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B) All the sales of the company were on cash basis and non of the sale was on
approval basis.
D) Sale bills were checked to know the rate, amount and the amount of VAT on it
E) All the payments from the debtor was received in cheque which was traced in the
bank statement.
Expenses
1. Purchases
A) The entity has purchase raw material worth Rs 51,33,347.85/- for manufacturing
the product.
B) While vouching purchase invoice it was taken into consideration that the date on
the invoice were only of the current year. It was also look at that the invoice must
bear the name of client.
C) Liability of VAT was also taken into consideration and it was looked that it was
not included in the amount of purchases.
D) Their was some inter-state purchase on whom “C” form was issued by the client.
2. Manufacturing Expenses
A) Being a manufacturing concern the client has to make some expenses to make raw
material into finished product.
Wages Rs 2,57,216/-
Bonus Rs 75,000/-
Electricity Rs 9,36,942/-
C) Amount of wages were vouch with the help of wages register and pay roll register.
Also payments made to labourer were vouch with the help of cash payment
voucher. As the number of employees was less than as per the requirements of
Employees Provident Act, so no P.F. was deducted.
D) Amount of Bonus was reconciled with the help of bonus sheet and payment was
verify by the help of cash payment voucher.
E) Amount of electricity expenses was reconcile with the electricity bill and payment
was traced in the bank statement as the payment of electricity bill was made
through cheque.
F) Factory rent was paid through cheque which was traced in the bank statement and
rent receipt voucher were verified to check the amount of rent.
3. Administrative Expenses
A) During the year following expenses were made by the company in relation to their
administration work.
Particulars Amount
Insurance-Car Rs 3,106.25/-
D) Expenses were done on the conveyance of the employee like they were send for
collection. These expense were verified with the help of supporting available like
petrol bill and as these were reimbursed to the employee there was payment in
cash which was verified and also signature of the employee on the voucher to
whom payment was made also verified.
E) The company during the year purchased a new car and company has made
expenses on the petrol which was verified with the help of bill of petrol and all the
payment was made by cash which was cross verified with the help of payment
voucher.
H) During the year company has paid insurance premium of it car which was vouch
with the help of policy receipt and the payment was traced in the bank statement
as the payment was made through cheque.
I) Company has to paid amount to various people like truck owners, rickshaw walas
and other people for transporting goods from factory to customer and their
supporting for some people was available and for some was not and all the
payment was made through cash which was authorised by the director themselves.
J) ROC expense are those which are paid to Registrar of Company. During the year
company has paid these expenses. These expenses were vouch with the help of
challans and their payment was made both by the way of cash and also by cheque.
Payment through cheque was reconcile by searching bank statement and payment
through cash was reconcile through payment voucher and also through challans
which specified the mode of payments.
K) During the year company has some expenses of printing and stationery for the
purpose of buying stationery like pencil, pens, register and calculator and also bill
book and other voucher book was also printed during the year. These expense
were reconciled with the help of supporting available like invoice and bill and
their payment made through cash which was verified through payment voucher.
L) Beside making payment for wages there are people also in staff who were provide
salary for their services. These salary amount were reconcile with the help of pay-
roll statement as prepared by the Human Resource Department and they were paid
through cheque which was reconcile by the bank statement.
M) Company has a telephone connection whose bill were verified for the purpose of
checking the amount debited in profit & loss A/c. It was also looked that the bill
were in the name of the company. There payment was made through cash which
was reconcile through payment voucher of the client and also by the cash receipt
of the telephone company.
N) For providing expertise services auditor has to be paid. His remuneration was
vouch with the help of bill issued by the auditor and his payment was due on the
date of balance sheet.
4. Financial Expenses
During the year there is only one financial expenses that was incurred by the company
is that of Bank Charges of Rs 2,684/- which was reconcile through bank statement
and all these payment was made by bank rather it that the bank of the client has
himself deducted these amount
Assets
1) Fixed Assets:-
Fixed asset employed of the company include Plant & Machinery, Electrical
Fittings and Car.
A) Opening balance of these assets in the book of account were reconcile with the
audited and signed Balance Sheet on 31 March, 2007.
Car Rs 3,84,061/-
And the same was verified by checking the correspondence purchase bills of the
assets and also it was checked whether the fixed assets is properly maintained.
C) And also payment for it was made through cheque so it was traced into the
bank statement on the client.
