S
 





 



 S 

 



 





S

 !"S
#

$%&'(&'(')


!*+ ,-.


/S $/ 0101  

 
/S $

S1101










-!-0-23+ !4"0 34 5!
- !5!"0-34  678999'
*-'9(:;''77<78<7= >'9(:;'';7
222$?@$-!+$

c

 ¯
 


girst and Foremost I thank the almighty for giving us goodwill, knowledge, health and
blessing to work sincerely to complete my project.

I wish to express my heartfelt gratitude to our SIP coordinator  ¯for
giving me the opportunity to complete my Summer Internship Training in PEPSICO.

I express my gratitude and owe my sincere thanks to our Academic head  

 under his guidance and constant advice I have completed my project successfully. I
whole heartedly thank him for his encouragement which boosted me to proceed forward
efficiently with my project

I extend propound thanks to my outstanding company supervisor . 

 ¯    !"  ##$ . His valuable suggestion, patience
has shaped my project work. Thanks a lot for giving me such an excellent idea to make my work
unique.
I want to thank all the staff of the Finance department of PEPSICO specially to Mr. Pradip
Gupta, Mr. Devraj Pal, Mr. Aritra basu, Mrs. Sonali Roy and Mr. Sudipta Chatterjee.

And Finally,
I should definitely thank my parents, my sister, brother for their supportive role and endless
valuable advice, whenever I ask for. Without their extreme invaluable forbearance, I could never
ever start and finish this project.








 $
%
$

9he major part of our diet consists of Soft drinks. There are two kinds of drinks we
consumed i.e. hot drinks & Cold drinks. The Indian beverage industry faces over supply in hot
drinks segments like coffee and tea. Indian beverage market is a tea dominant market.

The major consumer of the cold drinks is the young people, the age group lies between 16-30 yrs.
This is an inseparable part of their celebration and daily fulfillment of the thirst. The total soft drink
(carbonated beverages and juices) market is estimated at 284 million crates a year or US$ 1 billion.
The market is highly seasonal in nature with consumption varying from 25 million crates per month
during peak season to 15 million during off-season. The market is predominantly urban with 25 per
cent contribution from rural areas. Coca cola and Pepsi dominate the Indian soft drinks market.

Mineral water market in India is a 65 million crates (US$ 50 million) industry. On an average, the
monthly consumption is estimated at 4.9 million crates, which increases to 5.2 million during peak
season.

This project mainly deals with the finance & accounting system of the beverage industries and other
related activities.

As it is a manufacturing industries there are different type of accounting and financial tools are used
like cash flow, fund flow, Bank reconciliation statement, budgeting, purchase & sales accounting,
Freight accounting and the most crucial tools is Taxation(direct & indirect both). In this beverages
industries the raw materials are used like concentrate, perform, sugar, mango pulp, CO2 etc. they
purchase it from different vendor who give best quality at a decent price. Budgeting is also a very
important tool; the company does their budget in the beginning of the every financial year and sorted
out their production volume, sales volume, the purchase of raw material etc and go by following this
budget in the entire year. Company usually does their transaction with many numbers of Banks. So
for that there is a big chance of mismatches between company book and bank statement, Here bank
reconciliation play a very important role. In this beverages industries they paid freight to the
transport agency that dispatched goods to the distributor i.e. freight outward. Company spent a large
amount as freight outward. Another important thing is discussed in this project i.e. the movement of
empty bottles and its reconciliation between company and distributor.

So all this above accounting systems and financial tools are discussed in this project elaborately and
also there are some practical examples related with the company.



[

 &¯#
 

#¯ 


COMPANY DETAILS: 5
2 WORK PROCESS: 7
3 BUSINESS MODEL: 11
4 PURCHASE PROCESS&ACCOUNTING 12
5 BANK RECONCILIATION STATEMENT 16
6 VENDOR RECONCILIATION 22
7 DIRECT TAXATION 25
8 INDIRECT TAXATION 30
9 FREIGHT ACCOUNTING 35
10 BUDGETING 37
11 SALES HIERARCHICAL MODEL 42
12 SALES PROCESS 44
13 EMPTY MOVEMENT 46
14 CONCLUSION 48
15 BIBLIOGRAPHY 49

D

 ~
9
   #¯'
¯$


fter a not so successful attempt to enter the Indian market in 1985, Pepsi re-entered in 1988
with a joint venture of PepsiCo, Punjab Govt.-owned Punjab Agro Industrial Corporation (PAIC)
and Voltas India Limited. By 1994, Pepsi took advantage of the liberalized policies and took control
of Pepsi Foods by making an offer to both Voltas and PAIC to buy their equity. The India Govt.
gave concessions to the company, Pepsi was allowed to increase its turnover of beverages
component to beyond 25 per cent and was no longer restricted by its commitment to export 50 per
cent of its turnover. The Govt. approved more than US$ 400 million worth of investment of which
over US$ 330 million has already been invested. The Govt. also allowed PepsiCo to set up a new
company in India called PepsiCo India Holdings Pvt Ltd, a wholly owned subsidiary of PepsiCo
International, which is engaged in beverage manufacturing, bottling and exports activities as Pepsi
Foods Ltd. Since then, the company has bought over bottlers in different parts of India. One of the
largest multinational investors in the country, PepsiCo has established a business which aims to
serve the long term dynamic needs of consumers in India.
ô(:
PepsiCo nourishes consumers with a range of products from treats to healthy eats that deliver
joy as well as nutrition and always, good taste. PepsiCo India¶s expansive portfolio includes iconic
refreshment beverages Pepsi, 7 UP, Mirinda and Mountain Dew, in addition to low calorie options
such as Diet Pepsi, hydrating and nutritional beverages such as Aquafina drinking water, isotonic
sports drinks - Gatorade, Tropicana 100% fruit juices, and juice based drinks ± Tropicana Nectars,
Tropicana Twister and Slice, non-carbonated beverage and a new innovation Nimbooz by 7Up.
Local brands ± Lehar Evervess Soda, Dukes Lemonade and Mangola add to the diverse range of
brands.
PepsiCo¶s foods company, Frito-Lay, is the leader in the branded salty snack market and all
Frito Lay products are free of trans-fat. It manufactures Lay¶s Potato Chips, Cheetos extruded
snacks, Uncle Chipps and traditional snacks under the Kurkure and Lehar brands and the recently
launched µAliva¶ savoury crackers. The company¶s high fibre breakfast cereal, Quaker Oats, and low
fat and roasted snack options enhance the healthful choices available to consumers. Frito Lay¶s core
products, Lay¶s, Kurkure, Uncle Chipps and Cheetos are cooked in Rice Bran Oil to significantly
reduce saturated fats and all of its products contain voluntary nutritional labeling on their packets.

)

"To be the world's premier consumer Products Company focused on convenience food and
beverages. We seek to produce healthy financial rewards to investors as we provide opportunities for
growth and enrichment to our employees, our business partners and the communities in which we
operate. And in everything we do, we strive for honesty, fairness and integrity."

·

 ~

9
 

*)
"To build India¶s leading total beverage company, delighting consumers by best meeting their
everyday beverage needs, and stakeholders, by delivering performance with purpose, through our
talented people."

# +,*

"PepsiCo¶s responsibility is to continually improve all aspects of the world in which we operate
± environment, social, economic ± creating a better tomorrow than today"

-,*,
Our commitment is to deliver sustained growth, through empowered people, acting with
responsibility and building trust.


Our values reflect our aspirations - the kind of company we want PepsiCo to be. We express our values in
the form of a commitment.

$.
PepsiCo India and its partners have invested more than 1 billion since the company was
established in the country.

,
PepsiCo India provides direct and indirect employment to 150,000 people including suppliers
and distributors.



As per 2005 consensus Pepsi & Coca cola both acquired 95% of the market of soft drinks in
India. Within that 42.5% market has acquired by the PepsiCo. 



