1

A PROJECT

ON

“Costing and Financing of co-operative housing society”

In the subject Advance cost Accounting

SUBMITTED TO

UNIVERSITY OF MUMBAI

FOR SEMESTER-II OF

MASTER OF COMMERCE

BY

SUNITA KUMARI YADAV

MCOM PART-I AND ROLL NO- 1890

UNDER THE GUIDANCE OF

Mr. GAJANAN WADER

YEAR- 2012-2013

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DECLARATION BY THE STUDENT

I, SUNITA KUMARI YADAV student of M COM PART-I Roll Number 1890

hereby declare that the project for the Paper Advance Cost Accounting titled,

“Costing and Financing of co-operative housing society”

Submitted by me for semester-II during the academic year 2012-2013, is based on

actual work carried out by me under the guidance and supervision of Mr. GAJANAN

WADER

I further state that this work is original and not submitted anywhere else for any

examination.

Signature of Student

EVALUATION CERTIFICATE

This is to certify that the undersigned have assessed and evaluated the project on

“Costing and Financing of co-operative housing society”

Submitted by SUNITA KUMARI YADAV Student of M COM Part-I.

This project is original to the best of our knowledge and has been accepted for

internal assessment.

Internal Examiner External Examiner vice Principle

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PILLAI’S COLLEGE OF ARTS, COMMERCE & SCIENCE

Internal Assessment: Project 40 Marks

Name of Student Class Division Roll

Number.

First Name: SUNITA KUMARI

M COM

Father’s Name: BBS PART I 1890

Surname: YADAV

Subject: Advance Cost Accounting

Topic for the Project:

“Costing and Financing of co-operative housing society”

Mark Awarded Signature

DOCUMENTATION

Internal Examiner

(Out of 10 Marks)

External Examiner

(Out of 10 Marks)

Presentation

(Out of 10 Marks)

Viva and Interaction

(Out of 10 Marks)

TOTAL MARKS (Out of 40)

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CHAPTER

NO.

TOPIC PAGE

NO.

1. Hari leela co-op. housing society Ltd., New Panvel (E)

Income and expenditure as on 31-3-2008 1

Balance sheet as on 31-3-2008 2

2. Audit report

Part I-introduction 3

Part II- remark and suggestion 5

3. Introduction of the society 6

4. Book of account and document maintain by the

society

7

5. Evaluation of balance sheet

Evaluation of asset side 10

Evaluation of liabilities side 11

6. Financing and source of co-operative society 13

7. Accounting ration analysis 17

8. Bar diagram of income in income and

expenditure statement

20

Pie chart of expenditure in income and

expenditure statement

21

9. Conclusion 22

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INCOME & EXPENDITURE

For the year ended 01-04-2007 to 31-03-2008

INCOME Rs. EXPENDITURE Rs.

Member contribution 139800 Maintenance & repair 27431

Water, shed & color 76500 insurance 4838

Bank interest 2403 Pest control 2500

Sintex tank refund 4024 Water bill 30844

Electric bill 24590

Bonus 1250

Meeting 849

Bank charge 40

Shed work 73900

Salary 32200

Festival & pooja exp 16241

Depreciation(dead stock) 2318

Surplus balance 5726

TOTAL 222727 TOTAL 222727

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BALANCE SHEET

For the year ended 31-03-2008

LIABILITIES Rs. ASSETS Rs.

Paid up share capital 4500 Closing cash balance 9683

Closing bank balance

Reserve and other fund R.D.C.C. bank 4420

Reserve fund 60770 Abhyudaya co-op bank 23570

RDCC bank (chief promoter) 30212

Member contribution -- Investment & deposit

Fixed deposit 130000

Sinking fund F.D. 4000

Current liabilities &

provisions

-- Current assets, loans &

advances

--

Income & expenditure A/C Fixed assets

Surplus balance 140062.50 Dead stock

12864

(+)purchase in Yr.

