CBSE (Commerce) Class 12CBSE
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Accountancy Class 12 CBSE (Commerce) CBSE Topics and Syllabus

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Topics with syllabus and resources

1.00 Not-for-profit Organisation and Partnership Accounts
1.10 Accounting for Not-for-Profit Organisation
1.20 Accounting for Partnership : Basic Concepts
1.30 Reconstitution of a Partnership Firm – Admission of a Partner
1.40 Reconstitution of a Partnership Firm – Retirement/Death of a Partner
1.50 Dissolution of Partnership Firm
2.00 Company Accounts and Analysis of Financial Statements
2.10 Accounting for Share Capital
2.20 Issue and Redemption of Debentures
2.40 Analysis of Financial Statements
2.50 Accounting Ratios
  • Concept of Accounting Ratios 
    • Meaning of Accounting Ratios
    • Objectives of Accounting Ratios
    • Classification and Computation of Accounting Ratios
  • Objectives of Ratio Analysis 
  • Advantages of Ratio Analysis 
    • Helps to understand efficacy of decisions
    • Simplify complex figures and establish relationships
    • Helpful in comparative analysis
    • Identification of problem areas
    • Enables SWOT analysis
    • Various comparisons
  • Limitations of Ratio Analysis 
    • Limitations of Accounting Data
    • Ignores Price-level Changes
    • Ignore Qualitative or Non-monetary Aspects
    • Variations in Accounting Practices
    • Forecasting
    • Means and not the End
    • Lack of ability to resolve problems
    • Lack of standardised definitions
    • Lack of universally accepted standard levels
    • Ratios based on unrelated figures
  • Types of Ratios 
    • Statement of Profit and Loss Ratios
    • Balance Sheet Ratios
    • Composite Ratios

    Liquidity Ratios

    • Current Ratio
    • Quick Ratio

    Solvency Ratios

    • Debt-Equity Ratio
    • Debt to Capital Employed Ratio
    • Proprietary Ratio
    • Total Assets to Debt Ratio
    • Interest Coverage Ratio

    Activity (or Turnover) Ratio

    • Inventory Turnover Ratio
    • Trade Receivables Turnover Ratio
    • Trade Payable Turnover Ratio
    • Net Assets or Capital Employed Turnover Ratio

    Profitability Ratios

    • Gross Profit Ratio
    • Operating Ratio
    • Operating Profit Ratio
    • Net Profit Ratio
    • Return on Capital Employed or Investment
    • Return on Shareholders’ Funds
    • Earnings per Share
    • Book Value per Share
    • Dividend Payout Ratio
    • Price / Earning Ratio
2.60 Cash Flow Statement
3.00 Accounting for Partnership Firms and Companies


3.10 Accounting for Partnership Firms
  • Partnership: features, Partnership Deed.
  • Provisions of the Indian Partnership Act 1932 in the absence of partnership deed. Fixed vs Fluctuating capital accounts.
  • Preparation of Profit and Loss Appropriation account- division of profit among partners, guarantee of profits.
  • Past adjustments (relating to interest on capital, interest on drawing, salary and profit sharing ratio).
  • Goodwill: nature, factors affecting and methods of valuation - average profit, super profit and capitalization.
    Scope: Interest on partner's loan is to be treated as a charge against profits.
  • Accounting for Partnership firms - Reconstitution and Dissolution.
  • Change in the Profit Sharing Ratio among the existing partners - sacrificing ratio, gaining ratio, accounting for revaluation of assets and reassessment of liabilities and treatment of reserves and accumulated profits. Preparation of revaluation account and balance sheet.
  • Admission of a partner - effect of admiss on of a partner on change in the profit sharing ratio, treatment of goodwill (as per AS 26), treatment for revaluation of assets and re­ assessment of liabilities, treatment of reserves and accumulated profits, adjustment of capital accounts and preparation of balance sheet.
  • Retirement and death of a partner: effect of retirement I death of a partner on change in profit sharing ratio, treatment of goodwill (as per AS 26), treatment for revaluation of assets and reassessment of liabilities, adjustment of accumulated profits and reserves, adjustment of capital accounts and preparation of balance sheet. Preparationofloan account of the retiring partner. Calculation of deceased partner's share of profit till the date of death. Preparation of deceased partner's capital account, executor's account and preparation of balance sheet.
  • Dissolution of a partnership firm: types of dissolution of a firm. Settlement of accounts -preparation of real zation account, and other related accounts: capital accounts of partners and cash/bank a/c (excluding piecemeal distribution, sale to a company andinsolvency of partner(s)).
3.20 Accounting for Companies

Accounting for Share Capital

  • Share and share capital: nature and types.
  • Accounting for share capital: issue and allotment of equity shares, private placement of shares, Employee Stock Option Plan (ESOP). Public subscription of shares - over subscription and under subscription of shares; issue at par and at premium, calls in advance and arrears (excluding interest), issue of shares for consideration other than cash.
  • Concept of Private Placement.
  • Accounting treatment of forfeiture and re-issue of shares.
  • Disclosure of share capital in company's Balance Sheet.

