COMPARATIVE BALANCE SHEET “Comparative Balance Sheet analysis is the study of the trend of the same items, group of items and computed items in tvo or more Balance Sheets of the same busine: enterprise on different dates.” —Foulka Comparative Balance Sheet is the horizontal analysis of Balance Sheet in which each item of assets, equity and liabilities is analysed horizontally (i.e., showing increase/decrease rach item of Assets, Equity and Liabilities in absolute amount as well as in percentage by taking amount of previous year in each item) for two or more accounting periods. It analy as base. Advantages of Comparative Balance Sheet 1. A Balance Sheet shows the balances of accounts after closing the books at a certain date, whereas the Comparative Balance Sheet shows not only the balances of accounts as at different dates but also the extent of their increase or decrease between these dates. nv In a Balance Sheet, the emphasis is on status, whereas in the Comparative Balance Sheet the emphasis is on change. In other words, Comparative Balance Sheet shows the reasons for change in Financial Position. 3. Comparative Balance Sheet is more useful than Balance Sheet as it has data of two Balance Sheets which may be used in studying the trends in enterprise. 4. It shows the effects of business operations on its assets, equity and liabilities. It is a link between the Balance Sheet and the Statement of Profit and Loss. Preparation of Comparative Balance Sheet Comparative Balance Sheet has six columns with the following information: First Column has the items or components of Balance Sheet. Second Column has the note number against the item in the Balance Sheet. Third Column has data (amounts) of current year’s Balance Sheet. Fourth Column has data (amounts) of previous year’s Balance Sheet. Scanned with CamScannerFi orences 04 , ifth Columm has differences (increase or decrease) in amounts between the current year and previous year. rs (increase or decrease) expressed as percentage, taking, previous s calculated with the help of formula given below: Sixth Cola has the above differs year's amount as the base, Percentag — 6100 = Ko vious Year _ Absolute Change Amount of Pi Percentage Change = FORMAT OF COMPARATIVE BALANCE SHEET COMPARATIVE BALANCE SHEET as af Particulars Note | Current | Previous ] Absolute Change | Percentage Change No. Year Year {Increase/Decrease) | (Increase/Decrease) z z z = =A-B £100 A B C=A- a a 2) 8) “ i) ©) 1. EQUITY AND LIABILITIES 1. Shareholders’ Funds (0) Share Capital: (i) Equity Share Capital ~ ~ (i) Preference Share Capital (b) Reserves and Surplus - 2. Non-Current Liabilities (a) Long-term Borrowings “ (b) Long-term Provisions 7 3. Current Liabilities (a) Short-term Borrowings (b) Trade Payables (0) Other Current Liabilities - (d)_ Short-term Provisions = Total MN. ASSETS 1. Non-Current Assets (0) Fixed Assets: (i) Tangible Assets “ = “ (i) Intangible Assets = . on (6) Non-Current Investments - (0) Long:termLoans and Advances ~ ~ = - 2. Current Assets (a) Current Investments ~ ~ ~ - (b) Inventories 7 = ” ca (0) Trade Receivables ~ ~ - = (d) Cash and Bank Balances ~ ~ - (e) Shorter Loans and Advances - (f) Other Current Assets “ : : - Total = Meurrent year's value has decreased, show the Absolute change and Percentage change in brackels- Scanned with CamScannerPrepare Comparative Balance Sheet of Ayush Ltd: Particulars NoteNo. ] 3¥st March, | 31st March, 2020(%) | 20191) 1. EQUITY AND LIABILITIES 1. Shareholders’ Funds (a) Share Capital 7,20,000 (b) Reserves and Surplus 3,00,000, 2. Non-Current Liabilities Long terin Borrowings 5,10,000 3. Current Liabilities Trade Payables 2,40,000 3,00,000 Total 17,70,000_|__14,80,000 , ASSETS - 1, Non-Current Assets Fined Assets: () Tangible Assets 13,00,000 | 10,00,000 {ii} Intangible Assets 2,00,000 2,00,000 2. Current Assets (0) Trade Receivables 250,000 