1300

(+) surplus in Yr. 5726.00 145788

(-) depreciation

2318

9273

TOTAL 211158 TOTAL 211158

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INTRODUCTION

The statutory audit of Hari leela co-op. housing society Ltd., New Panvel (E) Taluka-

Panvel, dist- Raigad has been completed in the basis of records produced to me by

the disignitories of the society, oral explanation given by them and on my total

knowledge.

The financial statement at the end of the audit period prepared the disignitories of

the society are attached herewith which will give the idea of financial position of the

society.

1. MEETING:- (1-04-2007 TO 31-03-2008)

A. First general body meeting: N.A.

B. General meeting date:- --

C. Managing committee meetings :- --

D. Special general body meeting :- --

2. MEMBERSHIP:- as per the list there are 18 members in the society

3. RECTIFICATION REPORT:-

the society should submit the audit rectification report within in three month of

receipt of audit report.

4. ANALYSIS OF BALANCE SHEET: - (31-03-2008)

A) LIABILITIES SIDE:-

(01) SHARE CAPITAL:-

(a) share paid up share capital:- 4500/-

(02)RESERVE AND OTHER FUND:-

(a) reserve fund:- Rs. 60770 amount received as entrance fee, transfer

premium, transfer fee transferred to reserve fund as per BYE-LAWS.

(03) INCOME & EXPENDITURE A/C:- surplus balance as per

balance sheet for year ended 31-03-2008 Rs. 1,45,788/-

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(B) ASSETS SIDE:-

(01) CASH & BANK BALANCE:-

(a) cash in hand Rs. 9,683.00

(b) The R.D.C.C. Bank, New Panvel Br.(C.P) Rs.4,420.00

(c) abhyudaya Co-op. bank Rs. 23,570.00

(d) The R.D.C.C. Bank, New Panvel Br. Rs 30,212.00

the above balance are correct as per cash book and bank pass book as on

31-03-2008.

(02) INVESTMENT & DEPOSITS:-

(a) fixed deposits Rs. 1,30,000/-

(b) sinking fund F.D. Rs 4,000/-

(03) FIX ASSETS:-

(01) dead stock :- Rs. 9,273/-

kept dead stock register and record dead stock in dead stock register.

5. AUDIT CLASSIFICATION:-

taking into consideration the financial position and over all working of the

society has been awarded “B” audit class for financial year 01st april 2007 to

31st march 2008.

6. ACKNOWLEGEMENT:-

we are thankful to the members of managing committee for their co-operative

during the audit.

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PART-II

REMARK AND SUGGESTION

1) To be making provision of major repair fund as per Bye-Laws 13(b) of

each member on squire fir basis or value of cost which is decided in

general body meeting and invested as fixed deposit in RDCC bank.

2) Monthly meeting of committee and annual general body should be

conducted as per the laws, with prior agenda to each member. Minutes of

general body meeting and committee meeting should be recorded in

register (two separate register).

3) Collect registered agreement from all members of society and take

building cost those units in balance-sheet.

4) Every voucher should be signed by chairman, secretary or treasurer.

5) Member information register form “T” and member registration register

form “J” should be update time to time.

6) Close the saving account of chief promoter Raigad district central co-op.

bank Ltd, New Panvel

7) Cash in hand to be maintained as stated in bye laws and shall make

necessary transaction of payment by cheque only.

8) Audit should be done after ending of every financial year.

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Introduction of the society

Name: - Hari leela co-op. housing society Ltd., New Panvel (E)

Address: -

PLOT NO-13, sector-01,

Panvel- Matheran road, new Panvel (E),

Taluka- Panvel, dist-Raigad

Area of operation-

PLOT NO-13, sector-01,

Panvel- Matheran road, new Panvel (E),

Taluka- Panvel, dist-Raigad

Date of registration-12TH APRIL 2001

Registration no.-NBOM/CIDCO/HSG (OH)/1066/JTR/2001-2002

No. of member in the society- (individual):-18

Year under consideration.-2001-2002

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Cash book-

Cash book is a book of original entry in which transactions relating only

to cash receipts and payments are recorded in detail. When cash is

received it is entered on the debit or left hand side. Similarly, when cash

is paid out the same is recorded on the credit or right hand side of the

cash book.

