CUET Domain — Accountancy Formula & Journal Entry Sheet

This comprehensive resource is meticulously crafted for CUET aspirants focusing on the Domain Accountancy paper. It consolidates essential formulas, journal entries, and conceptual frameworks required to excel in the exam. Understanding and memorizing these core elements are critical for both theoretical comprehension and practical problem-solving. This guide aims to provide a structured and in-depth review, ensuring you're well-equipped for every question type.

CUET Accountancy: Exam Weightage and Strategy

The CUET Accountancy domain paper typically comprises Multiple Choice Questions (MCQs) covering a wide range of topics from both Class 11th and 12th syllabi. While specific weightage can vary year to year, a broad distribution is observed:

Strategic Approach for CUET Accountancy:

1. Conceptual Clarity: Do not just memorize formulas; understand the underlying concepts. Many MCQs test conceptual application rather than direct formula recall.
2. Journal Entry Mastery: Journal entries are the foundation. Practice writing entries for various transactions until it becomes second nature.
3. Formula Recall & Application: For topics like Ratio Analysis, NPO, and Partnership, quick and accurate recall of formulas is crucial. Practice applying them to diverse scenarios.
4. Speed and Accuracy: CUET is time-bound. Regular practice with MCQs under timed conditions will improve both speed and accuracy.
5. Identify High-Weightage Areas: Focus extra effort on NPO, Partnership, and Company Accounts given their higher weightage.
6. Read Questions Carefully: MCQs often contain subtle nuances. Pay close attention to keywords like "excluding," "including," "net," "gross," "transfer to," etc.

I. Accounting for Not-for-Profit Organisations (NPO)

NPOs are entities formed for promoting social, charitable, religious, or other welfare objectives, not for profit. Their primary financial statements are Receipts and Payments Account, Income and Expenditure Account, and Balance Sheet.

A. Key Concepts and Definitions

• Receipts and Payments Account: A summary of cash and bank transactions over a period. It's a real account and records all cash receipts and payments, whether revenue or capital, and whether relating to the current, past, or future period.
• Income and Expenditure Account: Similar to a Profit and Loss Account for commercial organizations. It is a nominal account and records only revenue items (income and expenses) relating to the current accounting period. It shows either a 'Surplus' (income > expenditure) or a 'Deficit' (expenditure > income).
• Fund-Based Accounting: Specific funds (e.g., Building Fund, Endowment Fund, Prize Fund) are created for particular purposes. Donations received for these funds are credited to the respective fund, and expenses incurred for that purpose are debited from the fund. Any balance is shown on the Liabilities side of the Balance Sheet.
• Subscription: The main source of income for NPOs. Accrual accounting principles apply.
• Legacy: Amount received as per the will of a deceased person. It's generally treated as a capital receipt and credited to the Capital (General) Fund.
• Donations:
  • General Donations: If small, treated as revenue income. If large, credited to Capital Fund.
  • Specific Donations: Capital receipt, credited to a specific fund.
• Endowment Fund: A fund arising from a bequest or gift, the income of which is used for a specific purpose. Capital receipt.

B. Formulas and Calculations

1. Calculation of Subscriptions for the Current Year: $$ \text{Subscriptions for Current Year} = \text{Subscriptions Received During Year} $$ $$

   • \text{Subscriptions Outstanding at end of Current Year} $$ $$
   • \text{Subscriptions Outstanding at end of Previous Year} $$ $$
   • \text{Subscriptions Received in Advance at end of Previous Year} $$ $$
   • \text{Subscriptions Received in Advance at end of Current Year} $$

   Alternatively, using a T-account for Subscriptions:

   Particulars	Amount (₹)	Particulars	Amount (₹)
   To Subscriptions O/S (Opening)	XXX	By Cash/Bank (Received during year)	XXX
   To Subscriptions Rec. in Advance (Closing)	XXX	By Subscriptions Rec. in Advance (Opening)	XXX
   To Income & Exp. A/c (Current Year Income) (Bal. Fig.)	XXX	By Subscriptions O/S (Closing)	XXX
   Total	XXXX	Total	XXXX

2. Calculation of Consumption of Consumable Items (e.g., Medicines, Sports Material, Stationery): $$ \text{Consumption} = \text{Opening Stock} + \text{Purchases (Cash/Credit)} - \text{Closing Stock} $$ Where Purchases (Cash/Credit) need to be calculated: $$ \text{Credit Purchases} = \text{Payments to Creditors} + \text{Creditors (Closing)} - \text{Creditors (Opening)} $$ $$

   • \text{Discount Received} - \text{Returns Outwards} $$ and $$ \text{Total Purchases} = \text{Cash Purchases} + \text{Credit Purchases} $$

   Alternatively, using a T-account for Creditors for Consumable Items:

   Particulars	Amount (₹)	Particulars	Amount (₹)
   To Cash/Bank (Payments)	XXX	By Balance b/d (Opening Creditors)	XXX
   To Balance c/d (Closing Creditors)	XXX	By Purchases (Credit) (Bal. Fig.)	XXX
   Total	XXXX	Total	XXXX

   And then using a T-account for Consumable Stock:

   Particulars	Amount (₹)	Particulars	Amount (₹)
   To Balance b/d (Opening Stock)	XXX	By Income & Exp. A/c (Consumption) (Bal. Fig.)	XXX
   To Purchases (Total)	XXX	By Balance c/d (Closing Stock)	XXX
   Total	XXXX	Total	XXXX

3. Income and Expenditure Account Structure (Key Elements):

   Expenditure (Debit Side)	Amount (₹)	Income (Credit Side)	Amount (₹)
   To Salaries	XXX	By Subscriptions	XXX
   To Rent	XXX	By Entrance Fees (if revenue)	XXX
   To Depreciation	XXX	By General Donations (if revenue)	XXX
   To Consumables Consumed	XXX	By Sale of Old Assets (Profit)	XXX
   To Loss on Sale of Asset	XXX	By Legacies (if revenue)	XXX
   To Specific Fund Expenses (if exceeds fund)	XXX	By Interest on Investments	XXX
   To Printing & Stationery	XXX	By Rent Received	XXX
   To Postage	XXX	By Surplus (Transfer to Capital Fund)	XXX
   To Deficit (Transfer to Capital Fund) (Bal. Fig.)	XXX
   Total	XXXX	Total	XXXX

   Note: Only revenue items pertaining to the current period are shown.

4. Receipts and Payments Account Structure (Key Elements):

   Receipts (Debit Side)	Amount (₹)	Payments (Credit Side)	Amount (₹)
   To Balance b/d (Opening Cash/Bank)	XXX	By Salaries	XXX
   To Subscriptions	XXX	By Rent	XXX
   To Entrance Fees	XXX	By Printing & Stationery	XXX
   To Donations (General & Specific)	XXX	By Purchase of Assets	XXX
   To Legacies	XXX	By Investment	XXX
   To Sale of Assets	XXX	By Specific Expenses	XXX
   To Interest Received	XXX	By Creditors for Consumables	XXX
   To Lockers Rent	XXX	By Balance c/d (Closing Cash/Bank)	XXX
   Total	XXXX	Total	XXXX

   Note: All cash receipts and payments, both capital and revenue, for all periods are shown.

