Accountancy Project Report

on
Preparation of Final Accounts
➢ Front Page
➢ Acknowledgement
➢ Certificate
➢ Declaration
➢ Contents
➢ Introduction
➢ Concept of Trading Account, its objectives, and advantages
➢ Concept of Proft and Loss Account, need of preparing P/L Account
➢ Concept of Balance Sheet, its features, need of Preparing Balance sheet
➢ Objectives of the Study
1. To understand the process of recording, classifying and summarizing the business
transactions.
2. To know the meaning, content and format of Trading, Profit and Loss Account and
Balance Sheet.
3. To explain the need and purpose of preparation of Trading Account, Profit and
Loss Account and Balance Sheet.
4. To learn the process of preparation of Final Accounts of a business organization.
➢ Practical Problem: (Sample Transactions)
M/s Jessica & Sons decided to commence a Sole Trade Business. Following are
the financial transactions of the business. You are required to record the
following transactions in the books, post them into ledgers and prepare a trial
balance. Also prepare Trading and Profit and Loss Account as well as Balance
sheet on 31st March, 2024.
➢ Findings of the Study
1. The Trading account ascertains the Gross Profit or Gross Loss of an organization
during an accounting period.
2. The Profit and Loss account helps to determine the Net Profit or Net Loss of an
organization during an accounting period.
3. The Balance Sheet reflects the Financial Position of an organization by showing the
nature and value of assets as well as the nature and amount of the liabilities at a
given date.
4. As per the Trading Account prepared, the Gross Profit of ___________ (Name of
the business you have taken in the Practical problem) stands at Rs ____________
for the year ended 31st March 20__ (the year you have mentioned in the practical
problem).
5. It is found from the Profit and Loss Account that ____________ has earned a net
profit of Rs. ________ for the year ended 31st March 20__.
6. According to the balance sheet of ____________, the Assets and Liabilities stand
at Rs _____________ on 31st March 20__.

➢ Conclusion
Final accounts give an idea about the financial performance and financial position of a
business to its management, owners, and other interested parties. All business
transactions are first recorded in the book of prime entry, i.e. Journal. They are then
classified under the separate ledger accounts and balanced. A Trial Balance is prepared
after having posted the journal entries into ledger and balancing the accounts. A Trial
Balance is a statement which is prepared with the debit and credit balances of the
Ledger Accounts to test the arithmetical accuracy of the books. After preparation of
 the Trial Balance, the trader wants to know the trading results of the business, which
means whether the business has earned a profit or a loss. For this purpose, the business
prepares Trading Account and Profit and loss Account at end of an accounting period
to finds out its the true financial performance. Similarly, the business prepares Balance
Sheet, containing the balances of its Assets and Liabilities on a particular date in order
to ascertain the true financial position of the business. The preparation of final
accounts is the last stage of the accounting cycle. Final account is an essential practice
for every enterprise to know the actual performance of the organization.

➢ References
BOOKS
C. Mohan Juneja, J. S. Arora, R. C. Chawla and P.C. Sahoo : 2023 : Double Entry Book-
Keeping 1.1 – 1.52
Grewal, T. S., & Gupta, S. C. (2023). Double Entry Book Keeping Financial Accounting. S.
Chand Publishing.
Jain, S. P., & Narang, K. L. (2023). Financial Accounting. Kalyani Publications.
WEBSITES
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OR

PTO
 Accountancy Project Report
on
Accounting for Depreciation
➢ Front Page
➢ Acknowledgement
➢ Certificate
➢ Declaration
➢ Contents
➢ Introduction
Expenditure on assets of the business, like furniture, fixtures and fittings of the shop,
motor vans, machines and equipment are neither goods nor expenses of a year.
Expenditures of this nature give services to the business for many years and therefore
called fixed assets. If the expenditure on the fixed assets is deducted from the profit of
any one year, it would be wrong. Since their benefit is enjoyed by the business for more
than one year. The correct thing will be to distribute their cost over the years of their
useful life to the business. The portion of the cost of fixed assets charged each year as
expense is named as depreciation.
For example, an office chair is purchased for Rs. 7,500 and it is estimated that after ten
years it will be scrapped. The useful life of the chair is ten years over which the cost of
Rs. 7,500 will be distributed. Each year’s allocation may be calculated as Rs. 750. Thus,
Rs. 750 is the depreciation expense for each year. Depreciation, thus, is an expense
charged during a year for the reduction in the value of fixed assets, arising due to:
Normal wear and tear out of its use and passage of time, obsolescence due to change in
technology, fashion, taste and other market conditions.
➢ Concept and Features of Depreciation
➢ Causes and need for charging Depreciation
➢ Concepts of Amortization, Depletion, Dilapidation and Obsolescence
➢ Methods of Charging Depreciation (SLM and WDV Method), its merits and
demerits
➢ Methods of Recording Depreciation
➢ Objectives of the Study
1. To understand the meaning and nature of Depreciation.
2. To determine the need for charging depreciation and identify its causes.
3. To explain the various methods of charging depreciation and highlight its
advantages and disadvantages.
4. To compute the amount of depreciation using Straight Line Method and Written
Down Value Method.
5. To highlight the different methods of recording depreciation.
➢ Practical Problem
*SAMPLE QUESTIONS
 1. M/s Mehra and Sons acquired a machine for Rs. 1,80,000 on October 01, 2016, and
spent Rs. 20,000 for its installation. The firm writes-off depreciation at the rate of
10% p.a. on original cost every year. Record necessary journal entries for the year
2017 and draw up Machine Account and Depreciation Account for first 3 years
given that:
(i) The book of accounts closes on March 31 every year; and
(ii) The firm charges depreciation to asset account.

