ISC ACCOUNTS PROJECT

Name – Saksham Srivastava

Class – 12th c
Roll Number - 35
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Certificate
Name of Teacher- Dr. Anupam Vidyarthi

Designation - Vice Principal

School - Seth M.R. Jaipuria School

It is to clarify that Saksham Srivastava of class 12 c had

completed his project under my guidance.

I certify that the project is made in accordance with

the guidelines of ISC.

Dr. Anupam Vidyarthi

 Acknowledgement
I would like to express my special thanks to my
Accounts teacher Dr. Anupam Vidyarthi as well
as my Principal Mrs. Promini Chopra who gave
me the golden opportunity to do this wonderful
project on Issue of shares and Ratio Analysis. This
project helped me in knowing a lot of things and I
am really thankful to them. Secondly I would like
to thank my parents and friends who helped me a
lot in finalizing this project within the frame.
 Index
Project 1:
S.No Title
1. Shares-Introduction
2. Types of Shares
3. Share Capital
4. Question on Issue of shares
5. Solution
6. Conclusion

Project 2:
S.No Title
1. Ratio Analysis-Introduction
2. Classification of Ratios
3. Question on Ratio analysis
4. Solution
5. Conclusion
6. Bibliography
 Project 1 :
Shares-Introdution
Meaning of Shares: The total capital of the company is divided into
units of small denominations. Each such unit is called ‘share’.
Example – If the total capital of the company is 10,00,000 divided
into 1,00,000 units of ₹10 each, each unit of ₹10 will be called a
share (of ₹10 each). Nature of Shares: The shares of a Company are
movable property, transferable in the manner provided by the
Articles of Association of the Company. Shares of Company are
treated as goods under Sales of Goods Act, 1930. These can be
bought, sold, hypothecated and bequeathed.
 TYPES OF SHARES
Under section 43 of the Companies Act, 2013, a company may issue
two types of shares:

a) Preference shares

b) Equity shares

a) Preference shares - Preference shares are those which carry a

right to receive dividend at a fixed rate before any dividend is paid
on equity shares. When the company is wound up, they have the
right to the return of capital before that of equity shares. Preference
shareholders have the right to participate in excess profits.

b) Equity shares - Shares which carry no preference right or priority

in the payment of dividend and in the repayment of capital are
called equity shares or ordinary shares. Equity shares are issued
prior to other securities and are repaid in the last. Dividend on such
shares is payable only when there are profits and the company
declares dividend. Holders of equity shares generally enjoy voting
rights. They are also entitled to residual profits of the company.
 SHARE CAPITAL
It means the capital raised by a Company by the issue of shares.
Many individual and institutions contribute varying sums to the
Company’s capital yet there is no separate Capital Account for each
of these individuals or institutions. There is one Consolidated Capital
Account called the Share Capital Account. Kinds of share capital:

1.) Authorized, Registered or Nominal capital

2.) Issued capital

3.) Subscribed capital

a) Subscribed and fully paid up

b) Subscribed but not fully paid up

4.) Called up capital

5.) Paid-up capital

6.) Reserve capital

Question : -
A Ltd. Issued to the public for subscription
of 1000 shares of rupees 10 each at a
discount of 10% payable rupees 4 on
application rupees 3 on allotment and
rupees two on first and final call . The
issue was fully subscribed and all the
money was duly recieved .
Pass the journal entries for the following:-
Solution : -
Date Particulars L.F. Dr. Cr.
Bank a/c Dr. 4000
1. 4000
To share Application
share application Dr. 4000
2. 4000
To share capital
Share allotment a/c Dr. 3000
3.
Discount on issue of shares Dr. 1000
4000
To Share Capital
Bank a/c Dr. 3000
4. 3000
To Share allotment
Share first and final call Dr. 2000
5. 2000
To Share capital
Bank a/c Dr. 2000
6. 2000
To Share first and final call
 CONCLUSION
In this question, a Ltd. issued to the public for
subscription of 1000 shares of Rs. 10 each at a
discount of 10% payable Rs. 4 on application Rs. 3 on
allotment and Rs. 2 on first and final call. The issue
was fully subscribed and all the money was duly
received. Therefore 4000 share application were
given by debiting it from bank. Then , Share
application was debited to share capital .

Share allotment and discount on issue of shares was

debited to share capital. Lastly Share first and final call
was credited by Share allotment .
 BIBLIOGRAPHY
 D.K. Goel Accountancy (Volume 2)


https://byjus.com/commerce/issue-ofshares/#:~:te
xt=The%20issue%20of%20shares%20is,2013
%20while%20circulating%20the%20shares.
https://groww.in/p/types-of-shares/
 PROJECT 2:

RATIO ANALYSIS
There are various types of ratios which are generally called
accounting ratios which are being used to better understand the
financial position of a company.

Objectives of Ratio Analysis-

★To locate the weak spots of business which need more attention.

★To provide deeper analysis of the liquidity, solvency, activity and

profitability of the business.