C. Journal Entries (Illustrative)

1. For Cash Subscriptions Received: Bank/Cash A/c Dr. To Subscriptions A/c (Being subscriptions received for the year)

2. For Outstanding Subscriptions (Adjusting Entry): Outstanding Subscriptions A/c Dr. To Subscriptions A/c (Being subscriptions outstanding at year-end)

3. For Subscriptions Received in Advance (Adjusting Entry): Subscriptions A/c Dr. To Subscriptions Received in Advance A/c (Being subscriptions received in advance adjusted)

4. For Sale of Asset (Book Value ₹50,000, Sold for ₹60,000): Bank A/c Dr. ₹60,000 To Asset A/c ₹50,000 To Gain on Sale of Asset A/c ₹10,000 (Being asset sold at a profit)

5. For Specific Donation Received (e.g., Building Fund): Bank A/c Dr. To Building Fund A/c (Being donation received for building fund)

6. For Payment of Expenses: Expense A/c Dr. To Bank/Cash A/c (Being expense paid)

7. For Depreciation on Assets: Depreciation A/c Dr. To Asset A/c (or Provision for Depreciation A/c) (Being depreciation charged on assets)

8. To Transfer Surplus to Capital Fund: Income and Expenditure A/c Dr. To Capital Fund A/c (Being surplus transferred to Capital Fund)

II. Accounting for Partnership Firms

A partnership is "the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all" (Indian Partnership Act, 1932).

A. Fundamentals of Partnership

1. Profit and Loss Appropriation Account: An extension of the Profit and Loss Account. It shows how the distributable profit (or loss) is appropriated among partners. Items like Interest on Capital, Salary to Partners, Commission to Partners are debited, and Interest on Drawings is credited.

   Particulars	Amount (₹)	Particulars	Amount (₹)
   To Interest on Capital	XXX	By Profit and Loss A/c (Net Profit)	XXX
   To Partner's Salary/Commission	XXX	By Interest on Drawings	XXX
   To Reserves	XXX
   To Partner's Capital/Current A/c (Profit Transfer)	XXX
   By Partner's Capital/Current A/c (Loss Transfer)	XXX
   Total	XXXX	Total	XXXX

2. Partners' Capital Accounts:

   • Fixed Capital Method: Capital remains fixed. Transactions related to drawing, interest on capital, salary, share of profit/loss are recorded in 'Partners' Current Accounts'.
   • Fluctuating Capital Method: All transactions (capital, drawings, interest, salary, profit/loss share) are recorded directly in 'Partners' Capital Accounts'.

B. Formulas and Calculations

1. Interest on Capital: Calculated on the opening capital balance. If additional capital is introduced or capital is withdrawn during the year, interest is calculated proportionately. $$ \text{Interest on Capital} = \text{Capital Balance} \times \frac{\text{Rate}}{100} $$

2. Interest on Drawings:

   • If date of drawing is not given: Interest is charged for 6 months on the total drawings. $$ \text{Interest on Drawings} = \text{Total Drawings} \times \frac{\text{Rate}}{100} \times \frac{6}{12} $$
   • If fixed amount withdrawn at regular intervals:

     Period of Withdrawal	Interest Period (Months)
     Beginning of each month	6.5
     Middle of each month	6
     End of each month	5.5
     Beginning of each quarter	7.5
     End of each quarter	4.5
     $$
     \text{Interest on Drawings} = \text{Total Drawings} \times \frac{\text{Rate}}{100} \times \frac{\text{Average Period}}{12}
     $$
     Average Period = (Months left after first drawing + Months left after last drawing) / 2

C. Journal Entries (Fundamentals)

1. For Net Profit Transfer to P&L Appropriation A/c: Profit and Loss A/c Dr. To Profit and Loss Appropriation A/c (Being net profit transferred)

2. For Interest on Capital Allowed: Interest on Capital A/c Dr. To Partner's Capital/Current A/c (Individually) (Being interest allowed on capital)

   Profit and Loss Appropriation A/c Dr. To Interest on Capital A/c (Being interest on capital transferred to P&L App. A/c)

3. For Salary/Commission to Partner: Partner's Salary/Commission A/c Dr. To Partner's Capital/Current A/c (Individually) (Being salary/commission due to partner)

   Profit and Loss Appropriation A/c Dr. To Partner's Salary/Commission A/c (Being partner's salary/commission transferred to P&L App. A/c)

4. For Drawings Made by Partners: Partner's Capital/Current A/c Dr. To Bank/Cash A/c (Being cash drawn by partner)

5. For Interest on Drawings Charged: Partner's Capital/Current A/c Dr. To Interest on Drawings A/c (Being interest charged on drawings)

   Interest on Drawings A/c Dr. To Profit and Loss Appropriation A/c (Being interest on drawings transferred to P&L App. A/c)

6. For Transfer of Divisible Profit: Profit and Loss Appropriation A/c Dr. To Partner's Capital/Current A/c (Individually) (Being divisible profit distributed among partners)

7. For Transfer of Divisible Loss: Partner's Capital/Current A/c (Individually) Dr. To Profit and Loss Appropriation A/c (Being divisible loss borne by partners)

D. Goodwill (Valuation and Accounting Treatment)

Goodwill is the value of the reputation of a firm. It is an intangible asset.

1. Methods of Valuation:

   • Average Profit Method: $$ \text{Average Profit} = \frac{\text{Total Profits for given years}}{\text{Number of years}} $$ $$ \text{Goodwill} = \text{Average Profit} \times \text{Number of Years' Purchase} $$
   • Super Profit Method: $$ \text{Normal Profit} = \text{Capital Employed} \times \frac{\text{Normal Rate of Return}}{100} $$ $$ \text{(Average) Super Profit} = \text{Average Profit} - \text{Normal Profit} $$ $$ \text{Goodwill} = \text{Super Profit} \times \text{Number of Years' Purchase} $$
   • Capitalisation Method:
     • Capitalisation of Average Profit: $$ \text{Capitalised Value of Business} = \text{Average Profit} \times \frac{100}{\text{Normal Rate of Return}} $$ $$ \text{Goodwill} = \text{Capitalised Value of Business} - \text{Net Assets (Capital Employed)} $$
     • Capitalisation of Super Profit: $$ \text{Goodwill} = \text{Super Profit} \times \frac{100}{\text{Normal Rate of Return}} $$

2. Accounting Treatment of Goodwill (on Reconstitution of Partnership):

   • When Goodwill is brought in Cash by Incoming Partner (Premium Method): Bank A/c Dr. To Premium for Goodwill A/c (Being premium for goodwill brought by new partner)

     Premium for Goodwill A/c Dr. To Sacrificing Partners' Capital/Current A/c (in Sacrificing Ratio) (Being premium distributed among sacrificing partners)

     If goodwill is withdrawn by old partners: Sacrificing Partners' Capital/Current A/c Dr. To Bank A/c (Being goodwill premium withdrawn)

   • When Goodwill is not brought in Cash (or only partly brought in cash): Incoming Partner's Current A/c Dr. (with his share of goodwill) To Sacrificing Partners' Capital/Current A/c (in Sacrificing Ratio) (Being new partner's share of goodwill debited to his current A/c)

   • When Goodwill already exists in the books (Old Goodwill):

     • If written off: Old Partners' Capital/Current A/c Dr. (in Old Ratio) To Goodwill A/c (Being old goodwill written off)
     • If not written off but adjusted (not recommended generally): Similar to new goodwill treatment, but net effect to be calculated.

