session
5 minutes Three Slides
Purpose of maintaining General Ledger
5 minutes Interactive
Lecture & Guided Discussion
Three Slides
Posting in the General Ledger 10 minutes Interactive
Lecture & Guided Discussion
Five Slides
Purpose of preparing Trial Balance
5 minutes Interactive
Lecture & Guided Discussion
Six Slides
Preparation of Trial Balance 10 Minutes Interactive
Lecture & Guided Discussion
Three Slides
Work Book exercise 20 minutes Questionnaire at
the end of chapter in RM
Hands on practice on posting in the G L and preparation of Trial Balance
35 minutes Case Exercise
Summarising key points of discussion
5 minutes Recapitulation
85
IV Performance aids required : 1. Black or white board, chalk pieces or
white board marker pens, 2. duster, 3. OHP with transparencies or PC with LCD
projector, or Laminated Flip chart containing the slides and copies of handout.
V Compulsory Reading by Trainees: Handout No.1 of the “Handout-
cum-Work Book” provided to them
VI Session guide
1. Introduce yourself and explain the objectives of the session
2. Ask the participants what they were practising during the earlier sessions.
3. Some would say that they had prepared vouchers while others would say
they were writing the transactions in certain books like Cash Book, Bank
Book, Day Book and Subsidiary Ledgers.
4. Write the answers on the Black or White Board (use these visual aids
wherever necessary)
5. Ask them about the purpose of maintaining Cash Book and Bank Book.
6. The answer may be “to know the Cash Receipts, Cash Payments, Closing
Cash Balance, Closing Balance in the Bank Accounts etc.”
7. Then ask the participants whether these books would provide concise
information about a particular account like Salary and Allowances Account
or Savings Bank Deposit.
8. Some may say “No” while others may say that one has to go through the
entire Cash Book or Bank Book or Day Book and cull out the information
9. To conclude, it is possible to obtain concise information from Cash Book,
Bank Book & Day Book, but that would involve a lot of labour and time.
10. To make this work easier, another book has been prescribed.
86
11. Explain General Ledger. Flash Slide No.2
12. Explain the term “Posting in G L”, balancing of account etc. Flash Slide
No. 3 to 6
13. Then administer the case exercise on posting. Start from the place where
the earlier session ended (i.e. Writing of Cash Book, Bank Book and Day
Book). The Day Book entries have to be posted in the respective ledger
accounts and balance has to be arrived at for each account.
14. Ask some of the participants to go through certain accounts which are
considered as Expenditure Accounts, some to go through Income
Accounts, Asset Accounts and Liabilities Accounts.
15. Ask them what they have observed from the closing balance shown by the
individual expenditure heads.
16. The answer may be all expenditures show “Debit” balance. Similarly,
those who have gone through Asset Accounts would give the same
answer.
17. Those who have gone through the Income Accounts and Liabilities
Accounts would say that the closing balance is a “Credit” Balance.
18. Then ask them why it so ?
19. If they were not able to answer, say that the first entry or the originating
entry in Asset Accounts and Expenditure Accounts is always a debit entry
and hence the closing balance of these accounts will always be a Debit
Balance.
20. Similarly, in the case of Liabilities Accounts and Income Accounts, the first
entry or the originating entry is always a credit entry and hence the closing
balance of these accounts will always be a Credit Balance.
87
21. Ask the participants if there is any error in balancing or posting in the
wrong side of the account what will happen?
22. They would say the concerned account would not show a correct picture.
It would not show a true and fair view of its position.
23. Then ask them how will you come to know that some arithmetical error
has taken place?
24. Those, who know some basics about accountancy, would say we have to
prepare Trial Balance.
25. Explain about Trial Balance and it preparation - Flash slides No.7 to 11
26. Explain the logic behind Trial Balance - Every Debit has a corresponding
and equal Credit(s) and vice versa. The sum total of net balances would
be “Zero”. In other words, the sum total of Debit Balances should be equal
to that of the Credit Balances.
27. Then continue with the exercise. Ask the participants to prepare the Trial
Balance from the balances extracted from the General Ledger and see
whether the Trial Balance is tallying.
28. Once the Case Exercise is complete ask the participants to attempt the
Work Book Exercise.
29. On completion of the Work Book Exercise, discuss the answers to the
questions. If anybody is getting a wrong answer, discuss where exactly,
the participant has gone wrong.
30. Once the Work Book Exercise is over, sum up the learnings.
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VII Learnings from the session:
i. General Ledger is maintained to obtain concise information about
each account head.
ii. Assets and Expenditure Accounts will always show a “DEBIT”
Balance.
iii. Liabilities and Income Account will always show a “CREDIT”
Balance.
iv. Trial Balance is prepared to find the arithmetical accuracy of
transactions recorded in the books of account.
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Answers to Work Book Exercise
i. The Account where the net profit is apportioned to various Reserves /
Funds is called as Appropiration of Profits
ii. The book which keeps records of all cash transactions, i.e. Cash receipts
and cash payments is called Cash Book
iii. All cash receipts are recorded on the Receipts Side while all the cash
payments are recorded on the Payments Side of the Cash Book.
iv. Bank Book is used to record all the transactions involving Society’s
Current Account or Savings Bank Account with DCCB / SCB / Other
Banks.
v. General Ledger is the book of final entry
vi. The process of recording of transactions in the ledger is called posting.
vii. Fixed Deposit Ledger is a form Subsidary Ledger
viii. Trial Balance is prepared to test the arithmetical accuracy of Ledger
ix. Assets and Expenses Accounts would show Debit balances.
x. Incomes and Liabilities Accounts would show Credit balances
xi. Cash Book has two sides viz., Receipts Side & Payments Side.
xii. All deposits made in Bank account are entered in Debit column of bank
book.
xiii. When cash is deposited in bank account, entries are made in Payments
side of Cash Book.
xiv. Day book has two sides viz., Receipts Side and Payments Side.
96
xv. Investment account always shows a Debit balance
4.9.2 Choose the correct answer
i. All transactions - cash, credit, transfer (adjustment), trading, banking etc.,
took place in a day are recorded in - (a) Day Book
ii. Purchases Voucher is prepared to book - (d)Credit Purchases
iii. Sales Voucher is prepared to book - (c) Credit Sales iv. (b) Journal Voucher is prepared to book transactions not involving cash
v. Journal Voucher is used to record those transactions that cannot be
passed through any other voucher type
vi. Debit Note is used for recording - (d) Purchases Returns
vii. Credit Note is used for recording - (a) Sales returns
viii. Statements, which show the business results over a period of time and
business position as at a point of time, are called as - (b) Financial
Statements
ix. The periodicity of preparation of Trading Account and Profit & Loss
Account is - (a) yearly
4.9.3 Say True or False
i. Cash Book always shows a credit balance - False
ii. Entries in the credit column of bank book represent withdrawals or
payments from bank account. - True
iii. Transfer vouchers are posted in cash column of the day book. - False
iv. Only cash transactions are recorded in the day book. - False
v. Postings in General Ledger are made from vouchers. - False
97
vi. All asset accounts are debit balances and all liability accounts are credit
balances. - True
4.9.4 Name the two accounts involved in this transaction
i. Deposited Rs. 5,000/- into the Current Account with the DCCB
Current Account with DCCB & Cash
ii. Sold fertiliser worth of Rs.2,500/- on cash basis
Cash A/c & Sale of Fertilisers A/c
iii. Purchased rice, dal etc., worth of Rs.3,000/- for running the Mid-day Meal
Scheme by paying cash
Purchase of Food Grains and other items under Mid Day Meal
Scheme & Cash A/c
iv. Purchased seeds worth of Rs.25,000/- from M/s Cauvery Seeds on credit
basis
Purchase of Seeds A/c, Sundry Creditors A/c
v. Seeds worth of 1,500/- sent back to M/s Cauvery Seeds since they were
damaged Sundry Creditors A/c & Purchases Returns A/c
vi. One of the customer who is having savings bank with the society
deposited Rs.2,000/- into his account
Cash A/c and Savings Deposit A/c
vii. Paid electricity charges Rs. 200/-
Rent, Taxes, Electricity A/c & Cash A/c
viii. Purchased stationery worth of Rs.100/-
Printing & Stationery A/c & Cash A/c
98
4.9.5 Match the following
1 General Ledger 5 A book that contains all accounts
2 Trial Balance 7 A Statement of all accounts
3 Balance 2 Net difference of debit and credit total
4 Posting 6 A process of transferring transactions from Day Book to Ledger
5 Cash Book 3 A book that contains all cash transactions
6 Bank Book 1 A book to record the transactions involving Society’s Current A/c with DCCB
7 Investment Ledger 4 A book where the details of all investments are written
4.9.6 Answer the following questions briefly.
i. What is the relationship of closing balance as per cash book and physical
cash held in safe ?
Physical cash should tally with the closing cash balance as per Cash
Book.
ii. Why is it necessary to prepare bank reconciliation statement?
To find out the reasons for the difference between the balance as per
Bank Book and Pass Book
99
4.9.7 Problem on preparation of Bank Reconciliation Statement
On 31st October 2007 the Bank Book of Chandipur PACS showed a balance of
Rs. 50,000/- while the Pass Book of the Current Account with the DCCB showed
a balance of Rs.55,250/- on a scrutiny of both these books, it was observed that
the difference was on account of the following.
� Cheques issued by the PACS but not paid by bank Rs. 6,000/-
� Cheques deposited into the DCCB but not collected Rs. 4,000/-
� Direct payment by a customer into bank Rs. 3,000/-
� Interest on term deposit credited by bank Rs. 500/-
� Bank charges debited in the pass book Rs. 250/-.
4.9.7 Bank Reconciliation Statement as on 31 October 2007 Amount(Rs.) Amount (Rs.) Balance as per Bank Book = 50,000 Add: Cheques issued but not paid = 6,000 2. Direct Payment by Customer = 3,000 3. Interest on Term Deposit Credited by the Bankd = 500 ------------------- 9,500 ======= 59,500 Less: 1. Cheques Deposited but not Credited by the bank = 4,000 2. Bank Charges debited by the Bank but not accounted = 250 ------------------ 4,250 ======= Balance as per Pass Book = 55,250 =======
100
Solution to Case Exercise on Common Accounting System
Posting in General Ledger & Preparation of Trial Balance
101
GENERAL LEDGER
Head of Account Cash on Hand Account
Date Particulars
Day Book
Folio No
Debit (Rs.)
Credit (Rs.)
Balance (Rs.)
Initials
Opening Balance
3,000 3,000
31 March 2007
To 71,110 74,110
By 68,000 6,110
GENERAL LEDGER
Head of Account Savings Bank Account with DCCB
Date Particulars
Day Book
Folio No
Debit (Rs.) Credit (Rs.)
Balance (Rs.)
Initials
Opening Balance
3,327,000 3,327,000
31 March 2007
To 750,000 4,077,000
By 3,774,000 303,000
GENERAL LEDGER
Head of Account Admission Fees Account
Date Particulars
Day Book
Folio No
Debit (Rs.)
Credit (Rs.)
Balance (Rs.)
Initials
Opening Balance
1,000 1,000
31 March 2007
By 10 1,010
102
GENERAL LEDGER
Head of Account Paid up Capital A/c - Individual
Date Particulars
Day Book
Folio No
Debit (Rs.)
Credit (Rs.)
Balance (Rs.)
Initials
Opening Balance
1,085,000 1,085,000
31 March 2007
By 5,100 1,090,100
GENERAL LEDGER
Head of Account Savings Deposits Account
Date Particulars
Day Book
Folio No
Debit (Rs.)
Credit (Rs.)
Balance (Rs.)
Initials
Opening Balance
6,263,000 6,263,000
31 March 2007
By 2,000 6,265,000
To 5,000 6,260,000
GENERAL LEDGER
Head of Account Fixed Deposits Account
Date Particulars
Day Book
Folio No
Debit (Rs.)
