Class 12 Exam  >  Class 12 Notes  >  How to prepare for Accountancy? Step by Step Guide

How to prepare for Accountancy? Step by Step Guide - Class 12 PDF Download

The Accountancy subject of Commerce aims at teaching the art of recording, classifying and summarizing in a significant manner. In terms of money, student will learn transactions and events which are financial in character and the interpretation of the results of these transactions and events. Also, students will get familiar with the reasons for the successes and failures of various businesses. Accountancy is a practical subject which automatically means that it requires a lot of practice. So you have to practice really good and on a regular basis if you want to score good in this subject. But, you must also learn to study it smart by optimally utilising your time. Accountancy is that commerce subject which is very similar to mathematics. It has many fixed rules, standard procedures, heavy calculations, and several adjustments. Accountancy requires preparations on a regular, if not daily basis, for the first couple of months into the academic year.

Here are some tips to guide you through the preparation of Accountancy for Class 11 and Class 12:

How to prepare for Accountancy? Step by Step Guide - Class 12

Accountancy for Class 12 (XII) - CBSE and NCERT Curriculum

Includes 95 docs, 136 videos & 20 tests 

1. Understand the Theoretical concepts:

Before moving onto the complex and difficult part of Accounts, begin by studying the theory of concepts from NCERT Textbooks for Accountancy in order to have a clear understanding. Clear all your doubts from NCERT Solutions for Accountancy. The things that need to be focused on initially include various definitions, terminologies with their meanings, conceptual explanations, applications and examples of the concepts. You need to understand the logic and reasoning behind every concept. You should pay attention to the features, advantages and disadvantages of various topics as these questions are asked frequently in the exams.

NCERT Textbooks and solutions for Accountancy

Part A - Company Accounts and Analysis of Financial Statements

Chapter 1 - Accounting for Share Capital

Chapter 2 - Issue and Redemption of Debentures

Chapter 3 - Financial Statements of a Company

Chapter 4 - Analysis of Financial Statements

Chapter 5 - Accounting Ratios

Chapter 6 - Cash Flow Statements

Part B - Partnership Accounts

Chapter 1 - Accounting for Partnerships : Basic Concepts

Chapter 2 - Reconstitution of a Partnership Firm : Admission of a Partner

Chapter 3 - Reconstitution of a Partnership Firm : Retirement/Death of a Partner

Chapter 4 - Dissolution of a Partnership Firm

2. Learn formulas and solve Accounting questions:

Accountancy includes a lot of formulas and these formulas should be well understood and not just crammed. You need to know how each formula is derived and the logic behind it. Unless you have full understanding of the basics of the formulas, you will not be able to solve questions with accuracy. Once you understand the formulas prepare a chapter wise formula sheet and revise them regularly. After the basics and formulas are clear, start solving accounting problems. Start with the simple ones and slowly move further with complex problems. These accounting problems will have terms and concepts that have been explained in the theoretical part of the chapter.

3. Practice a lot:

You need to be completely thorough with all the Accountancy concepts whether theoretical or mathematical. This needs a lot of practice to achieve. Practice with the questions, problems, and adjustments that are available at the end of every chapter of the textbook. This will help you gain confidence in the subject and also give a nice idea about the kind of questions that can be asked in the exam.

4. Never skip Revision:

Once you have completed the entire syllabus of Accountancy, start with the revision. Revision is very very important as it increases your retention ability and you will never forget the formulas and the theoretical concepts that you revised. Start revising from all the notes you prepared, practice registers and formula sheets made by you while studying. You must dedicate a good amount of time to revision. Allocate the time available between all the chapters and start solving those questions which you found difficult to solve while practicing. Revision is sure to take you to success.

5. Evaluation with Previous year papers and sample papers:

It is highly recommended to analyse past year papers of Accountancy. The previous year papers for accountancy will help you to know the pattern of the exam and also the topics and questions that are frequently asked and emphasized. Attempting previous year papers also help you managing your time during the examination. You will gain a lot of confidence with this as you will be able to practice according to the pattern of questions asked.

Finally, evaluate yourself with sample papers. Sample papers will keep you updated with any changes in the question paper format and other changes.