E. Reconstitution of Partnership

1. Change in Profit Sharing Ratio

• Sacrificing Ratio: Ratio in which old partners give up their share of profit. $$ \text{Sacrificing Ratio} = \text{Old Share} - \text{New Share} $$
• Gaining Ratio: Ratio in which partners acquire a share of profit from other partners. $$ \text{Gaining Ratio} = \text{New Share} - \text{Old Share} $$
• Accounting Treatment of Reserves and Accumulated Profits/Losses:

  • If to be distributed: Reserves/P&L (Cr. Bal.) A/c Dr. To All Partners' Capital/Current A/c (in Old Ratio) (Being reserves/accumulated profits distributed)

    P&L (Dr. Bal.)/Deferred Revenue Expenditure A/c Dr. To All Partners' Capital/Current A/c (in Old Ratio) (Being accumulated losses/expenses written off)

  • If not to be disturbed (maintained in books): Gaining Partner's Capital/Current A/c Dr. To Sacrificing Partner's Capital/Current A/c (Being adjustment for share of reserves/profits through capital accounts) Amount = Total Reserves/Accumulated Profit $\times$ Gaining/Sacrificing Share

2. Admission of a Partner

• New Profit Sharing Ratio: Calculated based on the new partner's share and how existing partners concede their share.

• Sacrificing Ratio: Calculated as Old Share - New Share. This ratio is used to distribute goodwill premium.

• Revaluation Account: Prepared to revalue assets and reassess liabilities. Gains are credited, losses are debited. Balance (profit/loss) is transferred to old partners' capital accounts in the old ratio. $$ \text{Revaluation Profit} = \text{Increase in Asset Value} + \text{Decrease in Liability Value} + \text{Unrecorded Asset} $$ $$

  • (\text{Decrease in Asset Value} + \text{Increase in Liability Value} + \text{Unrecorded Liability}) $$

  Journal Entries for Revaluation:

  • Increase in Asset Value: Asset A/c Dr. To Revaluation A/c
  • Decrease in Asset Value: Revaluation A/c Dr. To Asset A/c
  • Increase in Liability Value: Revaluation A/c Dr. To Liability A/c
  • Decrease in Liability Value: Liability A/c Dr. To Revaluation A/c
  • Unrecorded Asset: Asset A/c Dr. To Revaluation A/c
  • Unrecorded Liability: Revaluation A/c Dr. To Unrecorded Liability A/c
  • Revaluation Profit: Revaluation A/c Dr. To Old Partners’ Capital/Current A/c (in Old Ratio)
  • Revaluation Loss: Old Partners’ Capital/Current A/c Dr. (in Old Ratio) To Revaluation A/c

• Adjustments of Capital: Often, capitals are adjusted based on the new partner's capital and the new profit-sharing ratio.

  • To find the total capital of the firm: Based on new partner's capital: $$ \text{Total Capital} = \text{New Partner's Capital} \times \frac{\text{Reciprocal of New Partner's Share}}{1} $$
  • New individual capital for old partners: Total Capital $\times$ Individual New Share. Difference (Actual Capital - New Capital) is brought in or withdrawn.

3. Retirement/Death of a Partner

• Gaining Ratio: Old Share - New Share (when other partners gain). This ratio is used to adjust for goodwill.

• Adjustment of Goodwill: Remaining partners compensate the retiring/dead partner for his share of goodwill. Gaining Partners' Capital A/c Dr. (in Gaining Ratio) To Retiring/Dead Partner's Capital A/c (Being goodwill adjusted)

• Revaluation of Assets and Liabilities: Same process as admission. Profit/loss is distributed among ALL (including retiring/dead) partners in the old ratio.

• Share of Profit till Date of Death/Retirement:

  • Based on time: Profit of previous year/period $\times$ (Months/Days from start of year to death) / 12 or 365
  • Based on sales: Previous year's profit to sales ratio $\times$ Current year's sales till death. Journal Entry: Profit and Loss Suspense A/c Dr. To Deceased/Retiring Partner's Capital A/c (Being share of profit till date of death/retirement)

• Amount Due to Retiring/Deceased Partner: Transferred to a Loan Account or Executor's Account. Retiring Partner's Capital A/c Dr. (or Deceased Partner's Capital A/c) To Retiring Partner's Loan A/c (or Deceased Partner's Executor's A/c) (Being balance due transferred for payment)

4. Dissolution of Partnership

• Realisation Account: Prepared to close all asset and liability accounts and determine the profit or loss on realisation.

  • Debit side: Assets (excluding cash/bank, fictitious assets) transferred at book value, Realisation expenses, Creditors paid, Unrecorded liabilities paid.
  • Credit side: Liabilities (excluding Partner's Loan, Capital) transferred at book value, Assets realised, Unrecorded assets realised.
  • Balance: Realisation Profit (transfer to Partners' Capital in PSR) or Loss (transfer to Partners' Capital in PSR).

  Journal Entries for Realisation:

  • Transfer of Assets (at book value): Realisation A/c Dr. To Sundry Assets A/c (Individual assets)
  • Transfer of Liabilities (at book value): Sundry Liabilities A/c (Individual liabilities) Dr. To Realisation A/c
  • Cash Realised from Assets: Bank/Cash A/c Dr. To Realisation A/c
  • Asset taken over by Partner: Partner's Capital A/c Dr. To Realisation A/c
  • Creditors Paid: Realisation A/c Dr. To Bank/Cash A/c
  • Creditor taken over by Partner: Realisation A/c Dr. To Partner's Capital A/c
  • Realisation Expenses Paid: Realisation A/c Dr. To Bank/Cash A/c
  • Realisation Profit: Realisation A/c Dr. To All Partners' Capital A/c (in PSR)
  • Realisation Loss: All Partners' Capital A/c Dr. (in PSR) To Realisation A/c

• Payment Priority (as per Section 48 of Partnership Act, 1932):

  1. Outside debts (Creditors, Bank Overdraft, Loans from others)
  2. Loan from partners (if any, repaid after outside debts)
  3. Partners' Capital Accounts (remaining balance distributed)

• Partner's Capital Accounts (Final Settlement): Balance carried forward from previous Balance Sheet + Realisation profit - Realisation loss - Drawings - Loans from firm - Share of accumulated loss = Final Payout (To Bank) or Amount to be brought in (By Bank).