2.40,000 (b) Cash and Bank Balances 20,000 40,000 Total Solution: Ayush Ltd, COMPARATIVE BALANCE SHEET as at 31st March, 2020 and 2019 Particulars Note | 31stMarch, | 31stMarch, | Absolute Change | Percentage Change No. 2020 2019 | (Increase/Decrease) | (Increase/Decrease) z z z % |. EQUITY AND LIABILITIES 1. Shareholders’ Funds (0) Share Capital 7,20,000 | —6,00,000 1,20,000 20.00 (6) Reserves and Surplus 3,00,000 240,000 60,000 25.00 2, Non-Current Liabilities Long-term Borrowings 510,000 | 340,000 1,70,000 50.00 3. Current Liabilities Trade Payables 240,000 | __3,00,000 (60,000) (20.00) Total | _17,70.000 | 14,80,000 290,000 19.60 U1, ASSETS 1. Non-Current Assets Fired Assets: () Tangible Assets 13,00,000 | 10,00,000 3,00,000, 30.00 (ii) Intangible Assets 2,00,000 | — 2,00,000 - 7 2. Current Assets (0) Trade Receivables 250,000 | 240,000 10,000 417 (b) Cash and Bank Balances (50.00) Total 19.60 Note: Decrease in Curent Year's value of absolute change and percentage change is shown in brackets Scanned with CamScannerFrom the following Balance Sheet of Bubble Ltd, as at 31st March, 2020, prepare Comparative Balance Sheet Particulars 1. EQUITY AND LIABILITIES 1. Shareholders’ Funds (a) Share Capital (b) Reserves and Surplus 2, Non-Current Liabilities Long term Borrowings 3. Current Liabilities Trade Payables Total I. ASSETS 1. Non-Current Assets (a), Fired Assets. (8) Tangible Assets (i) Intangible Assets (b) Non Current Investments 2. Current Assets (a) inventories (b) Cash and Bank Batances NoteNo | 3istMarch, | 31st March, 2020 (8) 20191) 280,000 1,80,000 1,00,000 1,00,000 £0,000 20,000 50,000 (000 50,000 30,000 80,000 50,000 70,000 30,000 Total 5.10,000 Solution: COMPARATIVE BALANCE SHEET OF BUBBLE LTD. os at 31st March, 2020 and 2019 Particulars Note | 31stMarch, | 31st March, | Absolute Change | Percentage change No. 2020 2019 | (Increase /Dectease) | (Increase/Decrease) z z gz % 1. EQUITY AND LIABILITIES. 1. Shareholders’ Funds (a) Share Capital 5556 (b) Reserves and Surplus - 2, Non-Current Liabilities Long term Borrowings 30000 3. Current Liabilities Trade Payables 66.67 Total S455 W. ASSETS 1. Non-Current Assets (0) Fixed Assets: (1) Tangible Assets, 5556 Ui) Intangible Assets * 66.67 (6) Non-Current investments 60.00 2. Current Assets, (a) Inventories 133.33 (6) Cash and Bank Balances (25.00) Total SASS ___ Scanned with CamScannerFrom the following information, prep, are Comparative Balance Sheet of Lovely Ltd.: Particulars NoteNo. | 31st March, | 31st March, - — — — 2020 (2) 2019) |. EQUITY AND LIABILITIES y | 1, Shareholders’ Funds te Share Capital (Equity) 25,00,000 | 25,00,000 ) Reserves and Surplus 6,00,000 5,00,000 2. Non-Current Liabilities Long-term Borrowings 1500000 | 15,00,000 3. Current Liabilities (a) Short-term Borrowings (Bank Overdraft) 2,40,000 2,25,000 (b) Trade Payables 225,000 | — 2,00,000 (6) Other Current Liabilities 35,000 50,000 (4), Short-term Provisions 30,000 Total s1,50,000 1 I, ASSETS 1. Non-Current Assets (0) Fixed Assets (Tangible Assets) 36,00,000 | 30,00,000 (b) Non-Current Investments 5,00,000, 5,00,000 2. Current Assets (a) Inventories 550,000 | —7,50,000 (b) Trade Receivables 3,00,000 | — 5,00,000 (c) Cash and Bank Balances 1,75,00 | — 1,50,000 {d) Other Current Assets 25,000 | 100,000 Total 51,50,000 Solution: Lovely Ltd, COMPARATIVE BALANCE SHEET as at 31st March, 2020 and 2019 Particulars Note | 3istMarch, | 31stMarch,] Absolute Change | Percentage Change No. | 20208) | 201912) | {increase/ Decrease) (2})\Increase/ Decrease) (%) 1. EQUITY AND LIABILITIES 1, Shareholders’ Funds (a) Share Capital (Equity) 25,00,000 | 25,00,000 ~ o- (6) Reserves and Surplus 6,00,000 | —5,00,000 1,900,000 2000 2. Non-Current Liabilities Long-term Borrowings 15,00,000 | 15,00,000 ~ . 