Credit (Rs.)
Balance (Rs.)
Initials
Opening Balance
6,653,000 6,653,000
31 March 2007
By 10,000 6,663,000
103
GENERAL LEDGER
Head of Account : Borrowings from DCCB Account - KCC Credit Limit
Date Particulars
Day Book
Folio No
Debit (Rs.)
Credit (Rs.) Balance
(Rs.) Initials
Opening Balance
11,655,000 11,655,000
31 March 2007
By 50,000 11,705,000
To 30,000 11,675,000
GENERAL LEDGER
Head of Account Loans and Advances Account - KCC Loans
Date Particulars
Day Book
Folio No
Debit (Rs.) Credit (Rs.)
Balance (Rs.)
Initials
Opening Balance
12,176,000 12,176,000
31 March 2007
To 50,000 12,226,000
By 24,000 12,202,000
GENERAL LEDGER
Head of Account Sundry Creditors A/c
Date Particulars
Day Book
Folio No
Debit (Rs.)
Credit (Rs.)
Balance (Rs.)
Initials
Opening Balance
87,000 87,000
31 March 2007
By 15,000 102,000
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GENERAL LEDGER
Head of Account Sale of Fertiliser A/c
Date Particulars
Day Book
Folio No
Debit (Rs.)
Credit (Rs.)
Balance (Rs.)
Initials
Opening Balance
317,000 317,000
31 March 2007
By 2,000 319,000
GENERAL LEDGER
Head of Account Interest on Loan and Advances A/c
Date Particulars
Day Book
Folio No
Debit (Rs.)
Credit (Rs.)
Balance (Rs.)
Initials
Opening Balance
1,833,000 1,833,000
31 March 2007
By 6,000 1,839,000
GENERAL LEDGER
Head of Account Recapitalisation Fund A/c - Contribution from GoI
Date Particulars
Day Book
Folio No
Debit (Rs.)
Credit (Rs.)
Balance (Rs.)
Initials
Opening Balance
0 0
31 March 2007
By 700,000 700,000
105
GENERAL LEDGER
Head of Account Recapitalisation Fund A/c - Contribution from State Govt
Date Particulars
Day Book
Folio No
Debit (Rs.)
Credit (Rs.)
Balance (Rs.)
Initials
Opening Balance
0 0
31 March 2007
By 50,000 50,000
GENERAL LEDGER
Head of Account Furniture & Fixtures A/c
Date Particulars
Day Book
Folio No
Debit (Rs.)
Credit (Rs.)
Balance (Rs.)
Initials
Opening Balance
46,000 46,000
31 March 2007
To 6,000 52,000
GENERAL LEDGER
Head of Account Sundry Debtors A/c- Others
Date Particulars
Day Book
Folio No
Debit (Rs.)
Credit (Rs.)
Balance (Rs.)
Initials
Opening Balance
180,000 180,000
31 March 2007
To 1,000 181,000
106
GENERAL LEDGER
Head of Account Purchase of Fertilisers A/c
Date Particulars
Day Book
Folio No
Debit (Rs.)
Credit (Rs.)
Balance (Rs.)
Initials
Opening Balance
316,000 316,000
31 March 2007
To 15,000 331,000
GENERAL LEDGER
Head of Account Insurance Account
Date Particulars
Day Book
Folio No
Debit (Rs.)
Credit (Rs.)
Balance (Rs.)
Initials
Opening Balance
0 0
31 March 2007
To 2,000 2,000
GENERAL LEDGER
Head of Account Salary & Allowances Account
Date Particulars
Day Book
Folio No
Debit (Rs.)
Credit (Rs.)
Balance (Rs.)
Initials
Opening Balance
295,000 295,000
31 March 2007
To 26,000 321,000
107
GENERAL LEDGER
Head of Account Investment A/c Term Deposits with DCCB (Other than Reserve Fund)
Date Particulars
Day Book
Folio No
Debit (Rs.) Credit (Rs.)
Balance (Rs.)
Initials
Opening Balance
10,707,000 10,707,000
31 March 2007
To 3,750,000 14,457,000
108
Solution to Case Exercise on Common Accounting System
Preparation of Trial Balance
109
Trial balance as on 31 March 2007 Month ______ Year _______
LIABILITIES & INCOME (Amount in Rs.)
Head of Account in G L
Folio No.
Opening Balance at
the beginning of
the month
Total of Debit
during the month
Total of Credit during
the month
Closing Balance
Paid up Capital - Individuals 1,090,100
Paid up Capital - Government 225,000
Reserve fund 37,000
Savings Deposits 6,260,000
Fixed Deposits 6,663,000
Recurring Deposits 1,540,000
Borrowings from DCCB - KCC Credit Limit
11,675,000
Interest Accrued on Deposits 2,076,000
Interest Accrued on Borrowings
306,000
Provision for Sundry Debtors (Others)
169,000
Provision for NPAs 602,000
Overdue Interest Reserve 841,000
Sundry Creditors 102,000
110
Subsidy meant for society 34,000
Other Liabilities 406,000
Purchases Returns 14,000
Sale of Fertilisers 319,000
Interest on Loans and Advances
1,839,000
Admission Fees 1,010
Interest on Deposits with Banks / Institutions
1,394,000
Recapitalisation Assistance Fund - Contribution from GoI
700,000
Recapitalisation Assistance Fund - Contribution from State Government
50,000
Total 36,343,110
111
ASSETS & EXPENDITURE (Amount in Rs.)
Head of Account in G L
Folio
No.
Opening Balance at
the beginning
of the month
Total of Debit
during the
month
Total of Credit
during the month
Closing Balance
Cash In Hand 6,110
Savings Bank Account with DCCB
303,000
Term Deposit with DCCB (Representing Reserve fund)
81,000
Term Deposits with DCCB (Other than Reserve Fund)
14,457,000
Shares in Other Cooperative Institutions
762,000
Loans and Advances - KCC Loan
12,202,000
Loans & Advances - Loans against Deposits
610,000
Land & Buildings 212,000
Furniture & Fixtures 52,000
Interest Accrued but not due on Loans
414,000
Interest Receivable on Investments
2,740,000
Overdue Interest Receivable 841,000
Sundry Debtors for Others 181,000
Stock of Agricultural inputs - Fertilisers
49,000
112
Purchase of Fertilisers 331,000
Transport and other Expenses on Purchase of Fertilisers
5,000
Interest on Deposits 1,078,000
Interest on Borrowings from DCCB
1,487,000
Salary and Allowances 321,000
Rent, Taxes, Electricity 9,000
Postage and Telephone Charges
1,000
Printing and Stationery 8,000
Audit Fees 2,000
Other Expenses 2,000
Management Expenses 5,000
Vehicle Expenses 2,000
Repair Cost on Premises 1,000
Insurance 2,000
Profit & Loss Account 179,000
Total 36,343,110
113
Recap Session Time Allotted for Recap: 15 minutes Ask a participant to come to the dais and give an account of what he has learnt during the previous day.
Session No.5 Session Title: Preparation of Financial Statements I. Session Objectives: At the end of the session the participants will:
� List out the various Financial Statements
� Describe the preparatory work.
� Demonstrate preparation of Financial Statements
II. Duration of the session: 180 minutes III. Key topics to be covered:
Key topics Time
allocation Methodology to
be adopted Slides to be used
Introduction, Objectives of the Session
5 minutes Three Slides
Components, Preparatory Steps
5 minutes Interactive
Lecture & Guided Discussion
Three Slides
Preparation of Trading Account
10 minutes
Interactive Lecture & Guided
Discussion Five Slides
Preparation of Profit & Loss Account and Appropriation of Net Profit
10 minutes
Interactive Lecture & Guided
Discussion Six Slides
Preparation of Balance Sheet 10 Minutes Interactive
Lecture & Guided Discussion
Three Slides
114
Work Book exercise 20 minutes Questionnaire at
the end of chapter in RM
Hands on practice on writing books/registers
110 minutes
Case Exercise
Summarising key points of discussion
5 minutes Recapitulation
IV Performance aids required : 1. Black or white board, chalk pieces or
white board marker pens, 2. duster, 3. OHP with transparencies or PC with LCD
projector, or Laminated Flip chart containing the slides and copies of handout.
V Compulsory Reading by Trainees: Handout No.5 of the “Handout-cum-
Work Book” provided to them
VI Session guide
1. Introduce yourself in case it is necessary 2. Explain the Objectives of the session - flash Slide No.2 3. Ask the participants what were doing in the last session of the
previous day 4. The answer would be - posting in the General Ledger and
preparation of Trial balance 5. Write the answers on the Black or White Board (use these visual
aids wherever necessary) 6. Ask them the purpose of General Ledger & Trial balance. 7. The participants would give the answer as - to know the concise
information about each account head and to know the arithmetical accuracy of posting.
8. Then ask the participants whether the General Ledger or Trial
Balance would give a picture about the business result of an institution.
115
9. The answer would be “No”. 10. Then ask them what should be done to know the business result. 11. The accounts have to grouped or rearranged. 12. Then tell them about the purpose of preparing Financial Statements
- flash Slide No.3 13. List out the Financial Statements - Flash Slide No.4 14. In order to arrive at a true and fair position of the business results,
certain steps have to be initiated before preparation o financial statements - flash Slide No. 5 & 6.
15. Ask the participants - in case the salary for the month of March was
paid in April. Whether it will have an effect on the result of the society for the year ended 31 March?
16. The answer may be - “No”. Unless voucher is passed for the salary
it will not have any effect. 17. Put some more questions like - Whether the same has to be taken
into account or not? 18. What is to be done to bring this amount into the current year’s
books? 19. The answer may be - we have to pass an adjusting entry. 20. Explain about Adjusting Entries - Flash Slide No. 7 & 8. 21. Explain about Trading A/c and ask the participants to list out the
account heads related to non-trading activities. 22. Explain the items of Trading Account, Balancing of Trading Account
and preparation of Monthly Trading Account - Flash slide No. 9 to 14.
23. Explain about Profit & Loss Account 24. Ask the participants to list out the various expenditure and income
accounts 25. Explain how to prepare & balance the Profit & Loss A/c, how to
appropriate the net profit etc. - Slide No. 15 to 19.
116
26. Explain about Balance Sheet and its preparation - Flash slide No.
20 to 23. 27. Administer the Case Exercise. 28. Start from the place where the earlier Faculty has stopped -
Preparation of Trial Balance. 29. See whether the Gross Profit and Net Profit tallies with those
arrived by the participants. 30. Ask any of the participant to write the Trading Account, Profit and
Loss Account and Balance Sheet on the Black Board or White Board.
31. Ask the other participants to compare their answers with the
answer written on the Board. 32. In case of difference, clarify where the participant has committed
mistake. 33. Once the Case Exercise is complete ask the participants to attempt
the Work Book Exercise. 34. On completion of the Work Book Exercise, discuss the answers to
the questions. If anybody is getting a wrong answer, discuss where exactly, the participant has gone wrong.
35. Once the Work Book Exercise is over, sum up the learnings.
VII Learnings from the session:
a. Financial Statements are prepared to find out the business results over a period of time and the business position as at a point of time.
b. Trial Balance, Trading A/c, Profit & Loss A/c and Balance Sheet
form the Financial statements c. Adjusting entries are passed to arrive at the true and fair view of the
financial position d. Trading A/c is prepared to know the trading results i.e. Gross Profit
or Gross Loss
117
e. Profit & Loss A/c is prepared to know the net results i.e. Net Profit or Net Loss
f. Net Profit is appropriated to various Funds and Reserves and for
declaring Dividend g. Balance Sheet is a Statement of Assets and Liabilities as on a
particular date.
