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CBSE class 11 commerce Accountancy important topics


CBSE class 11 commerce Accountancy important topics:

CBSE class 11 commerce Accountancy important topics- Accountancy: Accounts is a demanding subject of Commerce stream. It deals with the income, expenses, assets and other relevant things. However, it is appreciated in the sectors of finance and banking. It has been observed that most students are interested to learn this subject as it provides good job opportunities. Some important areas of accounting career are budget analysis, audit, tax, management accounting, and others. With thorough knowledge in Accounts, students can apply for the jobs in the government as well as corporate sectors. Additionally, they can work independently.

CBSE class 11 commerce Accountancy important topics:

CBSE class 11 commerce Accountancy important topics

CBSE class 11 commerce Accountancy important topics:

Attempt questions on company accounts, cash flow statements and partnership first. These carry 60% weightage in the paper. Calculate each and everything properly. Show proper working notes. You must draw up a proper format and must write narrations in case of journals. You should also go through all illustrations and give formula for ratio analysis. Besides the NCERT, you must also refer to CBSE sample papers.

Class 11 Accountancy HOT Questions

CBSE class 11 commerce Accountancy important topics: Company Accounts and Analysis of Financial Statements

Chapter 1 – Accounting for Share Capital

What is public company?

A public company is defined as a company that offers a part of its ownership in the form of shares, debentures, bonds, securities to the general public through stock market. There must be atleast seven members to form a public company. As per the section 3 (1) (iv) of Companies Act 1956, public company means a company which:a) is not a private company,b) has a minimum paid up capital of Rs 5,00,000 or such higher paid up capital, as may be prescribed,c) is a private company, being a subsidiary of a company which is not a private company.A public company should not be mistakenly understood as a publicly-owned company, as the latter is exclusively owned and controlled by the government. A public company issues its share to general public without any restriction on maximum number of persons. A public company can be segmented into two types:

1. Listed Company– A Company whose shares are listed and traded in the stock exchange like, Tata Motors, Reliance, etc.

2. Unlisted Company– A Company whose shares are not listed in the stock exchange and thereby these shares cannot be traded in the stock exchange.

What is meant by the word ‘Company’? Describe its characteristics.

The Section 3 (1) (i) of the Company Act of 1956 defines an organisation as a company that is formed and registered under the Act or any existing company that is formed and registered under any earlier company laws. In general, a company is an artificial person, created by law that has a separate legal entity, perpetual succession, common seal and has limited liability. It is a voluntary association of person who together contributes in the capital of the company to do business. Generally, the capital of a company is divided into small parts known as shares, the ownership of which is transferable subject to certain terms and conditions. There are two types of company, public company and private company.

Characteristics of Company:

1. Association of Person: A company is formed voluntarily by a group of persons to perform a common business. Minimum number of person should be two for formation of a private company and seven for a public company.

2. Artificial Person: Company is an artificial and juristic person that is created by law.

3. Separate Legal Entity: A company has a separate legal entity from its members (shareholders) and Directors. It can open a bank account, sign a contract and can own a property in its own name.

4. Limited Liability: The liability of the members of a company is limited up to the nominal value or the face value of the shares. Unlike a partnership firm, on insolvency of a company, the members and the shareholders are not liable to pay the amount due to the creditors of the company. In fact, the members and the shareholders are only liable to pay the unpaid amount of the shares held by them. For example, if the value of share is Rs 10 and Rs 6 is paid up, then the member is liable to pay only Rs 4.

5. Perpetual Existence: The existence of company is not affected by the death, retirement, and insolvency of its members. That is, the life of a company remains unaffected by the life and the tenure of its members in the company. The life of a company is infinite until it is properly wound up as per the Company Act.

6. Common Seal: The Company is an artificial person and has no physical existence; hence it cannot put its signature. Thus, the Common Seal acts as an official signature of a company that validates the official documents.

7. Transferability of Shares: The shares of public limited company is easily and freely transferable without any consent from other members. But the share of ownership of a private limited company is not transferable without the consent of the other members.

What is private limited company?

Private limited company is a company that is limited by shares or by guarantee by its members. A private limited company is defined as a company that has a minimum paid up share capital of Rs 1,00,000. As defined by the Section 3 (1) (iii) of Companies Act 1956, private limited company is defined by the following characteristics:a) It restricts the right to transfer its shares.b) There must be atleast two and a maximum of 50 members (excluding current and former employees) to form a private company.c) It cannot invite application from the general public to subscribe its shares, or debentures.d) It cannot invite or accept deposits from persons other than its members, Directors and their relatives.Unlike public company, a private company cannot issue its shares or debentures to general public at large as shares of these companies are not traded in the stock exchange, for example, Coca-Cola India Private limited, etc.

CBSE class 11 commerce Accountancy important topics: Chapter 2 – Issue and Redemption of Debentures

What is meant by a Debenture?

The word Debenture is derived from a Latin word ‘debere‘ which means to borrow. A debenture is issued in the form of a certificate under the seal of a company and containing a contract for the repayment of the principal sum after a fixed period of time and payment of interest at regular intervals, generally half yearly. Debentures are issued by a company for acquiring long-term borrowings.