PepsiCo businesses operate in highly competitive markets. They compete against global,
regional, local and private label manufacturers on the basis of price, quality, product variety and
distribution .their chief beverage competitor, The Coca-Cola Company, has a larger share of CSD
(Carbonated Soft Drinks) consumption, while Pepsi have a larger share of liquid refreshment
beverages consumption. In addition, Further, their snack brands hold significant leadership positions
in the snack industry worldwide. Their snack brands face local, regional and private label
competitors, as well as national and global snack competitors, and compete on the basis of price,
quality, product variety and distribution.

‰

 ~
9
  #¯'
# 

9here are eleven stages through which PEPSICO run their business quite efficiently. The work
flow is discussed below.

1st STAGE: Ú
 


  

 

   

 
  






ù Gather customer, company and competitor data
ù Develop/ review mkt. strategy
ù Determine pricing strategy
ù Communicate the deal internally and externally

2nd STAGE: g

 


 

ù Review historical volume /pricing activity

ù Assess inventory levels
ù Review future pricing &marketing activity
ù Prepare MU forecast

3rd STAGE: ~








ù Communicate pricing information

ù Execute Coaching &support sales objectives
ù Obtain and enter presold order

4th STAGE: Ú


Ú


ù Gather production forecast information

ù Prepare production schedule
ù Order Raw material
ù Produce quality product

5th STAGE: Ú

Ú




ù Place product off production line into delivery

ù Transport product to warehouses
ù Rotate and manage the warehouse inventory levels

-

 ~
~


6th STAGE: Ú

   !


ù Service vehicles for next day

ù Review equipment placement plan
ù Prepare equipment (maintenance /repair) for delivery

7th STAGE: Æ
 

ù Obtain load sheets by route

ù Build loads to specification
ù Place product and equipment in trucks as ordered

8th STAGE: 
"

#



ù Do physical count for check

ù Sell or deliver right product and equipment to right place at right time
ù Merchandise ± rotate shelves and coolers, build displays
ù Setup PDP and promotional materials

9th STAGE: 


~ 



ù Generate customer invoices

ù Obtain cash payments or obtain customer signature for charges

10th STAGE: Settle the Route

ù Check in route truck at Warehouse and Reconcile truck Inventory

ù Prepare truck for Reload
ù Balance customer payments and inventories

11th STAGE: Customer Pay Credit Payment

ù Customer Pay Credit Invoice

ù A/R Processes Payment
ù A/R Collects Any Past Due Receivables

r

 ~
~


There are some support teams and support centre that helps the company to run the business successfully
through the above mentioned process which is discussed below:

%/ %0


ù Market development
ù Financial Planning
ù Human Resource Activity
ù Administrative/customer Service

ô%/ô%0


ù Support of MU
ù Customer Strategy & Coverage
ù Finance ,Process & HR Support
ù Cross ±Mkt. unit Coordination
ù Coordination between support centre and MUs
ù Consumer Strategy & communication

 )
ù Provide Global Strategic Direction
ù Develop Field Ready Tools and Processes
ù Provide Value added Centralized Service
ù Support field in building capability
ù Provide leadership for financial integrity, Product Quality, Brand equity, Company Culture
and Public Images

There are some fixed & variable expenses which are incurred to carry on these processes are
discussed below:

1 (:
2¯/,2¯(0: Includes business unit overhead and exp.

3 ,: Includes cost of concentrate, sugars, and packaging material etc.

" *+,  ": Cost that fluctuate with production volume (e.g. line labour, water
utilities, chemicals etc.)

¦

 ~
~


!1(  ": Indirect labour and overhead that do not vary with production volume (e.g. Plant
management, production centre &building)

!,: includes cost of labour, benefits, repairs & maintenance, fuel, license, taxes, insurance,
depreciation etc.

  /  4 "0: Includes labour, benefits, parts, depreciation etc. to place
and maintain marketing equipment (e.g. coolers, vendors, fountain etc.)

,,2(,.)Includes cost of labour, benefits, TDMs, CRs etc. Cost of sales of office.

¯2 /¯(.2 0) Includes advertising, consumer promotion etc.

) Includes cost of labour, benefits, breakage and shrinkage.

) Moving product from production to warehouse includes cost of labour, benefits, vehicle
exp. Depreciation etc

c 

 ~
9
ô%$ 

epsiCo has 36 bottling plants in India, of which 13 are Company Owned Bottling
Operation (COBO) and 23 are Franchisee Owned Bottling Operation (FOBO).PepsiCo normally grant
their bottlers exclusive contracts to sell and manufacture certain beverage products bearing his
trademarks within a specific geographic area. These arrangements provide them with the right to
charge PepsiCo¶s bottlers for concentrate, finished goods and Aquafina royalties and specify the
manufacturing process required for product quality. Since PepsiCo do not sell directly to the
consumer, they rely on and provide financial incentives to their bottlers to assist in the distribution and
promotion of PepsiCo¶s products.
In India there are some groups who have taken franchisee of PepsiCo India Holdings Pvt Ltd.

A. RKJ Group

Under RKJ group there are two Bottlers:
a) Varun Beverages Ltd: VBL set up his plant in Noida, Mathura (UP), and Rajasthan etc.
b) North East pure drinks Ltd: Guahati
B. SKJ Group
Under SKJ group there are three Bottlers:

a) SMV Beverages Ltd: Nagpur (Maharashtra)

b) Steel city beverages Ltd: Jamshedpur

c) Tripty Drinks Ltd: Cuttack

C. CKJ Group

Under CKJ group there are two Bottlers:

a) Aradhana soft drinks Ltd: Hariyana &Andhrapradesh

b) Jai Beverages Ltd: Jammu

D. Khillani¶s Group:

Lumbini Beverages Ltd: Hajipur

E. Dillon Cool Drinks & beverages Ltd: Jallandhar (Punjab)

Pearl drinks Ltd: Delhi

In India Companies Own Bottling plant is situated in Bazpur (uttarkhand), Raigad (Maharashtra),
Dehat (Uttarpradesh), Aurangabad, Vishakhapatnam, Gujrat, Tamilnadu, Kerala etc.

cc

 ~
9
# !#% &¯¯$
¯ %
$

urchase of material happened through

' Purchase order
' Non purchase order

#"()

When quantity is not available in the store or reaches in the reorder level then company has to make
a purchase requisition (PR) i.e. indent. In PR Company has to give brief description about the material
and its quantity. After that they take quotation from different vendor. From those quotations they choose
the vendor who gives best quality at a minimum rate. Then Company prepares a purchase order where
delivery date of that material, payment terms and tax rate is mentioned and gives the order of material to
that vendor. Then it comes into the plant. When the transporter entered into the plant, there a gate entry
no. is generate in their bill from the securities. After that they come into the store with this entry number.
The store department registers that stock after inspection through concerned engineer/quality. The
transporter comes in the plant with two copies of Chelan. The store department gives stump and signature
on that Chelan and takes one copy and return another copy to the transporter. If there is any shortage of
quantity then transporter write that shortage quantity in the Chelan with his signature and return it to the
vendor with the stump and signature of stores authority. If that material is excisable and company can
avail CENVAT credit on that then store department capture that excise amount at the time of GRN, then
store department send that GRN to the Accounts Dept for invoice verification. The user department
issued that material from the store with an issue slip. After the invoice verification company give
payment to that vendor. In chart (1.1) the whole process is shown.


G
 GG
ÿ
 ÿ
 G 





$."
"" G  G

4  G    


G

G "  . "
G

( G
 G



 &¯
5 5

c

 

~
g
~



¯"")

5± material a/c or inventory a/c will be debit and GR/IR clearing a/c and freight clearing a/c will
be credit (At the time of Goods Received Note).

