CBSE Class 12 Board Exam Accountancy Syllabus

On admission, how is the new profit-sharing ratio of old partners affected if the new partner's share is taken equally from them?

Each old partner sacrifices an equal portion, and their new shares are their old shares minus the equal sacrifice.

What entry is passed when goodwill already appears in the books at the time of admission/retirement?

Existing goodwill is written off by debiting all old partners' capital accounts in their old ratio and crediting Goodwill Account.

At retirement, how is the gaining ratio used regarding goodwill?

The remaining (gaining) partners compensate the retiring partner for his share of goodwill in their gaining ratio.

How is the amount due to a retiring partner determined?

By preparing his capital account including capital balance, share of reserves, revaluation profit/loss, goodwill, interest, and less drawings.

On the death of a partner, how is his share of profit till the date of death usually calculated?

On the basis of time (or sales/turnover) using last year's profit or average profit, proportionate to the period from the start of the year to date of death.

What account is opened to transfer the amount due to a deceased partner?

Deceased Partner's Executor's Account (or Executor's Loan Account).

What is the order of payment under Garner v. Murray rule on dissolution?

A solvent partner's deficiency from an insolvent partner is borne by the remaining solvent partners in the ratio of their last agreed capitals.

On dissolution of a firm, in what order are the proceeds applied (as per Section 48)?

First to outside creditors, then to partners' loans, then to partners' capital, and any surplus distributed in profit-sharing ratio.

What is the purpose of a Realisation Account on dissolution?

To record the sale of assets and payment of liabilities and to determine the profit or loss on realisation, shared in profit-sharing ratio.

Define a share and state the two main types.

A share is a unit of the share capital of a company. The two main types are Equity (ordinary) shares and Preference shares.

Differentiate between Authorised Capital and Issued Capital.

Authorised capital is the maximum capital a company can raise as per its MOA; issued capital is the part of authorised capital offered to the public for subscription.

What is Calls-in-Arrears?

The amount called up on shares but not yet paid by shareholders; interest may be charged at up to 10% p.a. as per Table F.

What is Calls-in-Advance and the interest rate under Table F?

Money received from shareholders for calls not yet made; interest is paid on it at up to 12% p.a. under Table F.

How is shares issued at a premium recorded?

The premium is credited to the Securities Premium Account; it cannot be treated as revenue profit.

State two permitted uses of the Securities Premium under Section 52 of the Companies Act 2013.

Issuing fully paid bonus shares and writing off preliminary expenses (also buy-back, premium on redemption, share issue expenses).

What is forfeiture of shares?

Cancellation of shares due to non-payment of allotment or call money; the amount already received is forfeited and transferred to Share Forfeiture Account.

On reissue of forfeited shares, what is the maximum discount allowed?

The reissue discount cannot exceed the amount forfeited on those shares; any balance in Share Forfeiture Account after reissue is transferred to Capital Reserve.

What is pro-rata allotment of shares?

When shares are oversubscribed, shares are allotted to applicants in a fixed ratio, and excess application money is adjusted towards allotment or refunded.

Define a debenture.

A debenture is a written acknowledgement of debt issued by a company, usually carrying a fixed rate of interest and repayable after a specified period.

State two differences between shares and debentures.

Shareholders are owners and receive dividends (not fixed); debenture holders are creditors and receive fixed interest. Debentures are repayable; equity capital generally is not.

What does 'Loss on Issue of Debentures' arise from?

From issuing debentures at a discount and/or the premium payable on their redemption; it is a capital loss written off over time.

How is interest on debentures treated in accounts?

It is a charge against profits (an expense), payable whether or not the company earns profit, and is subject to TDS.

Under Schedule III of the Companies Act 2013, what are the two main formats and which is mandatory?

The Balance Sheet (vertical format) and the Statement of Profit and Loss; both follow the prescribed vertical format under Schedule III, Division I.

Under Schedule III, name the two broad heads on the Equity and Liabilities side of a company's Balance Sheet (first level).

Shareholders' Funds and Liabilities (Non-current Liabilities and Current Liabilities), along with Share Application Money Pending Allotment.

Under which head and sub-head is 'Calls-in-Advance' shown in a company's Balance Sheet?

Current Liabilities, under Other Current Liabilities.

State the difference between a Comparative Statement and a Common-size Statement.

A comparative statement shows absolute and percentage changes between two periods; a common-size statement expresses each item as a percentage of a common base (Revenue from Operations / Total).

What does the Current Ratio measure and what is its formula?

It measures short-term liquidity. Current Ratio = Current Assets / Current Liabilities; ideal is 2:1.

What is the Quick (Liquid) Ratio formula and its ideal value?

Quick Ratio = (Current Assets - Inventory - Prepaid Expenses) / Current Liabilities; ideal is 1:1.

State the formula for Inventory Turnover Ratio.

Inventory Turnover Ratio = Cost of Revenue from Operations / Average Inventory.

State the formula for Debt-Equity Ratio and its ideal value.

Debt-Equity Ratio = Debt (Long-term/Non-current Liabilities) / Shareholders' Funds; ideal is 2:1.

How is Cash Flow from Operating Activities computed using the indirect method (starting point)?

Start with Net Profit before Tax and Extraordinary Items, add back non-cash and non-operating items, then adjust for changes in working capital, less tax paid.