ACCOUNTANCY_055

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 Part A: Accounting for Partnership Firms and Companies
Unit 1: Accounting for Partnership Firms
Units/Topics Learning Outcomes
• 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: meaning, nature, factors affecting
and methods of valuation - average profit,
super profit and capitalization.
Note: Interest on partner's loan is to be treated as a
charge against profits.
Goodwill: meaning, factors affecting, need for
valuation, methods for calculation (average profits,
super profits and capitalization), adjusted through
partners capital/ current account.
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, accumulated profits
and losses. 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 re-
assessment of liabilities, treatment of
reserves, accumulated profits and losses,
After going through this Unit, the students will be
able to:
• 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 revaluation 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

adjustment of capital accounts and
preparation of capital, current account and
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, losses
and reserves, adjustment of capital accounts
and preparation of capital, current account
and 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)).
Note:
(i) If the realized value of tangible assets is not given it
should be considered as realized at book value itself.
(ii) If the realized value of intangible assets is not
given it should be considered as nil (zero value).
(ii) In case, the realization expenses are borne by a
partner, clear indication should be given regarding the
payment thereof.
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 capital, current
account and 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, losses
and reserves on retirement / death of a
partner and capital adjustment.
• develop the skill of calculation of deceased
partner's share till the time of his death and
prepare deceased partner's and executor's
account.
• discuss the preparation of the capital
accounts of the remaining partners and the
balance sheet of the firm after retirement /
death of a partner.
• 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
Units/Topics Learning Outcomes
Accounting for Share Capital
• Features and types of companies.
• Share and share capital: nature and types.
After going through this Unit, the students will be
able to:
• state the meaning of share and share capital

• 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), Sweat Equity.
• Accounting treatment of forfeiture and re-
issue of shares.
• Disclosure of share capital in the Balance
Sheet of a company.
Accounting for Debentures
• Debentures: Meaning, types, 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 (concept of TDS is
excluded). 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)
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.
• describe the presentation of share capital in
the balance sheet of the company as per
schedule III part I of the Companies Act
2013.
• 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.
• understand the concept of collateral security
and its presentation in balance sheet.
• develop the skill of calculating interest on
debentures and its accounting treatment.
• state the meaning of redemption of
debentures.
Part B: Financial Statement Analysis
Unit 4: Analysis of Financial Statements
Units/Topics Learning Outcomes
Financial statements of a Company:
Meaning, Nature, Uses and importance of financial
Statement.
Statement of Profit and Loss and Balance Sheet in
After going through this Unit, the students will be
able to:
• develop the understanding of major headings
and sub-headings (as per Schedule III to the

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: Meaning,
Significance Objectives, importance and
limitations.
• Tools for Financial Statement Analysis:
Comparative statements, common size
statements, Ratio analysis, Cash flow
analysis.
• Accounting Ratios: Meaning, Objectives,
Advantages, 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. Debt to Capital
Employed Ratio.
• Activity Ratios: Inventory Turnover Ratio,
Trade Receivables Turnover Ratio, Trade
Payables Turnover Ratio, Fixed Asset
Turnover Ratio, Net Asset Turnover Ratio
and Working Capital Turnover Ratio.
• Profitability Ratios: Gross Profit Ratio,
Operating Ratio, Operating Profit Ratio, Net
Profit Ratio and Return on Investment.
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 skill of preparation of preparation
of comparative and common size statement,
understand their uses and difference
between the two.
• 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 and others.
• 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
Units/Topics Learning Outcomes
• Meaning, objectives Benefits, Cash and Cash
Equivalents, Classification of Activities and
preparation (as per AS 3 (Revised) (Indirect
Method only)
After going through this Unit, the students will
be able to:
• state the meaning and objectives of cash flow
statement.
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.
• 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. 

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CBSE Class 12 Accountancy (055) Detailed Notes for Board Exam 2025

Part A: Accounting for Not-for-Profit Organizations, Partnership Firms, and Companies

Chapter 1: Accounting for Not-for-Profit Organizations

Meaning and Features

• Organizations such as charities, clubs, schools, hospitals, and religious institutions work for social welfare and not for profit.
• They receive funds through donations, subscriptions, grants, and legacies.
• They maintain records to check income, expenditure, and financial position.

Financial Statements

1. Receipts and Payments Account

   • A summary of cash and bank transactions during an accounting period.
   • Includes all receipts and payments, whether revenue or capital in nature.

2. Income and Expenditure Account

   • Similar to a Profit and Loss Account but only records revenue receipts and expenses.
   • Prepared on the accrual basis.
   • Adjustments such as outstanding and prepaid expenses, accrued and unearned incomes are made.

3. Balance Sheet

   • Shows assets, liabilities, and capital funds at the end of the year.
   • Capital fund = Previous year’s capital fund + Surplus – Deficit.

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Chapter 2: Accounting for Partnership Firms

Partnership

• A partnership is a business where two or more persons come together to share profits and losses.
• Governed by the Partnership Act, 1932.