What does a Bearer Debenture mean?

When a company does not maintain any record of the debenture holders and the debenture is transferable mere by delivery, then the type of the debenture held by the holders is termed as Bearer Debenture. Interests on such debentures are paid to the persons who produce the interest coupons that are attached with these debentures in a specified bank.

State the meaning of ‘Debentures issued as a Collateral Security’.

The term collateral security means additional or secondary security in addition to the primary security. Sometimes, when a company takes loan from a financial institution, then besides the primary security, the company may issue debenture for additional security (as collateral security). The lender who receives debenture as collateral security is not entitled for interest on these debentures. If any default is made by the company in paying back the principal amount (i.e. the loan amount) or interest on the loan, then the lender has the full right to recover his/her dues from the sale of primary security. But, if the primary security is not sufficient to recover the amount of the debt, then the debentures issued as collateral may be used for recovery of the remaining amount.

What is meant by an ‘Irredeemable Debenture’?

Irredeemable Debentures are those debentures that are not repayable or redeemable by a company during its life time. These are repayable only at the time of winding up of the company. These are also known as Perpetual Debentures that means debentures having indefinite life. In India, now days, no company can issue irredeemable debentures.

CBSE class 11 commerce Accountancy important topics: Chapter 3 – Financial Statements of a Company

What is public company?

A public company is defined as a company that offers a part of its ownership in the form of shares, debentures, bonds, securities to the general public through stock market. There must be atleast seven members to form a public company. As per the section 3 (1) (iv) of Companies Act 1956, public company means a company which:a) is not a private company,b) has a minimum paid up capital of Rs 5,00,000 or such higher paid up capital, as may be prescribed,c) is a private company, being a subsidiary of a company which is not a private company.A public company should not be mistakenly understood as a publicly-owned company, as the latter is exclusively owned and controlled by the government. A public company issues its share to general public without any restriction on maximum number of persons. A public company can be segmented into two types:

1. Listed Company– A Company whose shares are listed and traded in the stock exchange like, Tata Motors, Reliance, etc.

2. Unlisted Company– A Company whose shares are not listed in the stock exchange and thereby these shares cannot be traded in the stock exchange.

Explain the nature of the financial statements.

The financial statements are the end-products of the accounting process. The financial statements not only reveal the true financial position of the company but also help various accounting users in decision making and policy designing process. The nature of the financial statements depends upon the following aspects like recorded facts, conventions, concepts, and personal judgment.

1. Recorded facts– The items recorded in the financial statements reflect their original cost i.e. the cost at which they were acquired. Consequently, financial statements do not reveal the current market price of the items. Further, financial statements fail to capture the inflation effects.

2. Conventions– The preparation of financial statements is based on some accounting conventions like, Prudence Convention, Materiality Convention, Matching Concept, etc. The adherence to such accounting conventions makes financial statements easy to understand, comparable and reflects the true and fair financial position of the company.

3. Accounting Assumptions – These basic accounting assumptions like Going Concern Concept, Money Measurement Concept, Realisation Concept, etc are called as postulates. While preparing financial statements, certain postulates are adhered to. The nature of these postulates is reflected in the nature of the financial statements.

4. Personal Judgments- Personal value judgments play an important role in deciding the nature of the financial statements. Different judgments are attached to different practices of recording transactions in the financial statements. For example, recording stock either at market value or at the cost requires value judgment. Similarly, provision on various assets, method of charging depreciation, period related to writing off intangible assets depends on personal judgment. Thus, personal judgments determine the nature of the financial statements to a great extent.

What is private limited company?

Private limited company is a company that is limited by shares or by guarantee by its members. A private company is defined as a company that has a minimum paid up share capital of Rs 1,00,000. As defined by the Section 3 (1) (iii) of Companies Act 1956, private limited company is defined by the following characteristics.a) It restricts the right to transfer its shares.b) There must be atleast two and a maximum of 50 members (excluding current and former employees) to form a private company.c) It cannot invite application from the general public to subscribe its shares, or debentures.d) It cannot invite or accept deposits from persons other than its members, Directors and their relatives.Unlike public company, a private company cannot issue its shares or debentures to general public at large as shares of these companies are not traded in the stock exchange, for example, Coca-Cola India Private limited, etc.

Define Government Company?

As per the Section 617 of Company Act of 1956, a Government Company means any company in which not less than 51% of the paid up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one on more State Governments and includes a company which is a subsidiary of a Government Company as thus defined.

CBSE class 11 commerce Accountancy important topics:

  • Accounting for Partnership : Basic Concepts
  • Reconstitution of a Partnership Firm – Admission of a Partner
  • Reconstitution of a Partnership Firm – Retirement/Death of a partner
  • Dissolution of Partnership Firm

CBSE class 11 commerce Accountancy important topics:

CBSE class 11 commerce Accountancy important topics: Recommended for such an enthusiastic audience:

CBSE class 11 commerce Accountancy important topics:

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