Principle of accounting

Practical work
Trial balance of A3 company for the year ended 31st chaitra 2075
is given below:
Debit items Amou Credit items Amoun
nt t
Cash balance 10000 Sales 120000
Fixed assets 80000 Provision for bad 1000
debt
Opening stock 20000 Accumulated 9000
depreciation
Purchase 70000 Accounts payable 20000
Office expenses 10000 Capital 100000
Prepaid expenses 15000 Bank Loan 10000
Advertisement 8000
Account receivables 45000
Drawing 2000
Total 26000 Total 26000
0 0

Required:
a. Statement of profit and loss
b. Statement of balance sheet
Solution: Profit and loss statement as per provision of NFRS is

A3 Company
Profit and loss statement based on NFRS
For the year ended 31st chaitra 2075
Particular Note Amount (Rs)
s
Revenue from operation 1.1 1,20,000
Cost of sales 1.2 (90,000)
Gross profit 30,000
Other income Nil
Distributed expenses 1.3 (7,000)
Administrative expenses 1.4 (10,000)
Other operating expenses 1.5 Nil

Profit from operation 13000

Financial cost Nil
Profit before tax 13000
Income tax expenses Nil
Profit from continued operation 13000
Profit/loss from discontinued operation Nil
Net income for the year 13000

Working notes:
1.1 Revenue from operations :
Sales: 120,000
120,000
1.2 Cost of sales:
Opening stock: 20,000
Purchase + 70,000
90,000
1.3 Other income: 0
1.4 Distribution Expenses:
Advertisement: 8,000
Less: Provision for bad debts (1,000)
7,000

1.5 Administrative Expenses:

Office Expenses: 10,000
10,000
1.6 Finance Cost: 0
 A3 Company
Statement of financial position
As at 31st chaitra 2075
Assets Note Current years(2075)
s
Non-current assets:
Property, plant & equipment 1.1 71000
Total non-current assets 71000
Current asset:
Cash and cash equivalents 1.2 10,000
Trade and other receivables 1.3 45,000
Prepaid expense 15,000

Total current assets 70,000

Total 141,000
assets…………………………………………
Equity:
Share capital 111,000
Total equity 111,000
Liabilities
Non-current liabilities:
Loans and borrowing 10000
Total non-current liabilities 10000
Current liabilities:
Trade and other payable 20000
Total current liabilities 20000
Total liabilities 30000
Total equity and liabilities 141,000

Working Notes:

2.1 Property, Plant and Equipment:

Fixed Assets: 80,000
Less: Accumulated Depreciation (9,000)
71,000
2.2 Trade and other receivables:
Account Receivable 45000
45,000
2.3 Cash and cash equivalent:
Cash Balance: 10,000
10,000
2.4 Capital:
Capital: 100,000
Add: Net profit 13,000
Less: Drawing (2,000)
111,000
2.5 Trade and other payables:
Accounts Payable: 20,000
20,000