118
119
120
121
122
123
124
125
126
127
128
129
Work Book Answers
5.11 Work Book
5.11.1 Say True (T) or False (F)
1. Revenues and costs are recognized as they are earned or incurred and
not as money is received or paid. - True
2. Since the double entry system of book keeping follows the rule that every
debit must have a corresponding credit and vice versa once the trial
balance statement has tallied we can safely presume that the accounts
are correctly prepared. - False
3. While preparing final accounts Investments must be always be valued at
the market value. False
4. While preparing final accounts expenditure and income should be treated
on actual basis and not on accrual basis – False
5. A clear demarcation be made in regard to provisions and contingencies on
the one side and reserves on the other. While provisions and
contingencies are to be made from P&L Account, statutory and other
reserves be made out of appropriation of profits. - True
6. Since the overdue interest is booked on accrual basis in CAS, this will
inflate the profit of the PACS. - False
7. In the books, entries for accounting closing stock of all the items should be
passed with reference to actual stock after physically verifying the stock
and not stock as per stock register - True
8. In case assets are purchased out of grant assistance from State
Govt./NABARD, no depreciation should be shown on those assets - False
9. Profit is shown as a liability and loss is shown as an asset in the Balance
sheet of PACS. - True
10. Inter Branch account will always appear on the Asset side of the Balance
Sheet - False
130
11. The un-appropriated balance of Profit should be carried to “Asset” side of
the Balance sheet.- False
12. Expenses shown in Profit and Loss account include paid and payable
figures. Similarly, income shown consists of both income received and
income receivable - True
13. Under Loans and advances only net figure after deducting “Provision for
NPAs” should be shown in the outer column of the Balance Sheet. - True
14. The Balance Sheet is a statement of assets and liabilities of a society
created during a year - False
15. Provisions for NPAs which includes provision for Sub-standard Assets,
Doubtful Assets and Loss Assets should be shown on the liability side of
the Balance sheet - False
16. Overdue Interest Reserve or Provision for Overdue Interest should be
subtracted from the total of Interest Accrued and Receivable and only the
net interest accrued should be shown on the Assets Side under Other
Assets - True
17. In case the society charges sales tax on items sold, the amount of sales
tax has to be deducted from the Gross Sales figure and only the net
amount is shown in the Trading Account - True
18. Sales Tax liability is shown as other assets in the Balance Sheet. - False
5.11.2 B. Fill in the Blanks
i. In reporting all business transactions of the PACS, the intention is to exhibit a
true and fair picture of the Operational Results and Financial Position of the
business.
ii. Depreciation should be provided for on depreciable assets on Straight Line
Method or Diminishing Value Method on a consistent basis.
iii. The net profit arrived at should be carried forward for Appropriation of
Profits. In case of loss, the same should be carried to Balance Sheet.
131
iv. Insurance of stock should be charged to Trading Account for respective
activity.
v. We should ensure the total of member-wise share capital in the Share Capital
Ledger agrees with the share capital as per the General Ledger balance.
vi. The Trading Account is prepared to ascertain the results of the Trading
Activity of the PACS
vii. The amounts of the Authorsed and Subscribed Capital should be furnished
in the Balance Sheet. But they should not be included in the total.
5.11.3 Give short answers
1. List out the various Financial statements a PACS should prepare under
the CAS
i. Trial Balance
ii. Trading Account
iii. Profit & Loss A/c
iv. Profit & Loss Appropriation A/c
v. Balance Sheet
vi. Annexures to Profit & Loss A/c & Balance Sheet.
2. Give a short account of the Annexure to P&L Account and Balance
Sheet
• Details of Miscellaneous Income should be furnished in Annexure to Profit &
Loss A/c.
• Details of Borrowings from Other Institutions, Shares in Other Cooperative
Institutions, Term Deposits with DCCB / SCB / Other Banks, Other Investments,
Closing Stock of any other stock other than those mentioned etc., sundry debtors
and sundry creditors should be given separately as Annexures and should be
attached to the Balance Sheet
132
3. What do you understand by Capital Reserves? Give few examples
Capital Reserve is a reserve created on account of the following.
a. Profit on sale of capital assets like land, building, furniture etc.
b. Amount received against the forfeiture of shares
c. Government grant received in the form of promoters’ contribution
d. Excess of assets taken over than the amount of liability on acquisition of
business
The above mentioned amounts cannot be treated as normal income and hence
not to be included in the net profit of the society.
4. Contra Items in the Balance Sheet of the PACS
Liabilities Side : Bills for Collection (being Bills Receivable as per contra)
Assets Side: Bills Receivable (as per Contra)
5. Contents of the Annual Report of the PACS
Annual Report should contain important developments in the society covering
total members, enrollment of new members, borrowing members, members
retired during the year, changes in the Management Committee and holding of
MC meetings as per bye-law, growth of deposits, advances and profit, issue of
Kisan Credit Cards and ST-SAO loans disbursed through KCC, loans issued to
SC/ST/ women beneficiaries/ SHGs and information about Farmers’ clubs and
other details as per the provisions of the Cooperative Societies Act along with
the financial statements of PACS.
5.11.4 Complete the following
i. Capital Rs. 40,000/- + Liabilities Rs. 15,000/- = Assets Rs. 55,000/-
ii. Capital Rs. 65,000/- + Liabilities Rs.24,000/- = Assets Rs.89,000/-
iii. Assets Rs.1,00,000/- - Liabilities Rs.30,000/- = Capital Rs. 70,000/- iv. Assets Rs. 35,000/- - Liabilities Rs.10,000/- = Capital Rs. 25,000/-
133
5.11.5 Match the following - Table 1
Sl. No Particulars Sr No Particulars
1 Bank Reconciliation Statement
4 Balance confirmation
certificates
2 Trial Balance 6 Arithmetical Accuracy of
Accounts
3 Damaged or degraded stock 1 Realizable value
4 Unusable Assets 10 Write off
5 Trading Account 7 Non-Credit Business
6 WDV Method 5 Depreciation
7 Reserves and Funds 3 Created out of profit
8 Balance confirmation certificates
2 Borrowing
9 Overdue Interest Reserve 8 Provision for Overdue Interest
10 Bills Receivable 9 Contra Item
5.11.6 Match the following - Table 2
Sr No Particulars Sr No Particulars
1 Trading Account 3 Non-Credit Business of PACS
2 Balance Sheet 10 Assets and Liabilities
3 Statement of Sources and Uses of Funds
9 Balance Sheet
4 Income and Expenditure 1 Profit and Loss account
5 CAS 2 Common Accounting System
134
6 Liabilities 4 Sources of Funds
7 Annual Report 8 Important Developments of the
PACS
8 Capital Reserve 6 Profit on sale of Capital Asset
9 Depreciation on Assets 7 Straight Line Method
10 Capital Reserve 5 Forfeited Shares
5.11.7 Say True or False
i. Closing stock of goods should be valued on the basis of Cost Price or
Market Price whichever is higher - False
ii. Depreciation Chart is prepared to work out the depreciation in closing
stock of goods - False
iii. Trading Account is prepared to ascertain the trading results of the
business - True
iv. Sale of gunny bags, kerosene barrels, etc., is an Item of Trading Account -
True
v. Only cash sales should be shown in the Trading Account - False vi. Gross Profit or Gross Loss is transferred to Balance Sheet - False
vii. In Profit & Loss Account, The left hand side of the Profit & Loss Account is
called as the “Liability” side - False viii. The right hand side of the Profit & Loss Account is called as the
“Expenditure” side - False
ix. Profit on sale of Capital assets is credited to Reserve Capital - False
x. Grants received are shown on the Assets Side of the Balance Sheet -
False
135
xi. In the Balance Sheet “Provision for Standard Assets” is reported on the
Liabilities Side - True xii. Provisions for NPAs is subtracted from the total of Loans and Advances
and only the net figure is shown on the Assets Side of the Balance Sheet.
- True
xiii. “Provision for Overdue Interest” is subtracted from the total of Loans and
Advances and only the net figure is shown on the Assets Side of the
Balance Sheet.- False
xiv. Provision for Sundry Debtors on Credit Sales and Provision for Bad and
Doubtful Debts (others) are shown separately in the Balance Sheet on the
Liabilities Side - False
xv. Appropriation of net profit to various reserves & funds is done in Balance
Sheet - False
xvi. Term Deposits with SCB / DCCB is shown under Cash & Bank Balances
on the Assets side of the Balance Sheet - False
136
Solution to Case Exercise on Common Accounting System
Preparation of Financial Statements
137
Alalpur Service Cooperative Society Limited, Alalpur
JOURNAL VOUCHER
No. 20 Dated : 31 March 2007
S. No.
Head of Account Ledger Folio No.
Debit (Rs.)
Credit (Rs.)
1 Depreciation on Properties a/c 12,700
2 Land & Building A/c 7,500
3 Furniture & Fixtures A/c 5,200
Being the amount of depreciation provided for building and furniture & fixtures for
the year 2006-07
________________________________________________________________
Rupees Twelve Thousand Seven Hundred only
________________________________________________________________
________________________________________________________________
Place : ________________
Authorised Signatory _____________________________
138
Alalpur Service Cooperative Society Limited, Alalpur
JOURNAL VOUCHER
No. 21 Dated : 31 March 2007
S. No.
Head of Account Ledger Folio No.
Debit (Rs.)
Credit (Rs.)
1 Transport and Other Expenses on Purchase of Fertilisers A/c
2,000
2 Provision for Outstanding Expenses A/c
2,000
Being the amount of provision made for outstanding Transportation Charges
incurred but not paid before 31 March 2007
________________________________________________________________
Rupees Two Thousand only
________________________________________________________________
________________________________________________________________
Place: _________________ Authorised Signatory _____________________________
139
Alalpur Service Cooperative Society Limited, Alalpur
JOURNAL VOUCHER
No. 22 Dated : 31 March 2007
S. No.
Head of Account Ledger Folio No.
Debit (Rs.)
Credit (Rs.)
1 Prepaid Expenses a/c 2,000
2 Insurance a/c 2,000
Being the amount of insurance paid in advance now adjusted.
________________________________________________________________
Rupees Two Thousand only
________________________________________________________________
________________________________________________________________
Place : ________________
Authorised Signatory ____________________________________________
140
Alalpur Service Cooperative Society Limited, Alalpur
JOURNAL VOUCHER
No. 23 Dated : 31 March 2007
S. No.
Head of Account Ledger Folio No.
Debit (Rs.)
Credit (Rs.)
1 Profit and Loss Account 2,000
2 Provision for Depreciation in Value of Investments
2,000
Being the amount of Provision made in respect of the shares of Cooperative
Printing Press since the Press is under liquidation.
________________________________________________________________
Rupees Two Thousand only
________________________________________________________________
________________________________________________________________
Place : ________________
Authorised Signatory _______________________________
141
Alalpur Service Cooperative Society Limited, Alalpur
JOURNAL VOUCHER
No. 24 Dated : 31 March 2007
S. No.
Head of Account Ledger Folio No.
Debit (Rs.)
Credit (Rs.)
1 Profit & Loss A/c 400,000
2 Provision for Standard Assets 100,000
3 Provision for Sub-Standard Assets 300,000
Being the amount of provision for Standard Assets and Sub-Standard Assets
made for the year 2006-07.
________________________________________________________________
Rupees Four Lakh only
________________________________________________________________
________________________________________________________________
Place : ________________
Authorised Signatory ____________________________
142
Alalpur Service Cooperative Society Limited, Alalpur
JOURNAL VOUCHER
No. 25 Dated : 31 March 2007
S. No.
Head of Account Ledger Folio No.
Debit (Rs.)
Credit (Rs.)
1 Closing Stock of fertiliser 47,000
2 Trading A/c 47,000
Being the value of closing stock of fertilisers as on 31 March 2007 brought into
the books of account.