(± GR/IR clearing a/c, freight clearing a/c, CENVAT receivable a/c and VAT receivable a/c will
be debit and Vendor a/c will be credit.(At the time of invoice verification)

6( 7 Store consumption a/c debit and inventory a/c will be credit. (At the time of issue of
material)

8± Vendor a/c will be debit and Bank or Cash a/c will be credit. (At the time of payment)

When material is issued to production floor, Store will book the material against an issue entry of the
same.

So the actual entry is material a/c debit and Bank a/c credit.

When the cheque is enchased by the vendor, bank a/c will get affected and the total loop is closed.

"()
When purchase is not made through purchase order that time at first company made a purchase
requisition then they take quotation from different vendor and choose the best option and give that order
verbally or give the indent to the vendor. The whole process is discussed in the following chart.


(
" ""  "   $."
 ( . ( ".( #
4 4  * "
"

 &¯
5 

¯""
5 ± Expenses a/c will be debit and vendor a/c will be credit.

(± vendor a/c will be debit and bank or cash a/c will be credit.

So the ultimate entry is expenses a/c debit and bank or cash a/c credit.

c[

 ~
g
~



'#!ô$2$
*$!$ ¯
$)
There are three types of bill which is discussed below:

50 ,ô,,:

When company has required any material for that they prepared a purchase requisition. Then they
take the quotations from different vendor and choose the best and order that material to the vendor. When
the vendor supplies the material to the company they submit a bill with that material. Here we have to
check the types of material, rate and quantity from the purchase requisition. Also we have to check the
taxes Charged by the vendor.

0 ."ô,,:

Sometime Company made certain contract for any specific job with other contractor or any service
provider. They sit together and do an agreement for their work, the validity of that contract, the rate etc.
After completion of the specific job the contractor submit a bill to the company. Then accounts
department have to check the bill by viewing that contract. Now I will explain it elaborately with a
following example.

Goswami Enterprise, a C&F (clearing and forwarding) agent working on behalf of VBL. VBL made a
contract with that contractor and fix up the commission, reimbursement etc. They provide labour to the
company for this following job.

a) Filled goods receive b) filled goods dispatched c) empty receive d) empty goods dispatched e) re-
cartooning etc

For that work they provide shipper, SAP operator, SAP MT punching, casual labour etc. For that they
will get Reimbursement, commission, from the PEPSI CO.

When Goswami enterprise send the bill to the company against their work the manager have to check the
bill with the respective contract.

60 ô,, ",":

In case of Emergency company has to purchase some material from local market. The volume of
such purchase has certain limit. It has no written quotation or agreement. Company will check that bill if
they have any mail or letter of any authorized person from the Company.

cD

 ~
g
~




 #
!¯'ô$)
When interstate purchase happened then company has to issue
µForm 50¶i.e. Way Bill/Road Permit. Sales tax (ST) department provide that Way Bill to the company.
To get that Way Bill from ST Department Company has to fill up the µForm 52¶ and duly signed by the
authorized person of the company. Then the sales tax department wants µForm 54¶ i.e. Way Bill
Utilization Form from the company. Then company filled up the Way Bill utilization form with the
details i.e. no. of Way Bill submits and no. of Way Bill in transit .After viewing that sales tax
department issued waybill.

For example, suppose company applied 300 Way Bills to the ST department. Then the department gives
the form to the company after viewing the utilization statement. If the company submit 200 Way Bills to
the department and rest 100 waybill in transit then sales tax department issued 200 Way Bills against
300.

Sales tax department issued Way Bill which has two copies one is original and another is duplicate.
When company purchase material they issued both original and duplicate bill to the vendor. When
vendor cross the border of any state with the material they submit original bill to the check post and
duplicate one to the company when the vendor reach in the company premises with the material.

c·

 ~
9
·ô¯
  $$¯
$
¯
 


ank Reconciliation is an important statement of any business. Company need to make the best


decisions about the day-to-day operations of their business. It keeps tight control over company¶s
cash and also manages the capital wisely.

With Bank Reconciliation, we¶ll know which checks have cleared, which transactions are
outstanding, which bank accounts contain what amounts, and exactly where the money is. Find the
errors and record differences between company¶s books and the bank easily with two types of
reconciliation from the Reconciliation Report²book-to-bank and bank-to-book.

Bank Reconciliation gives company the accurate information that needs to make the most of his cash.
Using multiple bank accounts for Accounts Receivable/Sales Order deposits and Accounts
Payable/Purchase Order checks gives company the flexibility to receive money and to disburse
money from different accounts.

e know that BRS is the Reconciliation between two books i.e. bank book and company¶s book.

In this company they take bank book as a base. So they adjust the entries when the following
adjustments are come and Bank balance is credit balance then«.

Cheque issued but not presented to the bank(LESS)

Cheque received but not credited by Bank. (ADD)

When bank balance is negative or debit balance then««.

Cheque issued but not presented to the bank (ADD)

Cheque received but not credited by Bank (LESS)

SOME PRACTICAL CASE:

50 After collecting all the parties cheque CMS submitted the cheque into the bank, bank credited the
cheque and send a statement on next day with the cheque number.

Suppose if bank received total of Rs8000000 cheque but credit only Rs4000000 in that day and other
Rs4000000 in another day. But company debited full Rs8000000 in that day.

c‰



~~
9 9
9

9

,;

At that time there is a difference of Rs4000000 in company book and bank book .company book is Rs
4000000 higher than bank book. So at that time the right entry will be«..

Bank a/c will be debited by Rs4000000 and company a/c will be credited by Rs4000000.

0 If there is a problem in amount of any transaction between bank and company, for example, if
company deposited 80000 to the bank but written 180000 to his book.

,;

Then we have to see the fund flow statement. I will take that fund flow statement and the
bank book or companies book in an excel sheet and compare those balances. If these balances are not
matched then we will go for reconciliation. The process is discussed in the Fig-1.3.

Fund Flow Statement Bank Statement

Opening balance ****** bank balance as per bank as on 1.3.2005 ******

ADD: collection $$$$$$ Add: cheque deposited but not credited ******

less: payment ****** Less: cheque issued but not presented ******

bank balance as per company book as at

closing balance ******* 31.3.2005 *******

!$)5 6

Balances as per SAP and Balances as per bank will always match.

If it is not matched then there is a problem in opening balance i.e.

I. We know that opening balance is the previous periods closing balance. After
preparing fund flow statement if accounts manager Check previous periods closing
balance and if any change arises he put that change in closing balance but keeps the
opening balance as it is.
II. Balance as per bank statement and balance as per fund flow will always match. If it
is not match then there is a problem of Fund Transfer i.e. suppose some excess fund
transfer to the H.O. and there is no record for that.

c-

 

~~
9 9
9

9

60 Another very important problem is that company do there transaction through 3-4 bank.
Suppose Rs80000 deposited to HDFC but written SBI instead of HDFC. But the problem has
found after 4-5 days.

,;

Wrong entry- SBI a/c debited and company a/c credited by Rs 80000

Rectification entry- Company a/c debited and SBI a/c credited by Rs80000.

Write entry- HDFC a/c debited and party a/c will be credited by Rs 80000

Now the whole reconciliation process is discussed in the following practical example.