Link to Previous Year papers and sample papers for Accountancy

Syllabus for Class 11 Accountancy:

Total marks - 90

Duration - 3 hours 

Units

 

Marks

Part A: Financial Accounting ‒ I

 

Unit ‒ 1

Theoretical Framework

15

Unit ‒ 2

Accounting Process

40

  

55

Part B: Financial Accounting ‒ II

 

Unit ‒ 3

Financial Statements of Sole Proprietorship from Complete and Incomplete Records

25

Unit ‒ 4

Computers in Accounting

10

  

35

Part C: Project Work

10

Detailed syllabus for each unit:

Part A: Financial Accounting - I

Unit 1: Theoretical Framework

Introduction to Accounting

• Accounting - concepts objectives, advantages and limitations, types of accounting information; users of accounting information and their needs. Qualitative Characteristics of Accounting Information. Role of Accounting in Business.

• Basic Accounting Terms- Business Transaction, Capital, Drawings. Liabilities (Non Current and Current). Assets (Non Current, Current); Fixed assets (Tangible and Intangible), Expenditure (Capital and Revenue), Expense, Income, Profit, Gain, Loss, Purchase, Sales, Goods, Stock, Debtor, Creditor, Voucher, Discount (Trade discount and Cash Discount)

Theory Base of Accounting

  • Fundamental accounting assumptions: GAAP: Concept
  • Business Entity, Money Measurement, Going Concern, Accounting Period, Cost Concept, Dual Aspect, Revenue Recognition, Matching, Full Disclosure, Consistency, Conservatism, Materiality and Objectivity
  • System of Accounting. Basis of Accounting: cash basis and accrual basis
  • Accounting Standards: Need, benefits, limitations, applicability; IFRS- Need
  • Goods and Services Tax (GST): Characteristics and Objective.

Unit 2: Accounting Process

Recording of Business Transactions 

  • Voucher and Transactions: Source documents and Vouchers, Preparation of Vouchers, Accounting

Equation Approach: Meaning and Analysis, Rules of Debit and Credit.

Recording of Transactions: Books of Original Entry-

  • Journal
  • Special Purpose books:
  • Cash Book: Simple, cash book with bank column and petty cash book
  • Purchases book
  • Sales book
  • Purchases return book
  • Sales return book
  • Ledger: Format, Posting from journal and subsidiary books, Balancing of accounts

Bank Reconciliation Statement:

  • Need and preparation, Bank Reconciliation Statement with Adjusted Cash Book

Depreciation, Provisions and Reserves. 

  • Depreciation: Concept, Features, Causes, factors
  • Other similar terms: Depletion and Amortisation
  • Methods of Depreciation:
    • Straight Line Method (SLM)
    • Written Down Value Method (WDV)

Note: Excluding change of method

Difference between SLM and WDV; Advantages of SLM and WDV

Accounting treatment of depreciation

i. Charging to asset account

ii. Creating provision for depreciation/accumulated depreciation account

iii. Treatment for disposal of asset

Provisions and Reserves: Difference

Types of Reserves:

i. Revenue reserve

ii. Capital reserve

iii. General reserve

iv. Specific reserve

v. Secret Reserve

  • Difference between capital and revenue reserve Accounting for Bills of Exchange.
  • Bill of exchange and Promissory Note: Definition, Specimen, Features, Parties.
  • Difference between Bill of Exchange and Promissory Note
  • Terms in Bill of Exchange:

i. Term of Bill

ii. Accommodation bill (concept)

iii. Days of Grace

iv. Date of maturity

v. Discounting of bill

vi. Endorsement of bill

vii. Bill after due date

viii. Negotiation

ix. Bill sent for collection

x. Dishonour of bill

xi. Retirement of bill

xii. Renewal of bill

Accounting Treatment

Note: excluding accounting treatment for accommodation bill Trial balance and Rectification of Errors •Trial balance: objectives and preparation

(Scope: Trial balance with balance method only)

Errors: types-errors of omission, commission, principles, and compensating; their effect on Trial Balance.

Detection and rectification of errors; preparation of suspense account.

Part B: Financial Accounting - II

Unit 3: Financial Statements of Sole Proprietorship from Complete and Incomplete Records

Financial Statements

Receipts and Expenditure: Revenue receipts and capital receipts. Capital expenditure, Revenue expenditure and deferred expenditure

Objective and Importance.

