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ACCOUNTS (858)

Aims:
1. To provide an understanding of the principles 2. To develop an understanding of the form and
of accounts and practice in recording classification of financial statements as a means
transactions and interpreting individual as well of communicating financial information.
as company accounts.
CLASS XI
There will be two papers in the subject. users of accounting information; subfields of
accounting - meaning of financial
Paper I - Theory: 3 hours ……80 marks
accounting, cost accounting and
Paper II- Project Work ……20 marks management accounting.
PAPER - I (THEORY) – 80 Marks 2. Journal, Ledger and Trial Balance
There will be one paper of 3 hours duration of (i) Journal: recording of entries in journal with
80 marks divided into two parts. narration.
Part I (20 marks): will be compulsory and will (a) Classification of Accounts.
consist of short answer questions, testing knowledge,
application and skills relating to elementary/ (b) Double Entry System.
fundamental aspects of the entire syllabus. (c) Rules of journalizing – traditional
Part II (60 marks): Candidates will be required to classification or modern approach.
answer five questions out of eight from this section. (d) Meaning of journal.
Each question shall carry 12 marks. (e) Format of journal.
(f) Simple and compound journal entries
1. Introduction to Accounting (with specimens to practice).
Background of accounting and accountancy; (g) Advantages of using a journal.
types of accounts; basic terms used in
accounting, and Accounting Equation. (ii) Ledger: posting from journal to respective
Knowledge and understanding of IFRS ledgers.
(International Financial Reporting Standards); (a) Meaning of ledger.
GAAP (Generally Accepted Accounting (b) Format of a ledger.
Principles), Accounting Standards.
(c) Mechanics of posting.
(a) Basic Terms: Event, Transaction, Vouchers,
(d) Balancing of various ledger accounts.
Debtors, Creditors, Purchases, Sales, Assets
(intangible, tangible, fixed, current, liquid (e) Practical problems on journal and
and fictitious), Liabilities (internal and ledger.
external – current, fixed and contingent), (iii) Sub-division of journal - cash book
Goods traded in, Stock (raw material, work [including simple cash book and triple
in progress and finished goods), Profit, Loss, column cash book (cash, bank and discount)
Expense, Revenue, Income, Drawings and with contra entry pertaining to receipt of
Capital. cheque not deposited on the same day. Petty
(b) Accounting equation – Meaning and cash book (including analytical and imprest
usefulness. system), sales day book, purchases day book,
sales return day book, purchases return day
(c) Evolution of accounting; difference between book and Journal proper.
bookkeeping, accounting and accountancy;
functions, characteristics, objectives, Mechanics of posting from special subsidiary
advantages and limitations of accounting; books.
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(iv) Trial Balance. 5. Bills of Exchange
(a) Meaning, objectives, advantages and (i) Introduction to Negotiable Instruments:
limitations of a Trial Balance. explanation of basic terms.
Meaning of negotiable instruments; Bills of
(b) Preparation of the Trial Balance by the
exchange, promissory note (including
balance method from the given ledger specimen and distinction), cheque,
account balances. advantages and disadvantages of Bills of
Exchange, explanation of basic terms -
3. Bank Reconciliation Statement
drawer, drawee, payee, endorser, endorsee,
Bank reconciliation statement. bill on demand / bill on sight, bill after date,
(a) Meaning and need for bank reconciliation bill after sight, tenure of the bill, days of
statement. grace, due date, endorsement and
discounting of bills, bill sent for collection,
(b) Preparation of a bank reconciliation
dishonour of a bill, noting charges, notary
statement from the given cash book balance public, renewal of a bill, retirement of a bill
or pass book balance or both. and insolvency of the drawee/acceptor.
(c) Preparation of a bank reconciliation (ii) Practical problems on the above in the books
statement from the extract of the cash book of drawer, drawee and endorsee.
as well as the pass book relating to the same Self explanatory.
month. NOTE:
• Accommodation Bill is not required.
(d) Preparation of an amended cash book and a
• Entries in the books of the bank not
bank reconciliation statement from the given required.
cash book balance.
6. Accounting Concepts
(e) Preparation of an amended cash book and a
GAAP (Generally Accepted Accounting
bank reconciliation statement from the Principles), Basis of Accounting; Accounting
extract of the cash book as well as the pass Standards; Knowledge and understanding of IFRS
book relating to the same month. (International Financial Reporting Standards);
4. Depreciation (a) GAAP: Going Concern, Accounting Entity,
Money Measurement, Accounting Period,
(i) Depreciation. Complete Disclosure, Revenue Recognition,
Depreciation - meaning, need, causes, Verifiable Objective, Matching Principle,
objectives and characteristics. Historical Cost, Accrual Concept, Dual
(ii) Methods of charging depreciation: Straight Aspect Concept, Materiality, Consistency,
Line and Written Down Value method. Prudence and Timeliness.
(b) Basis of accounting – cash basis and accrual
Method of recording depreciation – charging basis.
to asset account, creating provision for (c) Accounting Standards: Concept and
depreciation / accumulated depreciation. objectives.
(iii) Problems relating to purchase and sale of (d) Introduction to IFRS.
assets incorporating the application of 7. Final Accounts and Concept of Trading, Profit
depreciation under the two stated methods. and Loss account and Balance Sheet (with and
without adjustments), Marshalling of Balance
Self explanatory.
Sheet
NOTE: Questions on change of method from (i) Capital and Revenue Expenditure/Income.
SLM to WDV and vice-versa are not (a) Meaning and difference between capital
required. expenditure and revenue expenditure
with examples.
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(b) Meaning and difference between capital (b) Rectification of errors after the preparation
income and revenue income with of trial balance and through suspense
examples. account if required.
(c) Meaning and difference between capital
(c) Rectification of errors after the preparation
profit and revenue profit with examples. of Final Accounts through P/L Adjustment
(d) Meaning and difference between capital A/c if required. Redrafting of Balance Sheet
loss and revenue loss with examples. not required.
(e) Meaning of deferred revenue expenditure
with examples. 9. Accounts from incomplete records
(ii) Provisions and Reserves.
(i) Single entry and difference with double
Meaning, importance; difference between entry.
provisions and reserves; types of reserves - (a) Meaning, characteristics and limitations.
revenue reserve, capital reserve, general
reserve, specific reserve and secret reserve. (b) Difference between Statement of Affairs
and Balance Sheet.
(iii) Trading, Profit and Loss Account and
(ii) Ascertainment of profit/loss by statement of
Balance Sheet of a sole trader, (Horizontal
affairs method including application.
Format) without adjustments.
Self explanatory.
Meaning object, importance and preparation
of Trading, Profit and Loss Account and NOTE: Single entry system as applied to
Balance Sheet of a sole trader. partnership firms is not required.
Conversion of Single Entry into Double Entry not
(iv) Preparation of Trading Account, Profit and required.
Loss Account and Balance Sheet with
necessary adjustments. 10. Non Trading Organisation
Adjustments relating to closing stock, (i) Non Trading Organization: meaning,
outstanding expenses, prepaid expenses, objectives, necessity and treatment of
accrued income, income received in advance, specific items.
depreciation, bad debts, provision for
doubtful debts, provision for discount on Self explanatory.
debtors, manager’s commission (on the net (ii) Different books maintained and differences
profit before and after charging such between them.
commission), goods distributed as free (a) Receipts and Payments Accounts:
samples and goods taken by the owner for meaning, features, differences between
personal use and abnormal loss. Receipts and Payments Account and
(v) Marshalling of a Balance Sheet: Order of Cash Book.
permanence and order of liquidity. (b) Income and Expenditure Accounts:
Self explanatory. meaning, features, difference, between
Income and Expenditure account and
8. Rectification of Errors
Profit and Loss account.
Errors and types of errors: Rectification of errors
(c) Balance Sheet and its role.
after the preparation of trial balance and
Rectification of Errors after the preparation of (iii) Preparation of Income and Expenditure
Final Accounts. Account and Closing Balance Sheet.
(a) Types of Errors: errors of omission, errors of Preparation of Income and Expenditure
commission, errors of principle, Account and Balance Sheet when Receipts
compensating errors.
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and Payments Account and other information PAPER II – PROJECT WORK – 20 Marks
is given. Candidates will be expected to have completed two
(a) Entrance, admission fees, life membership projects from any topic covered in Theory.
fees, legacies and special donations are to
be capitalised. Mark allocation for each Project [10 marks]:
(b) General donations and all receipts of a
Overall format 1 mark
recurring nature such as membership fees
are to be taken as revenue receipts. Content 4 marks
(c) Preparation of accounts of incidental
activities such as restaurant accounts are Findings 2 marks
not required. Viva-voce based on the Project only 3 marks
NOTE: Preparation of a Receipt and
Payments Account only or an Income and A list of suggested Projects is given below:
Expenditure Account with a Balance Sheet
from incomplete records need not be 1. Preparation of Journal / sub-division of journal,
covered. (in horizontal format). Ledger, Trial balance and Financial Statements
of a trading organization on the basis of a case
11. Introduction to the use of Computers in study.
Accounting
• Develop a case study of a sole trader starting
• Introduction to Computerised Accounting business with a certain amount of capital.
System: Components of CAS, Features,
Advantages and Limitations of CAS, He could have got the amount from his past
Accounting Information System and savings or by borrowing from a bank by
Management Information System. mortgaging his personal assets or by winning
Self-explanatory. a lottery or any other source.
• A theoretical understanding of preparation of • Write in detail, his transactions during the
Trial Balance, Profit and Loss account and year- his purchases - cash and credit, sales-
Balance Sheet with the help of spreadsheets. cash and credit, expenses, purchase of fixed
Self explanatory. assets and depreciation charged on them, any
• Comparison of accounting processes in outstanding expenses, prepaid expenses,
manual and computerized accounting. accrued income, drawing bills of exchange,
• Selection of an Accounting Software accepting bills payable, etc.
Package. • From this case study developed (which
Factors affecting the selection of accounting should have at least 15 transactions), pass the
software package/s based on organizational journal entries, post them into the ledger,
needs. prepare a Trial Balance and the Trading and
Profit and Loss Account and Balance Sheet.
• Introduction to Computerised Accounting
softwares. • The various expenses for comparison
Basic understanding and advantages and purposes, could be depicted in the form of
disadvantages of ready to use, customized, bar diagrams and pie charts.
tailor-made accounting systems (E.g.: Tally,
VISHESH or any other accounting system).

