Preparation of Project Report

Project report preparation is very important because it provide very useful information for better business decision. It works like a written plan for forward work. It includes the aim of business project. It also includes the total written budget of project. We have to prepare it systematic way.

There are lots of type of projects. With single example, you can learn the steps and you can  apply it on your own project. For example, you have to open big retail shop in your city. For this, you are investing own capital. But you have not sufficient fund. This is your project, you need bank loan. For this, you have  to show your project through your project report. Following will its main steps.

Following are its main steps

1. Write the Proposal on the Top of Report

You have to give clear proposal to bank through your project report. You can write, I have own property in commercial area whose value is Rs. 50,00,000. I am investing same in retail shop. Except this, I have Rs. 10,00,000. But this is not sufficient. I need Rs. 40,00,000 for construction the showroom and adding stocks in the big shop. For, this, I give the proposal. Either, you can give me loan or you can become the partner of 40% in my business. You are bank. You can open your showroom also or you can give me the loan on current market rate. For this, I am  ready to give property registry as security to you.

2. Write the Main Aims of Project

After writing proposal, you should write the main aim of project.  For example, you can write, your aim is to provide basic needed products to final consumers at very cheap rate.


3. Write the Total Budget of Project


In this section, you have to write the budgeted cost of each part of your proposal. For example, you have to construct the shop building. Write the budgeted cost of builders. For example, you have 20 foot X 100 foot place and if the current market cost of builder service is Rs. 100 per square feet, you can write the correct budgeted cost of this. Like this, you have to write the budgeted cost of construction material. Except this, you have to also show the budgeted cost of products which you have to show in this shop.


4. Show the Data of Employees who is working on the Project

You have to show whole staff detail who is working on same project.

5. Highlight of Report

You should highlight the estimated sales and earning if your project will clear.

6. Complete Report with Recommendations

If your CA is making your report, you can write his recommendations in same project report. For this, he will verify your project and then write recommendations. For this, he can make your projected income statement and balance sheet. He will also satisfy  that you are following  different laws applying on your project. He will also calculate projected accounting ratios like debt-equity ratio and current ratio.
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Project appraisal

Project appraisal is the process of evaluation of any project or project proposal. All those who have to invest their money in the project must assess different aspects of project They will check whether same project will give refund their invested money at minimum time and whether it will give good return or not.


Except this, they will also check whether same project can be completed without any legal or technical problem. For example, you go to bank for getting loan. You have shown your project through your project report. Now, bank's duty to appraise the project before investing their money in same project like a blind person.

Not just bank but other sponsors who will invest their money in the given project will evaluate through their standards of investments. With this, all the investors can save their money from risk.

Following are its main steps

1. Assessment

Company make some standard. On this basis they will assess the project. For example, it is the rule of bank. If a person or company has to invest their own capital of total will be 60%, then same bank will give loan. If any project shows only 30% own capital, bank can reject same project through initial assessment stage.

2. Better Alternatives

If investor sees other better alternative, he or she can reject the project. It is the part of project appraisal to check the other alternative for safeguard from any type of risk.

Types of Project Appraisal

1. Techincal appraisal

In their area of construction, design or manufacturing of any product like any vehicle, there is so important to do technical appraisal. All are not expert. So, engineer of specific area will do technical appraisal and write the report what he see in the given project. Whether it is technically sound or not.

2. Investment  Appraisal

Investment  Analysis is very important for taking investment decisions. Investment analysis is the process to study about the price and value of investment in shares, debentures, bonds,debts, properties, assets and other investment projects. For completing investment analysis, we need technical knowledge of stock trends, capital budgeting and capital market. 

3. Cost benefit analysis

Social Cost Benefits Analysis means to analyze the social cost and total social benefits if we accept any project. We all know that for completing the big project, we need big  investment. In social cost benefit analysis (SCBA), we see whetherreturn or benefits on this investment are more than its cost from point of view of society in which we are living. 

4. Through Capital budgeting Methods

In capital budgeting, we evaluate project through pay back period, IRR and NPV.
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What is Deprival Value

In accounting, deprival value is the value is the method which is used for measuring the value of asset. It is not historical cost value nor fair value. It is almost actual value which has to pay by a person who will acquire the asset.


We know no one want to suffer the loss of asset. If anybody has to pay the liability to other, he can repay his liability by giving his asset but he want to justify. For example, if today a house is sold, we will get its market value RS. 50,00,000 but owner has paid Rs. 1 crore on it for its construction. So, if any lender has to take it, he should give him its deprival value or wait for getting better buyer of this house.