★To provide information for making cross-sectional analysis i.e. for

making comparison with that of some selected firms in the same
industry.

★To provide information for making time series analysis i.e. for
making comparison of a firm’s present ratios with its past ratios.

★To provide information useful for making estimates and preparing

the plans for the future.
 CLASSIFICATION OF RATIOS
❖Balance Sheet Ratios
1. Current Ratio
2. Quick Ratio
3. Debt-Equity Ratio
4. Debt to Total Assets Ratio
5. Proprietary Ratio
❖ Statement of Profit & Loss Ratios
1. Gross Profit Ratio
2. Net Profit Ratio
3. Operating Ratio
4. Operating Cycle Ratio
5. Interest Coverage Ratio
❖ Composite Ratios
1. Trade Receivables Turnover Ratio
2. Trade Payable Turnover Ratio
3. Working Capital Turnover Ratio
4. Inventory Turnover Ratio
5. Earnings Per Share
6. Price Earnings Ratio
7. Return of Investment
QUESTION : -
Calculate any three of the following ratios with the help of
the information given below-

(i) Operating Ratio

(ii) Gross Profit Ratio
(iii) Quick Ratio
(iv) Working Capital Turnover Ratio
(v) Proprietary Ratio

INFORMATION

Equity Share Capital 1,00,000; 8% Preference Share

Capital *80,000; Long-term Borrowings (9% Debentures
60,000); Reserve and Surplus 10,000; Revenue from
Operations 2,00,000; Opening Inventory 12,000;
Purchases 1,20,000; Wages 8,000; Closing Inventory
18,000; Selling and Distribution Expenses 2,000; Liquid
Assets 50,000, Tangible Fixed Assets 2,12,000 and Current
Liabilities 30,000.
 SOLUTION
i.) Operating Ratio : -
(Cost of Revenue from Operations+ Operating Expenses)*100
Net Revenue from Operations

Cost of Revenue from Operations= Opening Inventory+ Purchases +

Wages- Closing Inventory

Cost of Revenue from Operations= 12,000+1,20,000+8,000-

18,000=1,22,000 Operating Ratio= {1,22,000+ 2,000(Selling Ex.)
*100}/2,00,000 =62%

ii.) Gross Profit Ratio : -

Gross Profit*100
Net Revenue From Operations

Gross Profit= Net Revenue from Operations- Cost of revenue

from operations
Gross Profit= 2,00,000-1,22,000=78,000 Gross Profit Ratio=
(78000/200000)*100

iii.) Quick Ratio : -

Liquid Assets
Current liabilities
 Quick Ratio= 50000/30000= 1.67:1
iv.) Working Capital Turnover Ratio : -
Net revenue from operations
Working Capital

Working Capital = Closing Inventory+ Liquid Assets-Current

Liabilities

Working Capital Turnover Ratio – (2,00,000/38,000)= 5.26 times

v.) Proprietary Ratio : -

Sharehoder’s fund
Total assets

Shareholder’s Fund= Equity+ Preference Share

Capital+ Reserves and Surplus
Shareholder’s Fund= 1,00,000+80,000+10,000= 1,90,000

Total Assets= Closing Inventory+ Liquid Assets+ Tangible

Fixed Assets= 18,000+ 50,000+ 2,12,000= 2,80,000

Proprietary Ratio= (1,90,000/2,80,000)*100= 67.86%

 CONCLUSION
In the above question, the accounting ratios of a particular firm have been
calculated. The Gross Profit Ratio of the firm was found to be 39%. The Gross
Profit ratio reflects pricing policy and efficiency in the direct trading
operations of the enterprise This Operating ratio measures the proportion of
an enterprise's cost of Revenue from Operations and operating expenses in
comparison to its Revenue from Operations. The operating ratio of the
company is 62%. 'Liquid assets' means those assets which will be converted
into cash and cash equivalents very shortly. The liquid ratio in this question
comes out to be 1.67:1 which is also more than the ideal ratio of 1:1.
Therefore, it can be said that the company is in a position to pay its current
liabilities instantly. Working Capital Turnover Ratio is of particular
importance in nonmanufacturing concerns where current assets play a major
role in generating sales. This ratio reveals how efficiently working capital has
been utilized in making sales. In other words, it shows the number of times
working capital has been rotated in producing sales. The following company
has a ratio of 5.26 times which shows efficient use of working capital and
quick turnover of current assets like inventory and Trade ReceivablesThe
Proprietary ratio indicates the proportion of total assets funded by owners or
shareholders. The proprietary ratio is 67.86% which is an indicator of sound
financial position from long-term point of view, because it means that a large
proportion of total assets is provided by equity and hence the firm is less
dependent on external sources of finance.
 Bibliography
 D.K. Goel Accountancy (Volume 2)

https://www.investopedia.com/terms/r/
ratioanalysis.asp


https://www.investopedia.com/financial-edge/0910/6-
basicfinancial-ratios-and-what-they-tell-you.aspx

https://www.accountingtools.com/articles/
ratioanalysis.html
Thank You

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