&! ô¯

¯
 

~







 
~  


~





CH.9090140768 PAID TO THE GOSWAMI
9090140768 1/25/2009 30000 ENTERPRISE
9090141250 2/10/2009 45000 CH.9090141250 RECEIVED FROM VBL
9090789403 2/25/2009 4000 CH.9090789403
9090367340 3/12/2009 5980 CH.9090367340
9090892056 3/8/2009 12000 CH.9090892056
9801288035 3/17/2009 19870 CH.9801288035
7245288037 4/10/2009 34900 CH.7245288037
9086288059 4/22/2009 90000 CH9086288059
4390288095 5/12/2009 26000 CH.4390288095
4560288097 5/25/2009 73000 CH.4560288097
2881046789 6/9/2009 56000 CH.2881046789
2881149065 6/22/2009 100000 CH.2881149065
2881348942 6/27/2009 70000 CH.2881348942
TOTAL 59:9·  6;  <56·  CREDIT BALANCE

cr



~~
9 9
9

9

&=%#$
ô%

 $
ô'ô¯

 
~

   
·
   ~ .547296 IN F/O ~ ANDES REF.,KANKROLI
9090140988 4/14/2009 50000.00 ~ .9090140988 IN F/O ADE~~O FLEXIONE WORKFOR~E
9090141141 5/8/2009 73500.00 ~ .9090141141 IN F/O RAJANIS MERATIA,AJMER
9090141145 5/21/2009 60000.00 ~ .909014145 IN F/O NIRMAL KUVERA,AJMER
9090301207 6/17/2009 200000.00 ~ .9090301207 IN F/O I~I~ILOMBARD GI~ LTD. NOIDA
9090881936 6/25/2009 101000.00 ~ .288114 F/O OSWAL TYRE, JDPR
  


&=%$%ô%

#

~



 









287867 1/28/2009 -8906.00 ~ . 287866 ISSUE TO VYAS ELE~TRI~AL & ENGG.
~ .287980 IN F/O ADE~~O FLEXIONE WORKFOR~E
287980 2/17/2009 -6443.58 LTD.
288002 2/24/2009 -11610.00 ~ .288002 IN F/O TAL ARI ME AL
288035 3/8/2009 -6000.00 ~ . 288035 IN F/O SANJNA DEVI JDPR
~ 288037 IN F/O SURYA PRAKAS ,JDPR M/O MAR-
288037 3/8/2009 -5500.00 09
288059 3/14/2009 -46234.03 ~ .288059 IN F/O ADE~~O FLEXIONE WORKFOR~E
288095 3/18/2009 -6806.18 ~ .288095 IN F/O RAJANIS MERATIA,AJMER
288097 3/18/2009 -12705.42 ~ .288097 IN F/O NIRMAL KUVERA,AJMER
288104 3/18/2009 -6180.00 ~ .288104 IN F/O I~I~ILOMBARD GI~ LTD. NOIDA
288114 3/19/2009 -18598.50 ~ .288114 F/O OSWAL TYRE, JDPR
288134 3/21/2009 -2345.61 ~ .288134 F/O ~ ANDES REF.,KANKROLI
288138 3/21/2009 -2242.99 ~ .288138 F/O TARA REF. JAISALMER


 

c¦



~~
9 9
9

9

%
$:

ô¯
  $¯
$
¯
 

PARTI~ULARS AMOUNT(Rs)



~

 


  213250

ADD: ~




 ~

 


AS PER ATTA~ MENT  884500.00

LESS: ~



 



 



AS PER ATTA~ MENT 133572.31




~

 
~

  

 $ #
¯

)

("":

At a time the maximum cash payment can be possible is up to Rs. 20000. When Rs.5000
cash will be given to any party then revenue stamp will stuck into the voucher. At that time if
system is failed then manual voucher is prepared and the revenue stamp will be stuck on the
supporting documents of that payment.

+(:

There are four modes of bank payment i.e.

ù By cheque
ù By DD
ù By RTGS (REAL TIME GROSS SETTLEMENT) this is beyond Rs.100, 000.
ù BY NEFT (NATIONAL ELECTRONIC FUND TRANSFER) this is bellow Rs 100,000.
ù Through E- payment (it has been done through internet).

 



~~
9 9
9

9




" ""(>")
PEPSICO enjoying the cash credit facility from bank. Bank gave particular amount of
cash in credit to PEPSICO for doing daily transaction. For this facility bank demanded for some
security, against that company has to hypothecate his stock or FG or debtors to the bank. Every
month company provides a statement of FG, position of stock and the valuation of debtors in a
certain format provided by bank. Bank charges interest for this service only on the usage amount.

c

~
9

*  $$¯
$
¯
 


9he vendor reconciliation means reconcile between two books i.e. companies book and
vendor¶s book. Some time company purchase some raw material and FG from the other
company or use their brand name for selling his product. So in an entire year there are lots of
transactions happened, for that company and their respective vendors maintain record on their
own book. After end of the year vendor send a statement to the company from that company
made reconciliation statement with their book. For Example, VBL buy concentrate from PFL
(Pepsi Food Ltd.) and also uses brand name for selling their product for that VBL pay royalty to
PFL.As biggest bottlers of PepsiCo, VBL got some incentives for trade and consumer programs
to sale their product, such as consumer incentives, advertising support, new product support, and
vending and cooler equipment placement. Consumer incentives include coupons, pricing
discounts and promotions, and other promotional offers. Advertising support is directed at
advertising programs and supporting bottler media. New product support includes targeted
consumer and retailer incentives and direct marketplace support, such as point-of purchase
materials, product placement fees, media and advertising. Vending and cooler equipment
placement programs support the acquisition and placement of vending machines and cooler
equipment. So for this PFL and VBL maintain their own records for every transaction and if
there is any miss matched happened with the balance of two books then company goes for
reconciliation.

 #¯
$ ¯ ¯:

a) When PFL send certain amount of concentrate to the VBL and debited to VBL by that
amount. But sometime some goods are damaged on the way so VBL credited PFL by
deducting that amount from the total amount. For Example, PFL send concentrate at the
Rs. of 6 lakh and debited that amount in the name of VBL. But on the way some goods of
Rs.40000 is damaged. VBL credited to PFL by Rs. 540000 (600000±40000) so Rs.40000
will stand for reconciliation.
b) Some expenditure incurred by VBL in favor of PFL and debited to PFL in his book.
Some days later VBL claim that amount to the PFL. So that amount will stand for
reconciliation until that period when PFL is credited to VBL.
c) VBL uses Brand name of PFL for selling their product, against that PFL take Royalty
from VBL. PFL fixed that percentage of royalty on total sale of VBL. Every month VBL
send a sales statement to PFL. From that PFL calculate the royalty and credited to VBL.
But VBL debited to PFL by deducting 10% TDS on total royalty. For Example, suppose
the total royalty payable to VBL is Rs.20000 PFL credited VBL by that amount. But
VBL debited PFL by Rs.18000 i.e. deducting the TDS (20000 ± 10% 0f 20000). So this
difference of Rs.2000 will stand for reconciliation.




 

~~
9 9
9

9

A practical example of vendor reconciliation between Varun Beverages ltd And Pepsi Food Ltd
is discussed below. As PFL is one type of vendor of Varun Beverages Ltd.

#!
¯
 
! ¯ 5 
?%5 
  

  ~
   
   ··
·   
    
 
     
 
· 
!  
     ·  
·
 
"   

 ·     · ·    #
  ·   ·  · · 
  ·
 ·  ·   $
$ 


 

*ô
¯
 
! ¯ 5 
?% 5 

~ 
 ~~   
        
 $··
        · · !!% #· 
 ·    
 
· 
&'( 

   ·    ·
  
·

  ·# !
   ·    · ·  
%
 ·       $
$ 

 

[



~~
9 9
9

9

%
$:
*  $¯
$
¯
 


~


 




~

 
 
ADD; ROYALTY RS.20000 ~REDITED BY PFL BUT VBL DEBITED ONLY RS 18000 2000

LESS: PFL DEBITED VBL BY RS.651025 BUT VBL ~EDITED TO PFL BY RS.542521 108504 -106504





~

 
 

D

 ~
9

¯@¯
$ 9
~ 


9he most important and highly useable method of taxation is TDS (tax deducted at source)
for calculating TDS the principal is payment or credit whichever is the earlier. For example if
company purchase goods of Rs. 50000 ,they pay advance Rs.20000 and rest after receiving of the
bill i.e.Rs.30000.So TDS will be deducted on Rs.20000 at first then on Rs 30000.
The TDS rate is applicable on following payment.