________________________________________________________________
Rupees Forty Seven Thousand only
________________________________________________________________
________________________________________________________________
Place ______________________ Authorised Signatory ______________________________
143
Trading Account for the year ended 31 March 2007
Particulars
Amount (Rs.)
Particulars
Amount (Rs.)
Inner Col.
Current Year
Inner Col. Current Year
1. Opening Stock 1 Sales A/c.
1 (a) Fertilizers 49,000 1 (a) Fertilizers 319,000
2. Purchases A/c
1(b) Less Sales Returns
0
2((i) Fertilizers 331,000 1(c) Net Sales [1(a)-1(b)]
319,000
2(b) Less Purchase Returns
14,000 2. Commission
0
2 (c) Net Purchases [2(a)-2(b)]
317,000 3. Compensation
0
3. Transport and other expenses on purchases.
7,000 4. Gunny Bags Sales
0
4.Salary for Salesman/ Manufacturing wages
0
5. Other Trading Income
0
5. Factory expenses
0 6. Closing Stock
6.Insurance for Stocks, Godown
0
6.a. Gross Stock [(i) to (viii)]
7. Godown rent
0 (i) Fertilisers 47,000
8. Electricity charges
0
6.b. Less: Value of stock in deficit and reduction in value of damaged / rejected stocks.
0
9. Licence Fee
0 6.c. Net Closing Stock [6(a)-6(b)]
47,000
10.Interest on borrowings for the non-credit activities
0
12. Trading Gross Profit carried to main Profit & Loss A/c
7. Trading Loss carried to the main Profit & Loss A/c
7,000
Total
373,000 Total
373,000
144
PROFIT AND LOSS ACCOUNT OF XYZ PACS Ltd.,
for the year ended 31 March 2007
Particulars Amount (Rs.)
Particulars Amount (Rs.)
Current Year
Current Year
1. Gross loss transferred from Trading a/c
7,000 1. Gross profit transferred from Trading a/c
2. Interest (paid and payable) on
2. Interest on Loans and Advances (Received and Receivable)
i. Deposits 10,78,000 18,39,000
ii. Borrowings from DCCB / SCB*
14,87,000
iii. Loans availed from State Government
iv. Borrowings from others
3.Establishment and other Expenses
3. Income on Investments
3.i. Salary and Allowances including Contribution to PF, Bonus, Gratuity or Pension Fund
3,21,000
3(i) Interest on Deposits with Banks / institutions
13,94,000
3.ii. Management expenses (expenditure relating to board meetings etc)
5,000 3(ii) Dividend on other investments
4. Rent, Taxes, Electricity and Repair Costs on Premises
10,000 4. Rental Income
5. Insurance 0 5. Admission Fees
1,010
6. Law charges 0
6. Miscellaneous Income (specify details in annexure)
7. Postage and telephone charges
1,000
145
8. Printing and Stationery 8,000
9. Audit Fees 2,000
10. Vehicle expenses 2,000
11. Traveling & Conveyance expenses
0
12. Donations and Subscriptions
0
13. Depreciation on properties
12,700
14. Other expenses 2,000
15. Provisions for
i. Standard assets 1,00,000
ii. NPA
ii(a) Sub standard assets 3,00,000
ii(b) Doubtful debts
ii(c) Loss Asset
iii. Bad and doubtful debts (credit sales)
iv. Bad and doubtful debts (others)
v. Depreciation in value of investments
2,000
vi. Overdue Interest on loans
vii. Overdue interest on investments
viii. Others (to be specified)
16. Profit for the year 7. Loss for the Year
1,03,690
Total 33,37,700 Total 33,37,700
*
146
BALANCE SHEET of XYZ PACS Ltd as on 31 March 2007
(Amount Rs.)
S. No.
Liabilities Break
up
31 Mar 2007' 31 Mar
200'
(Current Year)
(Previous Year)
1 Capital
i. Authorised
ii. Subscribed
iii. Paid-up
a) Individuals 10,90,100
b) Government 2,25,000
c) Others
2 Reserves and Funds (created out of surplus of PACS)
i. Reserve Fund 37,000
ii. Capital Reserve
iii. Agricultural Credit Stabilisation Fund
iv. Dividend Equalization Fund
v. Common Good Fund
vi. Building Fund (created out of surplus by PACS)
vii. Others (to be specified)
3 Profit and Loss Account (if closing balance is profit)
4 Grants and other Funds
i. Provident Fund
ii. Building Fund (received from State Government)
iii. Recapitalisation Assistance Fund 7,50,000
iv. Subsidies meant for Society 34,000
v. Subsidy meant for members
vi. Others (to be specified)
5 Deposits
i. Savings Deposits 62,60,000
ii. Recurring Deposits 15,40,000
iii. Fixed Deposits 66,63,000
iv. Reinvestment Deposits
v. Others (to be specified)
147
S. No.
Liabilities Break
up
31 Mar 2007 31 Mar 2006
(Current Year)
(Previous Year)
6 Borrowings
(a) Borrowings from DCCB / SCB*
i. ST (SAO) / KCC Credit Limit 116,75,000
ii. MT/LT Agri Loans
iii. MT Conversion
iv. MT/LT Reschedulement
v. SHG Loans
vi. Non farm sector Loans
vii. Cash Credit Limit for procurement of Agricultural Produce
viii. Cash Credit Limit for Gold Loans
ix. Loans against deposits with DCCB / SCB
x. Fertilizer Cash Credit Limit
xi. Seeds Cash Credit Limit
xii. Public Distribution Scheme CC Limit
xiii. Consumer Commodities CC Limit
xiv. Other non credit activities
xv. Other borrowings from DCCB / SCB (to be specified)
(b) Borrowings from State Government
(c) Borrowings from Other Institutions (details in annexure)
7 Other Liabilities
i. Interest Accrued on Deposits 20,76,000
ii. Interest Accrued on Borrowings 3,06,000
iii. Unclaimed Dividend
iv. Sundry Creditors (details in Annexure) 1,02,000
v. Others (to be specified) 4,06,000
8 Bills for Collection (being Bills Receivable as per Contra)
9 Branch Adjustment Account
10 Provisions
i. Provision for PF / Gratuity / Bonus / Pension
ii. Provision for Standard Assets 1,00,000
iii. Provision for Expenses 2,000
iv. Others (to be specified)
Total 312,66,100
148
Sr. No
Assets Breakup 31 Mar 2007 31 Mar 2006
(Current
Year) (Previous
Year)
1 Cash on Hand 6,110
2 Balances with DCC Bank / SCB * i. Current Account ii. Savings Account 3,03,000
3 Balances with Other Banks / Institutions
i. Current Account
ii. Savings Account 4 Investments
i. Government and Trustee Securities
ii. Shares in Other Cooperative Institutions (specify details in annexure )
7,62,000
iii. Term Deposits with DCCB/ SCB * representing Reserve Funds (Annexure)
81,000
iv. Term Deposits with DCCB / SCB* (other than Reserve Funds)
144,57,000
v. Term Deposits with other banks
vi. NSC / KVP
vii. Staff PF balance with PF Trust / with Banks
viii. Others (Details in Annexure)
(a) Gross Investments 153,00,000
(b) Less: Provision for depreciation in the value of investment
2,000
(c) Investment net of provisions (a – b) 152,98,000
5 Loans and Advances
i. ST (SAO) Loans / KCC Loans 122,02,000
ii. Medium Term / L T Agricultural Loans
iii. MT Conversion Loans
iv. MT /LT Reschedulement
v. Loans against deposits 610,000
(a) Total 128,12,000
(b) Less: Provision for NPA 9,02,000
(c)Loans and Advances net of provisions (a – b) 119,10,000
6 Closing Stocks
i. Agricultural Inputs (fertilisers, seeds etc.) 47,000
(a) Total ( i to vi) 47000
(b) Less: Reduction for value of shortage / damaged/degraded stock
0
(c) Net closing stock (a) – (b) 47,000
149
Sr. No
Assets
Breakup 31 Mar 200x (Current
Year)
31 Mar 200x (Previous
Year) 7 Fixed Assets (net of depreciation as per
Depreciation Chart)
i. Land and Buildings / Godowns 2,04,500
ii. Furniture and Fixtures 46,800
iii. Computers and Electrical Installations
iv. Vehicles
v. Others (to be specified)
8 Other Assets
1(a) Interest Accrued and Receivable (i to iii)
i. Interest Accrued but not due on Standard Loans
4,14,000
ii. Interest accrued but not due on NPA Loans
iii. Overdue interest receivable 8,41,000
1(b) Less: Provision for overdue interest 8,41,000
1(c) Net interest Accrued & Receivable (a) – (b) 4,14,000
2(a) Interest receivable on Investments 27,40,000
2(b) Less : Provision for overdue interest on investments. 0
2(c) Net Interest receivable on investments (a) – (b)
27,40,000
3 Miscellaneous Income Receivable
4(a) Sundry debtors (for credit sales)
4(b) Less: Provision for bad and doubtful Sundry Debtors (for credit sales)
4(c) Net Sundry debtors for credit sales {net of provision i.e. (a)-(b)}
5(a) Sundry debtors (others) - details in annexure
1,81,000
5(b) Less : Provision for bad and doubtful sundry debtors (others)
1,69,000
5(c) Net Sundry Debtors (others) (a – b) 12,000
6 Prepaid expenses 2,000
7 Tax Deducted at source
8 Others
9 Bills Receivable (as per contra)
10. Branch Adjustments accounts
11 Profit and Loss Account (if balance is loss) 282,690
Total 312,66,100
150
Session No.7 (Day 2 – III Session)
Session Title: Conversion of the present Profit & Loss Account, Balance Sheet as per the CAS pattern
I. Session Objectives: At the end of the session, the participant will be able to:
• Demonstrate how the present / existing Trading Account, Profit & Loss
Account & Balance Sheet can be converted as per the requirements of
CAS
II. Duration of the session: 90 minutes
III. Performance aids required:
Black or White Board with Chalk piece or white Board Marker Pens & dusters
IV. Session Guide
a. Distribute the present Trading Account, Profit & Loss Account and
Balance Sheet of any society to the participants.
b. Discuss each and every particulars in these statements and how they
should be written in the Financial Statements prescribed under CAS.
c. Ask the participants to rewrite the Financial Statements as per CAS
pattern.
d. On completion of the same, discuss the answers and clarify the doubts.
V. A model exercise is given below:
151
Case Exercise on Rewriting of Financial Statements as per CAS Formats
Trading Account of Dhaulimuhan S C S Limited
Particulars Debit (Rs.)
Credit (Rs.)
Opening Stock - Fertiliser 6,591
Sale of Fertiliser 4,780
Shortage of Fertiliser 988
Closing Stock of Fertiliser 2,983
Gross Profit 2,160
Total 8,751 8,751
Profit & Loss Account
Particulars Debit (Rs.)
Credit (Rs.)
Establishment Cost 125,678
Interest paid on Loans 838,572
Interest paid on Deposit 744,687
House Rent Received 1,200
Other Cost Received 860
Entrance Fee Collected 780
Miscellaneous Income 630
Process Fee Collected 1,865
Interest Received on Investment 606,085
Interest Received on Loans 1,226,689
L/Yr Interest Payable on Loans 197,084
L/Yr Interest Payable on Godown Loans 3,071
L/Yr Interest Payable on Deposits 143,725
L/Yr Interest Receivable on Loans 349,367
L/Yr Interest Receivable on Agri Loans 530
L/Yr Interest Receivable on Deposits 9,092
152
L/Yr Difference in Balance Sheet 1,790
Sale Proceeds of Pump Set 164 1,143
By Gross Profit Brought Forward 3,505
Depreciation A/c 2,160
Land & Building @ 2.5% 4,473
Bank Counter @ 5% 1,197
Bank Counter @ 5% 500
Sign Board 24
Bicycle 70
Electrification @ 10% 512
Provision for Overdue Interest 202,684 188,277
Provision for Salary of Staff 2,250
OTS Rebate Allowed 1,884
Provision for OTS Rebate Receivable 2,826
Net Profit 94,354
Total 2,378,864 2,378,864
Details of Establishment Expenditure
Particulars Amount
(Rs.) Particulars
Amount (Rs.)