3. Current Liabilities (a). Short-term Borrowings 2,40,000 | 2,25,000 15,000 667 (b) Trade Payables 2,25,000 | 2,00,000 25,000 1250 (c) Other Current Liabilities 55,000 50,000 5,000 10.00 (d) Short-term Provisions 30,000 | _ 25,000 5.000 2000 Total '51,50,000 | _50,00,000 1,50,000 3.00 I. ASSETS 1. Non-Current Assets (a) Fixed Assets: Tangible Assets 36,00,000 | 30,00,000 6,00,000 20.00 (6) Non-Current Investments ,00,000 | 5,00,000 ~ - * a ventas 550,000 | 7,50,000 (2,00,000) (2667) (b) Trade Receivables 3,00,000 5,00,000 (2,00,000) (40.00) (@) Cash and Bank Balances 1,75,000 | 1,50,000 25,000 1667 (d) Other Current Assets 25,000 | _1,00,000, (75,000), (75.00) Total 37,50,000 | $0,00,000 1,50,000 3.00 }| = Scanned with CamScannerCOMPARATIVE INCOME STATEMENT OR COMPARATIVE STATEMENT OF PROFIT AND LOSS Statement of Profit and Loss or Income Statement shows the financial performance, ie, ney profit earned or net loss incurred by the company during, the year. Comparative Statement of Profit and Loss is the horizontal analysis of Statement of Profit and Loss which shows (i) the operating results for the compared accounting periods, (ii) changes in data in terms of absolute amount, and (iii) percentage from one period to another. Comparative Income Statement or Comparative * Revenues and Expenses in absolute values. * Increase or decrease of revenues and expenses in absolute values. * Percentage changes in revenues and expenses. shows the: Statement of Profit and Li Objectives of Comparative Income Statement 1. To analyse Revenue and Expenses for two or more years 2. To analyse increase or decrease in Revenue and Expense the percentage. , ; 3. To review business operations of the last year and its likely effect on the current year’s operations. to know the reasons for changes in Financial Performance. in terms of money and also Stating differently, the objective is STATEMENT OF PROFIT AND LOSS The Syllabus prescribes that Part Il of Schedule Ill of the Companies Act, 2013 is excluded for the purpose of preparing Final Accounts of a Company. However, for the preparation of Comparative and Common-size Income Statement the extent and format of Statement of Profit and Loss is to be studied. It should be noted that the Council has not specified complete Statement of Profit and Loss to be studied. The format for ‘Statement of Profit and Loss’ as specified in the syllabus is as follows: Name of the Company ... STATEMENT OF PROFIT AND LOSS for the year ended ... Rin) Particulars Note igures Figures No. | for the Current | for the Previous Reporting Period|Reporting Period |. Revenue from Operations Hl, Other Income {Ml Total Revenue (+I) IV, Expenses: Cost of Materials Consumed Purchases of Stock-in-Trade Changes in Inventories of Finished Goods, Work-in-Progress and Stock-in-Trade Employees Benefit Expenses Finance Costs Depreciation and Amortisation Expense Other Expenses Total Expenses V. Profit before Tax (lll - IV) Vi. Less: Tax Vi_Profit after Tax (V - VI) Scanned with CamScannerMeaning of Terms used in Statement of Profit and Loss S.No| Term : Meaning |. | Revenue from Operations | It is revenue earned by the company from its operating activities, ie. activities carried on to earn profit. It includes: (a) Net Sales; (L) Sale of Scrap; (c) Commission Received; and (d) Revenue from Services. ii, | Other Income Other Income means revenue earned by the company from activities that are not the operating activities of the company. It includes: (a) Rent Received; (b) Interest and Dividend Received; (c) Gain on sale ofinvestments; (d) Discount Received (e) Gain (Profit) on sale of fixed assets; (f) Excess Provision Written back; (9) Liability Written Back; and (h) Other Non-operating Income. i | Expenses Expenses incurred are shown under different heads of Statement of Profit and Loss _ as discussed below: (a) | Cost of Materials It applies to manufacturing companies. It consists of raw materials and other Consumed ‘materials consumed