$ ¯
%! ¯@$ % $ $
 %
$
#¯' 

 #¯'   #¯'

194A Interest income If interest amt. is 10% 10%

other than excess Rs.5000 then
securities TDS is applicable

194C Payment to If a single payment is 2% 1%

contractors exceed Rs.20000 and
yearly payment
Rs.50000 then TDS
will be deducted.

194H Payment of If it is exceed Rs.2500 10% 10%

brokerage and
commission

194I Payment of rent Up to Rs 120000P.A. Then for SAME

there will be no TDS If building it is
it is exceed then
10% and for
P&M is 2%.

194J Professional and If it is Rs.20000 P.A. - SAME SAME

technical Not applicable. if it is
services exceed then 10% is
the TDS rate i.e. for
lawyer, auditors,
consultant etc.

·

9

9

Now there is some exceptional rule which is discuss below

ù If anyone has the PAN card he will be applicable for TDS on the chart basis, if he has no PAN
card then flat 20% rate will be applicable.
ù Any transportation cost or freight the TDS will not be applicable.
ù If anyone have lower deduction certificate from income tax department he can get some
deduction.

The deposit date of TDS to the Govt. is within 7 days of the previous month closing. Suppose if
the TDS is for the month of march then company has deposit that amount within 7th April. But if some
bill of the month of march has not come yet then in that case company will get a grace period up to
31st may.


% /:=0A,B)
The TDS return is came from IT dept. in quarterly basis i.e. four times in a year.

ù APRIL--- JUNE(1st quarter) return will come in 15th July

ù JULY ---SEPT. (2nd quarter) with in 15th Oct.
ù OCT. --- DEC. (3rd quarter) with in 15th Jan.
ù JAN. --- MAR. (4th quarter) with in 15th June.

Now we will see how tax is calculated on salary of Non Government employee. Sec:192b

In an employee¶s salary there are basic + HRA + conveyance + CEA + medical reimbursement +
books & periods + companies contribution to PF etc. There they get some exemption. Now we will
discuss one by one.

&¯,,3":
A) In HRA they get some deduction if they took any rented accommodation i.e. if they live at any
metro city (Bombay, Delhi, Bangalore, Chennai and Kolkata) they get 50% of basic.

B) Other than metro city the deduction will be 40% of basic.

C) in general, it is basic salaries 10%

From this three whichever is lower that will be deducted.

.",,3")
Up to Rs800 per month will be exempted from tax.

‰

9

9

(",+)

Up to Rs 15000 per annum will be non taxable.

#.( ()
Employer and employees PF is not taxable. The maximum amount of contribution in PF is
Rs.6500 out of that employees contribution towards PF is 12% of 6500.companies contribution is
12% of basic. Out of that 4% in PF and 8% in Pension plan.

,(C(")

For one child exempted will be up to Rs.100 and Rs.300 for boarding of one child.

Now we will see the whole taxation system of salary with a Example

Let one employees per month salary is Rs.50000 within that

PARTICULARS AMOUNT (RS.)

Gross salary (Basic): 20000
HRA: 20000
Conveyance: 800
CEA: 400
Medical reimbursement: 1250
Books & period: 5150
PF (comp. Contribution): 2400
So, Total · 

-

9

9

Now we will see the computation of the total amount of tax of that employee.

#¯
$ %¯ 
&'/ 0 '¯'/ 0
Gross salary(Basic): 20000 240000
HRA: 20000 240000
Conveyance: 800 9600
CEA: 400 4800
Medical reimbursement: 1250 15000
Books & period: 5150 61800
PF (comp. Contribution): 2400 28800


¯ ·  600000
1  
HRA(240000×10% ± 240000): 216000
Conveyance : 9600
Medical Reimbursement: 15000
Books & periods: 61800
PF: 28800

, :DD 
E(("/>D "0  
Up to Rs.100000
PF (780×12): 9360
LIC: 70000
KVP or NSC: 22000
TOTAL: 5 56: 100000
Gross taxable income 5:DD 
Less: u/s 80D
Medical claim(up to Rs.5000) 5000
1+," 5:6D 
Now we have to calculate the total amount of tax as per the rule. Income tax slab for individual tax
payers will be as follows:

160000 NIL
160000 ± 500000 10%
500000- 800000 20%
More than 800000 30%


r

9

9

In this example the total amount of Tax payable is (163800 ± 160000)= 6D

Beside that there is some item where the employee can get exemption.

ù U/S 80G if the employee gives any donation that will be totally exempted from tax.
ù Interest of education loan will be exempted from tax.
ù In Housing loan, principal amount will be deducted U/S 80C interest amount up to Rs.1.5
lakh.

$  
¯@
%
Under section 24Q i.e. for salaried employee the income tax return will have to submit on 31st
March and the last date of submission is on 7th April. Company has to submit a detailed salary
chart of all the employees to the income tax department for that they have to fill up a form on that
basis they give the income tax return.

Under section 26Q i.e. for non salaried employee, there is no annual return.

¦

 ~
9
$$

¯@¯
$

n indirect taxation there are three types of taxation

ù CENTRAL EXCISE
ù STATE SALES TAX
ù SERVICE TAX


¯@ $
Excise duty is applicable on manufacturing industries i.e.in manufacturing goods in a factory.

Excise duty is calculated on assessable value.

The tax rate of excise duty is discussed below:

Basic excise duty ±10%of assessable value

Primary education cess ±2% on basic excise duty

Secondary Higher education cess ± 1% on basic excise duty

So, overall excise duty rate is 10.3%.

When company purchase raw material from any vendor, company has to pay excise duty against that
raw material to that vendor with the raw material value. For example; Let assessable value of any raw
material is Rs.100000.So,

Base tax is 100000×10% = 10000

SECESS is 10000 × 2% = 200

HSECESS is 10000 × 1% = 100

The manufacturer now can avail CENVAT credit of Rs.10300 and can set off the amount with total
Excise liability.

When company dispatch finished goods to any party, they pay excise duty to the Govt. For example;
Let assessable value of dispatching any finished goods is Rs.200000.so,

Basic excise duty is 200000 × 10%=20000

SECESS is 20000 × 2% = 400

HSECESS is 20000 × 1% = 200

[ 


~99

9

So the total excise liability is Rs.20600.The manufacturer has to pay to the Govt. account total
payable Less CENVAT credit. This payment has to be made by 5th of the subsequent month.

So the total amount of tax liability is (output tax minus input tax) i.e.

Rs.20000- 10000 = Rs.10000

Rs.400- 200= Rs. 200 & Rs.200-100= Rs.100. So total is Rs.10300.

Now, we will see the calculation of assessable value.

There are different abatement rate for calculating assessable value in case of MRP based product.
Company produces two types of beverages i.e.

1) Plain water 2) Aerated water

The beverage company falls under the following category.

Plain water i.e. Aquafina the abatement rate is 45 % of MRP. Suppose, in one case of FG there are
24 bottles and the MRP is Rs.10.

So the total MRP is 24 pcs. ×Rs.10 = Rs.240

Abatement rate is 45% of Rs.240 = Rs.108

So the assessable value will be (Rs.240-Rs.108) = Rs.132

Excise duty is 10% of Rs.132 i.e. 13.20

ECESS is 2% of Excise duty i.e. Re. 0.26

HECESS is 1% 0f Excise duty i.e. Re. 0.13

So the total amount of tax payable is Rs.13.60.

For Aerated water like (Pepsi, Miranda, Mountain Dew, 7up, Soda etc)

The abatement rate is 40% of MRP.