Salary to Staff 31,996 B/F 106,649
Salary to Secretary 54,556 Tom Tom Expenses 300
Contingent Expenditure 994 General Body Expenses 910
Collection Drive 2,677 Electricity 1,339
Bonus to Secretary 2,500 Audit Fees 1,200
T A to Secretary 2,100 Entertainment Expenses 4,199
Printing & Stationery 3,871 Xerox Expenses 200
153
Election Expenditure 3,521 Typing Expenses 200
Hire Charges & Fuel 3,301 Repair & Maintenance 2,200
Electrification Expenses 560 Liveries 300
Insurance Fees 51 Board Meeting 3,100
Commission & postage 22 Carpus Fund 5,081
Coop. Education Fund 500 Total 125,678
C/o 106,649
Balance Sheet of Dhaulimuhan S C S Ltd
Liabilities Balance
(Rs.) Assets
Balance (Rs.)
Paid up Share Capital Cash &Bank Balance
Member Share 389,377 Cash in hand 7,272
Nominal Share 192,850 Current Deposit with KCCB
1,995
Govt Share 173,000 S B D I with KCCB 37,944
Reserve fund & Other Reerves
S B D II with KCCB 376
Reserve Fund 3,535 S B D III with KCCB 75,127
Cooperative Education fund
500 Fixed Deposit with KCCB
1,219,000
Deposits K d A/c with KCCB 5,552,991
Member Deposits 8,460 Sundry Creditors A/c with KCCB
0
Security Deposits of staff 10,580 Interest Receivable on Deposit
0
H R Deposit 2,000 Investment of Share
Election Security 3,920 Share with KCCB, H O 320,500
154
S B D Individual 1,728,680 Nominal Snare with KCCB
170,700
D S B D Individual 207,712 Share wtih OSCMF Ltd 1,000
Mani Manika Individual 1,830 Share with District Cooperative Union
100
R D Individual 231,140 Statutory Funds
F D Individual 2,460,208 RFD with KCCB 6,264
K D Individual 2,950,934 Risk Fund with KCCB 31,065
Loans & Borrowings Other Investments
Agri Loan from KCC Bank
3,786,504 Cadre Development Fund with KCCB
3,400
S C Loan - KCCB 40 Advance with W C C Store, Khurda
8,000
S R T O Loan _ KCCB 961,885 Stocks
Term Loan - KCCB 21,303 Stock of Fertiliser 2,983
Godown Loan - KCCB 74,000 Shortage of Fertiliser 988
Godown Loan _ OSCB 62,156 Loans & Advances
Cadre fund to KCCB 61,663 Agri Loan with Members 3,228,220
Sundry Debtor - KCCB 9,832 Term Loan with Members
265,943
Interest Payable to KCCB
372,081 Manika Loan with Members
0
Interest Payable on Deposits
157,388 LAD Loan with Member 743,790
Interest Payable to Godown Loan
14,846 SRTO Loan with Members
1,469,340
L A D to KCCB 305 C D Loan with Members 78,872
Provisions & Reserves Interest Receivable on Agricultural Loan
577,223
Provision for Bad Debts 104,896 Interest Receivable on Non-agricultural Loan
0
155
Provision for Bad Assets 8,000 Fixed Assets
Provision for pay of Watcher
30 Land & Building with compound wall
174,439
Provision for Shortage 109 Dead Stock & furniture 22,739
Provision for Election Expenses
35 Diesel Pump set 0
Provision for Overdue Interest
202,684 Mini Bank Counter 9,499
Grants & Subsidies Sign Board 445
Subsidies B F 10,760 Bicycle 700
Managerial Subsidy 8,000 Electrical Equipment 4,603
Input Subsidy 4,394 Books & Library 330
Consumer Subsidy 900 Other Assets
Dug Well Subsidy 9,543 Advance with Sound Culture Centre
0
Crop Insurance Subsidy 4,995 Litigation cost with Members
17,988
Building Grant 12,000 Crop Insurance Provision with Member
12,714
Risk Fund with DRDA 10,345 Sundry Advance with Staff
1,750
Other Liabilities OTS allowed Receivable from Bank
2,826
Fertiliser Dues to OSCMF
108 Sundry Recoveries from Staff
12,872
Payable to WCC Store 2,758 Profit & Loss A/c - Last Year
334,520
Payable to Ex Secretary 14
Payable to S B Singh 35
Cooperative Education Fund
1,400
Advance to OSCSC Ltd 3,503
156
House Rent Advance from sound culture
50
Suspense Collection 240
Audit Fees payable 1,440
CDF from NABARD - Mini bank
25,775
Provision for OTS Rebate recoverable
2,826
Provision for salary of staff
2,250
Crop Insurance payable to members
345
Profit & Loss A/c - Current Year
94,354
Total 14,398,518 Total 14,398,518
TASK : Regroup the accounts as per CAS Grouping and Prepare the Trading Account,
Profit & Loss Account and Balance Sheet as per CAS Formats
Answer: Trading Account
For the year 2006-07
Particulars Amount (Rs.) Particulars Amount (Rs.)
Current Year
Previous Year
Current Year
Previous Year
Opening Stock Sales A/c
I. Fertilisers 5,603 i. Fertilisers 4,780
Closing Stock
Fertilisers 2,983
Trading Gross Profit carried to main Profit & Loss Account
2,160
Total 7,763 Total 7,763
157
Profit and Loss Account of Dhaulimuhan SCS Ltd., for the year ended 31 March 2007
Expenditure
Amount (Rs.) Income
Amount (Rs.)
Current Year
Previous Year
Current Year
Previous Year
1. Interest paid on
1. Gross Profit transferred from Trading A/c
2,160
i.Deposits 600,962 2. Interest on Loans and Advances
874,908
ii.Borrowings 638,417 3. Income on Investments
596,993
2. Establishment & Other Expenses
4. Rental Income 0
i.Salary & Allowances 88,286 5. Admission Fees 780
ii.Management Expenses
4,010 6. Miscellaneous Income
3. Rent, Taxes, Electricty and Repair Costs
3,539 i.Process Fee 1,865
4. Insurance 51 ii.Misc. Income 630
5. Law Charges 0 iii.Last year diff. in Balance sheet
1,790
6. Postage & Telephone Charges
22
7. Printing & Stationery
3,871
8. Audit Fees 1,200
9. Vehicle Expenses 0
10. Traveling & Conveyance Exp
5,401
11. Donations & Subscriptions
0
12. Depreciation on properties
6,776
13. Other Expenses 13,733
14. Provisions for
i.Overdue Interest 14,407
ii.OTS Rebate 2,826
iii.Salary to Staff 2,250
Profit for the year 93,375
Total 1,479,126 Total 1,479,126
158
Appropriation of Profits
Expenditure Amount (Rs.)
Income Amount (Rs.)
Current Year
Previous Year
Current Year
Previous Year
Accumulated Losses (Previous Year)
334,520 Profit for the Current Year
93,375
Balance of losses carried to Balance Sheet
241,145
Total 334,520 Total 334,520
Interest (Paid & Payable) on Deposits
Interest paid on Deposit = 744,687 Dr
Less: L/Yr interest payable on Deposits = 143,725 Cr
Interest on Deposits shown in the P & L A/c = 600,962 Dr
Interest (Paid & Payable) on Borrowings
Interest paid on Borrowings = 838,572 Dr
Less: L/Yr interest payable on Godown Loans = 3,071 Cr
Less: L/Yr interest payable on Borrowings = 197,084 Cr
Interest on Borrowings shown in the P & L A/c = 638,417 Dr
Establishment and Other Expenses
Salary to Staff = 31,996
Salary to Secretary = 54,556
Contingent Expenditure = 994
Bonus to Secretary = 2,500
Liveries = 300
---------------------
Total = 90,346 Dr
Less: Other Cost Recovered = 860 Cr
Less: House Rent Received = 1,200 Cr
Amount reported in the P & L A/c = 88,286
159
Management Expenses
General Body Expenses = 910
Board Meeting = 3,100
Total = 4,010
Other Expenses
Collection Drive = 2,677
Election Expenditure = 3,521
Tom Tom Expenses = 300
Electrification Expenses = 560
Contribution to Cooperative Education Fund = 500
Entertainment Expenses = 4,199
Xerox Expenses = 200
Typing Expenses = 200
Corpus Fund = 5,081
Total = 17,238 Dr
Less: L/Yr Double Corpus Fund = 3,505 Cr
Total = 13,733 Dr
Travelling & conveyance Expenses
T A to Secretary = 2,100
Hire Charges & Fuel = 3,301
Total = 5,401
Rent, Taxes, Electricity & Repairs to Premises
Electricity Charges = 1,339
Reparis & Maintenance = 2,200
Total = 3,539
Sale Proceeds of Pumpset (net) = 979 (1,143 - 164) - Shown
as Capital Reserve in Balance sheet
160
Depreciation on Properties
Depreciation on Land & Building = 4,473
Depreciation on Dead Stock = 1,197
Depreciation on Bank Counter = 500
Depreciation on Sigh Board = 24
Depreciation on Cycle = 70
Depreciation on Electrical Installations = 512
Total = 6,776
Provision for Overdue Interest
Total Provision for Overdue Interest to be made = 202,684 Dr
Less: Provision made till last year = 188,277 Cr
Provision of Overdue Interest to be made during = 14,407
Current year
Interest (Received & Receivable) on Loans and Advances
Interest Received on Loans = 12,26,689 Cr
Less: L/Yr Interest Receivable on Loans = 3,49,367 Dr
Less: L/Yr Interest Receivable on Agri Loans = 530 Dr
Less: OTS Rebate Allowed = 1,884 Dr
Amount Reported in the Profit & Loss A/c = 8,74,908
Income on Investments
Interest received on Investments = 606,085 Cr
Less: L/Yr Interest Receivable on Deposits = 9,092 Dr
Amount Reported in the P & l A/c = 596,993
Paid-up Capital - Individuals
Member Share = 389,377
Nominal Share = 192,850
Total = 582,227
161
Subsidies Meant for Society
1Subsidies B F = 10,760 Managerial Subsidy = 8,000
Input Subsidy = 4,394
Consumer Subsidy = 900
Total = 24,054
Subsidies meant for Members
Dug Well Subsidy = 9,543
Crop Insurance Subsidy = 4,995
Total = 14,538
Savings Bank Deposits
S B D Individual = 17,28,680
Member Deposits = 8,460
Total = 17,37,140
Fixed Deposits
F D Individual = 24,60,208
Mani Manika - Individual = 1,830
Total = 24,62,038
Interest Accrued on Borrowings
Interest Payable to KCCB = 372,081
Interest payable on Godown Loans = 14,846
Total = 386,927
Provisions for Expenses
Provision for Pay of Watcher = 30
Provision for election expenses = 35
Provision for salary of staff = 2,250
Total = 2,315
162
Sundry Creditors
Amount Payable to KCCB = 9,832
L A D to KCCB = 305
Fertiliser Dues to OSCMF = 108
Amount payable to WCC Store = 2,758
Amount payable to ex Secretary = 14
Amount payable to S B Singh = 35
Advance from OSCSC Ltd = 3,503
House Rent Advance from sound Culture = 50
Suspense Collection = 240
Crop Insurance payable to Members = 345
Total = 17,190
Assets
Balances with DCCB/SCB - Savings Bank A/c
S B D I with KCCB = 37,944
S B D II with KCCB = 376
S B D III With KCCB = 75,127
Total = 113,447
Investments - Shares in other Cooperative Institutions
Shares with KCCB - HO = 320,500
Nominal Share with KCCB = 170,700
Shares with OSCMF = 1,000
Share with District Cooperative Union = 100
Total = 492,300
Term Deposits with DCCB (other than Reserve Funds)
Fixed Deposit with KCCB = 1,219,000
K D A/c with KCCB = 5,552,991
Risk Fund with KCCB = 31,065
Cadre Development Fund with KCCD = 3,400
Total = 6,806,456
163
Fixed Assets - Furniture & Fixtures
Dead Stock & Furniture = 22,739
Mini Bank Counter = 9,499
Sign Board = 445
Total = 32,683
Sundry Debtors - Others
Advance with WCC Store, Khurda = 8,000
Shortage of Fertiliser to be recovered = 988
Litigation Cost with Members = 17,988
Crop Insurance Provision with Member = 12,714
Sundry Advance with Staff = 1,750
OTS Rebate allowed receivable from bank = 2,826
Sundry Recoveries from staff = 12,872
Total = 57,138
Less: Provision for Shortage = 109
Less: Provision for OTS Rebate = 2,826
Net amount reported in the Balance Sheet = 54,203
Balance Sheet of Dhaulimuhan SCS Ltd as on 31 March 2007
S
No Liabilities
Break Up
31 March 2007
31 March 2006
1 Capital
i) Authorised
ii) Subscribed
iii) Paid-up
a) Individuals 582,227
b) Government 173,000
c) Others 0
2 Reserves and Funds
i) Reserve Fund 3,535
ii Capital Reserve 979
3 Profit and Loss Account 0
164
4 Grants and other Funds
i) Building Fund 12,000
ii) Cooperative Education Fund 1,900
iii) Subsidies meant for Society 24,054
iv) Subsidy meant for Members 14,538
v) Others
Risk Fund with DRDA 10,345
CDF from NABARD 25,775
5 Deposits
i) Savings Deposits 1,737,140
ii) Recurring Deposits 231,140
iii) Fixed Deposits 2,462,038
iv) Reinvestment Deposits 2,950,934
v) Daily Savings Deposits 207,712
6 Borrowings
a) Borrowings from DCCB
i)ST(SAO) / KCC Credit Limit 3,786,504
ii)MT / LT Agri Loans 21,303
iii)S C Loan 40
iv)Non Farm Sector Loans 961,885
v)Godown Loan 74,000
Vi)Loan Against Deposit 305
b) Borrowings from State Govt. 0
c) Borrowings from SCB
I) Godown Loan 62,156
7 Other Liabilities
i) Interest Accrued on Deposits 157,388
ii) Interest Accrued on Borrowings 386,927
iii)Sundry Creditors 16,885
iv) Cadre Fund to KCCB 61,663
v) Audit Fees Payable 1,440
vi) H R Deposit 2,000
vii) Security Deposit of Staff 10,580
viii) Election Security 3,920
165
8 Provisions
Provision for PF / Gratuity / Pension 0
Provision for Standard Assets 0
Provision for Expenses 2,315
Total 13,986,628
S No.