in manufacturing of goods. Expressing it in terms of a formula: Opening Inventory (Stock) of Materials + Net Purchases of Materials - Closing Inventory (Stock) of Materials. (b) | Purchases of Stock-in-Trade| It means net purchases of goods for trading, Thus, if goods are purchased and further process is carried on them, they become raw material and are shown under Cost of Materials Consumed. For example, Paper purchased for resales shown as Purchases of Stock-in-Trade whereas Paper purchased to manufacture (say) copies, itis shown under Cost of Materials Consumed. (¢) | Changesin inventories | Itis the difference between opening inventory (Stock) and closing inventory (Stock) of Finished Goods, of Finished Goods, WIP and Stock-in-Trade. Its to be noted that inventory (opening Work-in Progress (WIP) | and closing) of materials isnot shown in this head butis shown under Cost of Materials and Stock-in-Trade Consumed. (a) | Employees Benefit Itincludes payments made to or for the benefits of employees. Expenses such as Expenses Wages, Salary, Staff Welfare Expenses, Canteen Expenses, Contribution to Provident Fund and Other Staff Welfare Funds, etc. are shown under this head. Employees Benefit Expenses may be further categorised into direct and indirect expenses. (e) | Finance Costs Finance Costs include expenses incurred on borrowings. Expenses shown under the head are interest on loans, processing fee for grant of loan and Discount or Loss on Issue of Debentures, etc. However, bank charges are shown as Other Expenses'they being expenses incurred for availing services of the bank. (| Depreciation and Depreciation is allocation of cost of fixed (tangible) asset over its useful life. Amortisation Expense __ | Amortisation is writing off the amount of intangible assets over their useful life. (9) | Other Expenses Allother expenses which do not fall in the above categories are shown under Other Expenses. The examples of such expenses are: (a) Telephone Expenses; (b) Rent and Taxes; (q) Selling and Distribution Expenses; (d) Advertisement Expenses; (e) Loss on Sale of Fixed Assets/investments; (f) Cash Discount Allowed; (g) Bad Debts; and (h) Provision for Doubtful Debts. Other Expenses may further be categorised into Direct Expenses and Indirect Expenses or Operating and Non-operating Expenses. (h) | Provision for Tax Itis the provision for tax payable by the company on its income. It may be given as Tax absolute amount or as per cent. Scanned with CamScannerPreparation of Comparative Income Statement or Comparative Statement of Profit and Loss Comparative Income or Comparative Statement of Profit and Loss, like Comparative Balance Sheet, is prepared having six columns and has following information: First Column: In this column, the items of Statement of Profit and Loss (e.g, Revenues and Expenses) are written. Second Column: In this column, Note Number given against the item in the Statement of Profit and Loss is written. Third Column: In this column, the amounts of items for the current year are written. Fourth Column: In this column, the amounts of items for the previous year are written. Fifth Column: In this column, differences (increase or decrease) in amounts between the current year and previous year are written. Sixth Colum: In this column, the above differences (increase or decrease) expressed as a percentage of previous year’s amount are shown. Percentage Change = —“?solute Change _ gg _ ‘Amount of the Previous Year %. Scanned with CamScannerFORMAT OF COMPARATIVE INCOME STATEMENT OR COMPARATIVE STATEMENT OF PROFIT AND Loss COMPARATIVE INCOME STATEMENT OR COMPARATIVE STATEMENT OF PROFIT AND LOSS for the years ended. Particulars Note [Figuresforthe]Figuresforthe] Absolute Change Percentage Change No. | Current Year |Previous Year] (Increase or Decrease) (Increase or Decrease) z z z % w 2 8) @) (5) 6) A B C=A-8 