So the calculation will be 24pcs ×Rs.10 = Rs.240

Abatement rate is 40% of Rs. 240 = Rs.96

So the assessable value will be (Rs.240-Rs.96) = Rs.144

[c

 
~99

9

Excise duty is 10% of Rs.144 i.e.Rs.14.4

ECESS is 2% of excise duty i.e. Re.0.28

HECESS is 1% of Excise duty i.e. Re.0.14

The total amount of tax payable is Rs.14.82

But any type of fruit juice i.e. Slice is exempted from tax. The calculation will be like this

MRP of 1 case slice is 24pcs× Rs.10 = Rs.240

Abatement rate will be 40% of Rs.240 = Rs. 96

The total assessment value is (Rs.240-Rs.96) = Rs.144

After that there will be no tax calculation on that value.

CENVAT is applicable on two types of goods.

 Input Goods (like Raw material, packing material etc.)

 Capital Goods (like plant & machinery and spare parts)

CENVAT credit on inputs can be utilized in the same month when it has been availed and can be
utilized on a later date also.

But In case of CENVAT on capital goods the 50% of CENVAT can be availed and utilized in the
same financial year in which the capital goods has been procured .the balance 50% can be availed and
utilized in any of the subsequent financial year.

For example, M/s A has purchased 1 machinery in the year 2009-10 amounting to Rs.100000
which includes Rs.10000 as Excise duty.

Now M/s A can utilize Rs.10000/2 i.e. Rs.5000 in the year 2009-10 and balance Rs. 5000 can be
utilized in 2010-11 or later.

If any input and capital goods is utilized for manufacturing Excisable goods in that case company
can get CENVAT credit.

Again if any input and capital goods is utilized for manufacturing non excisable goods in that case
company cannot get CENVAT credit.

If any machine produces both excisable and non excisable goods then company get CENVAT credit.

[


~99

9

¯
¯@)
In the sales tax there are two types of taxation i.e. VAT & CST.

,(*¯

3,,+,"+,.

Generally the VAT rate is 4% on certain goods and 12.5% on some goods. 4% VAT rate will be
applicable for Fruit juice like Slice, Nimbooz and also for plain water i.e. Aquafina and 12.5% VAT
rate will be applicable for aerated water like Pepsi, Miranda, Mountaindew,7upetc.
,( 
/ ,,
103,,+,"+,

When company sold goods to any registered vendor then CST rate is 2%.To get that, party has to
submit a form (that is called form µC¶) from his jurisdiction officer of sales tax department to the
company.

But if any sales happened between companies to any unregistered party then local sales tax rate will b
applicable as CST i.e. 4% and 12.5%.

" ((

Suppose company transfer Rs.100000 stock to own company of other states then that company has
to issue a form (that is called Form µF¶) on that particular amount i.e. Rs.100000 to sales tax
department.

¯@
%

Excise duties return has to submit to the Govt. on 10th for the subsequent month and VAT return has
to submit to the Govt. on 30th at the end of every quarter¶s subsequent month.

There is four quarter i.e.

ù APRIL--- JUNE (1st quarter)

ù JULY ---SEPT. (2nd quarter)
ù OCT. --- DEC. (3rd quarter)
ù JAN. --- MAR. (4th quarter)

*$ 
¯@
¯/(
¯"0
In service tax calculation the abatement rate is 75% of freight and the service tax rate is 10.3 %

(i.e.10 % base, 2% SECESS and 1% HSECESS).

[[


~99

9

There is some rules for calculating service tax

1. The service tax is on 25% of the freight. For example, if the freight amount is Rs.2000, then
service tax payable will be 10% on (2000×25%) Rs.500 i.e. Rs.50 plus education cess 2% of
Rs.50 and higher education cess1% of Rs.50.
2. No service tax is payable if the freight amount is less than Rs.1500 in respect of a full load. If
it is exceed Rs.1500, then service tax is payable on total amount. For example, if the freight
amount is Rs.2000 the service tax to be paid on Rs.2000 and not on Rs.500 (2000-1500).

3. For individual consignment (it means all goods transported by a goods transport agency by
road in a goods carriage for a consignee), the exemption limit is Rs.750.this will mainly
apply in cases like parcel booking, where goods of several persons are transported together.
4. A manufacturer of excisable goods who has paid service tax on freight can himself take
credit on such service tax paid by him.

5. For inward transportation, credit of service tax is eligible. For outward freight it is admissible
up to place of removal and if sale gets completed in buyer¶s premises, then credit is eligible
up to such point of sale. Such credit can be availed on the basis of the consignment notes
issued by the transport agency.

6. The liability for payment of the service tax is always on the person paying the freight.

7. When any consignment happened between two party transport operators give a consignment
note. It should be serially numbered, consignor and consignees name, origin and destination,
registration no. of the vehicle and the person who is responsible for payment of service tax in
respect of such transportation.






[D

~
9
!$&
¯ %
$

n any manufacturing industries freight is a very important aspect. Company has to bear a
large amount for freight. Freight is two types i.e. Freight inward and Freight outward. The Freight
inward means the goods (any type of raw material or FG) which are come into the plant or
warehouse and for that the transport agency claims their charge as freight. The Freight outward
means when FG is dispatched to any distributor, warehouse, warehouse to distributor or
warehouse to warehouse and for that transport agency claims their charge as freight. The rate of
freight is negotiating by the company and transport agency by sitting together.

Transport agency has three type of vehicles i.e. LCV, HCV, HHCV. In LCV (low commercial
vehicle) the maximum capacity is 250c/s, in HCV (high commercial vehicle) the maximum capacity
is 650c/s and in HHCV (heavy high commercial vehicle) the capacity is 1200c/s. Transporter has to
carry this volume in every trip they made.

" 3")

Raw case means the weightage taken by the company for all the glass bottles (200ml and
300ml) or pet bottles (2Ltr and1.2Ltr). For one pcs 2Ltr pet bottle they take 1.5 as weightage and
in every case there are 9 bottles. So the calculation of freight will be /  "F+,  ;
F5 ·F0 and for one pcs 1.2Ltr slice bottle they take 2 as weightage and in every case there
are 12 bottles. For 200ml and 300ml glass bottles the weightage is 1 and every case there are 24
bottles

If any leakage, breakage or shortage happened at the time of transformation then company has to
bear certain amount for this loss.

ôô:

When transporter transfer the goods that time if any leakage happened then company give
0.2% deduction of total raw bottles. If transporter demanded more than 0.2% then company will
deduct that from his total amount. For example, if any HHCV transporter transports 1200 c/s
300ml bottles and within that, 90 bottles written in the bill as leakage then the transporter get
0.2% deduction on raw bottles i.e. (1200c/s × 1 × 24×0.2%)=86 bottles. But he takes 90 bottles,
so company deduct 90-86 i.e.4 bottles of extra leakage from total freight payable.

."1:

For transporting any goods company has to pay service tax to the Govt. for freight inward (only
for FG) company will not get service tax credit. For freight outward when FG is transfer to any
distributor then company will not get service tax credit but when FG is transfer to any warehouse
then company will get service tax credit.
[·

g
 9
~~
9

¯"")

Freight inward and outward is company¶s expenses. So the accounting will be freight
inward/outward a/c is debit and party i.e. transport agency a/c will be credit. But we have to
consider service tax in freight accounting and when company will not get service tax as credit
then the accounting will be freight outward a/c debit and party a/c, service tax payable a/c and
any leakage& breakage a/c will be credit.













[‰

~
9
 ô%
$

udget is used as a tool for planning and control. It is an action plan to guide managers in
achieving the objectives of the firm. Budgeting is a qualitative statement, for a definite period of
time, which may include planned revenue, expenses, assets, liabilities and cash flows. Again it is
also a quantitative expression of a plan, prepared for the business as a whole for departments, for
functions such as sales and production or for financial resource items such as cash, capital
expenditure, manpower, purchase etc. It has done by taking the last year budget and its actual
consumption as base. After preparation of Budget if there is any difference from the actual
amount then concerned department have to analyze this and report the variance reason to the
management. If the variance is controllable then the department must take proper action.

