ENRICHMENT PROGRAMME · solved questions as the solved questions are comprehensive and cover all relevant facts. Do not forget to go through the previous years questions‟ with solutions

ENRICHMENT

PROGRAMME

055ACCOUNTANCY

UNIT TOPIC MARKS

1. Accounting for Partnership Firms 35

2. Accounting for Companies 25

PART –A (60 MARKS)ACCOUNTING FOR PARTNERSHIP FIRMS AND

COMPANIES

UNIT TOPIC MARKS

3. Analysis of Financial Statements 12

4. Cash Flow Statement 8

PART –B (20 MARKS)

FINANCIAL STATEMENT ANALYSIS

UNIT TOPIC

PROJECT WORK:

Project File: 4 Marks

Written Test : 12 Marks

Viva Voce: 4 Marks

PART - C

LITTLE THINGS

THAT MATTER

MUCH

Read the questions very carefully: Underline the main and key

points in the allotted reading time. Generally, the students

answer what they think right and not in the manner what

exactly the examiner asks for.

During the days of examination, it is advised to go through

solved questions as the solved questions are comprehensive

and cover all relevant facts.

Do not forget to go through the previous years questions‟ with

solutions (scanner). This will instil a lot of confidence and

acquaint you the pattern of questions, typology and

methodology how and what type of questions are set by

examiner.

Questions in the Cash Flow Statement and Ratio Analysis will

be given in the new format of the Balance Sheet but the

answer has to be attempted as usual. Now there is change in

attempting the solutions.

Do not practice so much complex and lengthy questions at the

time of examination as it may waste a lot of time.

This subject is entirely based on the concept clarity. Do not try to

cram anything except general theory, rather try to understand the

logic behind the conceptual, legal and technical concepts.

Go through question based on High Order Thinking Skills.

Time Management: Just double the time according the

weightage of an individual question. For example, a question

carrying 8 marks should be attempted within 16 minutes. This

way you will be able to finish your paper in about 160 minutes

and be left with 20 minutes for revision.

Attempt all those questions first which you find easy to do.

Attempt all parts of a questions altogether. If you don‟t know

how to attempt a part of a question, leave space and attempt

later.

If your Balance Sheet does not tally, just find the difference

and match this amount in the question and see whether you

have given the second effect of such amount or not. Still if

such amount is not found then double it or halve it to find such

related figure creating difference.

Double Effect: It you take any figure from the balance sheet

then you need to show single effect at the required place

because second effect is itself in the balance sheet. Any

adjustment, balancing figure or figure obtained by the way of %

age has to be shown at two places i.e. one on the Dr. side of

one account and other on the Cr side of other. If still, your

Balance Sheet doesn‟t tally then proceed to the next question

and try to correct it at the end.

Step marking is followed in Accountancy and marks are

awarded accordingly. It would be of no use if you match the

Balance Sheet with wrong amounts.

The experts have pointed out the

common mistakes which students

usually commit while attempting the

paper. In the further part of this

presentation, you are going to come

across these common mistakes from

each of the chapters that have been

repeatedly committed by various

students during the course of

examination .

COMMON ERRORS

FUNDAMENTALS OF PARTNERSHIP FIRM

While calculating interest, rate as “% age with

the word “per annum” and the rate “%” without

the word per annum must be read very carefully.

If the words like „irrespective of months‟ or

average period‟ have been used, number of

months/days will be ignored.

The word “Appropriation and Charge” must be

differentiated and give the treatment of

expenses accordingly.

Interest on Partner‟s Loan advanced to the firm is

always charge against the profit whereas interest on

capital may be charge against the profits or

appropriation out of profits depending upon the nature

of information given in the question i.e. as per

partnership agreement. However, in the absence of any

information about treatment of IOC, it is always treated

as appropriation of profits

Interest on Partner‟s Loan is always credited to

Partner‟s Loan Account and is never credited to partner‟s

Current Account or Capital Account.

Short cut methods involving use of average time

period for calculating Interest on Drawings are applied

when the drawings are of constant amount made at

regular intervals.

While calculating opening capitals if closing capitals

are given, drawings and profit or loss appearing in the

balance sheet are not readjusted as such amount

represent amounts not adjusted earlier.

In case of Past adjustments, always check if capitals

are Fixed or fluctuating as in case of fixed capital, entry

has to be passed using current account. Same has to be

taken care of while preparing Profit and Loss

Appropriation account. In appropriation account do

specify Partner‟s current account in case capitals are

fixed.

Guaranteed partner will get his guaranteed amount

even in case of insufficient profits or if the firm runs into

losses.