D=$x100 1. Revenue from Operations Il, Other Income i Il, Total Revenue (| +I) “ - IV. Expenses: Cost of Materials Consumed . we Purchases of Stock-in-Trade ™ - - CChanges in Inventories of Finished “ Goods, Work-in-Progress and Stock-in-Trade_ oe ar Employees Benefit Expenses - Finance Costs Depreciation and Amortisation Expense Other Expenses Total Expenses V. Profit before Tax (il Vi. Less: Tax VIL. Profit after Tax (V- VI) iv) Note: If current year’s value has decreased show the Absolute Change and Percentage Change in brackets so as to reflect negative item. Scanned with CamScannerFrom the following information drawn from Statement of Profit and Loss of Gold Star Ltd. for the years ended 31st March, 2020 and 2019, prepare Comparative Income Statement: Particulars 31st March, | 31st March, 2020 ®) 2019 @) Revenue from Operations 4000000 | 32,00,000 Employees Benefit Expenses 20,0000 | 16,00,000 Other Expenses 2,00,000 4,00,000 Tax Rate 40% Solution: Gold Star Ltd. ‘COMPARATIVE INCOME STATEMENT for the years ended 31st March, 2020 and 2019 Particulars. Note | 31st March, | 3istMarch,| Absolute Change | Percentage Change No. | 2020 2019 | (Increase/Decrease) | (Increase/Decrease) z z z % |. Revenue from Operations 40,00,000 | 32,00,000 8,00,000 25 I. Expenses Employees Benefit Expenses 20,00,000 | 16,00,000 4,00,000 2s Other Expenses 2,00,000 | 4,00,000 (2,00,000) (50) Total Expenses 22,00,000_| 20,00,000 2,00,000 10 Ill. Profit before Tax (I-11) 18,00,000 | 12,00,000 6,00,000 50 Less:Tax @ 40% 7,20,000 | _4,80,000 2,40,000 50 'V, Profit afterTax 10,80,000 | 7,20,000 3,60,000 50 Scanned with CamScannerPrepare Comparative Income Statement of Ahmed Ltd. with the help of the following information: Particulars Bist March, | 31st March, 2020 (®) 2019) Revenue from Operations (Net Sales) 8,00,000 5,00,000 Cost of Revenue from Operations 5,00,000 3,00,000 Direct Expenses 20,000 40,000 Operating Expenses 40,000 30,000 Income Tax @ 40% Solution: COMPARATIVE INCOME STATEMENT for the years ended 31st March, 2020 and 2019 Particulars Note | 31st March, |31st March, | AbsoluteChange | Percentage Change No. | 2020 2019 | (Increase/Decrease) | (Increase/Decrease) z z z % 1. Revenue from Operations 8,00,000 | 5,00,000 3,00,000 60.00 Il, Expenses Cost of Revenue from Operations 5,00,000 | 3,00,000 2,00,000 66.67 Operating Expenses 40,000 | 30,000 10,000 3333, Total Expenses 540,000 | 3,30,000 2,10,000 63.64 I Profit before Tax (III) 2,60,000 | 1,70,000 90,000 5294 Less: Tax 1,04,000 | 68,000 36,000 5294 WW. Profit after Tax 1,56,000_| _1,02,000 54,000 52.94 Note: Direct Expenses are included in Cost of Revenue from Operations. Hence, they are not shown separately in Comparative Statement of Profit and Loss. Scanned with CamScannerPrepare Comparative Income Statement from the following: Particulars 31st March, 2020 ®) 31st March, 2019 @) Revenue from Operations (Sales) 17,50,000 12,00,000 Cost of Revenue from Operations 7,50,000 600,000 Operating Expenses 80,000 90,000 Interest on investments % 60,000 (both years) and Income Tax payable @ 50%. Solution: | COMPARATIVE INCOME STATEMENT OR COMPARATIVE STATEMENT OF PROFIT AND LOSS for the years ended 31st March, 2020.and 2019 Particulars Note ]3istMarch,| 31st March,| Absolute Change | Percentage Change No. 2020 2019 (Increase/Decrease) (Increase/Decrease) z x z % 1. Revenue from Operations 17,50,000 | 12,00,000 550,000, 45.83 I, Other Income 60,000 | 60,000 ~ ~ Il, Total Income (1+ 11) 78,10,000_| 12,60,000 550,000 43.65 IV. Expenses Cost of Revenue from Operations 750,000 | 6,00,000 150,000 25.00 Operating Expenses 80,000 90,000 (10,000) qu.) Total Expenses 830,000 | 6,90,000 1,40,000 20.29 V. Profit before Tax (II1- IV) 980,000 | 5,70,000 4,10,000 71.93 Less: Income Tax 490,000 | _2,85,000 2,05,000 71,93 VL. Profit after Tax “4,90,000 | _2,85,000 2,05,000 71.93 Scanned with CamScanner