Particulars Amount
Car Rs 1,235.17/-
B) Debtors
C) Inventory
ii) In case of cash it was reconcile with the help of cash payment voucher
and cash receipt voucher. It was taken into consideration that cash payment
are properly authorised and there is revenue stamp when the amount exceed
Rs 5000/-. Also physical verification of cash was also done. Cash balance also
included Main cash, Petty Cash, Imprest balances with the Employees etc has
been verified to rule out the possibility of shortage in one covered by other.
While dong ledger scrunity of Cash ledger it was look that cash balance is not
short any day in the year.
B) Debtors
i) First of all a schedule of debtor was taken from the client to knew amount
due
to various debtor.
ii) While checking the sales we were able to check the amount debit to the
iii) Payment from them was only received through cheque which was verified
through the pay-in-slip of the bank and also the bank statement was checked.
iv) In case of any cheque bounced it was looked that the amount was rightly
debited into the respective debtor account and also the charges which the bank
has debit in respect of that cheque.
v) Also direct confirmation was also seek by them by sending a letter of
confirmation.
C) Inventory
While checking for the amount of the inventory or closing stock it was verified
that the quantity shown in the profit & loss account and the rate per unit, looked
while determining the value of closing stock, was cost or market price whichever
is lower. To determine the quantity of the closing stock, stock register was
checked and also the physical verification was done. By checking the stock
register we were able to know the quantity of the stock left with the client in the
end of the year.
Particulars Amount
i) In case of advance tax the amount was verified with the help of advance tax
challan and also the payment was made through cheque which was verified as
the corresponding entry was checked in the bank statement.
ii) In case of advance FBT the amount was verified with the help of FBT challan
and also the payment was made through cheque which was verified as the
corresponding entry was checked in the bank statement and the advance FBT
was made through in four instalment and all the challan was looked.
iii) The company has also VAT Credit on the capital goods which it purchased at
the time of its formation and some part of VAT Credit has been taken by the
company at the beginning of the financial year which was verified through the
Sale Tax Return for the first quarter and the remaining is left and the opening
balance was verified from the last year audited abd signed balance sheet.
iv) The company has paid for the insurance of it car and as the insurance policy is
paid for a year therefore there is some amount as prepaid car insurance. It was
check from the insurance cover note and also the calculation was also checked
and the payment was made through cheque which was verified in the bank
statement.
v) The company has paid excess to one of its creditor so the amount is due to be
recovered from them. As the payment was made through cheque it was
checked in the in the bank statement.
Current Liabilities
A) Creditors:-
i. First of all a schedule of creditor was taken from the client to knew amount
due to various creditor.
ii. While checking the purchases we were able to check the amount credited to
the respective creditor account.
iii. Payment from them was only made through cheque which was verified
through bank statement.
iv. No debit note was issued by the company against any of the creditor and also
no purchase return was there in the whole year.
C) Expenses Payable:-
For the year ending company some of amount to payable and these are:-
Particulars Amount
Bonus Rs 75,000/-
Electricity Rs 75,060/-
Salary Rs 2,34,000/-
Wages Rs 21,655/-
iii) Amount for the bonus payable to employees was also due for the year and
which calculation was verified with the help of the wages register and it was
looked as all the rules and regulations are been taken into care of the Bonus
Act.
iv) Electricity bill for the month of march was also due which was verified with
the help of bill raised by the company providing the electricity in the area
where the plant is located.
v) Also the salary was also due to Mr Sumit Goel of not only of the current year
but also some of the last year.
vi) Wages for the month of the march was also due which was checked with the
help of wages register.
D) Provisions:-
The company has made some of the provision relating to current year tax and fbt
and these are:-
Particular Amount
i) The company as per the provision of the Income Tax has to pay tax on the
profit earned by it during the year. The company has made provision fro the
amount of Income Tax it has to paid and its calculation was rechecked for this.
ii) The company as per the provision of the Income Tax has to pay tax on the
some of the benefit provided by it to its employee during the year. The
company has made provision for the amount of Fringe Benefit Tax it has to
paid and its calculation was rechecked for this.
Pre-operative Expenses:-
Pre-operative Expenses are those expenses which were incurred by the promoter at
the stage of promoting the company and as per the Income Tax provision the
company can claim its deduction in five equal instalments and the after claiming the
deduction for the current year still some amount is outstanding and the opening
balance was checked from the last year audited and signed balance sheet and the
instalment to be claim during the year was also checked from the balance sheet.