Page 37 - DCOM302_MANAGEMENT_ACCOUNTING

Management Accounting

Notes 4. After having been procured the financial data pertaining to various time periods are ready
for comparison; to determine or identify the level of increase or decrease taken place in the
financial position of the firms
5. To determine the level of increase or decrease in financial position, the percentage analysis
to carried out in between them.

Example: From the following information, prepare comparative Balance Sheet of X Ltd.

Particulars 31 Mar, 2004 31 Mar, 2005
st
st
Equit share capital 50,00,000 50,00,000
Fixed assets 60,00,000 72,00,000
Reserves and surpluses 10,00,000 12,00,000
Investments 10,00,000 10,00,000
Long-term loans 30,00,000 30,00,000
Current assets 30,00,000 21,00,000
Current liabilities 10,00,000 11,00,000
Solution: As the first step, we have to segregate the available information into two different
categories, viz. Assets and Liabilities.
Particulars 2004 (`) 2005 (`) Absolute % Increase % Decrease
Change (`)
Fixed Assets 60,00,000 72,00,000 12,00,000 20 -
Investments 10,00,000 10,00,000 N.C - -
Current assets 30,00,000 21,00,000 (9,00,000) 30
Total Assets 1,00,00,000 1,03,00,000 3,00,000 3 -
Equity share capital 50,00,000 50,00,000 N.C - -
Reserves and surpluses 10,00,000 12,00,000 2,00,000 20 -
Long-term loans 30,00,000 30,00,000 N.C - -
Current liabilities 10,00,000 11,00,000 1,00,000 10 -
Total Liabilities 1,00,00,000 1,03,00,000 3,00,000 3 -

N.C = No change in the position during the two years
Formula to Calcalate (%) Increase/Decrease in Statement

Absolute change
= × 1 100
Value of Asset/Liability in Previous year
where: Absolute change = Value of Asset/Lability in current year – Value of Asset/Lability in
previous year.
From the above table, the following are basic inferences:
1. The fixed assets volume got increased 20% from the year 2004 to 2005, amounted
` 12,00,000.
2. ` 9,00,000 worth of current assets decrease from the year 2004 to 2005 recorded 30%.
3. The total volume of assets recorded 3% increase from the year 2004 to 2005.
4. It obviously understood that 20% increase taken place on the reserves and surpluses.
5. It clearly evidenced that the current liabilities of the firm increased 10% from the year 2004
to 2005.

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