Page 262 - AAAXII

M.250 An Aid to Accountancy—CBSE XII

21. COMPARATIVE STATEMENT OF PROFIT AND LOSS for the years ended 31st March, 2017 and 2018

Particulars Note 31st March, 31st March, Absolute Percentage
No. 2017 2018 Change Change
` ` ` %
I. Revenue from Operations 10,00,000 20,00,000 10,00,000 100.00
II. Expenses:
(a) Cost of Materials Consumed 6,00,000 15,00,000 9,00,000 150.00
(b) Other Expenses 5,50,000 6,00,000 50,000 9.09
Total Expenses 11,50,000 21,00,000 9,50,000 82.61
III. Profit before Tax (I – II) (1,50,000) (1,00,000) (50,000) (33.33)
IV. Tax ... ... ... ...
V. Profit after Tax (III – IV) (1,50,000) (1,00,000) (50,000) (33.33)

Note: Since there is loss, tax will not be adjusted.
Or
Common-size Balance Sheet is the Vertical analysis of Balance Sheet in which each asset
is expressed as percentage of Total Assets and each liability is expressed as percentage
of Total of Equity and Liabilities. Total Assets or Total of Equity and Liabilities are
taken as 100 and all the values are expressed as percentage of the total.
Objective of Common-size Balance Sheet
(i) To analyse the change in individual items of Balance Sheet.
(ii) To determine the trend in different items of assets, equity and liabilities.
(iii) To assess the relative financial position on the basis of Common-size Balance
Sheets for different enterprises belonging to the same industry.
Opening Inventory + Closing Inventory
22. (a) Average Invenory =
2
` 60,000 + ` 1,00,000
= = ` 80,000
2
Cost of Revenue from Operations
Inventory Turnover Ratio =
Average Inventory
Cost of Revenue from Operations
8 =
` 80,000
Cost of Revenue from Operations = ` 80,000 × 8 = ` 6,40,000
Gross Profit = 25% of ` 6,40,000 = ` 1,60,000
Revenue from Operations = Cost of Revenue from Operations + Gross Profit
= ` 6,40,000 + ` 1,60,000 = ` 8,00,000.
(b)
Effect Reason
(i) Reduce Equity is increased by the amount of profit but Debt remains unchanged.
(vi) No Change Long-term Debts are not affected because debentures redeemed are Current Liabilities. As per Schedule
III of the Companies Act, 2013, long-term liabilities maturing within 12 months or within the period of
Operating Cycle from the Balance Sheet Date are shown as Current Liabilities under Current Maturities
of Long-term Debts. Thus, redeemed debentures are Current Liabilities and not Non-current Liabilities.
Shareholders’ Funds also remain unchanged. Therefore, Debt to Equity Ratio will not change.