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2. Preparation of the accounts of a 4. Complete the labels.
Not-for-Profit-Organisation on the basis of a case (i) Prepare a Spreadsheet as per the following
study. format:
• Develop a case study of an NPO by Revenue Jan. Feb. March April
beginning with the primary motive of Outdoor
Sales
establishing it, that is, why have you decided
Indoor
to open a club or a library or a hospital, etc. Sales
• Write in detail about the sources of capital Total
Sales
fund, subscriptions, donations (ordinary and
special), other receipts and payments of your Expenses
NPO as well as outstanding expenses, Salaries
prepaid expenses, subscription due but not Rent &
received, subscription received in advance, Utilities
purchase of fixed assets and depreciation Others
charged on them, legacy received, etc. Total
Expenses
• From this case study developed (which
should have at least 15 transactions), pass the Net
journal entries, post them into the ledger, profit
prepare a trial balance and thereafter prepare (ii) Fill the Sales and Expenses for the months in
the NPO’s Cash Book, Receipts and Payment lakhs and calculate the Total Sales and Total
Account, its Income and Expenditure Expenses.
Account and its Balance Sheet. (iii) Calculate the Net Profit using the excel
formulas by subtracting the expenses from
• The various expenses, for comparison revenue.
purposes, could be depicted in the form of (iv) Highlight all the numbers and prepare a Bar
bar diagrams and pie charts. Chart showing the Indoor and Outdoor Sales
for the months.
3. Prepare a Bank Reconciliation Statement and
(v) Save your work on the desktop as
Amended Cash Book from the information given Label_Project.
in your Cash Book and Bank Statement (vi) Print a hard copy of your work and close the
(Pass Book) with at least fifteen transactions. file.