In normal business, deprival value is not accepted for calculating the value of assets, if any company is selling his asset. Either market value or historical cost is prefer. Now, a movement of getting best price has started in valuation of property and accounting standards are being amended for added it as one of method of valuation.

Its other name is relief value or value of asset on the basis of income generation power. Business owner will leave the asset, so, deprival value will give him highest benefit.


Following is the Formula of Deprival Value 

There is not any fixed formula of calculating deprival value. But still following model is used for calculating deprival value.

1. Deprival Value is lower than replacement cost of asset.

2. Deprival Value will higher than recoverable amount of asset.

3. Deprival Value will higher than net present value of asset.

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New partner in an existing partnership (Partnership Deed)

INTRODUCING A NEW PARTNER IN AN EXISTING PARTNERSHIP

THIS DEED is executed on this _____ day of ________ between:

Sh.________________ s/o, Sh. __________________, r/o of _________________________, 

Sh.________________ s/o, Sh. __________________, r/o of _________________________, (hereinafter referred to as "the existing Partners") of the one part 

AND

Sh.________________ s/o, Sh. __________________, r/o of _________________________, hereinafter referred to as "the new partner") of the other part

The existing partners and the new partner hereinafter collectively referred to as the "Parties". 

WHEREAS 

1. The existing Partners have been carrying on the business of ___________ in partnership together at under the firm name M/s _______________ vide terms of a deed of partnership dated ____________ (hereinafter called "the existing partnership business").

2. Sh. __________ has expressed his desire to join the existing partnership business as the new partner and is ready to contribute a capital of Rs.__________

3. The existing Partners have agreed to introduce Sh. __________ as the new partner in the existing partnership business on the terms and conditions hereinafter appearing.

NOW THIS DEED WITNESSETH AS UNDER:

1. Term of Partnership

The partnership hereby constituted (hereinafter called "the new partnership") shall be deemed to have commenced on the day of ____________ and from such date the deed of partnership dated _________shall be superseded by this deed and shall continue unless otherwise determined by the Parties. 

2. Name

That the business of the Partnership shall be carried on under the same name and style as that of the existing partnership business i.e. M/s ____________________. 

3. Place of Carrying Business

That the business of Partnership shall be carried from ________________________ or any other place as may be agreed upon by the Parties.

4. Capital Contribution & Interest on Capital

The capital of the new partnership shall be Rs. __________ whereof Rs.________ represents the capital of the existing partnership contributed by the partners and the balance of Rs ________ shall be contributed by the new partner __________ as his share. However, further funds required for the new Partnership shall be contributed or arranged by the Parties equally and in such manner as may be mutually agreed upon by and between the Parties from time to time. Interest at the rate of ____ percent per annum or as may be prescribed under Section 40 (b) of the Income Tax Act, 1961 or any other applicable provisions as may be in force under the Income tax assessment of Partnership firm for the relevant accounting period shall be payable to the Parties on account standing to the credit of the account of the Parties. Such interest shall be calculated and credited to the account of each partner at the close of each accounting year. However, in case of loss or lower income, rate of interest can be nil or lower than ____ percent as may be agreed upon by and between the Parties from time to time. 

5. Remuneration

That the new partner shall also be a working partner in the firm and he shall be entitled to a remuneration of Rs. ________ per month which shall be paid by the __th of each month. The Parties shall be entitled to increase or reduce the above remuneration as may be agreed upon from time to time by and between the parties. 

6. Drawings by Partner

The new Partner shall be entitled to draw (in addition to the remuneration as per clause 4) out of the partnership business any sum or sums of money not exceeding Rs. ________ per month for his own use, such sums to be duly accounted for on each succeeding settlement of accounts and division of profits of the partnership and if any excess drawings is found on any such settlement, the same shall be refunded by the new partner concerned (with interest at ___% per annum).

7. Debts of Old Partnership

All the debts and liabilities of the existing partnership shall be discharged by the existing partners and they shall indemnify and keep indemnified the new partner and also the assets and the properties of the new partnership against such debts, liabilities and against all proceedings, costs, claims and expenses in respect thereof;

8. Profits of Old Partnership

All the profits of the existing partnership up to the commencement of the new partnership shall belong to the existing partners only in the proportions in which they would be entitled thereto vide the terms of deed of partnership dated ________

9. Profit Sharing Ratio of new partnership

That profits or losses of the new Partnership (including losses of capital nature, if any) shall be divided amongst and borne by the Parties in proportion to their respective shares in the new partnership.