Trading and Profit and Loss Account: Gross Profit,

Operating profit and net profit. Preparation.

Balance Sheet: need, grouping and marshalling of assets and liabilities. Preparation.

Adjustments in preparation of financial statements with respect to closing stock, outstanding expenses, prepaid expenses, accrued income, income received in advance, depreciation, bad debts, provision for doubtful debts, provision for discount on debtors, Abnormal loss, Goods taken for personal use/staff welfare, interest on capital and managers commission.

Preparation of Trading and Profit and Loss account and

Balance Sheet of a sole proprietorship with adjustments.

Incomplete Records

Features, Reasons and Limitations.

Ascertainment of profit/loss by statement of affairs method.

Difference between Accounts from incomplete records and Statement of Affairs. Preparation of Trading , Profit and Loss account and Balance Sheet.

Unit 4: Computers in Accounting

• Introduction to computer and accounting information system {AIS}: Introduction to computers (elements, capabilities, limitations of computer system)

• Introduction to operating software, utility software and application software. Introduction to accounting information system (AIS) as a part of Management Information System.

• Automation of accounting process: meaning

• Stages in automation:

(a) Accounting process in a computerised environment; comparison between manual accounting process and computerised accounting process,

(b) Sourcing of accounting software; kinds of software: readymade software; customised software and tailor-made software; generic considerations before sourcing accounting software

(c) creation of account groups and hierarchy

(d) generation of reports - trial balance, profit and loss account and balance sheet.

Scope:

(i) The scope of the unit is to understand accounting as an information system for the generation of accounting information and preparation of accounting reports.

(ii) It is presumed that the working knowledge of any appropriate accounting software will be given to the students to help them learn basic accounting operations on computers.

Part C: Project Work (Any One)

1. Collection of source documents, preparation of vouchers, recording of transactions with the help of vouchers.

2. Preparation of Bank Reconciliation Statement with the given cash book and the pass book with twenty to twenty five transactions.

3. Comprehensive project of any sole proprietorship business. This may state with journal entries and their ledgering, preparation of Trial balance. Trading and Profit and Loss Account and Balance Sheet. Expenses, incomes and profit (loss), assets and liabilities are to be depicted using pie chart / bar diagram.

Syllabus for Class 12 Accountancy:

Total marks - 80

Duration  - 3 hours

Units

 

Marks

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

 

Unit ‒ 1

Financial Statements of Not-for-Profit Organizations

10

Unit ‒ 2

Accounting for Partnership Firms

35

Unit ‒ 3

Accounting for Companies

15

  

60

Part B: Financial Statement Analysis

 

Unit ‒ 4

Analysis of Financial Statements

12

Unit ‒ 5

Cash Flow Statement

8

  

20

  

 

Part C: Project Work

20

 

Project will include:

 

 

Project File

4 Marks

 

 

Written Test

12 Marks (one hour)

 

 

Viva Voice

4 Marks

 

OR

Part B: Computerized Accounting

 

 

Unit 4. Computerized Accounting

20

 

 

 

Part C: Practical Work

20

 

Practical work will include

 

 

Practical File

4 Marks

 

 

Practical Examination

12 Marks (one hour)

 

 

Viva Voice’

4 Marks

 

Detailed syllabus for each unit:

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.

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.

Note: Interest on partner's loan is to be treated as a charge against profits.

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, executor’s account and preparation of balance sheet.
  • Dissolution of a 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) The realized value of each asset must be given at the time of dissolution.

(ii) In case, the realization expenses are borne by a partner, clear indication should be given regarding the payment thereof.

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 shares, private placement of shares, Employee Stock Option Plan (ESOP). 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 re-issue of shares.
  • Disclosure of share capital in company’s Balance Sheet.

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.
  • Redemption of debentures: Lump sum, draw of lots and purchase in the open market (excluding ex interest and cum-interest). Creation of Debenture Redemption Reserve.

Conversion method

Note: Related sections of the Indian Companies Act, 2013 will apply.

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 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: Objectives, importance and limitations.
  • Tools for Financial Statement Analysis: Comparative statements, common size statements, cash flow analysis, ratio analysis.
  • Accounting Ratios: 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.