III. Company Accounts

A company is an artificial person having a separate legal entity, perpetual succession, and a common seal.

A. Share Capital

1. Types of Share Capital:

   • Authorised Capital: Maximum capital a company can issue.
   • Issued Capital: Part of authorised capital offered to the public.
   • Subscribed Capital: Part of issued capital subscribed by the public.
     • Subscribed & Fully Paid-up: When face value is called and paid.
     • Subscribed but Not Fully Paid-up: When either not fully called or called but unpaid.
   • Called-up Capital: Part of subscribed capital the company has demanded payment for.
   • Paid-up Capital: Part of called-up capital actually received by the company.
   • Reserve Capital: Part of uncalled capital that a company decides to call only at the time of winding up.
   • Capital Reserve: Reserve created out of capital profits (e.g., premium on issue of shares, profit on sale of fixed assets, profit on forfeiture of shares).

2. Journal Entries for Issue of Shares (at Par):

   • On Application Money Received: Bank A/c Dr. To Share Application A/c
   • On Allotment of Shares & Transfer of Application Money: Share Application A/c Dr. Share Allotment A/c Dr. To Share Capital A/c
   • On Allotment Money Due: Share Allotment A/c Dr. To Share Capital A/c
   • On Allotment Money Received: Bank A/c Dr. To Share Allotment A/c
   • On Call Money Due (First Call, Second Call, etc.): Share First Call A/c Dr. To Share Capital A/c
   • On Call Money Received: Bank A/c Dr. To Share First Call A/c

3. Issue of Shares at Premium: Security Premium Reserve A/c (or Securities Premium A/c) is a capital receipt and shown under "Reserves and Surplus" on the Liabilities side of the Balance Sheet.

   • On Allotment Money Due (with Premium): Share Allotment A/c Dr. To Share Capital A/c To Securities Premium Reserve A/c
   • Premium can be received with application, allotment, or call money as specified.

4. Calls in Arrears: Where shareholders fail to pay calls due.

   • When Calls in Arrears A/c is NOT opened: No separate entry. The call A/c will show a debit balance reflective of the unpaid amount.
   • When Calls in Arrears A/c IS opened: Calls in Arrears A/c Dr. To Share First Call A/c (or Allotment A/c etc.)
   • Interest on Calls in Arrears: Debited to shareholders. As per Table F, interest up to 10% p.a.

5. Calls in Advance: Where shareholders pay calls before they are due.

   • On receiving Call in Advance: Bank A/c Dr. To Calls in Advance A/c
   • On adjusting Call in Advance at the time of calls due: Calls in Advance A/c Dr. To Share Calls A/c (e.g., Share First Call A/c)
   • Interest on Calls in Advance: Credited to shareholders. As per Table F, interest up to 12% p.a.

6. Forfeiture of Shares: Cancellation of shares due to non-payment of call money.

   • Shares Issued at Par (Forfeiture): Share Capital A/c Dr. (with Called-up Amount) To Share Forfeited A/c (with Amount Paid) To Calls in Arrears A/c (with Unpaid Amount)
   • Shares Issued at Premium (Forfeiture - if Premium NOT received): Share Capital A/c Dr. (with Called-up Amount) Securities Premium Reserve A/c Dr. (with Unpaid Premium Amount) To Share Forfeited A/c (with Amount Paid excluding Premium) To Calls in Arrears A/c (with Unpaid Amount including Unpaid Premium)
   • Shares Issued at Premium (Forfeiture - if Premium RECEIVED): (Premium received cannot be forfeited, so Securities Premium Reserve A/c is NOT debited at forfeiture. Treat it as if shares were issued at par.) Share Capital A/c Dr. (with Called-up Amount) To Share Forfeited A/c (with Amount Paid including Premium) To Calls in Arrears A/c (with Unpaid Amount)

7. Re-issue of Forfeited Shares:

   • Re-issued at Par: Bank A/c Dr. To Share Capital A/c
   • Re-issued at Premium: Bank A/c Dr. To Share Capital A/c To Securities Premium Reserve A/c
   • Re-issued at Discount: (Discount cannot exceed the forfeited amount per share) Bank A/c Dr. Share Forfeited A/c Dr. (with Discount Allowed) To Share Capital A/c
   • Transfer of Capital Reserve (Balance in Share Forfeited A/c): Share Forfeited A/c Dr. To Capital Reserve A/c (Being surplus from forfeited shares transferred to Capital Reserve)

B. Debentures

Debentures are a type of long-term debt instrument issued by companies to raise debt capital. They represent a loan made to the company by the debenture holders.

1. Journal Entries for Issue of Debentures for Cash:

   • On Application Money Received: Bank A/c Dr. To Debenture Application A/c
   • On Allotment and Transfer of Application Money: Debenture Application A/c Dr. Debenture Allotment A/c Dr. (if applicable) To % Debentures A/c
   • If Issued at Premium: Debenture Application and Allotment A/c Dr. To % Debentures A/c To Securities Premium Reserve A/c
   • If Issued at Discount: Debenture Application and Allotment A/c Dr. Discount on Issue of Debentures A/c Dr. To % Debentures A/c

2. Loss on Issue of Debentures: Discount on issue of debentures + Premium payable on redemption (if any). This is written off from Securities Premium Reserve (if available), Capital Reserve, or P&L Statement.

3. Redemption of Debentures: Repayment of debenture holders.

   • Debenture Redemption Reserve (DRR): Created out of distributable profits to ensure funds are available for redemption. $$ \text{Minimum DRR Requirement:} $$ $$ \begin{array}{l} \text{Listed debentures (other than infra. companies/NBFCs/HFCs): No DRR required.} \ \text{Other listed debentures:} 10% \text{ of outstanding debentures.} \ \text{Unlisted debentures (other than NBFCs/HFCs):} 10% \text{ of outstanding debentures.} \ \text{NBFCs/HFCs (both listed/unlisted): No DRR required.} \end{array} $$ Journal Entry: Surplus (P&L Statement) Dr. To Debenture Redemption Reserve A/c

   • Debenture Redemption Investment (DRI): Compulsory investment of a certain percentage of debenture value (15% of debentures maturing in the current year) on or before April 30th of that year. Journal Entry: Debenture Redemption Investment A/c Dr. To Bank A/c

   • Common Redemption Methods:

     • Lump Sum: % Debentures A/c Dr. To Debenture Holders A/c Debenture Holders A/c Dr. To Bank A/c
     • By Purchase in Open Market: % Debentures A/c Dr. To Bank A/c To Profit on Redemption of Debentures A/c (if purchased at discount) (or) Loss on Redemption of Debentures A/c Dr. (if purchased at premium) Profit/Loss on Redemption transferred to Capital Reserve/P&L.