Accounting for Debentures

  • Debentures: Issue of debentures at par, at a premium and at a discount. Issue of debentures for consideration other than cash; Issue of debentures with terms of redemption; debentures ascollateral security-concept, interest on debentures.
  • Redemption of debentures for immediate cancellation: Lump sum, draw of lots, purchase in the open market (excluding ex- interest and cum-interest) and conversion. Creation of Debenture Redemption Reserve.
  • Conversion method.
4.00 Financial Statement Analysis


4.10 Analysis of Financial Statements
  • Concept of Financial Statements 
  • Statement of Profit and Loss and Balance Sheet in the Prescribed Form with Major Headings and Sub Headings 
  • Concept of Financial Statement Analysis 
    • Meaning of Financial Statement Analysis
    • Objectives of Financial Statement Analysis
    • Importance and Limitations of Financial Statement Analysis
    • Tools for Financial Statement Analysis
  • Comparative Statements 
  • Common Size Statements 
  • Cash Flow Analysis 
  • Ratio Analysis and its Types 
  • Concept of Accounting Ratios 
    • Meaning of Accounting Ratios
    • Objectives of Accounting Ratios
    • Classification and Computation of Accounting Ratios
  • Liquidity Ratios 

    Current Ratio: `"Current Assets"/"Current Liabilities"`

    Current Assets = Current Investments + Inventories (excluding Loose Tools and Spare Parts) + Trade Receivables + Cash and Bank Balance + Short-term Loans and Advances + Other Current Assets

    Current Liabilities = Short term borrowings + Trade payables + Other Current Liabilities + Short term Provisions.

    Quick Ratio / Liquid Ratio : `"Quick Assets"/"Current Liabilities"`

    Or

    `"All Current Assets- Inventories(excluding Loose Tools and Spare Parts)- Prepaid Expenses"/"Current Liabilities"`

    Or

    `"Liquid Assets"/"Current Liabilities"`

  • Solvency Ratios - Debt to Equity Ratio 

    Debt to Equity Ratio: `"Debt / Long Term Debt"/"Equity / Shareholders' Funds"`

    Debt = Long Term Borrowings + Long Term Provisions

    Equity / Shareholders’ Funds = Share Capital + Reserves and Surplus

    Or

    Non Current Assets + (Current Assets – Current Liabilities) - Non Current Liabilities

    = Non Current Assets + Working Capital- Non Current Liabilities

    = (Tangible Assets + Intangible Assets + Non Current Investments + Long Term Loans and Advances) +  Working Capital – (Long Term Borrowings + Long Term Provisions)

  • Solvency Ratios - Debt to Total Assets Ratio 

    Debt to Total Assets Ratio: Debt/Total Assets

  • Solvency Ratios - Proprietary Ratio 

    Proprietary Ratio: `"Shareholders Funds/ Equity"/"Total Assets"`

    Total Assets = Non Current Assets + Current Assets = Tangible Assets + Intangible Assets + Non Current Investments + Long Term Loans and Advances

    +

    Current Investments + Inventories (including Loose Tools and Spare Parts) + Trade Receivables + Cash
    and Bank Balance + Short-term Loans and Advances + Other Current Assets

  • Solvency Ratios - Interest Coverage Ratio 

    Interest coverage ratio = Net profit before interest and taxes/Interest

    Interest includes interest on only long term borrowings.

  • Activity Ratios - Inventory Turnover Ratio 

    Inventory Turnover Ratio = (Cost of Goods Sold /Cost of Revenue from Operation)/Average Inventory

    Cost of goods sold= Opening Stock + Net Purchases + Direct Expenses – Closing Stock

    Cost of Revenue from Operations = Revenue from Operations – Gross Profit

    Or

    Cost of Material Consumed (including direct expenses) + Change in inventories of WIP and Finished Goods

    Or

    Opening Inventory + Net Purchases+ Direct Expenses – Closing inventory

    Average Inventory = (Opening Inventory + Closing Inventory)/2

  • Activity Ratios - Trade Receivables Turnover Ratio 

    Trade Receivable Turnover Ratio: = Credit Revenue from Operation/Average Trade Receivable

    Credit Revenue from Operation = Revenue from Operation – Cash Revenue from Operation

    Average Trade Receivables = Opening Trade Receivable + Closing Trade Receivable/2

  • Activity Ratios - Trade Payables Turnover Ratio 

    Trade Payable Turnover Ratio: = Net Credit Purchases/Average Trade Payable

    Average Trade Payables = Opening Trade Payable + Closing Trade Payable  / 2

  • Activity Ratios - Working Capital Turnover Ratio 

    Working Capital Turnover Ratio = Revenue from Operations/Working Capital

  • Profltabtltty Ratios - Gross Profit Ratio 

    Gross Profit Ratio: `"Gross Profit"/"Revenue from Operations"xx100`

    Gross Profit = Revenue from Operations – Cost of Revenue from Operations/ Cost of Goods Sold
    Cost of Revenue from Operations = Cost of Material Consumed (including direct expenses) + Change in inventories of WIP and Finished Goods.