10. Deed of Partnership dated _____ to remain in force

All the terms of the deed of partnership dated _______, except those as has been modified by this deed, shall remain in force and shall have effect as if the same have been executed by the parties hereto. 

IN WITNESS WHEREOF,the parties have set their hands this ____________ day of __________.

The Existing Partners

The New Partner

Witnesses: 

1. 

2.

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Balance Sheet Finalization - Quick completion check list

BALANCE SHEET FINALIZATION CHECK LIST

1. NO ENTRY ON NATIONAL HOLIDAY.

2. CONFIRMATION OF SECURED LOANS.

3. CONFIRMATION OF UNSECURED LOANS.

4. CONFIRMATION OF S.CREDITORS (SPECIALY THOSE WITH DEBIT BALANCE.)

5. CONFIRMATION OF S.DEBTORS (SPECIALY THOSE WITH  CREDIT BALANCE)

6. BONUS SHEET TO BE TALLIED WITH BONUS PAID IN CASH AND BY CHEQUE. 

7. CHECK CASH FOR NEGATIVE BALANCE.

8. ELECTRICITY CHARGES FOR 12 MONTHS ENTERED OR NOT.
NARRATION : ELECTRICITY CHARGES FOR THE PERIOD ………… TO ………… AS PER BILL DT. ………….. PAID VIDE CHEQUE NO. ………….. DT………………

9. SALARY SHEET – TALLY WITH SALARY PAID IN CASH+CHEQUE. SALARY OF EMPLOYEES WHO HAVE NOT SIGNED SALARY SHEET SHOULD REFLECT AS PAYABLE. TALLY WITH SALARY SUMMARY FOR WHOLE YEAR.

10. EX-GRATIA – COPY OF ALL FULL & FINAL A/C PAPERS REQUIRED.

11. INSURANCE EXP. – PRE-PAID ENTRIES TO BE DONE. COPY OF ALL COVER NOTES TO BE KEPT IN BALANCE SHEET FILE.

12. OTHER PRE-PAID EXP. ENTRIES LIKE LICENCE FEE, AMC ETC.

13. TALLY OPENING BALANCE WITH LAST YEAR BALANCE SHEET.

14. RECONCILE SALE + PURCHASE WITH SALES TAX RETURNS.

15. LICENCE FEE – RECEIPT OR COVERING LETTERS OF LICENCE COPY.

16. TEL. EXP. – BILL OF 12 MONTHS ENTERED OR NOT. NARRATION SIMILAR TO THAT OF ELECTRICITY EXP.

17. DEPRICIATION ENTRIES.

18. TALLY TDS CERTIFICATES WITH RELEVANT LEDGERS.

19. TALLY TDS RETURNS WITH RELEVANT LEDGERS.

20. RECONCILE ALL BANK ACCOUNTS.

21. G.P. RATE COMPARISON WITH LAST YEAR.

22. AUDIT FEE TO BE ENTERED.

23. CHECK CASH EXP. VOUCHERS.

24. CHECK ALL DEBIT NOTES / CR. NOTES. SHOULD BE SIGNED BY --

25. CHECK ALL CASH RECEIPTS. SHOULD BE SIGNED BY --

26. CHECK ALL DISCOUNTS TO CUSTOMERS OR SHORT & EXCESS OR BAD DEBTS VOUCHERS. SHOULD BE SIGNED BY --

27. ALL HEADS IN PREVIOUS YEAR P&L, TRADING BALANCE SHEET SHOULD BE IN CURRENT YEAR BALANCE SHEET AND COMPARASION OF AMOUNT TO BE DONE.

28. CHALLANS OF ALL GOVT. DUES TO BE ENCLOSED WITH I.T.R.
VAT / CST / ESI / EPF / TDS ETC .

29. EXP. PAYABLE ENTRIES : TEL., ELECTRICITY, WATER ETC .

30. FREIGHT INWARD FOR ALL CENTRAL PURCHASES SHOULD BE ENTERED.

31. TRANSFER PREVIOUS YEAR PRE-PAID TO RELEVANT EXPENSE HEAD.

32. CHECK PAYMENT OF PREVIOUS YEAR EXPENSE PAYABLE.

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How to Make a Simple Accounting System

 A simple accounting system is the system which can easily use by all the business persons whether he or she know only basic accounting. With this, they can manage their money better way. They can also track their incomes, expenses, assets and liabilities. With this, they can make better budget for next month.


