Accountancy is a highly conceptual topic. Understanding the formats and standards are critical for getting the final outcome right. Let’s take up three questions to see what should be kept in mind while approaching questions in accountancy.
Calculate interest on capitals of X and Y if interest on capital is 5% per annum, taking into consideration the given balance sheet
Balance sheet as on March 31, 2012
During the year the drawings of X and Y were Rs. 16,000 and Rs. 8,000, respectively. Profits for the year 2011-12 were Rs. 15,000.
The above question is a part of a very important chapter 'Fundamentals of a Partner' in Class 12. The concept clarity in the above question will help students answer higher weightage, long-answer format questions. There are two areas where a student gets confused in questions like these. First, the student tries to calculate the interest on capital directly and second, s/he gets confused with the meaning of the values given in and outside the balance sheet. The student first needs to find the opening capital in order to get to the interest on capital calculations. Moreover, the student needs to focus on the fact that both drawings and profit appear in the balance sheet as well, so the differential amount will only be considered and not the only amount which is given outside the balance sheet.
{{/usCountry}}The above question is a part of a very important chapter 'Fundamentals of a Partner' in Class 12. The concept clarity in the above question will help students answer higher weightage, long-answer format questions. There are two areas where a student gets confused in questions like these. First, the student tries to calculate the interest on capital directly and second, s/he gets confused with the meaning of the values given in and outside the balance sheet. The student first needs to find the opening capital in order to get to the interest on capital calculations. Moreover, the student needs to focus on the fact that both drawings and profit appear in the balance sheet as well, so the differential amount will only be considered and not the only amount which is given outside the balance sheet.
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X and Y are partners sharing profits and losses in the ratio of 5:3. X surrenders of his share and Y surrenders from his share in favour of Z, a new partner. Calculate the new profit-sharing ratio
In this question, the examiner is looking at the amount of attention a student is paying to what is written in the question. Most students start to calculate the new profit-sharing ratio directly, which leads to the entire answer being wrong. Pay attention to the language, when party X in the above question is surrendering of his share, that means the student needs to first calculate the sacrificing ratio and then the new profit sharing ratio; whereas the party Y is surrendering from his share, which implies that the sacrifice has already been taken care of and the student just needs to calculate the new profit-sharing ratio.
X Ltd forfeited 300 shares of Ram who applied for 500 shares on account of non-payment of allotment money Rs. 5 (including Rs. 2 as premium) and first call of Rs. 3. He paid only application money @ Rs. 2. Of these, 150 shares were re-issued to Mohan for Rs. 8 per share fully paid up Rs. 10.
The chapter Shares in Accountancy carries 18 marks of the total in the board examination. In questions like the one given above, the student in most cases forgets to calculate the excess application money received. Hence, to answer such questions correctly, the student first needs to calculate the excess application money received, which is adjusted in the allotment money.
(The author is head, department of accountancy, HT Studymate)