The cash book, though it serves the purpose of a cash book of original

entry viz., cash journal really it represents the cash account of the ledger

separately bound for the sake of convenience. It is more a ledger than a

journal. It is journal as cash transactions are chronologically recorded in

it. It is a ledger as it contains a classified record of all cash transactions.

The balances of the cash book are recorded in the trial balance and the

balance sheet

Personal ledger (member of ledger) - accounting a book or a

computer document in which details of money owed to or by particular

people are recorded:

The personal ledger will contain a separate account for each supplier

and customer.

General ledger- A general ledger is an accounting ledger that provides

a list of corporate activities in a summarized report. A bookkeeper

records transactions in a ledger through journal entries. A general ledger

may have multiple subsidiary ledgers, or sub ledgers, depending on the

account as well as the company's industry and accounting procedures.

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Register of share- A list of active owners of a company's shares,

updated on an ongoing basis. The shareholder register requires that

every current shareholder be recorded. The register includes each

person's name, address and number of shares held, but can further

detail the holder's occupation and price paid. The shareholder register is

fundamental to the examination of the ownership of a company.

Stock of register- record of the particulars related to the issuance of

stock certificates to stockholders. Included are the shares issued, par

value, name and address of owner, date of issuance, shares returned,

cancelled shares, and other pertinent information.

Property or dead stock register- dead stock is record of a cooperative

stock ownership. It is kept current by recording all purchases and sales

of stock.

Nomination register- it refers to a Nominee when he is not the sole

legal heir is a Trustee, for the legal heirs of the deceased. The practice

of providing for Nomination is to ensure that the institutions (Bank,

Insurance or a Co-operative Society) know from the Nomination as to

whom to hand over the Property of the deceased on the death of the

Member etc. It is, therefore, a useful legal device to have a Nomination

to secure continuity of Membership on the Records of a Society.

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Receipt and Payment A/C- Receipt and payment account is a

summary of cash receipts and payments during the accounting period. It

records all cash receipts and cash payments including capital receipts

and revenue receipts irrespective of accounting period. All cash receipts

are recorded on debit side or receipts side and all cash payments are

recorded on credit or payments side of receipts and payments account.

Member outstanding account- it refers to Remaining or in existence.

For debt that are not yet paid for securities in the hands of investors.

Minutes book from AGM and MCM- An account where official

proceedings are recorded.

A minute book refers to a book kept by the clerk of a court for recording

a summary of all the judicial orders in a proceeding. The records are

identified by case numbers.

It also refers to a record of official actions taken at a meeting of a board

of directors or of the stockholders of a corporation.

Sinking fund- A fund into which a company sets aside money over time,

in order to retire its preferred stock, bonds or debentures In the case of

bonds, incremental payments into the sinking fund can soften the

financial impact at maturity. Investors prefer bonds and debentures

backed by sinking funds because there is less risk of a default.

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ASSET SIDE

Evaluation of Cash and Bank Balance –

Cash balance-a balance that represents cash alone, as distinct from a

balance that includes money owed but as yet unpaid

Cash at bank- The sum of all coins, currency and other unrestricted

liquid funds that have been placed on deposit with a financial institution.

Cash at bank is considered a highly liquid form of current asset, and

when reported on a business' balance sheet, it is combined with cash in

hand for accounting purposes.

Closing Cash balance

Rs.9683

Closing bank balance

RDCC bank (chief promoter)

Rs.4420

Abhyudaya co-op. bank Rs.23570

RDCC bank Rs.30212 58202

Evaluation of Investment

1. In finance, the purchase of a financial product or other item of value

with an expectation of favorable future returns. In general terms,

investment means the use money in the hope of making more money.

Particular Rs. Rs.

Fixed deposit 130000

Sinking fund 4000 134000

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Evaluation of Fixed Asset

An asset that is not consumed or sold during the normal course of

business, such as land, buildings, equipment, machinery, vehicles,

leasehold improvements, and other such items.