Note: Net Profit Ratio is to be calculated on 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 investment, 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.

Project Work

Refer to the CBSE guidelines 

OR

Part B: Computerised Accounting

Unit 4: Computerised Accounting

Overview of Computerised Accounting System.

  • Introduction: Application in Accounting.
  • Features of Computerised Accounting System.
  • Structure of CAS.
  • Software Packages: Generic; Specific; Tailored.

Accounting Application of Electronic Spreadsheet.

Concept of electronic spreadsheet.

Features offered by electronic spreadsheet.

Application in generating accounting information - bank reconciliation statement; asset accounting; loan repayment of loan schedule, ratio analysis.

Data representation - graphs, charts and diagrams.

Using Computerized Accounting System.

Steps in installation of CAS, codification and Hierarchy of account heads, creation of accounts.

Data: Entry, validation and verification.

Adjusting entries, preparation of balance sheet, profit and loss account with closing entries and opening entries. Need and security features of the system.

Database Management System (DBMS)

Concept and Features of DBMS.

DBMS in Business Application.

Generating Accounting Information - Payroll.

Part C: Practical Work

Refer to the CBSE guidelines.

Similarly, Prepare For Other Subjects :

How to prepare Reasoning for Business Studies?
How to prepare Reasoning for English Exam?
How to prepare for Economics?

The document How to prepare for Accountancy? Step by Step Guide - Class 12 is a part of Class 12 category.
All you need of Class 12 at this link: Class 12