C. Financial Statements of a Company

As per Schedule III of Companies Act, 2013.

1. Balance Sheet (Vertical Format):

   • Equity and Liabilities:
     • Shareholders' Funds (Share Capital, Reserves and Surplus, Money received against share warrants)
     • Share Application Money Pending Allotment
     • Non-Current Liabilities (Long-term borrowings, Deferred tax liabilities, Other long-term liabilities, Long-term provisions)
     • Current Liabilities (Short-term borrowings, Trade payables, Other current liabilities, Short-term provisions)
   • Assets:
     • Non-Current Assets (Fixed Assets - Tangible, Intangible, Capital Work-in-Progress, Intangible Assets under Development; Non-Current Investments, Deferred Tax Assets, Long-term Loans and Advances, Other Non-Current Assets)
     • Current Assets (Current Investments, Inventories, Trade Receivables, Cash and Cash Equivalents, Short-term Loans and Advances, Other Current Assets)

2. Statement of Profit and Loss (Vertical Format):

   • Revenue from Operations
   • Other Income
   • Total Revenue (1+2)
   • Expenses (Cost of Materials Consumed, Purchases of Stock-in-Trade, Changes in Inventories, Employee Benefits Expense, Finance Costs, Depreciation and Amortisation Expense, Other Expenses)
   • Total Expenses
   • Profit Before Tax (3-5)
   • Tax Expense
   • Profit After Tax

IV. Analysis of Financial Statements

A. Tools of Financial Statement Analysis

1. Comparative Statements: Show changes in individual items (absolute & percentage) over two or more periods. $$ \text{Absolute Change} = \text{Current Year's Figure} - \text{Previous Year's Figure} $$ $$ \text{Percentage Change} = \frac{\text{Absolute Change}}{\text{Previous Year's Figure}} \times 100 $$
2. Common Size Statements: Express each item in a statement as a percentage of a common base figure.
   • Common Size Balance Sheet: Each item as % of Total Assets/Liabilities.
   • Common Size Statement of P&L: Each item as % of Revenue from Operations. $$ \text{Percentage of Base} = \frac{\text{Individual Item Amount}}{\text{Total Assets/Revenue from Operations}} \times 100 $$

B. Accounting Ratios

Ratios express the relationship between two accounting variables.

1. Liquidity Ratios (Short-term Solvency):

   • Current Ratio: Measures short-term debt paying ability. $$ \text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}} \quad (\text{Ideal: } 2:1) $$
   • Quick Ratio/Liquid Ratio/Acid Test Ratio: Measures immediate short-term liquidity. $$ \text{Quick Ratio} = \frac{\text{Quick Assets}}{\text{Current Liabilities}} \quad (\text{Ideal: } 1:1) $$ $$ \text{Quick Assets} = \text{Current Assets} - \text{Inventories} - \text{Prepaid Expenses} $$

2. Solvency Ratios (Long-term Solvency):

   • Debt to Equity Ratio: Relationship between outsiders' funds and shareholders' funds. $$ \text{Debt to Equity Ratio} = \frac{\text{Debt (Long-term Borrowings + Long-term Provisions)}}{\text{Equity (Shareholders' Funds)}} \quad (\text{Ideal: } 2:1) $$
   • Total Assets to Debt Ratio: Measures the safety margin of creditors. $$ \text{Total Assets to Debt Ratio} = \frac{\text{Total Assets}}{\text{Total Debt}} $$
   • Proprietary Ratio: Proportion of shareholders' funds in total assets. $$ \text{Proprietary Ratio} = \frac{\text{Shareholders' Funds}}{\text{Total Assets}} $$
   • Interest Coverage Ratio: Ability to meet interest payments. $$ \text{Interest Coverage Ratio} = \frac{\text{Profit Before Interest and Tax (EBIT)}}{\text{Interest Expense}} $$

3. Activity Ratios/Turnover Ratios (Efficiency Ratios):

   • Inventory Turnover Ratio: How efficiently inventory is managed (Cost of Revenue from Operations / Average Inventory). $$ \text{Inventory Turnover Ratio} = \frac{\text{Cost of Revenue from Operations}}{\text{Average Inventory}} \quad (\text{times}) $$ $$ \text{Average Inventory} = \frac{\text{Opening Inventory} + \text{Closing Inventory}}{2} $$ $$ \text{Cost of Revenue from Operations} = \text{Revenue from Operations} - \text{Gross Profit} $$ (or) Opening Inventory + Purchases + Direct Expenses - Closing Inventory
   • Trade Receivables Turnover Ratio: Efficiency in collecting debts. $$ \text{Trade Receivables Turnover Ratio} = \frac{\text{Net Credit Revenue from Operations}}{\text{Average Trade Receivables}} \quad (\text{times}) $$ $$ \text{Average Trade Receivables} = \frac{\text{Opening Trade Receivables} + \text{Closing Trade Receivables}}{2} $$
   • Trade Payables Turnover Ratio: Efficiency in paying creditors. $$ \text{Trade Payables Turnover Ratio} = \frac{\text{Net Credit Purchases}}{\text{Average Trade Payables}} \quad (\text{times}) $$ $$ \text{Average Trade Payables} = \frac{\text{Opening Trade Payables} + \text{Closing Trade Payables}}{2} $$
   • Working Capital Turnover Ratio: Efficiency in using working capital. $$ \text{Working Capital Turnover Ratio} = \frac{\text{Revenue from Operations}}{\text{Working Capital}} \quad (\text{times}) $$ $$ \text{Working Capital} = \text{Current Assets} - \text{Current Liabilities} $$

4. Profitability Ratios:

   • Gross Profit Ratio: Gross Profit on sales. $$ \text{Gross Profit Ratio} = \frac{\text{Gross Profit}}{\text{Revenue from Operations}} \times 100 \quad (%) $$
   • Operating Ratio: Operating cost in relation to revenue from operations. $$ \text{Operating Ratio} = \frac{(\text{Cost of Revenue from Operations} + \text{Operating Expenses})}{\text{Revenue from Operations}} \times 100 \quad (%) $$ $$ \text{Operating Expenses} = \text{Office & Admin. Exp.} + \text{Selling & Distribution Exp.} - \text{Discount Received} $$
   • Operating Profit Ratio: Operating profit in relation to revenue from operations. $$ \text{Operating Profit Ratio} = \frac{\text{Operating Profit}}{\text{Revenue from Operations}} \times 100 \quad (%) $$ (or) 100% - Operating Ratio $$ \text{Operating Profit} = \text{Gross Profit} - \text{Operating Expenses} $$ (or) Net Profit + Non-operating Expenses - Non-operating Incomes
   • Net Profit Ratio: Net Profit on sales. $$ \text{Net Profit Ratio} = \frac{\text{Net Profit after Tax}}{\text{Revenue from Operations}} \times 100 \quad (%) $$
   • Return on Investment (ROI)/Return on Capital Employed (ROCE): Efficiency in generating profit from capital employed. $$ \text{ROI/ROCE} = \frac{\text{Profit Before Interest and Tax (EBIT)}}{\text{Capital Employed}} \times 100 \quad (%) $$ $$ \text{Capital Employed} = \text{Equity} + \text{Long-term Debt} $$ (or) Non-Current Assets + Working Capital

C. Cash Flow Statement (Indirect Method)

Categorizes cash flows into three activities: Operating, Investing, and Financing.