Fixed assets enable their owner to carry on its operations. In accounting,

fixed does not necessarily mean immovable; any asset expected to last,

or be in use for, more than one year is considered a fixed asset. On a

balance sheet, these assets are shown at their book value (purchase

price less depreciation).

1. It includes dead stock the amount is Rs.9273

Depreciation is Rs.2318 @20% and written down value method is

used for depreciation.

purchases of dead stock in a year is also included Rs.1300)

LIABILITIES SIDE

This represents financial obligations of a Housing Society other than

Members Funds. It is the amount owing to the creditors for goods or

services received or for moneys borrowed. Liabilities = Assets - Capital.

Liabilities can be divided into two categories:

(a) Current Liabilities:

These are usually paid within a period of one year and are paid out of

current assets e.g. Creditors, Bills payable, bank overdraft etc.

(b) Long term Liabilities or Fixed Liabilities: These do not become

due for payment in one year and do not require current assets for their

payment e.g. long-term loans, issue of debentures etc.

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Evaluation of Share Capital

It includes paid up share capital which is of Rs. 4500.

Evaluation of Reserve Fund and Other Fund

It includes general reserve fund which has opening balance and amount

of during the year

This fund includes sinking fund also which includes opening balance.

This fund also includes building repair and maintenance and transfer

fees also Members contribution towards land and building are also the

part of it.

In reserve and fund it include reserve fund amount to

Rs.60770.

Current Liability and Provision

A company's debts or obligations that is due within one year. Current

liabilities appear on the company's balance sheet and include short term

debt, accounts payable, accrued liabilities and other debts.

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Cooperative housing society availed them financing and collect the

recourses from following sources for example building maintenance

charges, parking charges, non occupancy charges, interest on defaulted

dues, bank interest, misc income, donation ac, interest tower rent,

accrued interest on fixed deposit.

Member maintenance charge -Amount paid by tenants for general

cleaning and maintenance of the building occupied by them.

Service charge- it is an extra charge for tenants in addition to their rent

made by landlords for communal facilities and services. Service charges

are particularly common in the supported housing sector.

Member non occupancy charge-

Non-occupancy charges should not be more than one time of service

charges. Further, if members have given their tenements to their nearest

relatives mentioned below, non-occupancy charges should not be

charged.

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The greater the amount of capital held by the cooperative, the greater its

ability to purchase more efficient technology, invest in staff training and

education and make other improvements to the running of the business.

Capital for the operation and

improvement of the cooperative

business can come from three main

sources:

a directly from members themselves

b from retained surpluses generated

by the cooperative business

c from outsiders.

A. Directly from members

Members help finance the operations and growth of the cooperative

through:

· One-time or annual membership fees

· member contributions with no individual ownership attached, such as

service fees.

· Member share capital

· individual member deposits with the cooperative which may be used for

business

· deferred payment to members for part or all of their produce delivered

to the cooperative

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B. From cooperative business surpluses

Funds created through the retention of cooperative business surpluses

that are not directly allocated to members are another important source

of cooperative capital. This is a long term source of funds since most

cooperatives’ rules allow these funds to be distributed only when a

cooperative is liquidated. Unlike loans, or individual member deposits,

the cooperative does not have to pay interest to use these funds. Of

course, retaining such funds by the cooperative also represents a cost to

the individual members who otherwise would have had that portion of

the surplus allocated to them. Members willingly accept this cost when

the benefits it creates for them are clear and worthwhile.

C. From outsiders

In addition to institutional capital and member capital, cooperatives often

make use of external sources of funds to run their operations or to

finance investments. These non-member sources of funds may include

cooperative or commercial banks, suppliers, government or donor

agencies. External funding may be provided in different ways:

· as a grant

· as a short-term loan

· as a long-term loan

· as trade credit offered by a supplier.