    Or

    Opening Inventory + Net Purchases + Direct Expenses – Closing inventory

  • Profitability Ratios - Net Profit Ratio 

    Net Profit Ratio = `"Net Profit"/"Revenue from Operations"xx100`

    Net Profit = Gross profit + Other Income – Indirect Expenses – Tax



  • Profitability Ratios - Operating Ratio 

    Operating Ratio =``

    Operating Expenses = Employee Benefit Expenses + Depreciation and Amortisation Expenses + Selling
    and Distribution Expenses+ Office and Administrative Expense

    Operating Income = Sale of scrap, trading commission received, cash discount received, revenue from services.

     

  • Profitability Ratios - Operating Profit Ratio 

    Operating Profit Ratio : ``

    Net operating profit = Net Profit after Tax+ Non-Operating Expenses – Non Operating Incomes

    Or

    Gross Profit – Operating Expenses + Operating Incomes

    Non Operating Expenses = Finance Cost (Interest on Borrowings) + Loss on sale of Non Current Assets

    Non Operating Incomes = Interest and Dividend Received on Investment + Profit on sale of Non Current Assets

  • Profitability Ratios - Earning per Share 

    `"Earning per share" = "Net Profit after Tax and Preference Dividend"/"No. of Equity Shares"`


  • Profitability Ratios - Price Earning Ratio 

    `"Price Earning Ratio" = "Market Value of an Equity share"/"Earning per share"`



  • Profitability Ratios - Return on Investment 

    Return on Investment = `"Net Pr ofit before Interest and Tax"/"Capital Employed"xx100`

  • Financial statements of a company: Statement of Profit and Loss and Balance Sheet in the prescribed form with major headings and sub headings (as per Schedule Ill to the Companies Act, 2013).

Scope:

  • Exceptional items, extraordinary items and profit (loss) from discontinued operations are excluded.
  • Financial Statement Analysis: Objectives, importance and limitations.
  • Tools for Financial Statement Analysis: Comparative statements, common size statements, cash flow analysis, ratio analysis.
  • Accounting Ratios:Objectives, classification and computation.
  • Liquidity Ratios: Current ratio and Quick ratio.
  • Solvency Ratios: Debt to Equity Ratio, Total Asset to Debt Ratio, Proprietary Ratio and Interest Coverage Ratio.
  • Activity Ratios: Inventory Turnover Ratio, Trade Receivables Turnover Ratio, Trade Payables Turnover Ratio and Working Capital Turnover Ratio.
  • Profltabtltty Ratios: Gross Profit Ratio, Operating Ratio, Operating Profit Ratio, Net Profit Ratio and Return on Investment.
4.20 Cash Flow Statement

• Meaning, objectives and preparation (as per AS3 (Revised) (Indirect Method only)

Scope:

  1. Adjustments relating to depreciation and amortization, profit or loss on sale of assets including investments, dividend (both final and interim) and tax.
  2. Bank overdraft and cash credit to be treated as short term borrowings.
  3. Current Investments to be taken as Marketable securities unless otherwise specified.
5.00 Computerized Accounting


5.10 Computerized Accounting

Overview of Computerised Accounting System.

  • Introduction: Application in Accounting.
  • Features of Computerised Accounting System.
  • Structure of CAS.
  • Software Packages: Generic; Specific; Tailored.

Accounting Application of Electronic Spreadsheet.

  • Concept of electronic spreadsheet.
  • Features offered by electronic spreadsheet.
  • Application in generating accounting information - bank reconciliation statement; asset accounting loan.
  • Repayment of loan schedule, ratio analysis.
  • Data representation- graphs, charts and diagrams.

Using Computerized Accounting System.

  • Steps in installation of CAS, codification and hierarchy of account heads, creation of accounts.
  • Data: Entry,validation and verification.
  • Adjusting entries, preparat on of balance sheet, profit andloss account with closing entries and opening entries. Need and security features of the system.

Database Management System (DBMS)

  • Concept and Features of DBMS.
  • DBMS in Business Application.
  • Generating Accounting Information - Payroll.

 

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