The course in accountancy is introduced at plus two stage of senior second of school education, as the formal commerce education is provided after ten years of schooling. With the fast changing economic scenario, accounting as a source of financial information has carved out a place for itself at the senior secondary stage. Its syllabus content provide students a firm foundation in basic accounting concepts and methodology and also acquaint them with the changes taking place in the preparation and presentation of financial statements in accordance to the applicable accounting standards and the Companies Act 2013.
The course in accounting put emphasis on developing basic understanding about accounting as an information system. The emphasis in class Xi is placed on basic concepts and process of accounting leading to the preparation of accounts for a sole proprietorship firm. The students are also familiarized with basic calculations of Goods and Services Tax (GST) in recording the business transactions. The accounting treatment of GST is confined to the syllabus of class XI.
This course is developed to impart skills for designing need based accounting database for maintaining book of accounts.
The complete course of Accountancy at the senior secondary stage introduces the learners to the world of business and emphasize on strengthening the fundamentals of the subject.
Objectives:
1. To familiarize students with new and emerging areas in the preparation and presentation of financial statements.
2. To acquaint students with basic accounting concepts and accounting standards.
3. To develop the skills of designing need based accounting database.
4. To appreciate the role of ICT in business operations.
5. To develop an understanding about recording of business transactions and preparation of financial statements.
6. To enable students with accounting for Not-for-Profit organizations, accounting for Partnership Firms and company accounts.
COURSE STRUCTURE :
Unit Marks
Part A: Accounting for Not-for-Profit
Organizations, Partnership Firms and Companies
Unit 1. Financial Statements of Not-for-
Profit Organizations 10
Unit 2. Accounting for Partnership Firms 30
Unit 3. Accounting for Companies 20
Part B: Financial Statement Analysis
Unit 4. Analysis of Financial Statements 12
Unit 5. Cash Flow Statement 08
Part A: Accounting for Not-for-Profit Organizations, Partnership Firms and Companies
Unit 1: Financial Statements of Not-for-Profit Organizations
• Not-for-profit organizations: concept.
• Receipts and Payments Account: features and preparation.
• Income and Expenditure Account: features, preparation of income and expenditure account and balance sheet from the given receipts and payments account with additional information.
Scope:
(i) Adjustments in a question should not exceed 3 or 4 in number and restricted to subscriptions, consumption of consumables and sale of assets/ old material.
(ii) Entrance/admission fees and general donations are to be treated as revenue receipts.
(iii) Trading Account of incidental activities is not to be prepared.
Learning Outcomes :
• state the meaning of a Not-for-profit organisation and its distinction from a profit making entity.
• state the meaning of receipts and payments account, and understanding its features.
• develop the understanding and skill of preparing receipts and payments account.
• state the meaning of income and expenditure account and understand its features.
• develop the understanding and skill of preparing income and expenditure account and balance sheet of a not-for-profit organisation with the help of given receipts and payments account and additional information.
Unit 2: Accounting for Partnership Firms
• Partnership: features, Partnership Deed.
• Provisions of the Indian Partnership Act 1932 in the absence of partnership deed.
• Fixed v/s 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.
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 admission of a partner on change in the profit sharing ratio, treatment of goodwill (as per AS 26), treatment for revaluation of assets and reassessment 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 / 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. Preparation of loan 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 and his executor’s account.
• Dissolution of a partnership firm: meaning of dissolution of partnership and partnership firm, types of dissolution of a firm. Settlement of accounts - preparation of realization account, and other related accounts: capital accounts of partners and cash/bank a/c (excluding piecemeal distribution, sale to a company and insolvency of partner(s)).
Learning Outcomes :
• state the meaning of partnership, partnership firm and partnership deed.
• describe the characteristic features of partnership and the contents of partnership deed.
• discuss the significance of provision of Partnership Act in the absence of partnership deed.
• differentiate between fixed and fluctuating capital, outline the process and develop the understanding and skill of preparation of Profit and Loss Appropriation Account.
• develop the understanding and skill of preparation profit and loss appropriation account involving guarantee of profits.
• develop the understanding and skill of making past adjustments.
• state the meaning, nature and factors affecting goodwill
• develop the understanding and skill of valuation of goodwill using different methods.
• state the meaning of sacrificing ratio, gaining ratio and the change in profit sharing ratio among existing partners.