Types of Partnership Accounts

1. Fixed and Fluctuating Capital Accounts

   • Fixed Capital Account: Only capital changes when partners introduce or withdraw capital.
   • Fluctuating Capital Account: Capital balance changes every year based on profits, drawings, etc.

2. Goodwill Valuation

   • Goodwill represents a firm's reputation and is calculated during admission, retirement, or death of a partner.
   • Methods:
     • Average Profit Method
     • Super Profit Method
     • Capitalization Method

3. Admission of a New Partner

   • New partner brings capital and goodwill to the firm.
   • Old partners compensate through Sacrificing Ratio.

4. Retirement & Death of a Partner

   • Retiring partner's share of goodwill, revaluation profit/loss, and accumulated reserves is paid.
   • In case of death, the amount is transferred to the deceased partner’s legal representatives.

5. Dissolution of a Firm

   • Settlement of accounts among partners after closing business.
   • Assets sold, liabilities paid, and remaining balance distributed among partners in capital ratio.

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Chapter 3: Accounting for Companies

Issue of Shares

• Shares represent ownership in a company and can be issued at par, premium, or discount.
• Types of Shares:
  1. Equity Shares – No fixed dividend, voting rights.
  2. Preference Shares – Fixed dividend, no voting rights.

Forfeiture and Reissue of Shares

• If a shareholder fails to pay the installment, the shares are forfeited and can be reissued at a discount.

Issue of Debentures

• Debentures are loans taken by a company from the public, payable with interest.
• Types:
  • Secured & Unsecured Debentures
  • Convertible & Non-Convertible Debentures

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Part B: Analysis of Financial Statements

Chapter 4: Financial Statements of a Company

Components

1. Balance Sheet – Shows assets and liabilities in a structured format.
2. Statement of Profit & Loss – Reports profits or losses made by the company.
3. Cash Flow Statement – Tracks cash inflows and outflows.

Adjustments in Financial Statements

• Outstanding expenses, prepaid expenses, accrued income, unearned income.
• Depreciation, bad debts, provision for doubtful debts.

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Chapter 5: Accounting Ratios

Types of Ratios

1. Liquidity Ratios – Measure the company’s ability to meet short-term obligations.

   • Current Ratio = Current Assets / Current Liabilities
   • Quick Ratio = Quick Assets / Current Liabilities

2. Solvency Ratios – Measure long-term financial stability.

   • Debt-Equity Ratio = Total Debt / Shareholder’s Equity
   • Interest Coverage Ratio = EBIT / Interest

3. Profitability Ratios – Measure earning efficiency.

   • Net Profit Ratio = Net Profit / Net Sales × 100
   • Gross Profit Ratio = Gross Profit / Net Sales × 100

4. Activity Ratios – Show how efficiently assets are used.

   • Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
   • Debtors Turnover Ratio = Net Credit Sales / Average Debtors

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Chapter 6: Cash Flow Statement

Meaning and Importance

• It shows cash inflows and outflows under three activities:
  1. Operating Activities – Cash from core business operations.
  2. Investing Activities – Cash from buying/selling assets.
  3. Financing Activities – Cash from loans, issuing shares, debentures.

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हिंदी में सम्पूर्ण नोट्स

भाग A: गैर-लाभकारी संगठनों, साझेदारी फर्मों और कंपनियों के लिए लेखांकन

1. गैर-लाभकारी संगठनों के लिए लेखांकन

• गैर-लाभकारी संगठन लाभ के बजाय सामाजिक कल्याण के लिए कार्य करते हैं।
• उनके वित्तीय विवरण हैं:
  • रसीद और भुगतान खाता – सभी नकद लेन-देन।
  • आय और व्यय खाता – राजस्व लेन-देन दिखाता है।
  • तुलन पत्र – संपत्तियाँ और देनदारियाँ दिखाता है।

2. साझेदारी फर्मों के लिए लेखांकन

• साझेदारी व्यवसाय दो या अधिक व्यक्तियों द्वारा किया जाता है।
• पूंजी खाता स्थिर और परिवर्ती हो सकता है।
• साझेदार की प्रवेश, सेवानिवृत्ति और मृत्यु पर लेखांकन किया जाता है।
• गुडविल का मूल्यांकन आवश्यक होता है।

3. कंपनियों के लिए लेखांकन

• कंपनियाँ शेयर और डिबेंचर जारी कर पूंजी जुटाती हैं।
• शेयरों को सम, प्रीमियम, या छूट पर जारी किया जा सकता है।

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भाग B: वित्तीय विवरणों का विश्लेषण

4. कंपनी के वित्तीय विवरण

• तुलन पत्र, लाभ-हानि खाता, नकदी प्रवाह विवरण आवश्यक होते हैं।

5. लेखांकन अनुपात

• तरलता, सॉल्वेंसी, लाभप्रदता, गतिविधि अनुपात कंपनी के प्रदर्शन को दर्शाते हैं।

6. नकदी प्रवाह विवरण

• संचालन, निवेश, वित्तपोषण गतिविधियाँ के अंतर्गत नकदी प्रवाह का विश्लेषण किया जाता है।

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