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Costing of co-operative housing society

Analyzing society expenses, expenses include-

Security & sweeper charge, electricity charge paid or outstanding, water

charge paid or outstanding, audit fees, repairs and maintenance charge,

repair related to sewage, civil contribution ,plumbing, property tax

payable printing and stationary expense, conveyance and travelling

expense, festival expense, building coloring expense, banking charge

telephone charge.

Bank charges:-

A fee levied on an account by a financial institution. A bank charge can

result from the account holder not maintaining a minimum balance, for

overdrafts, or from any of a wide variety of other banking activities and

actions also called bank fees.

Printing and stationary expense- it is an indirect expense which is

related to printing and other expense.

Telephone charge- it is an indirect expense which is charged for

telephone service.

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These financial ratios turn the raw financial data from the balance sheet

into information that will help you manage your business and make

knowledgeable decisions. A ratio shows the relationship between two

numbers. It is defined as the relative size of two quantities expressed as

the quotient of one divided by the other. Financial ratio analysis is

important because it is one method loan officers use to evaluate the

credit worthiness of potential borrowers. Ratio analysis is a tool to

uncover trends in a business as well as allow the comparison between

one business and another.

In the following section, four financial ratios that can be computed from a

balance sheet are examined:

Liquidity Analysis Ratios

• Current Ratio

• Quick Ratio

• Working Capital

• Debt/Worth Ratio

Current Ratio

The current ratio (or liquidity ratio) is a measure of financial strength. The

number of times

current assets exceed current liabilities is a valuable expression of a

business’ solvency. Here

is the formula to compute the current ratio:

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A current ratio can be improved by either increasing current assets or

decreasing current liabilities.

This can take the form of the following:

• Paying down debt.

• Acquiring a loan (payable in more than one year’s time).

• Selling a fixed asset.

• Putting profits back into the business

Quick Ratio

The quick ratio is also called the “acid test” ratio. It is a measure of a

company’s liquidity. The

quick ratio looks only at a company’s most liquid assets and divides

them by current liabilities.

Here is the formula for the quick ratio:

The assets considered to be “quick” assets are cash, stocks and bonds,

and accounts receivable (all of the current assets on the balance sheet,

except inventory). The quick ratio is an acid test of whether or not a

business can meet its obligations if adverse conditions occur. Generally,

quick ratios between .50 and 1 are considered satisfactory as long as

the collection of receivables is not expected to slow.

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Working Capital

Working capital should always be a positive number. It is used by

lenders to evaluate a company’s ability to weather hard times. Often,

loan agreements specify a level of working capital that the borrower

must maintain.

The current ratio, quick ratio and working capital are all measures of a

company’s liquidity. In general, the higher these ratios are, the better for

the business and the higher degree of liquidity.

Debt/Worth Ratio

The debt/worth ratio (or leverage ratio) is an indicator of a business’

solvency. It is a measure of how dependent a company is on debt

financing (or borrowings) as compared to owner’s equity. It shows how

much of a business is owned and how much is owed.

Capital Structure Analysis Ratios

Debt equity ratio- Debt-to-Equity ratio is the ratio of total liabilities of a

business to its shareholders' equity. It is a leverage ratio and it measures

the degree to which the assets of the business are financed by the debts

and the shareholders' equity of a business.

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Bar diagram of income

in income and expenditure statement

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Pie chart of expenditure

in income and expenditure statement

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I conclude based upon the data in my project I have learned what is

cooperative housing society and there are many advantages and

disadvantages in cooperative housing society. Though the main aim of

these cooperative housing society is not to earn profit but still they are

interested in knowing whether their current income is more than the

current expenses or not. They are also keen in knowing the financial

position of their concern. Co-operative Societies are not charitable

societies. They carry on Economic Activities. The profit is not the motive

but the proper accounts need to be maintained and presented before the

members for their approval in the Annual General Body meeting.

While doing this project I learn how to register the cooperative housing

society, step involve while registering a society. While studying the

auditing report of two year 2010 and 2011 and making project on a Hari

leela cooperative housing society was also a knowledgeable experience

for me.