• develop the understanding of accounting treatment of evaluation assets and reassessment of liabilities and treatment of reserves and accumulated profits by preparing revaluation account and balance sheet.
• explain the effect of change in profit sharing ratio on admission of a new partner.
• develop the understanding and skill of treatment of goodwill as per AS-26, treatment of revaluation of assets and re-assessment of liabilities, treatment of reserves and accumulated profits, adjustment of capital accounts and preparation of balance sheet of the new firm.
• explain the effect of retirement / death of a partner on change in profit sharing ratio.
• develop the understanding of accounting treatment of goodwill, revaluation of assets and re-assessment of liabilities and adjustment of accumulated profits and reserves on retirement / death of a partner and capital adjustment.
• understand the situations under which a partnership firm can be dissolved.
• develop the understanding of preparation of realisation account and other related accounts.
Unit-3 Accounting for Companies
Accounting for Share Capital :
• Share and share capital: nature and types.
• Accounting for share capital: issue and allotment of equity and preferences shares. 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 and Employee Stock Option Plan (ESOP).
• Accounting treatment of forfeiture and reissue of shares.
• Disclosure of share capital in the Balance Sheet of a company.
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 as collateral security concept, interest on debentures. Writing off discount / loss on issue of debentures.
Note: Discount or loss on issue of debentures to be written off in the year debentures are allotted from Security Premium Reserve (if it exists) and then from Statement of Profit and Loss as Financial Cost (AS 16).
• Redemption of debentures-Methods: Lump sum, draw of lots.
• Creation of Debenture Redemption Reserve.
Note: Related sections of the Companies Act, 2013 will apply.
Learning Outcomes :
• state the meaning of share and share capital and differentiate between equity shares and preference shares and different types of share capital.
• understand the meaning of private placement of shares and Employee Stock Option Plan.
• explain the accounting treatment of share capital transactions regarding issue of shares.
• develop the understanding of accounting treatment of forfeiture and re-issue of forfeited shares.
• explain the accounting treatment of different categories of transactions related to issue of debentures.
• develop the understanding and skill of writing of discount / loss on issue of debentures.
• state the meaning of redemption of debentures. develop the understanding of accounting treatment of transactions related to
• redemption of debentures by lump sum, draw of lots and Creation of Debenture Redemption Reserve.
Part B: Financial Statement Analysis
Unit 4: Analysis of Financial Statements
Financial statements of a Company:
Statement of Profit and Loss and Balance Sheet in prescribed form with major headings and sub headings (as per Schedule III to the Companies Act, 2013)
Note: 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: Meaning, 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.
• Profitability Ratios: Gross Profit Ratio, Operating Ratio, Operating Profit Ratio, Net Profit Ratio and Return on Investment.
Learning Outcomes :
• develop the understanding of major headings and sub-headings (as per Schedule III to the Companies Act, 2013) of balance sheet as per the prescribed norms / formats.
• state the meaning, objectives and limitations of financial statement analysis.
• discuss the meaning of different tools of 'financial statements analysis'.
• develop the understanding and skill of preparation of comparative and common size financial statements.
• state the meaning, objectives and significance of different types of ratios.
• develop the understanding of computation of current ratio and quick ratio.
• develop the skill of computation of debt equity ratio, total asset to debt ratio, proprietary ratio and interest coverage ratio.
• develop the skill of computation of inventory turnover ratio, trade receivables and trade payables ratio and working capital turnover ratio.
• develop the skill of computation of gross profit ratio, operating ratio, operating profit ratio, net profit ratio and return on investment.
Note: Net Profit Ratio is to be calculated on the basis of profit before and after tax.
Unit 5: Cash Flow Statement
Meaning, objectives and preparation (as per AS 3 (Revised) (Indirect Method only)
Note:
(i) Adjustments relating to depreciation and amortization, profit or loss on sale of assets including investments, dividend (both final and interim) and tax.
(ii) Bank overdraft and cash credit to be treated as short term borrowings.
(iii) Current Investments to be taken as Marketable securities unless otherwise specified.
Learning Outcomes :
• state the meaning and objectives of cash flow statement.
• develop the understanding of preparation of Cash Flow Statement using indirect method as per AS 3 with given adjustments.
Note: Previous years’ Proposed Dividend to be given effect, as prescribed in AS-4, Events occurring after the Balance Sheet date. Current years’ Proposed Dividend will be accounted for in the next year after it is declared by the shareholders.