CHANGE IN PROFIT SHARING AMONG

PARTNERS

While calculating the value of goodwill, abnormal losses or

gains already adjusted are reversed but any normal expense or

income not adjusted earlier has to be deducted or added

respectively in the amount of profits given.

while calculating sacrificing shares, attention should be given

to the words „of‟ and „from‟

While calculating sacrificing shares, if share of an existing

partner comes negative it should be dealt with carefully while

adjusting share of goodwill. Negative sacrifice is gain and

negative gain is sacrifice. Gaining partner has to be debited with

his gaining share in goodwill of the firm.

DISSOLUTION OF PARTNERSHIP FIRMS

Expenses on realization borne by a partner is never

debited to Realisation account but when only paid by

partner it is debited to Realisation account & credited to

partner‟s capital. When expenses borne by partner then

for actual expenses paid by such partner out of his

pocket, no entry is passed by the firm. However if actual

expenses in such case (borne by partner) are paid by

firm, it must be debited to such partner‟s capital account

and credited to cash or bank account similar to

drawings.

COMPANY ACCOUNTS- SHARE CAPITAL

While attempting questions on Share Capital, share

applied and allotted must be differentiated while

calculating excess money of the defaulter.

At the time of reissue of forfeited shares, paid up

value on forfeited shares to be reissued cannot be less

than called up value. It can also not be more than full

value (face value or par value or nominal value) of the

shares. In the absence of information about paid up

value for reissue of forfeited shares, called up value at

the time of forfeiture is taken as paid up value i.e. the

amount to be credited to share capital account on

reissue.

After the forfeited shares have been reissued,

excess of price received over the paid up value

on reissue is always credited to Securities

Premium Reserve and deficit is always debited

to share Forfeited Account.

In case of question on issue of shares, always

check if it is normal or under or oversubscription.

In case of under subscription make sure that

minimum subscription condition of 90% has

been observed. Remotest possibility that shares

applied in question are less than 90% of the

issue, do solve the question and give a suitable

note about minimum subscription.

KEY ASPECTS

IMPORTANT ISSUES IN SYLLABUS

Partnership Accounts

1. Interest on Partner‟s loan is a charge against profits.

2. Preparation of Retiring Partner Loan Account .

3. Preparation of Deceased Partner Capital Account

and Executor‟s Account .

4. The realised value of each asset must be given at the

time of dissolution.

5. In case Realisation Expenses are borne by a partner,

it should be clearly indicated regarding the payment

thereof.

Cash Flow Statement

1. Bank Overdraft and Cash Credit are to be

treated as Short-term Borrowings.

2. Unless it is specified, Current Investments

are to be taken as Marketable Securities.

Company Accounts

1. Provisions of the Companies Act, 2013

will apply.

Accounting ratios

Unless specified Investments to be taken as

Trade Investments

FORMAT

OF

QUESTION PAPER

Part –A

Accounting for Partnership Firms and

Companies

Qs no. 1-17; Q1 to Q6 -- I mark.

Q7 to Q10 -- 3marks.

Q11 & Q12 --4marks

Q13 to Q15 --6marks

Q16 & Q17 --8marks

All 8 mark Qs will have a internal choice

Part –B

FINANCIAL STATEMENT ANALYSIS

Qs no. 18- 23; Q18 & Q19 -- I mark.

Q20to Q22 -- 4marks.

Q23 -- 6marks

EVALUATION QUESTIONS

Date Particulars L.F. Debit

(Rs.)

Credit

(Rs.)

2016

April 1

Meena’s Capital A/C…..

Dr.

?

(Being? )

?

?

Reena, Heena, & Meena shared profits &

losses in the ratio of 3:2:1 respectively. From

1st April, 2016, they agreed to share profits

equally. The goodwill of the firm was valued at

Rs. 18,000. You are required to fill up the

Journal entry:

Date Particulars L.F. Dr.(Rs.) Cr.(Rs.)

Share Capital A/C Dr.

To Share Allotment A/C

To Share First & Final Call A/C

To Share Forfeiture A/C

(Forfeiture of 500 shares of Rs.10 each)

……….

……….

1,500

2,000

Bank A/C Dr.

Share Forfeiture A/C Dr.

To Share Capital A/C

(Re-issue of 300 forfeited shares @ Rs……. Each)

2,100

……… ………

………………… A/C Dr.

To ………………

(Profit on re-issue of 300 forfeited shares transferred to

Capital Reserve A/C)

……….

………..

• Fill in the missing figures in the following journal entries:

INTEREST ON CAPITAL

Calculation of Interest on Capital

If provided in the Partnership Deed, interest on capital is allowed to the partners for

contributing capital to the firm.

* Interest on capital is calculated at the predetermined rate mentioned in the

Partnership Deed.