• Operating Activities: Cash flows from the primary revenue-generating activities of the enterprise. $$ \text{Net Profit Before Tax and Extraordinary Items} $$ $$

  • \text{Non-Cash and Non-Operating Expenses (e.g., Depreciation, Amortization, Interest Expense, Loss on Sale of Asset)} $$ $$
  • \text{Non-Operating Incomes (e.g., Interest Income, Dividend Income, Profit on Sale of Asset)} $$ $$ = \text{Operating Profit Before Working Capital Changes} $$ $$
  • \text{Decrease in Current Assets & Increase in Current Liabilities} $$ $$
  • \text{Increase in Current Assets & Decrease in Current Liabilities} $$ $$ = \text{Cash Generated from Operations} $$ $$
  • \text{Income Tax Paid} $$ $$ = \text{Cash Flow from Operating Activities} $$

• Investing Activities: Cash flows from the acquisition and disposal of long-term assets and other investments not included in cash equivalents.

  • Purchase of Fixed Assets (Cash Outflow)
  • Sale of Fixed Assets (Cash Inflow)
  • Purchase of Investments (Cash Outflow)
  • Sale of Investments (Cash Inflow)
  • Interest Received (Cash Inflow)
  • Dividends Received (Cash Inflow)

• Financing Activities: Cash flows that result in changes in the size and composition of the owners' capital (including preference share capital in the case of a company) and borrowings of the enterprise.

  • Issue of Shares/Debentures (Cash Inflow)
  • Buyback of Shares/Redemption of Debentures/Preference Shares (Cash Outflow)
  • Long-term Loans Raised (Cash Inflow)
  • Repayment of Loans (Cash Outflow)
  • Interest Paid (Cash Outflow)
  • Dividends Paid (Cash Outflow)

$$ \text{Net Increase/Decrease in Cash and Cash Equivalents} $$ $$ = \text{Cash Flow from Operating Activities} \pm \text{Cash Flow from Investing Activities} \pm \text{Cash Flow from Financing Activities} $$ $$ \text{Opening Balance of Cash and Cash Equivalents} $$ $$

• \text{Net Increase/Decrease} = \text{Closing Balance of Cash and Cash Equivalents} $$

V. Basic Accounting Concepts and Journalisation (Class 11 Review)

A. Accounting Principles and Concepts (Summary)

• Going Concern: Business will continue indefinitely.
• Consistency: Accounting policies remain consistent over time.
• Accrual Basis: Transactions recorded when they occur, not when cash is exchanged.
• Accounting Entity: Business is separate from its owner.
• Money Measurement: Only transactions quantifiable in money are recorded.
• Accounting Period: Life of business divided into accounting periods.
• Cost Concept: Assets recorded at their acquisition cost.
• Dual Aspect: Every transaction has two-fold effect (Dr. & Cr.).
• Revenue Recognition: Revenue recognized when earned.
• Matching Principle: Expenses matched with revenues they generate.
• Full Disclosure: All material information disclosed.
• Materiality: Only material information reported.
• Prudence/Conservatism: Anticipate no profits, provide for all losses.

B. Golden Rules of Accounting (for Journal Entries)

C. Journal Entries (Illustrative Class 11 transactions)

1. Business Started with Cash: Cash A/c Dr. To Capital A/c (Being business started with cash)

2. Goods Purchased for Cash: Purchases A/c Dr. To Cash A/c (Being goods purchased for cash)

3. Goods Purchased on Credit from Ram: Purchases A/c Dr. To Ram's A/c (Being goods purchased on credit from Ram)

4. Goods Sold for Cash: Cash A/c Dr. To Sales A/c (Being goods sold for cash)

5. Goods Sold on Credit to Shyam: Shyam's A/c Dr. To Sales A/c (Being goods sold on credit to Shyam)

6. Rent Paid: Rent A/c Dr. To Cash A/c (Being rent paid)

7. Salary Paid: Salary A/c Dr. To Cash A/c (Being salary paid)

8. Commission Received: Cash A/c Dr. To Commission Received A/c (Being commission received)

9. Furniture Purchased for Cash: Furniture A/c Dr. To Cash A/c (Being furniture purchased for cash)

10. Cash Withdrawn for Personal Use (Drawings): Drawings A/c Dr. To Cash A/c (Being cash withdrawn for personal use)

11. Depreciation Charged on Machinery: Depreciation A/c Dr. To Machinery A/c (Being depreciation charged on machinery)

12. Bad Debts Written Off: Bad Debts A/c Dr. To Debtor's A/c (Being bad debts written off)

VI. Worked Examples

Example 1: NPO - Subscription Calculation

Question: From the following information, calculate the amount of subscriptions to be shown in the Income and Expenditure Account for the year ended March 31, 2023: Subscriptions received during 2022-23 = ₹80,000 Subscriptions outstanding on March 31, 2022 = ₹10,000 Subscriptions outstanding on March 31, 2023 = ₹12,000 Subscriptions received in advance on March 31, 2022 = ₹5,000 Subscriptions received in advance on March 31, 2023 = ₹7,000

Solution:

1. Identify the Base: Subscriptions received during the year = ₹80,000.
2. Add Outstanding at End: This amount pertains to the current year, so add it. ₹80,000 + ₹12,000 = ₹92,000.
3. Subtract Outstanding at Beginning: This amount relates to the previous year, so subtract it. ₹92,000 - ₹10,000 = ₹82,000.
4. Add Advance at Beginning: This amount was received in the previous year but relates to the current year, so add it. ₹82,000 + ₹5,000 = ₹87,000.
5. Subtract Advance at End: This amount was received in the current year but relates to the next year, so subtract it. ₹87,000 - ₹7,000 = ₹80,000.

Amount to be shown in Income and Expenditure Account = ₹80,000.

Example 2: Partnership - Profit & Loss Appropriation A/c

Question: A and B are partners sharing profits in the ratio of 3:2. Their capitals were A: ₹2,00,000 and B: ₹1,00,000. The Partnership Deed provides for: (i) Interest on Capital at 10% p.a. (ii) B's salary ₹1,000 per month. (iii) Interest on A's drawings ₹500, B's drawings ₹300. The net profit for the year before all adjustments was ₹75,000. Prepare Profit & Loss Appropriation Account.

Solution:

Profit and Loss Appropriation Account for the year ended ...

