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ISC Class XII Notes 2024 : Accounts Mind Maps

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Yay Ig
Stanes ICSE School, Coimbatore
XII Commerce

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Interest on drawings Profits of the partners Interest on capital Salary and commission Transfer of profits to general reserve Loss of the partners Capital accounts remain fixed. All the entries to be made in partners' current accounts. Capital Account of Partners gC api tal M eth od First Level Second Level Trace the Mind Map Third Level All the entries to be made in capital accounts of partners. Only one account is maintained for each partner i.e., Capital Account. Fluctuat in Guarantee can be given by a partner Guarantee can be given by all the partners Association of two or more persons Lawful business is allowed Agreement may be oral or written Sharing of profits and losses Unlimited liability of partners Business can be carried on by all or any one acting for all "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". Section 4 of Indian Partnership Act, 1932 Past adjustments are required to be done to rectify the following commissions and errors while recording a transaction : Salary paid to the partners Interest on drawings Interest on capital Commission paid to the partners Interest on partner's loan res Featu n Guarantee of Profits Partnership Past Adjustments Fundamentals of Partnership Preparation of Account Profit & Loss Appropriation Account (It shows how the profits are distributed among partners) Profits to be shared equally No interest on capital to be paid No interest on drawings to be charged Interest on partners' loan @ 6 % p.a. Salary, commission, etc. not to be paid to partners If a partner derives any profit from any transaction of the firm then he should pay profit to the firm If the partner carries on the business of same nature then he or she needs to pay profit to the firm i ng Mea n Partnership Deed o D e fin iti The document which contains the terms of agreement between the partners is called a Partnership deed. Name and address of the firm and its main business Name and address of all partners Amount of capital contributed by each partner Principal Place of Business Rights and Duties of Partners Duration of Partnership Accounting period and date of commencement of the partnership Nature of business Interest on capital Interest on drawings Profit sharing ratio Methods of settlement of disputes among partners Oswaal ISC Mind Maps, ACCOUNTS, Class-XII 1 weighted average profit weighted profit Average Profit Method Self Generated Goodwill res fecting ors af Fact aluation its V u at Fe erage Pro f it talisati on of Super Profit Capi Types Cap italisation of Av Capitalisation Method Methods of valuation Purchased Goodwill es First Level Second Level Trace the Mind Map t ur Fea Third Level 2 Oswaal ISC Mind Maps, ACCOUNTS, Class-XII All the reserves and accumulated profits are distributed among old partners in their old profit sharing ratio by transferring them to their Capital Accounts. of a Partner Admission Preparation of Revaluation Account New Partner jus Ad Premium for goodwill is paid privately. Goodwill is brought in cash and is retained in business. Goodwill is brought in kind. Goodwill is brought in cash but withdrawn by old partners. Goodwill is not brought by new partner while it is adjusted from new partner's capital. Goodwill already exists in the account. Hidden Goodwill. On the basis of new partner's capital, On the basis of adjusted capital of old partners. Decrease in Assets Increase in Liabilities Unrecorded Liability Decrease in Liabilities Increase in Assets Unrecorded Assets ghts er Ri cr ifi ci atio Second Level Trace the Mind Map First Level Third Level Old Share of Profit New Share of Profit Old Profit Sharing Ratio Sacrificing Ratio New Share of Profit Old Share of Profit ng R it of Ending the existing partnership agreement, Sharing ratio of profit and loss changed, Goodwill is valued, Revaluation of assets and liabilities. Adjustment of reserves, accumulated profits and losses Right to share the future profit of the firm. Right to share the assets of the firm. Right to inspect the books of the firm. Pr Ne w /H His de on his/ her Admission be ma nt to tme Sa Oswaal ISC Mind Maps, ACCOUNTS, Class-XII 3 4 Oswaal ISC Mind Maps, ACCOUNTS, Class-XII Oswaal ISC Mind Maps, ACCOUNTS, Class-XII 5 6 Oswaal ISC Mind Maps, ACCOUNTS, Class-XII Oswaal ISC Mind Maps, ACCOUNTS, Class-XII 7 First Level Second Level Trace the Mind Map Investment is to be made by only those companies who are required to create DRR Atleast 15% of the nominal value of the debentures is to be invested. Debenture Redemption Investment Unlisted companies must transfer atleast 10% amount of the face value of debentures to be redeemed to DRR . Listed companies do not need to transfer amount to DRR. Third Level Methods of Redemption of Debentures um Out of Capital mp S a Lu n i t n me Pay Sources Redemption of Debentures Debenture Redemption Reserve Here every year some part of the debentures are redeemed by draw of lot. All debentures are redeemed on the specified date on their maturity. No amount is transferred to DRR The companies which are exempted from creating DRR can only redeem debentures out of capital. It means a company should transfer 100 percent of the face value of the redeemable debentures to DRR out of the surplus available for payment of dividend. 8 Oswaal ISC Mind Maps, ACCOUNTS, Class-XII Oswaal ISC Mind Maps, ACCOUNTS, Class-XII 9 Objec Types Financial Statement Analysis Tools Types Vertical analysis of income statement, Revenue from operations is taken as 100 and values of other items are expressed as percentage of revenue from operations, It shows revenues and expenses in absolute values. tives ing an Me Meaning Obj ectives pa Vertical analysis of balance sheet Total amount of assets and liabilities are considered as 100% and all other items are shown as the part of these 100% Shows assets, equity and liabilities in absolute values. Assets and liabilities as percentage of total assets or total equity and liabilities. To analyse the change in each item To determine the trend of different items To access the efficiency of business Absolute figures are written of two years and then percentage for change between them is taken into consideration Comparative Statement C om tiv e Sheet Based on historical records Affected by personal judgement Ignores qualitative factors Ignores price level change Financial statements are based on accounting concept so, do not reflect the financial position of the business Data presentation becomes comparable It indicates trends Indicates strengths and weakness Forecasting and planning The comparative study of the items of financial statements for two or more years. First Level Second Level Trace the Mind Map Third Level Horizontal analysis of the net income or net loss of the business. It shows: (i) To analyze revenue and expenses for two or more years, (ii) Change in revenue and expenses in absolute values, (iii) Percentage change, The study of the trend of the same items in two or more balance sheets of the same business. It finds the percentage change: Absolute Change 100 % Change = Amount of Previous Year Analysis of financial Statements is a systematic process of critical examination of the financial information in the financial statements to take various decisions. ns t io ita m Li 10 Oswaal ISC Mind Maps, ACCOUNTS, Class-XII ra Oswaal ISC Mind Maps, ACCOUNTS, Class-XII 11 12 Oswaal ISC Mind Maps, ACCOUNTS, Class-XII

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