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CLASS XII

There will be two papers in the subject. (b) Partners’ capital accounts: fixed and
fluctuating.
Paper I - Theory: 3 hours ……80 marks
(c)Partners’ Current Accounts when fixed
Paper II- Project Work ……20 marks capital method is followed
PAPER - I (THEORY) – 80 Marks Interest on capital, interest on
There will be one paper of 3 hours duration of drawings, interest on current
80 marks divided into three Sections A, B and C. accounts (debit and credit) salary,
It will be compulsory for all candidates to attempt commission to partners and
Section A. managers, transfer to reserves,
division of profit among partners,
Section A (60 Marks): will consist of two parts,
Part I and Part II and have a total of eight questions. (d) Guarantee of profits
Part I (12 Marks): will consist of Question 1 (e) Past adjustments (Relating to interest
(compulsory). This question will include short answer on capital, interest on drawing,
questions, testing knowledge, application and salary and Profit Sharing Ratio).
skills relating to elementary/fundamental aspects.
NOTE:
Question 1 will be based on Section A of the syllabus.
Part II (48 Marks): Candidates will be required to • Interest on loan given by the partner to
answer four questions out of seven from this part. the firm is to be taken as a charge against
Each question shall carry 12 marks. Part II will also profits. This interest will be debited to the
be based on Section A of the syllabus. P/L account and credited to his loan
account.
Section B/ C (20 marks): Candidates will have a
choice of attempting questions either from Section B • Interest on loan taken by a partner from
or Section C. Candidates will be required to answer the firm should be credited to P/L
two questions out of three from the section of their account and debited to his capital/current
choice. Each question shall carry 10 marks. account as the case may be.
SECTION A • Rent paid to a partner is a charge against
profit and is to be credited to partners’
1. Partnership Accounts
current account in case of fixed capital
A. Fundamentals of Partnership system or to partners’ capital account
(i) Definition, meaning and features of a when capitals are fluctuating.
Partnership.
• Admission of manager as a Partner is
Self explanatory. excluded.
(ii) Provisions of The Indian Partnership Act, B. Goodwill
1932, with respect to books of accounts.
Concept of goodwill and mode of valuation.
(a) Meaning and importance.
(b) Rules applicable in the absence of a (a) Meaning, nature and features of
partnership deed. Goodwill.
(b) Factors affecting the value of goodwill.
(iii) Preparation of Profit and Loss
Appropriation Account and Partners’ (c) Mode of Valuation.
Capital and Current Accounts. • Average profit method – Meaning and
(a) Profit and Loss Appropriation practical application.
Account. − Simple average.
− Weighted average method.
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• Super profit method – Meaning and in the new Balance Sheet after
practical application. reconstitution of a partnership firm.
• Capitalization method – Meaning and NOTE: Memorandum revaluation
practical application. account is excluded from the
− Capitalization of average profit. syllabus.