#(:
Budgeting is a short term financial plan. Most of the companies prepared budget for every
financial year i.e. at beginning of the every year


$")
ù Proper utilization of funds
ù Proper cost control
ù Provide a forecast of revenues, expenditures and also profitability. 
ù Enable the actual financial operation of the business to be measured against the forecast

)
We know that the nature of the budget is two types i.e. standard and practice. That means
estimated amount and actual consumption. If there is any difference between actual and standard
then it is called variance. But there are mainly three types of budget i.e.

5  .+()
It means the budget for other than capital expenditure like the profit & loss account
items. It is basically two types i.e. Variable and fixed. For example, production, sales and
purchase. In production the essential cost is raw material, packing material, labour and also the
fuel cost for bottling and blowing. For that the. Now we discuss the preparation of budget of each
and every management prepared a budget for a particular year that is called revenue budget items
of revenue budget.

[-



9

i 3,+()

The purchase budget is an estimate of future purchase. Here Company estimates the future
requirement of raw material and packing material of production.
i #"+()
At the beginning of every financial year companies sales department give a sales target to
the company. If that target is exceed the production capacity of the company then company
have to purchase it from the outside. So for that company made a budget.
i ,+()
The sales budget is an estimate of future sales, often broken down into both units and
rupees. It is used to create company sales goals.

i #("+()
Product oriented companies create a production budget which estimates the number of units that
must be manufactured to meet the sales goals. The production budget also estimates the various
costs involved with manufacturing those units, including labor and material.

i +()

The marketing budget is an estimate of the funds needed for promotion, advertising, and
public relations in order to market the product or service.

 <1+()
Capital expenditure budget means asset budget i.e. furniture, building etc. When any
new project is started for that management declared certain amount of budget and allocates that
amount into different cost centre i.e. discuss below.
i #"+() 
The project budget is a prediction of the costs associated with a particular company project. These
costs include labor, materials, and other related expenses. The project budget is often broken
down into specific tasks, with task budgets assigned to each.

6 !,3> +()
The cash flow budget is a forecasting of future cash receipts and expenditures for a
particular time period. It usually covers a period in the short term future. The cash flow budget
helps the business to determine when income will be sufficient to cover expenses and when the
company will need to seek outside financing.

[r



9

#") 

Atthe time of preparing any budget HO give the detail of expenses which will be incurred in
future and also give the instruction that which cost will be more from the last year and what
percentage will be increase. On that basis management prepare the budget of the entire year.
When the concerned department prepares the budget they considered some important items which
are discussed below:

1)Variance report last year 2)Variance report of budgeted year 3)product wise production
forecasting 4) Electricity consumption detail 5) MEM detail i.e. for Visicooler & PMX machine
etc. 6) other administrative expenses7) Salary and wages detail -Variable &fixed. Fixed includes
marketing and Non marketing¶s salaries & wages 8) Sales target (product wise and area wise)
which is AOP (Annual operation Plan) 9) Depoe maintenance 10) freight & logistics details, 11)
yield report 12) Raw material costing & consumption 13) other material consumption 14) Sales&
distribution or marketing expenses etc.

*")

It means the actual budget volume minus actual consumption of budget. Company has to
analyze these variances. It can be positive or negative.

Company estimates the total production, sales and also the purchase. Budget has been done
by divide it into two parts i.e. variable cost and fixed cost. In the variable cost there are some cost
which is directly related with production i.e. direct cost like purchase, raw material, stores and
spares, power& fuel, salary (non marketing) etc. then there is freight expenses of primary and
secondary. After that there are some indirect expenses like selling & distribution expenses, govt.
taxes and duties like excise and sales tax. In the fixed cost there are repair & maintenance,
administration expenses, marketing exp. (incl. salary) etc. then by adding all the expenses we will
get total cost of goods sold. From that COGS we have to deduct all the realization and income
then we will get the estimated profit.

After preparation of budget, management followed three processes which are discussed below:

ô()

It means preparation of the budget of all cost incurred in an entire year by discussing from
respective department of that cost and in the mid of every month company has to analyze the
actual consumption of budget with the concerned department. Sales department give the sales
target in an entire year to the management. If that target is within the licensed volume given by
the Govt. then company produce that much of goods in that financial year, if it is exceed, then
company has to purchase it from outside. But the main drawback of purchase is that the

[¦



9

profitability of the company will be decrease. So the main motto of the company will be produce
goods at his own. It is depend on how company efficiently controls the production. So to improve
production company has to follow three important step i.e.
ù Proper maintenance of machinery in season and also off-season.
ù Proper motivation to the labour by the HR department.
ù Smooth supply of raw material to the production by the purchase department.

Like in fuel expenses the budget plays a very important role. In this company the fuel is used in
production for blowing and bottling. The main fuel is used in production is electricity and diesel.
But the diesel is very costly rather than Electricity. So the company¶s motto is to utilize the
electricity as much as possible. If diesel is used more, then it increases the cost of production. For
that company prepared the budget of fuel consumption of an entire year.

ô(.")
Budget variance means the difference between budgeted amount and actual consumption of
a year. If the variance is less or more than the actual consumption then management have to find
the cause.
)
Management prepares a report for this variance of the budget which is called variance report.
And submit it to the HO in a format where they have to draw five column i.e. Budget at Budget
Volume, Budget at Actual Volume, Actual, Variances and Remarks. We will discuss it below:
ù Budget at budget volume)
The budget which is prepared by the management for the entire year and they fixes the total
volume of sales, to produce that volume company has made a budget for every individual cost
and sends it to the HO. The HO verifies and approved it by signing through authorized person.
ù Budget at actual volume)
Actually what will be the total volume required in a financial year that volume of budget is
called budget at actual volume. It can be differ from budget at budget volume.
ù Actual & provisions)
Then the entire month¶s actual consumption of budget will come in actual column of the
budget format. This amount can be varying also.

" #.)
For proper budget reporting company the payment which has occurred in the previous
month but not recorded, for that company keeps certain amount as aprovision. Company takes
the provision from the entire department like production, Operation, MEM, Laboratories, Store,
Shipping and IT etc.


D 



9

$" .)

Proper utilization of budget and its control is the main importance of provision. Budget is
prepared for the entire year and it is divided into twelve months. So every month company
prepares a budget. On that Basis Company incurred expenses. For example, suppose Rs.10 lakh is
the budget of previous month but the actual expenses incurred is Rs.5 lakh which is recorded but
the total expenses incurred is Rs.7lakh. So, Rs. 2lakh is incurred but not recorded till date. For
that Expenses Company takes a provision of Rs.2lakh but it is not the actual, at the time of
booking it also can vary. In that way we prepare provision and utilize the monthly budget. Every
month company prepared a budget after preparing the provision.

ô(,)
Company sits with the respective department for those expenses and income which has some
variances. They analysis the variances from the report and find the actual percentage of variance
of all the items from the last month.