Calculations:

• Total Interest on Capital = ₹20,000 + ₹10,000 = ₹30,000
• B's Salary = ₹1,000/month $\times$ 12 months = ₹12,000
• Total Interest on Drawings = ₹500 + ₹300 = ₹800
• Net Profit available for appropriation = ₹75,000 + ₹800 (Interest on Drawings) = ₹75,800
• Profit to be distributed = ₹75,800 - ₹30,000 (IOC) - ₹12,000 (B's Salary) = ₹33,800
• A's share of profit = ₹33,800 $\times$ (3/5) = ₹20,280
• B's share of profit = ₹33,800 $\times$ (2/5) = ₹13,520

(Self-correction - calculation error in table, re-checked and updated figures here) Total of expenses: 30,000 + 12,000 = 42,000 Net disposable profit = Net P/L + Int. on Drawings - Expenses = 75,000 + 800 - 42,000 = 33,800 A's share: 33,800 * (3/5) = 20,280 B's share: 33,800 * (2/5) = 13,520

(Re-correcting table entries)

Example 3: Partnership - Revaluation Account

Question: X, Y, and Z are partners sharing profits in the ratio 5:3:2. Z retires, and goodwill is valued at ₹80,000. X and Y decide to share future profits equally. Assets and liabilities are revalued:

• Machinery increased by ₹15,000
• Stock decreased by ₹5,000
• Provision for doubtful debts created for ₹2,000
• Unrecorded asset (Typewriter) found worth ₹3,000 Prepare Revaluation Account and pass journal entry for goodwill adjustment.

Solution:

Revaluation Account

Calculation of Gaining Ratio:

• Old Ratio (X:Y:Z) = 5:3:2
• New Ratio (X:Y) = 1:1
• X's Gain = New Share - Old Share = $1/2 - 5/10 = 5/10 - 5/10 = 0$ (Neither gains nor sacrifices)
• Y's Gain = New Share - Old Share = $1/2 - 3/10 = 5/10 - 3/10 = 2/10$ (Gains 2/10)
• Z's Share (Sacrifice) = $2/10$

Since only Y gains, Y will compensate Z for his share of goodwill.

Journal Entry for Goodwill Adjustment:

Calculation of Z's share of goodwill: Total Goodwill = ₹80,000 Z's share = ₹80,000 $\times$ (2/10) = ₹16,000

Example 4: Company Accounts - Forfeiture & Re-issue

Question: A company forfeited 100 shares of ₹10 each, issued at par, for non-payment of final call of ₹3 per share. Out of these, 60 shares were re-issued as fully paid for ₹8 per share. Pass necessary journal entries.

Solution:

Journal Entries

Calculations:

• Amount received per forfeited share = Face Value - Final Call = ₹10 - ₹3 = ₹7
• Total amount forfeited on 100 shares = $100 \times ₹7 = ₹700$
• Discount allowed on re-issue per share = Face Value - Re-issue Price = ₹10 - ₹8 = ₹2
• Total discount allowed on 60 shares = $60 \times ₹2 = ₹120$
• Capital profit on re-issued shares = Amount forfeited on re-issued shares - Discount allowed on re-issue
  • Amount forfeited on 60 shares = $60 \times ₹7 = ₹420$
  • Capital Profit = ₹420 - ₹120 = ₹300

Example 5: Ratio Analysis - Calculate Current Ratio

Question: From the following information, calculate the Current Ratio: Inventories = ₹50,000 Trade Receivables = ₹25,000 Cash & Cash Equivalents = ₹20,000 Short-term Investments = ₹5,000 Short-term Borrowings = ₹30,000 Trade Payables = ₹20,000 Other Current Liabilities = ₹10,000

Solution:

1. Calculate Current Assets:

   • Inventories = ₹50,000
   • Trade Receivables = ₹25,000
   • Cash & Cash Equivalents = ₹20,000
   • Short-term Investments = ₹5,000
   • Total Current Assets = ₹50,000 + ₹25,000 + ₹20,000 + ₹5,000 = ₹1,00,000

2. Calculate Current Liabilities:

   • Short-term Borrowings = ₹30,000
   • Trade Payables = ₹20,000
   • Other Current Liabilities = ₹10,000
   • Total Current Liabilities = ₹30,000 + ₹20,000 + ₹10,000 = ₹60,000

3. Apply the Current Ratio formula: $$ \text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}} = \frac{₹1,00,000}{₹60,000} = 1.67:1 $$

Current Ratio = 1.67:1

Example 6: Cash Flow Statement - Operating Activities

Question: From the following information, calculate Cash Flow from Operating Activities: Net Profit after Tax = ₹1,20,000 Tax Paid = ₹30,000 Depreciation = ₹15,000 Loss on sale of Furniture = ₹5,000 Goodwill amortised = ₹10,000 Increase in Trade Receivables = ₹8,000 Decrease in Trade Payables = ₹4,000 Increase in Inventories = ₹6,000 Outstanding Expenses (Decrease) = ₹2,000 Prepaid Expenses (Increase) = ₹1,000

Solution:

Calculation of Cash Flow from Operating Activities

VII. Common Mistakes to Avoid

1. Mixing Capital & Revenue Items: Especially in NPOs. Receipts & Payments is cash basis (all items), Income & Expenditure is accrual basis (revenue items, current period only).
2. Incorrect Capital Account Method: Using fixed capital rules for fluctuating accounts or vice-versa results in errors.
3. Ratio Selection: Applying the wrong ratio for a given scenario (e.g., Debt-to-Equity for short-term liquidity).
4. Goodwill Treatment: Confusing premium for goodwill with old goodwill already appearing in books. Applying correct sacrificing/gaining ratio is critical.
5. Revaluation vs. Realisation: Revaluation A/c for reconstitution and Realisation A/c for dissolution. They serve different purposes.
6. Debenture Redemption Requirements: Forgetting DRR and DRI rules, especially their percentages and timing.
7. Cash Flow Classification: Misclassifying an item from one activity to another (e.g., interest paid for operating vs. financing). Interest paid on debentures is a financing activity. Interest received on investments is an investing activity.
8. Ignoring Adjustments: Overlooking opening/closing balances for expenses, incomes, provisions, or stock.
9. Date Awareness: Not considering the date of transaction or retirement/death for calculations (e.g., interest on drawings, share of profit).
10. Calculations Errors: Simple arithmetic mistakes, especially with percentages and ratios.
11. Journal Entry Format: Not correctly identifying Dr. and Cr. accounts, or missing narration.

VIII. Memory Tricks and Mnemonics

• Golden Rules of Accounting:

  • Personal: Debit the Receiver, Credit the Giver (DRCG)
  • Real: Debit What Comes In, Credit What Goes Out (DWCI, DWGO)
  • Nominal: Debit All Expenses & Losses, Credit All Incomes & Gains (DAEL, DAIG)

• NPO Accounts Distinction:

  • R&P (Receipts & Payments): Cash Book Summary (CBS). All cash, all periods, capital + revenue.
  • I&E (Income & Expenditure): P&L for NPO. Accrual, current period, revenue only. Result is Surplus/Deficit.