− Capitalization of super profit. (iv) Accounting treatment of accumulated


profits and losses.
NOTE: Capital Employed/Net assets are
Total assets (excluding purchased non-trade General Reserve / Reserve Fund,
investments and fictitious assets) less outside Workmen Compensation Reserve/
liabilities. Fund, Investment Fluctuation
Investments to be taken as non-trade Reserve/Fund, Contingency Reserve,
investments unless specified as trade Profit and Loss Account (Debit and
investments. Credit balance) and Advertisement
C. Reconstitution of Partnership Suspense Account/ Deferred Revenue
Expenditure.
I. Admission
(v) Adjustment of Capitals.
(i) Calculation of new profit sharing
ratio, sacrificing ratio and gaining (a) Adjustment of old partner’s
ratio. Capital Accounts on the basis of
Self Explanatory the new partner’s capital.
(ii) Accounting treatment of goodwill on (b) Calculation of new partner’s
admission of a partner. capital on the basis of old
partner’s adjusted capital.
Based on Accounting Standard –26
issued by the Institute of Chartered (vi) Change in Profit Sharing Ratio.
Accountants of India in the context of
Change in PSR takes place at the
Intangible Assets.
time of admission of a partnership
(a) Premium for goodwill paid firm.
privately.
Accounting treatment of accumulated
(b) Premium for goodwill paid (in profits and losses through one
cash or kind) and retained in the journal entry: (Adjustment of the
business. incoming partner’s share to be done
(c) Premium for goodwill paid and through his current account-similar
withdrawn by the old partners. to the treatment of goodwill not
(d) When the incoming partner brought in cash.)
cannot bring premium for Gaining partners cap/current A/c Dr.
goodwill in cash, adjustments are
to be done through his current To sacrificing Partners cap/current
account. (in case of profits).
(e) Hidden goodwill. Sacrificing partners’ cap/current A/c Dr.
(f) When goodwill appears in the old To Gaining Partners cap/current
Balance Sheet. (in case of losses)
(iii)Preparation of Revaluation Account.
General Reserve/ Reserve
Preparation of a Revaluation fund, Workmen Compensation
Account where changes in the values
Reserve/ Fund, Investment
of assets and liabilities are reflected
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Fluctuation Reserve/ Fund, (vii) Calculation and payment of amount
Contingency Reserve, Profit and Loss due to retiring partner.
Account (Debit and Credit Balance) Self Explanatory.
and Advertisement Suspense Account/
(viii) Preparation of retiring partner’s loan
Deferred Revenue Expenditure.
accounts and deceased partner’s
II. Retirement and death of a partner executor’s loan account (with interest
on loan accrued and due and interest
(i) Calculation of new profit sharing
on loan accrued but not due).
ratio, gaining ratio and sacrificing
ratio. Self-explanatory.
Self Explanatory. (ix) Change in Profit Sharing Ratio.
(ii) Adjustment with regard to goodwill Change in PSR takes place at the
including hidden goodwill. time of retirement / death of a
partnership firm.
Self Explanatory.
Accounting treatment of accumulated
(iii) Adjustment with regard to profits and losses through one
undistributed profits and losses. journal entry:
Self Explanatory. Gaining partners cap/current A/c Dr.
To sacrificing Partners cap/current
(iv) Adjustment with regard to share of
(in case of profits).
profits of the retiring or deceased
partner from the date of the last Sacrificing partners’ cap/current A/c Dr.
Balance Sheet to the date of To Gaining Partners cap/current
retirement or death (on the basis of (in case of losses)
time or turnover).
General Reserve/ Reserve
Through P & L Suspense A/c (in case fund, Workmen Compensation
of no change in PSR of remaining Reserve/ Fund, Investment
partners). Fluctuation Reserve/ Fund,
Contingency Reserve, Profit and Loss
Through Gaining Partners capital/
Account (Debit and Credit Balance)
current A/c (in case of change in PSR
and Advertisement Suspense Account/
of remaining partners).
Deferred Revenue Expenditure.
(v) Preparation of Revaluation Account
on retirement or death of a partner. NOTE:
− Preparation of Balance Sheet in
Self Explanatory. Partnership Accounts to be done in
(vi) Adjustment of capitals. Horizontal format only.
(a) Readjusting the adjusted capital − Memorandum Revaluation Account,
of the continuing partners in the Joint Life Policy, Individual life
new profit sharing ratio. policy are excluded from the
syllabus.
(b) Adjusting the capitals of the
continuing partners on the basis III. Dissolution of a Partnership firm.
of the total capital of the new (i) Meaning of dissolution and
firm. settlement of accounts under
(c) When the continuing partners Section 48 of The Indian Partnership
bring in cash to pay off the Act 1932.
retiring partners. Self Explanatory
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(ii) Preparation of Realization Account, • To promoters (can be considered
Partner’s Loan Account, Partner’s either through Goodwill account or
Capital Account and Cash/Bank Incorporation costs account).
Account.
Self-explanatory. • To underwriters.
• To vendors.
NOTE:
• When an asset or a liability is taken (c) Calls in arrears, calls in advance and
to the realization account any interest thereon including the preparation
corresponding/related fund or of ledger accounts.
reserve is also transferred to (d) Over and undersubscription (including
realization account and not to capital prorata allotment).
account.
• When accounts are prepared on a NOTE: In prorata allotment when shares are
fixed basis, partners current account issued at a premium, excess money received
balances are to be transferred to on application will first be adjusted towards
capital account. No adjustments are the share capital. Any excess thereon will be
required to be passed through utilized towards the Securities Premium
current account. Reserve.
• Bank overdraft is to be taken to the
bank/cash A/c and not to be When allotment or any call money is due, it is
transferred to realization account but to be transferred to the calls in arrears
bank loan must be transferred to account, on which interest if provided in the
realization account. Articles of Association will be calculated.
• If question is silent about the (e) Forfeiture and reissue of shares at par,
payment of a liability, then it is has to premium or discount.
be paid out in full. Self explanatory.
• If the question is silent about the
realization of an asset, its value is (f) Disclosure of Share capital in the
assumed to be nil. company’s Balance Sheet. *
• Loan taken from a partner will be NOTE: Issue of bonus and rights shares,
passed through cash or bank private placement of shares, sweat equity
account. shares, employees’ stock option scheme,
• Loan given to a partner will be reservations for small individual participants
transferred (debited) to his Capital and minimum tradable lots are not required.
account.
• Admission cum retirement, B. Issue of Debentures
amalgamation of firms and Problems on issue of debentures (at par, at
conversion/sale to a company
premium and at discount.)
together with piecemeal distribution
and insolvency of a partner / partners Problems on issue of debentures to include:
not required. (a) Issue of debentures at par, at premium
and at discount under Companies Act
2. Joint Stock Company Accounts 2013.
A. Issue of Shares (b) Issue of debentures as collateral security
for a loan.
Problems on issue of shares.
(c) Issue of debentures for considerations
(a) Issue of shares at par and premium under other than cash.
Companies Act, 2013.
• To promoters.
(b) Issue of shares for considerations other • To underwriters.
than cash:
• To vendors
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(d) Accounting entries at the time of issue Schedule III Part II of the Companies
when debentures are redeemable at par Act 2013 to be studied is as follows:
and premium.
Statement of Profit and Loss for the year
(e) Interest on debentures (with TDS).
ended:……………..
(f) Disclosure of Debentures in the
Particulars Note Figures Figures
company’s Balance Sheet.
No. for the for the
(g) Disclosure of discount on issue of Current Previous
debentures in the company’s Balance reporting reporting
Sheet when debentures are redeemed in period period
instalments.
I Revenue from
NOTE: operations
Premium on the redemption of debentures to
be recorded under the head  Non Current II Other Income
Liabilities, subhead  Long Term III Total Revenue
Borrowings. (I + II)
C. Redemption of Debentures IV Expenses:
• Creation of Debenture Redemption Cost of
Reserve (DRR). materials
• Redemption of debentures out of profits. consumed
• Redemption of debentures out of capital. Purchases of
• Redemption of debentures in a lump sum. Stock-in-Trade

