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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
SELF-CONFIDENCE IS
THE FIRST REQUISITE TO
GREAT UNDERTAKINGS
Best Of Luck !!!