So, you should understand simple accounting system. Following are its steps

1. Track Your Paid Bills - Account Payable Process

In your email, every week, you got lots of bills whose payment you have done. These payments will be of your bought goods and services. So, mark it when you have obtained each bill and add it in your accounting software. With this, you can track all your paid bills through your expenses account.

2. Track Paid Amount for Your Sales - Account Receivable Process

Just check your bank account. All the account receivables whose amount, you have received, should be recorded in your accounting software. Before this, you have to record credit sale in your accounting software. Accounting software will adjust your total sale amount and amount received from your debtors.


3. Track Your Cash Flow 

If your accounting software is not making cash flow statement, you need to make it in your spreadsheet. You can start it with the opening balance of cash in your hand. Now, you have to show two column. Inflow of cash and outflow of cash. There should be three categories of inflow and outflow of cash. One is cash flow from operating activities. Second cash flow from investing activities and third cash flow from financing activities.
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Cash vs Accrual accounting

 Cash and accrual accounting are the two main methods of any accounting system which a business can use. Both are used in different industries. Accrual accounting is used more than cash accounting method. Still, you should know both and understand their differences also.


1. Recognize the Income and Expenses 

In cash accounting method, you recognize the income when you will receive it in cash. You will recognize the expenses when you will pay it.

In accrual accounting method, you recognize the income when you will sell the products or services and other will have the obligation to pay your sale amount or service fees. Like this, you will recognize your expenses when you will have obligation to pay the bought amount or to pay for obtained services.

2. Grant Award

In cash accounting method, You will record when you will get the cheque of your sold amount or you pay the expenses through cheque issue.

In accrual accounting method, you will record when you will get the promise from your debtor. In his or her promise, he will say to pay the amount on specific date. Whether he pay or not, you will have the right to record your sale and same amount will become the debt on your debtor and it will be assets in your books. If you will pay or not but on the due date of your bill payment will be the date of record of your expenses.

3. Example

In cash accounting method - For example, you get advance fees of checking your patient. It is your earned income.

In accrual accounting method - For example, you have checked your patient and give your advice. At same time, you have earned the income. No problem whether there is no money in the pocket of your patient, he will pay you tomorrow or after next week meeting.

4. Impact on Income Statement

If you will follow cash accounting method, your cash book will be income statement if you will delete the payments for fixed assets and receipt from loan.

If you follow accrual accounting, you need to make income statement separately. Your income statement will also include the income which are receivables. In your income statement, there are expenses which are due but not paid.

5. Impact on Balance Sheet

If you will follow cash accounting method, there will not account receivables and account payable in your balance sheet.

If you will follow accrual accounting method, you need to show account receivables outstanding expenses, outstanding revenue, advance income and advance expenses and account payable in balance sheet.

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Balance Sheet Basics

 Balance sheet, income statement and cash flow statement are the three main financial statements which provide useful information which help every business to take quality financial decisions. So, every business person should know about these three financial statements.


If you are new in accounting. You should learn about balance sheet basics. In this lecture, we explain what is balance sheet? What are the equation of balance sheet? What are the assets? What are the liabilities? and What are the net assets?

What is Balance Sheet?

Balance sheet is the two column list of all the assets and liabilities. One side side we have shown all the assets of a business and other-side, we show all the liabilities of business. Both side total will always equal.

What is Balance Sheet Equation?

Balance sheet equation works on the basis of accounting equation. As per this equation, Assets will equal to liabilities and net asset or capital. Total assets represents , What we have. Total liabilities represents, what we own or we have to repay outside. Difference of both will be what we are worth. It means, if today, we business is sold in the market. What value will we get. It is our net asset or net capital. 

What are Assets? 

Assets are resources which bring the money in the pocket. It will be helpful for long term and short term benefits to business. Assets are two types. One is fixed assets. Second is current assets. See below screenshot, there are 5 are current assets and 5 are fixed or long term assets. Every business have to show total assets in these two categories. Current assets can easily converted into cash within one year. But, for converting cash, long term assets needs more than one year. Long term assets are also called capital assets. Most of long term assets will be depreciated.

What are the Liabilities ?

Liabilities are the payable amount which we have to pay outside. These are also two types liabilities. One is current liabilities and second is long term liabilities. Current liabilities are those which are payable within one year. For example, accounts payables. Long term liabilities are those which are payable after one year.

What are the Net Assets or Capital?

Net assets or capital is the difference between total assets and total outside liabilities. If we add the changes in total assets in total assets at the beginning of year, we can also calculate net assets. Changes assets will equal to net profit or net loss in this year. 

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