FAQs on How to prepare for Accountancy? Step by Step Guide - Class 12

1. How do I prepare for Accountancy in Class 12?
Ans. To prepare for Accountancy in Class 12, follow these steps: 1. Understand the syllabus: Start by thoroughly understanding the accountancy syllabus prescribed by your educational board. 2. Create a study schedule: Plan your study time effectively, allocating specific slots for each topic or chapter. Make sure you set aside enough time for practice and revision. 3. Gather study materials: Collect the necessary textbooks, reference books, previous year question papers, and other study materials to aid your preparation. 4. Focus on conceptual clarity: Accountancy requires a strong foundation of concepts. Spend time understanding the basic principles and concepts before moving on to more complex topics. 5. Practice numerical problems: Accountancy involves calculations and numerical problem-solving. Practice solving different types of problems to strengthen your understanding and improve accuracy. 6. Revise regularly: Regular revision is crucial to retain information. Set aside time for regular revision of previously covered topics to ensure you don't forget key concepts. 7. Solve sample papers and mock tests: To familiarize yourself with the exam pattern and gain confidence, solve sample papers and mock tests. This will also help you identify your strengths and weaknesses. 8. Seek guidance: If you are facing difficulties understanding certain topics, don't hesitate to seek guidance from your teacher, classmates, or online resources. 9. Stay updated: Keep yourself updated with any changes in the syllabus or exam pattern. Stay informed about any important announcements or updates from your educational board.
2. What are some important topics to focus on while preparing for Class 12 Accountancy?
Ans. While preparing for Class 12 Accountancy, it is important to focus on the following topics: 1. Financial Statements: Understand the preparation of financial statements like Balance Sheet, Profit and Loss Account, and Cash Flow Statement. 2. Partnership Accounts: Learn the different types of partnerships, accounting for partnership firms, admission, retirement, and death of a partner. 3. Company Accounts: Study the accounting principles and practices related to the issue of shares and debentures, redemption of debentures, and final accounts of companies. 4. Analysis of Financial Statements: Learn how to analyze and interpret financial statements using various tools and ratios. 5. Cash Flow Statement: Understand the preparation and analysis of cash flow statements to assess the cash position and liquidity of a business. 6. Accounting for Not-for-Profit Organizations: Learn the accounting principles unique to not-for-profit organizations like clubs, societies, and charitable institutions. 7. Accounting for Dissolution of Partnership Firms: Understand the accounting procedures and treatment of assets and liabilities during the dissolution of a partnership firm.
3. How can I improve my numerical problem-solving skills in Accountancy?
Ans. To improve your numerical problem-solving skills in Accountancy, follow these tips: 1. Understand the concepts: Start by understanding the underlying concepts and principles related to the numerical problems you are solving. This will help you approach the problems with a clear understanding. 2. Practice regularly: Regular practice is essential to improve numerical problem-solving skills. Solve a variety of problems from different chapters to gain exposure to various types of questions. 3. Break down the problem: Break down complex numerical problems into smaller, manageable steps. This will help you understand the problem better and simplify the solution process. 4. Use formulas and shortcuts: Memorize important formulas and shortcuts that can help you solve problems more efficiently. This will save time during the exam and improve your accuracy. 5. Analyze your mistakes: Review your mistakes and understand where you went wrong. Identify common errors and work on avoiding them in future practice sessions. 6. Seek help if needed: If you are unable to solve a particular problem, don't hesitate to seek help from your teacher, classmates, or online resources. Sometimes, a different perspective or explanation can help you understand the solution better. 7. Solve previous year question papers: Practice solving previous year question papers to familiarize yourself with the exam pattern and gain confidence in solving numerical problems.
4. How can I effectively manage my time while studying Accountancy for Class 12?
Ans. To effectively manage your time while studying Accountancy for Class 12, consider the following strategies: 1. Create a study schedule: Plan your study time in advance and create a schedule that allocates specific time slots to each topic or chapter. This will help you stay organized and ensure you cover all the necessary material. 2. Prioritize topics: Identify the topics that require more attention or that you find more challenging. Prioritize these topics and allocate more study time to them. 3. Break it down: Break down your study sessions into smaller, manageable chunks. Studying for shorter periods with regular breaks can help maintain focus and prevent burnout. 4. Eliminate distractions: Find a quiet and distraction-free study environment. Turn off your phone or put it on silent mode to avoid distractions from notifications. 5. Set goals: Set specific goals for each study session. This will help you stay motivated and focused. Celebrate small victories when you achieve your goals, which will further boost your motivation. 6. Use study techniques: Explore different study techniques like creating flashcards, summarizing key points, or teaching the material to someone else. Find the techniques that work best for you and incorporate them into your study routine. 7. Take breaks: Take short breaks between study sessions to relax and recharge. Use these breaks to stretch, hydrate, or engage in activities that help you relax and clear your mind. 8. Avoid procrastination: Start your study sessions on time and avoid procrastination. Procrastination can lead to unnecessary stress and a rushed preparation.
5. Are there any online resources or study materials available for Class 12 Accountancy?
Ans. Yes, there are several online resources and study materials available for Class 12 Accountancy. Here are some options: 1. Educational websites: Many educational websites provide free study materials, video tutorials, practice questions, and mock tests specifically designed for Class 12 Accountancy. Examples include Khan Academy, Study.com, and TopperLearning. 2. Online courses: Platforms like Udemy, Coursera, and edX offer online courses on Accountancy. These courses are often taught by experienced instructors and can provide comprehensive coverage of the subject. 3. YouTube tutorials: YouTube is a great resource for finding video tutorials on various Accountancy topics. Many educators and channels provide free lessons and explanations for Class 12 Accountancy. 4. Mobile apps: There are mobile apps available for Class 12 Accountancy that offer study materials, practice questions, and mock tests. Some popular apps include Meritnation, BYJU'S, and Toppr. 5. Previous year question papers: Many educational websites and boards provide previous year question papers for Class 12 Accountancy. Solving these papers can help you understand the exam pattern and practice solving different types of questions. 6. Online forums and discussion boards: Join online forums or discussion boards dedicated to Accountancy to connect with fellow students and teachers. These platforms allow you to ask questions, clarify doubts, and gain insights from others.
Download as PDF
Explore Courses for Class 12 exam
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev
Download the FREE EduRev App
Track your progress, build streaks, highlight & save important lessons and more!
Related Searches

MCQs

,

Summary

,

Exam

,

pdf

,

How to prepare for Accountancy? Step by Step Guide - Class 12

,

practice quizzes

,

ppt

,

How to prepare for Accountancy? Step by Step Guide - Class 12

,

Viva Questions

,

Extra Questions

,

past year papers

,

Objective type Questions

,

shortcuts and tricks

,

Sample Paper

,

video lectures

,

Semester Notes

,

study material

,

Important questions

,

Previous Year Questions with Solutions

,

How to prepare for Accountancy? Step by Step Guide - Class 12

,

Free

,

mock tests for examination

;