• Redemption of debentures in annual Changes in


instalments by draw of lots. inventories of
finished goods
• Redemption of debentures by purchase in
the open market. Work-in-
progress and
Self-Explanatory.
Stock-in Trade
NOTE: Calculation of ex-interest and cum-
interest are not required. Employee
benefits expense
D. Final Accounts of Companies Finance costs
Preparation of the Balance Sheet of a Depreciation
company (along with notes to accounts) as and
per Schedule III Part I of Companies Act amortization
2013. ** expense
NOTE: Schedule III Part II of Companies Other expenses
Act 2013 (Statement of Profit and Loss) is
Total expense
not required for the purpose of preparing
final accounts of a Company. V Profit before tax
(III-IV)
However, for the preparation of
Comparative and Common Size Income VI Less Tax
Statements (Section B – Unit 4: Financial VII Profit after Tax
Statement Analysis), the extent and format (V-VI)
of the Statement of Profit and Loss as per
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SECTION B (iii) Preparation of Cash Flow Statement on basis
of operating, investing and financing
MANAGEMENT ACCOUNTING
activities.
3. Financial Statement Analysis The following items are to be taken when
calculating net cash flows from financing
Comparative Statements and Common Size activities:
Statements. • Issue or redemption of shares and
Meaning, significance and limitations of debentures at par.
Comparative Statements and Common Size • Interest paid on Long Term and Short
Statements. Term Borrowings and dividend – interim
Preparation of Comparative Balance Sheet and and proposed/paid on shares.
Statement of Profit and Loss (inter-firm and intra- • Long term borrowings and Short term
firm) showing absolute change and percentage borrowings – bank overdraft, cash credit
change. and short term loan. whether taken or
repaid.
Common size Balance Sheet to be prepared as a
• Share issue expenses / underwriting
percentage of total assets and total liabilities.
commission paid.
Common size Statement of Profit and Loss to be The following items are to be taken when
prepared as a percentage of Revenue from calculating net cash flows from investing
operations. activities:
• Cash purchase of fixed assets.
NOTE: Preparation of comparative statements
and common size statements to be made from the • Cash sale of fixed assets.
Balance Sheets and Statements of P/L without • Purchase of shares or debentures or long
notes to accounts. term investments of other companies.
• Interest and dividend received on shares
4. Cash Flow Statement (Only for Non-Financing or debentures or long term investments of
Companies) other companies.
(i) Meaning, importance and preparation of a • Sale of shares or debentures or long term
Cash Flow Statement. investments of other companies.
The following items are to be taken for cash
NOTE: Based on Accounting Standard – 3 and cash equivalents:
(revised) issued by the Institute of Chartered • Cash
Accountants of India.
• Bank
(ii) Calculation of net cash flows from operating • Short term investments
activities based on Indirect Method only. • Marketable securities
Preparation of a Cash Flow Statement from NOTE: Adjustments relating to provision for
two consecutive years’ Balance Sheet with or taxation, proposed dividend, interim
without adjustments. dividend, amortization of intangible assets,
Preparation of complete/partial cash flow profit or loss on sale of fixed assets including
statement from extracts of Balance Sheets provision for/accumulated depreciation on
and Statements of P/L with or without them, Profit or loss on sale of investment are
adjustments. also included.
To calculate cash flow from operating
NOTE: Any adjustment or an item in the
activities the Adjusted Profit and Loss
Balance Sheet relating to issue of bonus shares,
Account is not acceptable as per AS-3.
extraordinary items and refund of tax are not
required. Calculation of Net Profit before Tax has to be
shown as a Working Note.
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5. Ratio Analysis 2. Proprietary Ratio:
(a) Liquidity Ratios: Shareholders Funds/ Equity
Current Assets Total Assets
1. Current Ratio:
Current Liabilities Total Assets = Non Current Assets + Current Assets
Current Assets = Current Investments + = Tangible Assets + Intangible Assets + Non Current
Inventories (excluding Loose Tools and Spare Investments + Long Term Loans and Advances
Parts) + Trade Receivables + Cash and Bank +
Balance + Short-term Loans and Advances + Current Investments + Inventories (including Loose
Other Current Assets Tools and Spare Parts) + Trade Receivables + Cash
and Bank Balance + Short-term Loans and Advances
Current Liabilities = Short term borrowings + + Other Current Assets
Trade payables + Other Current Liabilities + Debt
3. Debt to Total Assets Ratio:
Short term Provisions Total Assets
Quick Assets
2. Quick Ratio / Liquid Ratio: 4. Interest coverage ratio =
Current Liabilities Net profit before interest and taxes
OR
Interest
All Current Assets- Inventories(excluding Loose Tools and Spare Parts)- Prepaid Expenses
Interest includes interest on only long term
Current Liabilities borrowings.
OR
(c) Activity Ratios:
Liquid Assets
Current Liabilities 1. Debtors Turnover Ratio will be replaced by
Trade Receivable Turnover Ratio: =
(b) Solvency Ratios: Credit Revenue from Operation
1. Debt to Equity Ratio: Average Trade Receivable
Debt / Long Term Debt Credit Revenue from Operation = Revenue from
Equity / Shareholders' Funds Operation – Cash Revenue from Operation