Assets Break-up 31 March
2007
31 March 2006
1 Cash on Hand 7,272
2 Balances with DCCB / SCB
I) Current Account 1,995
Ii) Savings Account 113,447
3 Balances with Other Banks/Institutions
0
4 Investments
I. Government & Trustee Securities
0
Ii) Shares in Other Cooperative Instutions
492,300
Iii) Term Deposits with DCCB / SCB representing Reserve Funds
6,264
Iv) Term Deposits with DCCB / SCB other than Reserve Funds
6,806,456
5 Loans and Advances
iI)ST (SAO) / KCC Loans 3,228,220
ii)MT / L T Loans 265,943
iii) Non Farm Sector Loans 1,469,340
iv) Loan Against Deposits 743,790
v) Loans for consumer durables 78,872
Total 5,786,165
Less: Provision for NPA 112,896
Loans and Advances net of provision
5,673,269 5,673,269
6 Closing Stock 2,983
7 Fixed Assets (net of depreciation)
I) Land & Buildings 174,439
Ii) Furniture & Fixtures 32,683
Iii)Computer and Electrical Installations
4,603
166
iv)Vehicles 700
V) Others - Library Books 330
8 Other Assets
Interest Accrued on Loans 577,223
Less: Provision for Overdue Interest
202,684 374,539
Sundry Debtors - Others 57,138
Less Provision for Bad & Doubtful Debts
2,935
Net Sundry Debtors - Others 54,203 54,203
9 Profit & Loss Account 241,145
Total 13,986,628
Session No. 8 (Day 2 – IV Session)
Session title An Introduction to Management Information System under Common Accounting System (CAS)
I. Session Objectives: At the end of the session, the participant will be able to:
• Explain the importance of MIS to be developed in consonance with CAS
• Describe the various returns / statements prescribed under MIS for
effective internal control and monitoring by external authorities
II. Duration of the session: 90 minutes
III. Key Topics to be covered
Key topics Time in minutes
Methodology Material to
be used
Introduction and objective 5
Need for revision / refinement of MIS
5 Guided and participatory Interaction,
Slide Nos. 1 & 2
Characteristics of a Sound MIS
5 Guided and participatory Interaction,
Slide Nos. 3 to 5
MIS Statements prescribed under CAS
40 Guided and participatory Interaction,
Slide Nos. 6 to 21
167
Work Book Exercise 10 Guided Interaction on the answers
Summarising and closing 5 Recapitulation
IV. Performance aids required:
Black or White Board with Chalk piece or white Board Marker Pens & dusters (or)
OHP with transparencies OR Computer (PC) supported with LCD Projector (or)
Laminated Flip chart containing the slides and copies of hand-out to be used.
V. Compulsory Reading by Trainees: Handout No.6 of the Handout-cum-Work
Book” provided to them
VI. Session Guide
e. Introduce yourself and start the session by explaining the objectives of the
session.
f. Ask the participants the question “What they understand by MIS?” List out
the responses of participants, summarise them and flash slide No. 1.
g. Ask the next question “what is the need for revision / refinement of MIS “.
List out the responses, summarise them and flash slide No. 2.
h. Ask the next question “what are the characteristics of sound MIS“. List out
the responses, summarise them and flash slide Nos. 3, 4 & 5
i. Ask the next question “Explain one by one the 14 statements out of the 19
(Nineteen) types of Statements / Returns prescribed under CAS” to be
used in PACs as regards to their utility, contents, source of information for
preparation & the formats as given in the Handbook on MIS prepared by
NABARD. Flash slide Nos. 6 to 21.
j. Ask the participants to complete the workbook exercise given at the end of
Chapter. After completion of the workbook exercise, handover a copy of
the answer sheet to the participants & ascertain whether the answers of
168
the participants tally with the answers given in the answer sheet & clarify
any difference of any participant.
k. Lastly summarise the discussions, thank the participants and close the
session.
VII. Learnings from the session:
� Any organization comprises of Management sub-system, Operations sub-
system and Information sub-system
� Information sub-system is concerned with the work of collection and
processing of data.
� An effective MIS provides required information to the management at the
right time, in the right form for decision making.
� Under MIS, PACS have to prepare/compile nineteen statements/ Returns.
169
170
171
172
173
174
175
176
177
178
179
180
Work Book Exercises
6.8.1 Questions and Answers – Objective type :
i. Why a sound and standardized MIS is need at PACS level?
Post reforms, PACS are expected to function as full fledged and self controlled
financial intermediaries that establish their own business policies to meet the
challenges of a dynamic economic environment and business models. To help
decision making at PACS and at other levels including those of higher financing
agencies, regulators and other agencies, there is an urgent need to have a
sound and standardized MIS at PACS.
ii. Explain the need of MIS for effective internal control?
The MIS in PACS would enable purpose - wise / activity-wise analysis to draw
inferences on the performance of PACS and initiation of corrective / timely action.
Credit activities of PACS include crop loans, MT loans etc and the non-credit
business consists of PDS operations, fertiliser/pesticides business, grocery shop
etc. The MIS generated should fully reflect the performance of the PACS under
all these activities for review & effective control
iii. Explain the Characteristics of a sound MIS.
• MIS should be comprehensive and should cover all operations of PACS.
• It should be selective and should not be over burdened with less important
or incidental information.
• It should be transparent and should establish relationship between input
and output.
• It should speak about success as well as failures so that corrective action
can be initiated.
• It should also bring out the causes of success and failure.
• The statements/returns should be in fixed periodicity so that there is
systematic analysis and sustained monitoring over a period of time.
181
iv Explain the Functions of MIS
The Management Information System (MIS) evaluates the performance of PACS
on an on-going basis and enable the Management to take timely, corrective
remedial action. Information system has to be purposeful and focused to enable
decision making process. It is essential for planning, developmental initiatives
and internal & external control.
v Name the users of MIS.
The users of MIS are the managing committee of PACs, the DCCB they are
affiliated to, Cooperation Department / RCS of the State as well as other State
and National agencies. National Federation of State Cooperative Bank
(NAFSCOB) and NABARD also use data on PACS, collected from the SCBs and
DCCBs.
vi Name the MIS returns developed for monitoring recovery and NPA position.
Demand, Collection and Balance Statement as given in Annexure-VI, Period-
wise Classification of Overdues as given in Annexure-VII & Asset Classification
and Provisioning Requirements as given in Annexure-VIII
vii Name the MIS returns prepared for monitoring lending performance.
The Kisan Credit Card (KCC) Scheme as given in Annexure-II, Crop-wise Loan
Disbursement as given in Annexure-III, & Medium and Long Term Loans Issued
during the year as given in Annexure-V.
6.8.2 Indicate True or False: (by appropriate tick mark)
Sr. No. Statement / Observation Answer
1 An effective MIS enables proper internal control True
2 There is no need to base MIS on CAS False
3 A sound MIS does not always help in purpose False
182
oriented analysis
4 Some MIS returns facilitate monitoring by external
authorities. True
5 Computerisation makes MIS vibrant. True
6 NPA statement must give break up under sub-
standard, doubtful and loss making categories. False
7 Percentage of recovery to demand can not be
ascertained from DCB statement True
8 Purpose-wise DCB helps in focused recovery drive. True
9
Separate trading account for PDS and fertilizer
business will be desirable to ascertain the
profitability of these non-credit activities.
True
Day 3 Recap Session Time Allotted for Recap: 15 minutes Ask a participant to come to the dais and give an account of what he has learnt
during the previous day
Session No. 9 (Day 3 – I Session)
Session title: Asset Classification & Provisioning Norms & preparation of Annexure VIII
I. Session Objectives:
At the end of the session, the participant will be able to:
• Explain the concept of NPA & how the assets are classified as per period
of NPAs
• Describe the provisioning norms various categories of assets classified as
per period of NPAs
• Explain the preparation of Annexure VIII
183
II. Duration of the session: 90 minutes
III. Key Topics to be covered
Key topics Time in minutes
Methodology Material to
be used
Introduction and objective 5 Slide No.1
Prudential Norms - Reason for introduction, NPA Norms
15 Guided and participatory Interaction
Slide Nos.
2 to 11
Income Recognition Norms, Asset Classification Norms
15 Guided and participatory Interaction
Slide Nos.
12 to 16
Provisioning norms 5 Guided and participatory Interaction
Slide Nos.
17 & 18
Preparation of Annexure VIII
10 Guided and participatory Interaction
Case Exercise on NPA classification & provisioning norms
30 Case Exercise
Work Book Exercise 10 Guided Interaction on the answers
Summarising and closing 5 Recapitulation
IV. Performance aids required:
Black or White Board with Chalk piece or white Board Marker Pens & dusters (or)
OHP with transparencies OR Computer (PC) supported with LCD Projector (or)
Laminated Flip chart containing the slides and copies of hand-out to be used.