• Assets & Liabilities in Revaluation:

  • Assets Increase, Liabilities Decrease = Credit Revaluation A/c (AID-CR) (Profit)
  • Assets Decrease, Liabilities Increase = Debit Revaluation A/c (ADL-DR) (Loss)

• Goodwill Valuation Methods:

  • SA C: Super Average Capitalisation (or SAC: Sacrificing Capital for that concept)

• Cash Flow Activities Hierarchy:

  • Operating, Investing, Financing (OIF - order for presentation)

• Debenture Redemption Investment (DRI): April 30th, 15% of maturing value. Think "A30-15".

IX. Previous Year Question Patterns (General Trends)

CUET accountancy questions assess both conceptual understanding and computational skills. Common patterns include:

1. Direct Formula Application: Often seen in Ratio Analysis or basic partnership calculations (IOC, IOD).
2. Journal Entries: Testing the understanding of specific transactions like forfeiture & re-issue, depreciation, goodwill adjustment, or opening entries for NPOs.
3. Preparation of Specific Accounts/Statements:
   • Extracts or full Income & Expenditure A/c or P&L Appropriation A/c.
   • Revaluation A/c or Realisation A/c.
   • Portions of Cash Flow Statement (e.g., only Operating Activities).
4. Missing Figures: Questions where one or more figures are missing from a statement or calculation block, requiring backward calculation.
5. Conceptual MCQs: Based on accounting principles, definitions, characteristics of company/partnership, differences between capital and revenue items, rules for DRR/DRI.
6. Ratio Interpretation: Given a ratio, comment on its implications (e.g., "high current ratio means...").
7. Treatment of Specific Items: How a specific item (e.g., Legacy, Subscription, Securities Premium, Workmen Compensation Fund) is treated under different scenarios (NPO, Partnership, Company).
8. Match the Columns: Matching concepts with definitions or formulas.
9. Assertion and Reasoning: Testing logical understanding of accounting principles.

Focus areas for PYQs:

• NPO: Subscription calculation, treatment of specific funds, preparation of Income & Expenditure A/c.
• Partnership: P&L Appropriation, goodwill valuation & treatment, sacrificing/gaining ratio, revaluation account.
• Company Accounts: Forfeiture/re-issue of shares (especially with premium), issue of debentures (discount/premium/redemption terms), DRR/DRI concepts.
• Ratio Analysis: All major categories, especially liquidity, solvency, and profitability.
• Cash Flow Statement: Classification of items and calculation of cash flow from each activity.

X. Revision Checklist

Not-for-Profit Organisations

• Receipts & Payments Account vs. Income & Expenditure Account (format, nature, items)
• Subscription calculation (all adjustments: O/S, Advance, Opening, Closing)
• Consumption of Consumable Stores calculation (Opening/Closing Stock, Creditors)
• Treatment of specific items: Donations (General/Specific), Legacies, Entrance Fees, Sale of Old Assets, Funds (Sports Fund, Building Fund, etc.)
• Balance Sheet (Opening & Closing)

Partnership Accounts

• Partnership Deed provisions
• Profit & Loss Appropriation Account (format, items, calculations: IOC, IOD, Salary, Commission)
• Fixed vs. Fluctuating Capital Accounts
• Goodwill: Meaning, Factors affecting, Methods of Valuation (Average, Super, Capitalisation)
• Goodwill: Accounting Treatment on change in PSR, admission, retirement/death
• Sacrificing & Gaining Ratios
• Revaluation Account (entries, profit/loss distribution)
• Treatment of Reserves & Accumulated Profits/Losses on reconstitution
• Admission of a Partner (New PSR, Sacrificing Ratio, Revaluation, Capital adjustments)
• Retirement/Death of a Partner (Gaining Ratio, Share of Profit till death, Executor's A/c)
• Dissolution of Partnership (Realisation A/c, Partner's Loan, Partner's Capital, Payment Priority)

Company Accounts

• Types of Share Capital (Authorised, Issued, Subscribed, Called-up, Paid-up, Reserve Capital)
• Journal entries for Issue of Shares (at Par, Premium, Discount - if allowed)
• Calls in Arrears & Calls in Advance (interest)
• Forfeiture of shares (at Par, Premium - if collected/not collected)
• Re-issue of forfeited shares (at Par, Premium, Discount) & Capital Reserve transfer
• Journal entries for Issue of Debentures (at Par, Premium, Discount, different redemption terms)
• Concepts of Debenture Redemption Reserve (DRR) & Debenture Redemption Investment (DRI)
• Basic format of Company Balance Sheet & Statement of P&L (Schedule III)

Analysis of Financial Statements

• Objectives & Limitations of Financial Analysis
• Comparative & Common Size Statements (format, purpose, calculation of percentages)
• Ratio Analysis: All categories (Liquidity, Solvency, Activity, Profitability)
  • Current Ratio, Quick Ratio
  • Debt to Equity Ratio, Total Assets to Debt Ratio, Proprietary Ratio, Interest Coverage Ratio
  • Inventory Turnover Ratio, Trade Receivables Turnover Ratio, Trade Payables Turnover Ratio, Working Capital Turnover Ratio
  • Gross Profit Ratio, Operating Ratio, Operating Profit Ratio, Net Profit Ratio, ROI/ROCE
• Cash Flow Statement (Indirect Method only)
  • Classification of items into Operating, Investing, Financing Activities
  • Calculation of cash flow from each activity
  • Treatment of non-cash/non-operating items, working capital changes

Class 11 Basics

• Accounting principles & concepts
• Golden rules of accounting & basic journal entries
• Basic depreciation concepts

XI. Last-Day Strategy for CUET Accountancy

1. Prioritise Formulas: Do a quick scan of all formula sheets. Write down the most frequently used/complex ones to mentally reinforce. Don't try to learn new formulas.
2. Review Key Journal Entries: Focus on high-frequency transactions like NPO subscriptions, goodwill adjustments, share forfeiture/re-issue, and debenture issue/redemption.
3. Focus on Concepts: Read through conceptual definitions (e.g., types of capital, differences between accounts, ratio interpretations). MCQs often target these.
4. Avoid New Practice Problems: Do not attempt to solve new, complex problems that might consume too much time or lead to frustration if you can't solve them.
5. Briefly Scan Previous Mistakes: Go through any personal error logs or marked questions where you made mistakes during practice. Understand why you erred.
6. Quick Glance at Formats: Review the formats of key statements like P&L Appropriation A/c, Revaluation A/c, and the structure of company financial statements.
7. Relax and Trust Your Preparation: A calm mind performs best. Get adequate sleep. Avoid last-minute panic.
8. Gather Essentials: Ensure you have your admit card, ID proof, and suitable writing instruments ready.