* Interest on capital is calculated on the opening balance of the capital. If

closing balance of the capital is given, then opening balance will be calculated

by adding those items which were earlier subtracted from opening capital and

those items will be subtracted from the opening capital which were earlier

added to it.

* If additional capital is introduced during the year, interest is allowed on it for

the period it remained in the business.

* If part of the capital is withdrawn permanently by a partner, interest on capital

will be calculated on the balance amount.

* If Interest on capital is treated as an appropriation of profit, it will be paid to

partners only if the firm earns profit during the year and if the firm‟s profits are

insufficient, then amount of Interest on Capital is to be reduced

proportionately.

* If Interest on Capital is treated as a charge against profit it will be paid to the

partners even if the firm incurs losses or the profits are insufficient.

X & Y are partners sharing profits in the ratio of

3:2 having capital balances of 80,000 and

70,000 respectively. Interest on capital is

allowed @ 10% p.a. as provided in the

Partnership Deed. Profits earned during the year

2010 before charging interest on capital were

12,000. Distribute Profit and Interest on Capital

among the partners if

(a) Interest on capital is treated as an

appropriation of profit and if (b)

Interest on capital is treated as a Charge against

Profit

Solution:

(a) Interest on Capital is allowed as an Appropriation of

Profit.

Profits earned during the year, 2010 = 12,000

Interest in X‟s Capital = 80,000 x 10/100 = 8,000

Interest in Y‟s Capital = 70,000 x 10/100 = 7,000

Since, firm‟s profit is 12,000 which is less than the sum

of Interest on X‟s and Y‟s Capital (i.e., 8,000 + 7,000 =

15,000)

Interest on Capital paid to X

8,000/15,000 x 12,000 = 6,400

Interest on Capital paid to Y

7,000/15,000 x 12,000 = 5,600

(b) If Interest on Capital is treated as a charge Against

Profit.

Profits earned during the year, 2010 = 12,000

Interest paid to X = 80,000 x 10/100 = 8,000

Interest paid to Y = 70,000 x 10/100 = 7,000

Loss after allowing Interest on Capital to X & Y =

3,000.

X & Y will bear the loss of 3,000 in their profit sharing

ratio.

Loss charged to X‟s Capital Account = 3,000 x 3/5 =

1,800

Loss charged to Y‟s Capital Account = 3,000 x 2/5 =

1,200

Note 1: If „Per Annum‟ or „p.a.‟ is not

given along with percentage of Interest

on Capital or drawing, then Time Period

will not be considered.

Note 2: When Partnership Deed is

silent upon the treatment of Interest

on Capital, is treated as Appropriation

of Profit.

TREATMENT OF

WORKMEN COMPENSATION

RESERVE

X and Y are partners sharing profits and

losses in the ratio 3:2. Z is admitted for

1/4th share in the firm.

Balance sheet as on……

Liabilities Assets

Workmen 20,000

Compensation Fund

Adjustment: Claim on account of workmen

compensation is determined at 15,000.

Give journal entries.

Solution:

Workmen Compensation Fund A/c Dr. 15,000

To Provision for Workmen Compensation Claim A/c

15,000

Workmen Compensation Fund A/c Dr. 5,000

To X‟s capital A/c 3,000

To Y‟s capital A/c 2,000

[Being Workmen Compensation Reserve of 5,000

(20,000 – 15,000) is distributed among old Partners in

old ratio]

Provision for Workmen compensation Claim liability

is shown on the liabilities side of the Balance Sheet

at 15,000.

• In case no claim is mentioned as an

adjustment; total amount of 20,000 to be

distributed among old partners in old ratio.

• In case claim is in excess of amount

mentioned in the Balance Sheet such as

30,000, the journal entries are:

Revaluation A/c Dr. 10,000

To Provision for Workmen Comp Claim 10,000

And Liability for Workmen Compensation will be

shown in the liabilities side of the Balance Sheet

at 30,000.

COMPANIES ACT2013

REVISED SCHEDULE

SOME IMPORTANT POINTS TO LEARN

Major Headings and Sub – Headings of the

Balance Sheet.

Specific item Headings of the Statement of

Profit and Loss

Treatment of different items headings of the

Statement of Profit and Loss

Treatment of Heading SHAREHOLDERS FUNDS-

Share Capital and Reserves and Surplus .

Treatment of Heading Non- Current Liabilities –

Long term borrowings .

SAMPLE PAPER

2016-2017

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SAMPLE PAPER

CLASS-XII

ACCOUNTANCY

Time allowed: 3 hours Maximum Marks: 80

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GREAT UNDERTAKINGS

Best Of Luck !!!