V. Compulsory Reading by Trainees: Handout No. 7 of the “Handout-cum-
Work Book” provided to them.
VI. Session Guide
a. Introduce yourself and start the session by explaining the objectives of the
session and flash Slide No.1.
184
b. Ask the participants – Whether they have heard the term Prudential
Norms - List out the responses of participants, summarise them and flash
slide No. 2 & 3
c. Then explain the concept of NPA and the NPA norms by flashing Slide
Nos. 4 to 11.
d. Ask the participants about the basis for treating interest on loans and
advance as income. Further ask them about the treatment of Overdue
Interest. Some will say that they treat the overdue interest as income and
make necessary provision. Ask them about the reason for making
provision for overdue interest. List out the responses and explain the
Income Recognition Norms by flashing Slide No. 12.
e. Ask the participants about Good Loans and Bad Loans and difference
between them. Why do they make provision when the loan becomes bad?
List out the responses and explain the Asset Classification Norms and the
Provisioning Norms. Flash slide Nos. 13 to 18.
f. Ask the participants to complete the workbook exercise given at the end of
Chapter. After completion of the workbook exercise, handover a copy of
the answer sheet to the participants & ascertain whether the answers of
the participants tally with the answers given in the answer sheet & clarify
any difference of any participant.
g. Administer the Case Exercise on Prudential Norms and initiate the
discussion on the outcome of the Case Exercise
h. Lastly summarise the discussions, thank the participants and close the
session.
VII Learning from the Session:
• Balance sheet should reflect society’s actual financial position
• An asset becomes NPA when it ceases to generate income
• Income recognition should be based on record of recovery
185
• Overdue interest not to be treated as income. If taken as income,
matching provision has to be made
• If a borrower has more than one loan account, if one account becomes
NPA, all the other loans will also become NPA.
• Advances against term loans, NSCs, IVPs, KVPs and life insurance
policies are not covered by NPA norms
• Adequate provision has to be made for each category of assets
186
187
188
189
190
191
192
193
194
195
7.8 Work Book
7.8.1 Fill up the blanks
a. Prudential Norms comprise of Income Recognition, Asset
Classification, Provisioning and Capital Adequacy Norms.
b. If an account ceases to generate income, it is called as NPA.
c. Crops with crop season longer than one year are called as long duration
crops.
d. The crop season for each crop is decided by State Level Bankers’
Committee.
e. A cash credit account will be treated as Out of Order if there are no
credits continuously for a period of six months.
f. Fee, commission etc., is treated as income only when the account is
classified as Standard Assets.
g. The provisioning norm for standard assets is 0.25 %.
h. Societies have to make provision at 10 % for sub-standard assets.
i. For loss asset and unsecured portion of doubtful assets, the provision
requirement is 100 %.
------------------------------------------------------------------------------------------------------- 3 rd Day
Session No. 10 & 11 (Session II & III of Day 3) Session title: Ratio Analysis and Interpretation of Ratios for Internal
Control I. Session Objectives: At the end of the session, the participants will be
able to explain:
• The meaning of Ratio Analysis & its objectives
196
• The definition of Working Funds, Equity, Income, Costs, Yield,
Margin etc.
• Calculation of different types of Financial Ratios like Efficiency
Ratios and Ratios indicating the performance and their interpretation
• Preparation of MIS XV to XVIII
II. Duration of the session: 180 minutes III. Key Topics to be covered:
Key topics Time
allocation Methodology to be
adopted Slides to be used
Introduction, Objective of the session
5 minutes One slide
Definition of Financial Statements, Components, Parties interested in Financial statements
10 minutes
Interactive lecture and guided discussion
Four slides
Meaning of Ratio Analysis, Objectives, how to use ratios
15 minutes
Interactive lecture and guided discussion
Four slides
Terminologies – Working Funds, Net Worth, Income, Yield, Costs, Margins and their interpretation
30 minutes
Interactive lecture and guided discussion
Nine slides
Calculation of Efficiency Ratios, Performance Indicators and their interpretation
20 minutes
Interactive lecture and guided discussion
Six slides
Capital Adequacy Ratio and its calculation with case exercise
30 minutes
Interactive lecture and guided discussion
Three slides
Case Exercise on Calculation of different ratios and their interpretation
40 minutes
Hands on Practice Three slides
Preparation of MIS XV, XVI & XVIII
20 minutes
Interactive lecture and guided discussion
Eleven slides
Summarising key points of discussion
10 minutes
Clarification & Recapitulation
IV. Performance aids required : 1. Black or white board, chalk pieces or
white board marker pens, 2. duster, 3. OHP with transparencies or PC with LCD
projector, or Laminated Flip chart containing the slides and copies of handout.
197
V. Compulsory Reading by Trainees: Handout No. 8 of the “Handout-cum-
Work Book” provided to them.
VI. Session guide
a. Introduce yourself and highlight the objectives of the session. To
recapitulate the learnings from the sessions on CAS, ask the participants
– What do you mean by Financial Statements? Who are the parties
interested in Financial Statements? – Write down the responses,
summarise them and flash slides Nos. 1, 2, 3 and 4.
b. Then ask the participants whether they have heard about the term
“Analysis of Financial Statements” & What are the objectives? Summarise
the responses and flash slides Nos. 5, 6 & 7.
c. Then list out certain terminologies like Working Funds, Net Worth, Income,
Yield, Cost, Margin etc., and ask them whether they have come across
such terminologies. Some participants may give some vague explanation.
Some may say that they have not heard about certain terms. Explain them
one by one slowly and ensure that the participants have fully understood
the concepts. While explaining flash the slides Nos. 8 to 16. While
explaining the concepts indicate the purpose of calculating the concerned
ratio.
d. Explain the Efficiency Ratios and Performance Indicators one by one and
indicate the purposes of working out those ratios. Ensure that all the
participants have understood the calculation of these ratios. Flash slides
Nos.17 to 22.
e. Ask the participants as to whether they have heard of the term “Capital
Adequacy”. Most of the participants may respond. List the responses and
explain the concept by flashing slide Nos. 23, 24 & 25. Show them the
198
calculation sheet and explain how to work out the Risk Weighted Assets.
Give them a small exercise on calculation of Capital Adequacy Ratio.
f. Indicate the statements to be prepared using the ratios. Explain each
statement one by one and the purpose for which they are prepared. Flash
slide Nos. 26 to 33 & 36.
VII. Learnings from the session:
� Ratio Analysis of Financial Statements is a mathematical tool to assess
the financial condition and performance of PACS.
� Ratios are relationships expressed in mathematical terms between
interconnected figures.
� Ratios are classified into Profit & Loss A/c Ratios, Balance Sheet Ratios
and Inter Statement Ratios
� Financial Ratios help the management to compare the cost with the yield,
decide the strategy for mobilizing resources, their deployment and profit
planning
-------------------------------------------------------------------------------------------------------
Session No. 12 (Session IV of Day 3) Session title: Concise Structure of Balance Sheet & Cash Flow
Statement I. Session Objectives: At the end of the session, the participants will be
able to explain:
• The concept of Working Funds and Equity
• Broad grouping of Accounts into Equity, Borrowings, Deposits,
Loans & Advances, Investments.
• Concept of Cash Flow and Utility of Cash Flow Statement
• Preparation of MIS – XVII & XIX
• Case Exercise on preparation of MIS XVII & XIX
II. Duration of the session: 90 minutes
199
III. Key Topics to be covered:
Key topics Time
allocation Methodology to be
adopted Slides to be
used Introduction, Objective of the session
5 minutes
Recap on the definition of Working Funds & Equity
5 minutes Interactive lecture and
guided discussion Two slides
Broad Grouping of Accounts into Equity, Borrowings, Deposits, Loans & Advances and Investments
10 minutes
Interactive lecture and guided discussion
One slide
Preparation of MIS – XVII and its utility
10 minutes
Interactive lecture and guided discussion
One slide
Case Exercise on preparation of MIS XVII
10 minutes
Hands on Experience
Concept of Cash Flow and its utility
10 minutes
Interactive lecture and guided discussion
One slide
Preparation of MIS XIX 15
minutes Hands on Practice Three slides
Case Exercise on preparation of MIS XIX
20 minutes
Hands on Experience
Summarising key points of discussion
5 minutes Clarification & Recapitulation
IV. Performance aids required : 1. Black or white board, chalk pieces or
white board marker pens, 2. duster, 3. OHP with transparencies or PC with LCD
projector, or Laminated Flip chart containing the slides and copies of handout.
V. Compulsory Reading by Trainees: Handout No. 8 of the “Handout-cum-
Work Book” provided to them.
VI. Session guide
a. Introduce yourself and highlight the objectives of the session. To
recapitulate the learnings from the session on Ratio Analysis, ask the
participants – What do you mean by Working funds & Equity? – Most
of the participants would respond. List out their responses and clarify the
same in case the responses were not correct.
200
b. Then tell the purpose of MIS – XVII (concise structure of balance sheet)
and how to prepare them. Flash slide Nos. 34 & 35. Give them a balance
sheet of a society and ask them to prepare the statement. Ask any one the
participant to write the answer on the black board or white board and
discuss the same with the other participants.
c. Ask the participants as to whether they have heard the terminology
“Sources and Uses” of funds. Many may not respond. Ask them what are
the ways money comes into a society? List out the responses, summarise
them and explain the sources and uses of funds in a society. Also inform
them that the sources are called as Cash Inflow and uses are called as
Cash Outflow. Flash slide No.37.
d. Explain how to prepare the Cash Flow Statement or MIS – XIX and its
utility by flashing slides Nos. 38, 39 & 40. Administer a case exercise on
preparation of Cash Flow Statement. Compare the answers arrived at by
the participants with the answer given in the Trainer’s Guide. In case of
discrepancy, discuss the answer with the participants. Finally summarise
the learnings from the session.
VII. Learnings from the Session:
� Cash flow statement is a statement depicting the changes in cash
position from one period to another.
� It is useful for short term planning
� Cash Book and Bank Book are the sources for preparation of Cash
Flow Statement.
� It has to be prepared on a monthly basis and put up to the Board or
Managing Committee.
201
202
203
204
205
206
207
208
209
210
211
212
213
214
215
216
217
218
219
220
221
Answers to Work Book Exercises
8.12.1 Say True (T) or False (F)
a. Ratios are used as a yardstick for evaluating the financial condition and
performance of a society. (True)
b. Operating Cost means Interest Expenses plus provision for NPAs and
Standard Asset made. (False)
c. Net Income is defined as the excess of Gross Expenses over Gross
Income. (False)
d. Higher the NPA Ratio, poorer is the quality of assets. (True)
e. Capital Adequacy Ratio indicates the quality of capital. (False)
f. NPA is an asset which ceases to generate income to the society. (True)
g. Transaction Cost is also called as Financial Cost. (False)
h. Credit Deposit Ratio indicates the quality of credit and deposit. (False)
222
8.12.2 Fill in the Blanks
a. Business per Employee, Deposit per Employee and Loans & Advances
per Employee are called as Efficiency or Profitability Ratios.
b. NPA Ratio indicates the quality of loan portfolio.
c. Risk Cost indicates the quality of assets.
d. Capital Adequacy Ratio indicates the risk bearing capacity of the society.
e. If the Net Margin is positive, then the society earns net profit and if it is
negative, it incurs net loss.
f. For calculation of Average Working Funds monthly average figures of
balance sheet items have to be taken.
g. Cost incurred on raising resources is called Financial Cost.
h. A society is considered earning profit only when its Gross Income is more
than its Gross Expenses.
i. To increase the interest income, the society should increase the recovery
percentage of interest.
j. To reduce its interest expenses, the society should mobilize low cost
deposits
8.12.3 Complete the following
v. Operating Income = Interest Income plus Miscellaneous Income vi. Operating Cost = Interest Expense plus Cost of Management
vii. Net Interest Income = Total Interest Income minus Total Interest Expenses
viii. Operating Profit = Operating Income minus Operating Expenses (cost)
ix. Net Income = Gross Income minus Gross Expenses
x. Financial Margin = Average Yield on Asset minus Average Cost
xi. Net Margin = Net Financial Margin minus Transaction Cost
223
Case Exercise on calculation of ratios The Profit & Loss Account for the year 2006-07 and Balance Sheet of XYZ PACS
Limited as on 31 March 2007 are furnished below:
Profit and Loss Account for the Year 2006-07
Expenditure Amount
(Rs.) Income
Amount (Rs.)