Debt = Long Term Borrowings + Long Term Average Trade Receivables =


Provisions Opening Trade Receivable + Closing Trade Receivable

Equity / Shareholders’ Funds = Share Capital + 2


Reserves and Surplus
2. Creditors Turnover Ratio will be replaced by
Or
Trade Payable Turnover Ratio: =
Non Current Assets + (Current Assets – Current
Liabilities) - Non Current Liabilities Net Credit Purchases
= Non Current Assets + Working Capital- Non Average Trade Payable
Current Liabilities Average Trade Payables =
= (Tangible Assets + Intangible Assets + Non Opening Trade Payable + Closing Trade Payable
Current Investments + Long Term Loans and 2
Advances) + Working Capital – (Long Term
Borrowings + Long Term Provisions)

107
3. Working Capital Turnover Ratio = Net Profit = Gross profit + Other Income –
Revenue from Operations Indirect Expenses – Tax
Working Capital
3. Operating Ratio:
4. Stock Turnover Ratio will be replaced by Cost of Revenue from Operations/Cost of Goods Sold + Operating Expenses
Inventory Turnover Ratio = × 100
Revenue from Operations
Cost of Goods Sold /
Cost of Revenue from Operation Operating Expenses = Employee Benefit Expenses +
Depreciation and Amortisation Expenses + Selling
Average Inventory and Distribution Expenses+ Office and
Cost of goods sold= Opening Stock + Net Administrative Expense.
Purchases + Direct Expenses – Closing Stock Operating Income = Sale of scrap, trading
Cost of Revenue from Operations = Revenue commission received, cash discount received, revenue
from Operations – Gross Profit from services.

Or 4. Operating Profit Ratio:


Cost of Material Consumed (including direct Net Operating Profit
expenses) + Change in inventories of WIP and × 100
Finished Goods Revenue from Operations

Or Net operating profit = Net Profit after


Tax+ Non-Operating Expenses – Non Operating
Opening Inventory + Net Purchases+ Direct Incomes
Expenses – Closing inventory Or
Average Inventory = Gross Profit – Operating Expenses + Operating
Opening Inventory + Closing Inventory Incomes
2 Non Operating Expenses = Finance Cost
(Interest on Borrowings) + Loss on sale of Non
(d) Profitability Ratios: Current Assets
1. Gross Profit Ratio: Non Operating Incomes = Interest and Dividend
Received on Investment + Profit on sale of Non
Gross Profit
× 100 Current Assets
Revenue from Operations
5. Earning per share:
Gross Profit = Revenue from Operations – Cost
of Revenue from Operations/ Cost of Goods Sold Net Profit after Tax and Preference Dividend
Cost of Revenue from Operations = Cost of No. of Equity Shares
Material Consumed (including direct expenses) +
Change in inventories of WIP and Finished
Goods. Price Earning Ratio
Or 6.
Market Value of an Equity share
Opening Inventory + Net Purchases + Direct
Expenses – Closing inventory
Earning per share

2. Net Profit Ratio: = 7. Return on Investment


Net Profit Net Pr ofit before Interest and Tax
× 100 = × 100
Revenue from Operations Capital Employed

108
NOTE: (iii) Application of spreadsheets in generating the
1. Current Ratio includes Net Debtors (Gross following accounting information:
Debtors – Provision for doubtful debts) while 1. Payroll
Trade Receivables Turnover Ratio includes Gross Components of payroll – Basic, HRA, DA
Debtors. and TA, CCA, deduction for PF and
2. Capital employed = Shareholders’ Funds +
Non-current liabilities – non trade investments income tax.
OR 2. Data Presentation
Non-current assets (excluding Non-trade Graphs and charts- using wizards,
investments) + Working Capital various charts type, formatting grid lines
OR and legends, previewing & printing
Fixed Assets + Trade Investments + Working
charts
Capital
3. Investments to be taken as non-trade investments Database - creation, sorting, query and
unless specified as trade investments. filtering a database.
4. In Return on Investments Ratio- Net Profit before
interest and tax will not include interest on 7. Database Management System (DBMS)
non-trade investments.
(i) Concept and Features of DBMS.
SECTION C Types and features of DBMS.
A conceptual understanding of the basic
COMPUTERISED ACCOUNTING
features of Data Base Management System
6. Accounting Application of Electronic Spread (DBMS), i.e. data update and retrieval using
Sheet
basic functions and commands of SQL.
(i) Concept of Electronic Spreadsheet. Basic Commands: Select, Where, And, Or,
Meaning, utility, merits and demerits of Update, Delete and
Electronic spreadsheets. Basic Functions: Avg, Count, Max, Min, Sum.
(ii) Features offered by Electronic Spreadsheet.
An understanding of basic features of (ii) DBMS in Business Application.
electronic spreadsheets such as: Creating
worksheet, entering data into worksheet, Database design, tables, fields, relationships,
heading information, data, text, dates, forms reports and indexing.
alphanumeric values, saving & quitting The following examples of DBMS in business
worksheet. Opening and moving around in an application:
existing worksheet. Toolbars and Menus,
• Accounting Information
keyboard shortcuts. Working with single and
multiple workbooks - copying, renaming, • Debtors and Creditors
moving, adding and deleting, copying entries
• Bank Reconciliation Statement
and moving between workbooks. Formatting
of worksheet- Auto format, changing - • Asset Accounting
alignment, character styles, column width,
date format, borders and colours. Previewing
and Printing worksheet - Page setting,
Print titles, Adjusting margins, Page break,
headers and footers. Formulas – summation,
subtraction, division, multiplication, average
and percentage. Functions: date, if-then-
else, freezing panes.