Dc

~
9
   #¯'C¯&$¯ &$ ¯ 

n this hierarchical Model,on the top there are FM (Franchisee Maneger),under this FM
there are two MDM( Market Development Maneger),One from franchisee and another from
companies own.After that there are AFM(Assistant Franchisee Maneger).Under this there are HOS(
Head of Sales),there are two HOS who has the responsibility of two zone i.e. south bengal, north
bengal etc. Under this HOS there are three ± four TDM (Taritory dvelopment maneger).who has the
responsibility of different teritory like north kolkata, south kolkata etc.After that there are
ADC.Under this ADC there are few no. of company Executive(CE). Beside this there are MEM
(Market Equipment Maneger) and BDM( Business Development Maneger). The whole process is
discussed in fig 1.5.













c·

From HOS to CE this category of employee will come under travelling and expenses form.
According to contract company will pay their selected expenses like food, Accommodation, phone
bill, all type of travelling expenses etc. At the beginning of every month the respective HOS of
different zone, TDM, ADC, and CE sit for the journey plan of entire month which is called
Projected journey Plan(PJP).according to that they do their work but interim change can be
happen. Now we will see how the company keeps these expenses into the account. According to
HR policy and grade all the employee get the benefit from the company. At first the marketing
employee has to write the employee name, his grade in the company, which department he is

D

 working. According to that he will get the benefit from the company. Then we write the place

 

~ ~



where he starts his journey and where he or she wants to go. In there if he stays in a hotel he will
get different benefit or if he stays in his relative house he will get different benefit. Then we have
to see in which cities he is travelling and in which grade /(",
G¯C (<
, ô+ , " GôC (<# &(+(  " G C (<
0 that city is fall. According to that he will get the benefit. If he avail train or bus
he will get different benefit. If he arrange own vehicle then he has to submit the bill of total
kilometer run of his vehicle. Company fix up the rate and kilometer of running in a month
.According to that he will get the benefit.

D[

~
9
 ¯# 


 n this beverage company they usually sold their product through distributor, customer
warehouse and foodservice and vending distribution networks. The distribution system used
depends on customer needs, product characteristics and local trade practices. At first company
appointed the distributor who has the license. Distributor sold it to the retailer and then it reaches
to the ultimate consumer through retailer. Company fixed the MRP, and also the selling price of
the distributor in which price they sold to the retailer.

PRIMARY SALE & SECCONDARY SALE:

When company sold goods directly to the distributor then it¶s called primary sale. After that
when distributor sold these goods to any retailer then it¶s called secondary sale.

RE- DISTRIBUTION:

When company give a big territory to any distributor to sold their product, do an agreement
with him that all the expenses will bear by the company for the distribution in any interior area of
that territory that is called re-distribution. Distributor appointed any sub distributor for this re-
distribution and fixes up the price in between them for every case which they dispatched to any
place.

MODERN TRADE:

Sometime company sold goods directly to the big retail shop like Metro cash & carry, Fame
etc. that is called modern trade. In between them there will be no distributor. VBL sold their
product directly to retail stores where the products are merchandised by our employees. DSD
enables us to merchandise with maximum visibility and appeal. DSD is especially well-suited to
products that are restocked often and respond to in-store promotion and merchandising.

PAYMENT:

There are two types of distributor who has done there transaction with company by«

1. Payment through cheque 2. Payment through demand draft

SCHEME:

In this beverage company scheme play a very important role. Scheme means the company
gives some offer to the distributor to maximize their sale. For example, Company brings out a

DD

 scheme that for every one case of FG they give two Aquafina bottles free. This type of scheme is
going on with the business and it is change time to time.



~


CLAIM:

Company gives different type of scheme to the distributor and from that distributor gives scheme
to his retailer. After a certain period, distributor claimed that amount of scheme from the company
in given format provided by the company.

CARD ACCOUNT:

When retailer sold the FG over their target then they get a cash discount from the company
through distributor, and that amount of discount will entered in a format of an a/c which is called
Card Account.

¯! ¯#)

In VBL there are some goods which are not used after a certain time like Glass bottle, Cartoon,
Visicooler and PMX machine etc. Company sale that damaged goods which is called scrape to
any party in the unit of kilogram. The accounting entry is discussed below: 

For Non Assets:

For the sale of non asset like cartoon or any miscellaneous items then the entry will be Customer
a/c debit and vat payable a/c & sales of scrape a/c will be credit.

For Asset:

Glass bottle is a fixed asset for the company. When it¶s damaged then company sale it and retire
that amount from the asset register.

D·

~
9
  * 
! #
'

The movement of empty bottles is a very important aspect of any beverages industries like
PEPSI CO. It is a process which is going on like a cycle. Now we will discuss the whole cycle in
the given below.

#"/3+,0 #, 3  ,, ! +

, ("  , via retailer to distributor, distributor
to plant and then go on with the same process.

At first company purchase new bottles from other company. And then it is come at the plant and
goes for washing. After that it is filled up and then converted into finished goods. Then these
finished goods are dispatched to the distributor, warehouse, and FOBO.

$
$ô%
:
Company dispatched certain volume of goods directly to the distributor which are pre-
determined. Company fixes up the rate separately for the bottles and the liquids. They take
advances as a security deposit for the empty bottles. If there is any breakage occurred Company
deduct that breakage amount from that deposit. For Example, suppose the cost per bottle and liquid
is Rs.5 & 10. Company sold 5000 cases to the distributor and each case contains 24 bottles. So
Company takes advances for the empty bottles as a security deposit i.e. (5000 case × 24 bottles×
Rs.5) = Rs.600000 so at the time of return, If the distributor does not able to return the same
quantity of bottles company will deduct the amount of that bottles which is not return to the plant
from the deposit amount and declared it as a breakage.

¯&%)
Company sends finished goods to warehouse which is called stock transfer. From that
warehouse finished goods is dispatched to the distributor.

!ô)
When this company sends goods to his any own bottling plant, company does an agreement
with that FOBO (Franchisees Own Bottling Plant) i.e. whatever goods they dispatched to the
FOBO against that they will give same number of bottles to the company because the accounting
of Empty bottles will be nullified. Or they give the cost of those bottles as a security deposit.

D‰

 


9g
9



 #
'  $¯
$)
Empty reconciliation is a very important part in the Beverage industry. Generally, company has
taken an amount of deposit against empties from the distributors. On the basis of deposits against
empties Company is provide empties to the distributors as Empty deposit. Distributors are holding
this Empty deposit still the business lasts. If any distributor wants to return empty deposit to the
company then company will check the empty quantities which the distributors is return and refund
the amount against the empties to the distributor. But if the distributor is not return full quantity of
empties then company will refund the quantity of empties actually receive from the distributor.
Distributor send a statement of their empty glass to the company and company has also send the
statement of that empty glass to the distributors for reconciliation. If there is any difference in the
report then company analyzes the same.

D-

~
9
   %$
An appreciation of companies accounting policies is necessary to understand their financial
results. These policies may require management to make difficult and subjective judgments
regarding uncertainties, and as a result, such estimates may significantly impact their financial
results. The precision of these estimates and the likelihood of future changes depend on a number
of underlying variables and a range of possible outcomes. Company applied their critical
accounting policies and estimation methods consistently in all material respects and for all
periods presented, and have discussed these policies with their Audit Committee. In these
beverages industries the Market risks play a very important role. Companies are exposed to
market risks arising from adverse changes in:
ù commodity prices, affecting the cost of our raw materials and energy
ù foreign exchange rates
ù Interest rates
In the normal course of business, they manage these risks through a variety of strategies,
including productivity initiatives, global purchasing programs and hedging strategies.

In this company they maintain a good corporate social responsibility by protecting the Earth¶s
natural resources through innovation and more efficient use of land, energy, water and packaging
in their operations.

Dr

~
9
 ô$ô$¯#&'



ô
2!¯ )
c. Aswath Damodaran, 2005, Second Edition, ¯,( !",

2. I. M. Pandey, 2005, Ninth Edition, !", , Vikas Publishers.

3. Debashish Banerjee, 2004, Sixth Edition, !", 

4 Hanif &Mukharjee,2006,2nd Edition, ¯""

5. Mazumdar ,Ali&Nisha,2006,2nd Edition ,!", 

6.Direct&Indirect Taxation,2010,


ô$
)
1.ººº
 


2.ººº $

3.ºººº

%
4.
&&


&

5.www.ciionline.org

?%¯¯:


D¦