2. M/s Sahani Enterprises acquired a printing machine for 40,000 on July 01, 2014
and spent Rs. 5,000 on its transport and installation. Another machine for Rs. 35,000
was purchased on January 01, 2016. Depreciation is charged at the rate of 20% p.a.
on written down value. Prepare Printing Machine account and Depreciation account
for the year ended 31st December.

3. On January 1, 2012 X Ltd. purchased a machinery by cheque for Rs. 12,00,000. On

July 1, 2014 a part of the machinery purchased on January 1, 2012 for Rs. 80,000
was sold for Rs. 45,000 and new machinery at a cost of Rs. 1,58,000 was purchased
and installed on the same date. The company has adopted the method of providing
10% p.a. depreciation on the original cost of the machinery. Give journal entries
and show the necessary ledger accounts assuming that Provision for Depreciation
Account is maintained. The accounting year ends on 31st December.

4. On 1st April 2011, X Ltd. purchased a plant for Rs. 5,00,000. On 1st July 2013, a
part of plant purchased for Rs. 70,000 on 1st April 2011 was sold for Rs. 40,000
and a fresh plant was purchased for Rs. 1,00,000. Depreciation is provided @ 20%
p.a. on reducing balance method and books of accounts are closed on 31st
December each year. Prepare Plant A/c. and Provision for Depreciation A/c.

➢ Findings of the Study

1. Depreciation is a permanent and gradual decline in value of the fixed assets, and
it cannot be restored.
2. Depreciation is not the process of valuation of assets but the process of allocation
of the cost of an asset to its useful life.
3. Depreciation is a non-cash expense and does not involve any cash outflow.
4. It occurs due to wear and tear, obsolescence, effluxion of time, accidents,
depletion, etc.
5. The Straight-Line Method (SLM) of Depreciation reduces the value of an asset
consistently annually till it reaches its scrap value.
6. The written Down Value (WDV) method is a depreciation technique that applies
a constant rate of depreciation to the net book value of assets each year.
7. The Written Down Value method of charging depreciation is accepted by the
Income Tax Act, 1961.
➢ Conclusion
Matching principle requires that the revenue of a given period is matched against the
expenses for the same period. This ensures ascertainment of the correct amount of
profit or loss. If some cost is incurred whose benefit extend to more than one
 accounting period, it is not justified to charge the entire cost as expense in the year in
which it is incurred. In fact, such a cost must be spread over the periods in which it
provides benefits. Depreciation, on fixed assets, deals with such a situation. Fixed
assets are the assets which are used in business for more than one accounting year.
Fixed assets (technically referred to as “depreciable assets”) tend to reduce their value
once they are put to use. In general, the term “Depreciation” means decline in the value
of a fixed assets due to use, passage of time or obsolescence. In other words, if a
business enterprise procures a machine and uses it in production process then the value
of machine declines with its usage. Even if the machine is not used in production
process, we cannot expect it to realise the same sales price due to the passage of time
or arrival of a new model (obsolescence). It implies that fixed assets are subject to
decline in value and this decline is technically referred to as depreciation.
➢ References
BOOKS
• C. Mohan Juneja, J. S. Arora, R. C. Chawla and P.C. Sahoo: 2023: Double Entry
Book-Keeping
• Grewal, T. S., & Gupta, S. C. (2023). Double Entry Book Keeping Financial
Accounting. S. Chand Publishing.
• Jain, S. P., & Narang, K. L. (2023). Financial Accounting. Kalyani
Publications.

WEBSITES
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