109
2. Preparation of a Cash Flow Statement with the
PAPER II – PROJECT WORK – 20 Marks
help of audited / unaudited / imaginary Balance
Candidates will be expected to have completed two Sheets of a company for two consecutive
projects from any topic covered in Theory. accounting years or two consecutive quarters of
an accounting year could be taken along with at
The project work will be assessed by the teacher
least five additional information (depreciation,
and a Visiting Examiner appointed locally and
purchase/ sale of fixed assets, dividend paid/
approved by the Council.
proposed, tax paid/ proposed, amortization of
Mark allocation for each Project [10 marks]: intangible assets, profit or loss on sale of fixed
assets including provision for depreciation on
Overall format 1 mark them and profit or loss on sale of investment).
Content 4 marks • The results of the operating, investing and
Findings 2 marks financing activities could be shown
graphically and/ or pictorially (bar diagrams
Viva-voce based on the Project only 3 marks and pie charts).
A list of suggested Projects is given below: 3. Preparation of Common Size and Comparative
1. Preparation of Journal / sub-division of journal, Income Statement and Balance Sheet of a
Ledger, Trial balance and Financial Statements of company by taking into account its audited,
a partnership form of business on the basis of a unaudited / imaginary financial results of two
case study. consecutive quarters of an accounting year or of
• Develop a case study showing how two or two consecutive accounting years.
more friends decide to come together and • The comparison has to be made in the form of
start a business with a certain amount of Common Size and Comparative Income
capital. Statement and Balance Sheet.
• Prepare their Partnership Deed including
interest on capital, partner’s salary, • The comparison could also be shown
commission, interest on drawings, interest on graphically and/ or pictorially (bar diagrams
partner’s loan and rent paid to a partner. and pie charts).
• Write in detail, their transactions during the 4. Taking the audited/ unaudited / imaginary
year: purchases - cash and credit, sales - cash financial results of any leading company, its
and credit, expenses, purchase of fixed assets
and depreciation charged on them, any liquidity, solvency, activity and profitability
outstanding expenses, prepaid expenses, ratios of two consecutive accounting years or of
accrued income, drawing bills of exchange, two consecutive quarters of an accounting year
accepting bills payable etc. should be calculated and the comparison of the
• From this case study developed (which ratios of both the years or quarters should be
should have at least 15 transactions), pass the shown graphically and/ or pictorially (bar
journal entries, post them into the ledger, diagrams and pie charts).
prepare a Trial Balance and the Trading and 5. Employee Salary Sheet:
Profit and Loss Account, Profit and Loss
Appropriation Account and Balance Sheet. (i) Design a spreadsheet using the following
• The various expenses, for comparison fields:
purposes, could be depicted in the form of bar
diagrams and pie charts. Employee’s Name: String Variable of
maximum size of 40 characters
• Calculate relevant accounting ratios like
liquidity, solvency, activity and profitability Date of Joining: Date in English U.K. format
giving their formulae and computation
(all this could be part of the viva-voce). Basic Salary: upto 2 places after decimal
• The ratios could also be shown graphically Calculate their net salary using the
and/ or pictorially (bar diagrams and pie Employee’s data. [Feed in random data for 20
charts) and if possible, could be compared to 25 employees]
with the ratios of the industry.

110
Some of the instructions are given below: (iii) Commission (Hard Cover Books and Soft
Cover Books)
Important Instructions:
(iv) Total Commission
Dearness Allowance (DA) is paid @ 45% of
Basic Salary. (v) Create a Chart (any style) showing the above
information.
House Rent Allowance (HRA) is paid @ 15%
of (Basic Salary + DA) Open the original page (with lines and shading) as
well as a formula page. (The entire formula must
City Compensatory Allowance (CCA) is paid
been shown)
@ 8.3% of (Basic Salary + DA + HRA)
Use “=round (.0)” where applicable so that all
Provident Fund (PF) is deducted @ 12% of
columns add correctly.
(Basic Salary + DA)
7. Spreadsheet on Outstanding Report
Income Tax (IT) is deducted @ 10% of
(Basic Salary + DA + HRA + CCA) Prepare and Present a Spreadsheet for a list of
outstanding notes receivable each month. The
Net Salary is summation of Basic Salary +
information for a particular month is as follows:
DA + HRA + CCA less PF and IT
Use the following financial information:
(ii) Save your worksheet on the desktop as
Employee_Salary. Face Interest Other details
Value Rate
(iii) Print a Hard Copy of your work and close the
file. 0 10.8% Late Penalty: 11%
6. Revenue and Commission Statement 500 9.2% Report date: July 30, 2011
Prepare a Spreadsheet for a certain Company, 1000 8.96% Days / Year: 365
which pays a commission based upon books sold.
Prepare a revenue and commission statement
based upon the following information: Note Period
Face Value Issue Date
Number Days
Number of Number of
Name of 1 Rs. 525 90 7/2/2011
Soft Cover Hard Cover
Salesperson
Books sold Books sold 2 Rs. 612 60 14/3/2011
Suresh Mehta 1546 360 3 Rs. 210 45 19/5/2011
Gladstone David 1788 315 4 Rs. 800 120 10/6/2011
Manish Arora 1340 294 5 Rs. 1469 30 24/6/2011
Manmeet Singh 990 450 Show the Interest rate, Days outstanding, Interest
Vineet Saighal 1105 689 earned, Late penalty and Total due.
Assumption: Use appropriate Lines and Shading to make the
report interesting and easy to read. Use two
Price of Hard Cover Books: @Rs. 34.45 per Book
places after the decimals where appropriate.
Price of Soft Cover Books: @ Rs. 22.05 per Book
Prepare a chart to show the above information.
Commission on Hard Cover Books: 9.0%
Commission on Soft Cover Books: 12% 8. Database Management
Prepare a spreadsheet showing your calculation to (i) Create a Database with at least 10 records
determine: with each record having the following fields:
(i) Revenue (Hard Cover Books and Soft Cover Employees Details: PAN Number, Name,
Books) Address and Phone Number
(ii) Total Revenue (ii) Sort the names in alphabetical order.
111
(iii) The Employee database has another table 10. Selection Grade Card
called Loan Details that stores the details of
(i) Make a Spreadsheet of a Selection Grading
loan taken by various employees. Create a
Chart using the following details:
query that gives a list of employees names
along with loan details. Candidate’s Name: String type
The loan details table has following fields: Test 1: Integer type
Loan Amount, Loan Date, Interest Rate, Test 2: Integer type
Amount Paid and Amount Balance.
Test 3: Integer type
(iv) Create a Report as per the format given
below: Test 4: Integer type
Employee Loan Details: The Worksheet format is as follows:

Emp. Emp. Loan Loan Amount Balance Test- Test- Test- Test-
No. Name Amount Date Paid Amount Name of 1 2 3 4
Decide tables, relationships etc. on your own. S.N. the (Max (Max (Max (Max
Candidate 25 25 25 25
9. Database Management: Mks) Mks) Mks) Mks)
(i) Create an Accounts Table by following the
Alfred
steps given below: 1 24 22 18 23
Gomes
(a) Click on the new button and highlight
Design View in the dialog box that Shankar
2 17 20 17 20
appears. Pandey
(b) Click the OK button and the Table Ali
Design View will appear. 3 Hassan 22 19 20 14
(c) Fill in the Field Name, Data Type and Raza
Description for each column/field in the
P. Subba
Account Table. 4 20 19 19 17
Rao
Field Name Data Description
Type Sushanto
5 19 21 24 22
Mukerjee
CustomerID Number The Unique Identifier for
a Customer (ii) Compute the percentage for each candidate’s
total. Show the total score and the percentage
AccountNo Number The Unique Identifier for for each candidate.
a Bank Account
(iii) Create a Header for the Chart. Include your
AccountType Text The type of account name.
(Checking, Saving etc.)
(iv) Save your work on the desktop as
DateOpened Date The date the account was Merit_Project.
opened
(v) Print a hard copy of your work and close the
Balance Number The current balance file.
(money) in this account.
(ii) Define a Primary Key for the Accounts table.
Click on the Account Number field with the
right mouse button and choose Primary Key
from the pop-up menu.
NOTE: No question paper for Practical work will be
(iii) Save the new Accounts Table. set by the Council.

112
*EXPLANATION AND PRESENTATION OF ITEMS UNDER SHAREHOLDERS’ FUNDS
Share Capital

Particulars Note No. Figures at the end of the Figures at the end of the
current reporting period previous reporting period
1 2 3 4
I. EQUITY AND LIABILITIES
1. Shareholders Funds
(a) Share Capital 1 xxx

Notes to Accounts: 1.
Particulars Amount (`)
(a) Share Capital
Authorised Capital
...... shares of `..... each xxx

Issued Capital
..... shares of `..... each xxx
(of the above shares…..shares are allotted as fully paid up pursuant to a contract without payment being received in
cash)
Subscribed Capital xxx
Subscribed and fully paid up
..... shares of `.... each xxx
(of the above shares…..shares are allotted as fully paid up pursuant to a contract without payment being received in
cash)
Subscribed but not fully paid up
..... shares of `.... each, .... ` Called up x x x
Less calls –in- arrear (xx)
Add Shares Forfeited A/c x

TOTAL xxx
Points to be noted:
♦ Equity share capital and preference share capital to be shown separately.
If the authorised/issued capital is not mentioned in the question it has to be shown in the notes to accounts. However, no figures will be shown as illustrated above.

113
**FORMAT OF THE BALANCE SHEET OF A JOINT STOCK COMPANY

PART-1
BALANCE SHEET
Name of the Company....................
Balance Sheet as at.........................
(Rupees in ................)
Particulars Note No. Figures at the end of the current Figures at the end of the previous
reporting period reporting period
1. 2 3 4.
I. EQUITY AND LIABILITIES
1. Shareholders Funds
(a) Share Capital
(b) Reserves and Surplus
(c) Money received against share warrants
2. Share application money pending allotment
3. Non- Current Liabilities
(a) Long- term borrowings
(b) Deferred tax liabilities (Net)
(c) Other Long term liabilities
(d) Long-term provisions
4. Current Liabilities
(a) Short term borrowings
(b) Trade payables
(c) Other current liabilities
(d) Short term provisions
TOTAL
II. ASSETS
1. Non- Current Assets
(a) Fixed Assets
(i) Tangible Assets
(ii) Intangible Assets
(iii) Capital work-in-progress
(iv) Intangible assets under development
(b) Non-current Investments
(c) Deferred Tax Assets (Net)
(d) Long term loans and advances
(e) Other non-current assets
2. Current Assets
(a) Current Investments
(b) Inventories
(c) Trade Receivables
(d) Cash and Bank Balance
(e) Short-term loans and advances
(f) Other current assets
TOTAL
114
SAMPLE TABLE FOR PRACTICAL WORK
S. Unique PROJECT 1 PROJECT 2 TOTAL
No. Identification MARKS
Number A B C D E F G H I J
(Unique ID) Teacher Visiting Average Viva-Voce Total Teacher Visiting Average Viva- Total (E + J)
of the Examiner Marks by Marks Examiner Marks Voce by Marks
candidate (A + B ÷ Visiting (C + D) (F + G ÷ Visiting (H + I)
2) Examiner 2) Examiner
7 Marks* 7 Marks* 7 Marks 3 Marks 10 Marks 7 Marks* 7 Marks* 7 Marks 3 Marks 10 Marks 20
Marks
1

10

*Breakup of 7 Marks to be awarded separately by the


Name of Teacher:
Teacher and the Visiting Examiner is as follows:
Signature: Date
Overall Format 1 Mark
Content 4 Marks Name of Visiting Examiner
Findings 2 Marks
Signature: Date
NOTE: VIVA-VOCE (3 Marks) for each Project is to be conducted only by the Visiting Examiner, and should be based on the Project only.

115

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