Interest Paid & payable on Gross Profit 6,000
i) Deposits 1,078,000 Interest on Loans and Advances
1,933,000
ii) Borrowings 1,487,000 Income on Investments
Establishment & Other Expenses
Interest on Deposits with Banks
1,242,000
i) Salary & Allowances 295,000 Dividend on Other investments
152,000
ii) Management Expenses 5,000 Admission Fees 1,000
Rent, Rates, Electricity and Repair Cost on Premises
10,000
Insurance less prepaid insurance
0
Postage & Telephone Charges 1,000
Printing & Stationery 8,000
Audit Fees 2,000
Travelling & Conveyance Expenses
2,000
Depreciation on Properties 12,100
Other Expenses 2,000
Provision for NPAs 300,000
Provision for Standard Assets 100,000
Profit for the year 31,900
Total 3,334,000 Total 3,334,000
224
Appropriation of Profit
Expenditure Amount (Rs.) Income Amount (Rs.)
Accumulated Losses (previous year)
179,000 Profit for the current year
31,900
Balance of losses carried to Balance Sheet
147,100
Total 179,000 Total 179,000
Balance of XYZ PACS Limited as on 31 March 2007
Liabilities Amount
(Rs.) Assets
Amount (Rs.)
Capital Cash on Hand 3,000
Paid up – Individuals 1,085,000 Balances with DCCB
Paid up – Government 225,000 Savings Account 325,000
Reserves & Funds Investments
Reserve Fund 37,000 Term Deposits with DCCB
13,707,000
Grants and other Funds Term Deposits with DCCB – R F deposits
81,000
Subsidy meant for society 34,000 Shares in Cooperative institutions
762,000
Deposits Loans & Advances
Savings Deposits 6,263,000 KCC Loans - Rs. 12176000
Recurring Deposits 6,553,000 Loan against Deposits - Rs. 610,000
Term Deposits 1,540,000 Less: Provision for NPAs -Rs. 902,000
Borrowings Loans & Advances net of provisions
11,884,000
KCC Credit Limit 11,655,000 Closing Stock 47,000
Other Liabilities Fixed Assets net of Depreciation
Interest Accrued on Deposits 2,076,000 Land & Buildings 204,500
225
Interest Accrued on Borrowings
306,000 Furniture & Fixtures 41,400
Sundry Creditors 87,000 Other Assets
Other Liabilities 406,000 Interest Accrued but not due
414,000
Provisions Interest Receivable on Investments
2,740,000
Provision for Standard Assets
100,000 Sundry Debtors Rs.180,000/-
Provision for Outstanding Expenses
2,000
Less: Provision for Sundry Debtors Rs. 169000
Net Sundry Debtors 11,000
Prepaid Insurance 2,000
Profit & Loss A/c (Accumulated Loss)
147,100
Total 30,369,000 Total 30,369,000
From the above financial statements, workout the following:
1. Working Funds
2. Interest Income
3. Interest Expenses
4. Net Interest Income
5. Miscellaneous Income
6. Operating Income
7. Cost of Management
8. Operating Cost
9. Operating Profit
10. Gross Income
11. Total Expenses or Gross Expenses
12. Net Income (Net Profit)
13. Average Yield
14. Average Cost
15. Financial Margin
226
16. Transaction Cost
17. Net Margin
18. Risk Cost
19. Net Worth
20. Capital Adequacy Ratio
21. Credit Deposit Ratio
22. Ratio of Total Loans to Total Assets
23. Ratio of Total Deposits to Total Assets
24. Ratio of Operating Expenses to Average Total Assets
25. Ratio of Interest Earned to Interest Paid
26. Prepare Concise Structure of Balance Sheet
Answers to Case Exercise
1 Working Funds Working Funds = Balance Sheet total minus contra items, accumulated losses & fixed assets
Working Funds = 303,69,000 (-)147,100 (-) 204,500 (-) 41,400
= 299,76,000
2 Interest Income Interest Income = Interest Income received & receivable on Loans &
Advances and on Investments
= 19,33,000 + 12,42,000 + 1,52,000
= 33,27,000
3 Interest Expenses Interest Expenses = Interest paid & payable on Deposits and on Borrowings
= 10,78,000 + 14,87,000
= 25,65,000
4 Net Interest Income Net Interest Income = Interest Income (-) Interest Expenses
227
= 33,27,000 (-) 25,65,000
= 7,62,000
5 Miscellaneous Income Miscellaneous Income = Trading Profit + Admission Fees
= 6,000 + 1,000
= 7,000
7,000
Miscellaneous Income as a percentage to W Funds = -------------------X 100 299,76,000 = 0.02% 6 Operating Income Operating Income = Interest Income + Miscellaneous Income
= 33,27,000 + 7,000
= 33,34,000
7 Cost of Management Cost of Management = Salary & Allowances + Management Expenses + Rent,
Rates, Electricity & Repairs to Property + Insurance +
Postage & Telephone Charges + Printing & Stationery
+ Audit Fees + Travelling & Conveyance Expenses +
Vehicle Expense + Donations & Subscriptions + Other
Expenses + Depreciation on Properties
Cost of Management = 2,95,000 + 5,000 + 10,000 + 1,000 + 8,000 + 2,000 + 2,000 + 12,100 + 2,000
= 3,37,100 8 Operating Cost
Operating Cost = Interest Expense + Cost of Management
= 25,65,000 + 3,37,100
= 29,02,100
228
9 Operating Profit Operating Profit = Operating Income (-) Operating Cost
= 33,34,000 (-) 29,02,100
= 4,31,900
10 Gross Income
Gross Income = Interest Income + Miscellaneous Income + Capital Gains &
Other Income
= 33,27,000 + 7,000
= 33,34,000
11 Total Expenses or Gross Expenses Gross Expenses = Interest Expenses + Cost of Management + Risk Cost
(Provisions Made for NPAs)
= 25,65,000 + 3,37,100 + 4,00,000
= 33,02,100
12 Net Income (Net Profit) Net Income = Gross Income (-) Gross Expenses
= 33,34,000 (-) 33,02,100
= 31,900
13 Average Yield Interest Income Average Yield = ------------------------------------------- X 100 Average Working Funds 33,27,000 = --------------------------- X 100 299,76,000
= 11.1 %
229
14 Average Cost Interest Expenses Average Cost = ----------------------------------------- X 100 Average Working Funds 25,65,000 = --------------------------- X 100 299,76,000 = 8.56 % 15 Financial Margin Financial Margin = Average Yield on Asset (-) Average Cost of Funds
= 11.10% (-) 8.56%
= 2.54%
16 Transaction Cost
Total Cost of Management Transaction Cost = ---------------------------------------------- X 100
Average Working Funds 3,37,100 = ------------------------- X 100 299,76,000
= 1.12%
17 Risk Cost Provision required to be made against its NPAs for the year +
= Provision required to be made for standard assets for the year X 100 Average working funds
4,00,000 = --------------------------- X 100 299,76,000 = 1.33%
230
18 Net Margin
Net Margin is defined as Financial Margin plus Miscellaneous Income as a
percentage to Working Funds minus Risk Cost and Transaction Cost as a
percentage to Working Funds.
Net Margin = 2.54% + 0.02% (-) 1.33% (-) 1.12%
= 0.11%
19 Net Worth Net Worth = Paid up Capital + Free Reserves + Credit Balance in the
Profit & Loss A/c + Provision for Standard Assets (-) Accumulated Losses
= 10,85,000 + 2,25,000 + 37,000 + 1,00,000 (-) 1,47,000
= 13,00,000
20 Capital Adequacy Ratio Net Worth Capital Adequacy Ratio = ------------------------------------------- X 100 Risk Weighted Assets 13,00,000 = ------------------------ X 100 193,00,375 = 6.74%
Work Sheet on Calculation of Risk Weighted Assets
Sl. No.
Assets Amount
(Rs.)
Risk Weight
(%)
Risk Weighted Assets
(3 X 4) / 100
(1) (2) (3) (4) (5)
1 Cash on Hand 3,000 0% 0
2 Balances with DCCB
A In Current Account 0 20% 0
B In Savings Bank Account 325,000 22.5% 73,125
231
3 Balances with Other Banks
A In Current Account 0 20% 0
B In Savings Bank Account 0 22.5% 0
C Others 0 22.5% 0
4 Investments
A Government Securities 0 2.5% 0
B Shares in other Cooperative Institutions
762,000 102.5% 781,050
C Fixed Deposits with DCCB / Other Banks �
13,788,000 22.5% 3,102,300
D NSC / KVP 0 2.5% 0
E Staff P F balance with P F Trust / as Deposits with Banks
0 22.5% 0
F Others - Deposit with Marketing Societies
0 102.5% 0
5 Loans & Advances
A ST / MT / LT Loans to Members 11,884,000 100% 11,884,000
B Loans to staff covered by mortgage / superannuation benefits
0 20% 0
C Other Loans (Specify) 0 100% 0
6 Closing Stock 47,000 100% 47,000
7 Fixed Assets
A Land & Buildings, Godown 204,500 100% 204,500
B Furniture, Fixtures, Banking Counter, Computers & Electrical Installations
41,400 100% 41,400
C Vehicles 0 100% 0
D Agriculture Machinery 0 100% 0
8 Other Assets
A Interest Accrued but not overdue 3,154,000 100% 3,154,000
B Overdue Interest 0 100% 0
C Interest Receivable on Investments 0 100% 0
D Sundry Debtors 11,000 100% 11,000
E Other Receivable 0 100% 0
232
F Amount involved in Frauds 0 100% 0
G Prepaid Expenses 2,000 100% 2,000
9 Total Risk Weighted Assets 30,221,900 19,300,375
21 Credit Deposit Ratio Total Loan Outstanding Credit Deposit Ratio = ---------------------------------------------- X 100 Total outstanding Deposit 118,84,000 = -------------------------------- X 100 143,56,000 = 82.78% 22 Ratio of Total Loans to Total Assets Total Loans & Advance Outstanding
Ratio of Total Loans to Total Assets = ---------------------------------------------X 100 Total Assets 118,84,000 = ---------------------------- X 100 302,21,900
= 39.32%
23 Ratio of Total Deposits to Total Assets Total Deposits Outstanding Ratio of Total Deposits to Total Assets = -------------------------------------- X 100 Total Assets 143,56,000 = --------------------------- X 100 302,21,900
= 47.50%
233
24 Ratio of Operating Expenses to Average Total Assets Operating Expenses Ratio of Operating Expenses to Average Total Assets = ------------------------------ X 100 Average Total Assets 29,02,100 = ---------------------------- X 100 302,21,900 = 9.60% 25 Ratio of Interest Earned to Interest Paid Interest Received on Loans
And Advances & Investments Ratio of Interest Earned to Interest Paid = --------------------------------------- X 100 Interest paid on Deposits & Borrowings 33,27,000 = -------------------------- X 100 25,65,000
= 129.71%