Senior Secondary Course ACCOUNTANCY (320) 2

Senior Secondary CourseACCOUNTANCY (320)2Course CoordinatorDr. Piyush Prasadfo k/kue loZ/kua iz/kkue NATIONAL INSTITUTE OF OPEN SCHOOLING(An Autonomous Institution under MHRD, Govt. of India)A-24-25, Institutional Area, Sector-62, NOIDA-201309 (U.P.)Website: www.nios.ac.in, Toll Free No. 18001809393

Printed on 60gsm. paper with NIOS water markMAY,2015 (22,000 copies)

ADVISORY COMMITTEEProf. C.B. SharmaChairmanNIOS, NOIDA (UP)Dr. Kuldeep AgarwalDirector (Academic)NIOS, NOIDA (UP)Dr. Rachna BhatiaAssistant Director (Academic)NIOS, NOIDA (UP)CURRICULUM COMMITTEEProf. Jawahar LalProfessorDeptt. of CommerceDelhi School of Eco.DelhiDr. Shipra VaidyaProfessor, Department ofSocial Sciences & HumanitiesNCERT, New Delhi 16Dr. A.K. SahajpalReaderDeptt. of CorrespondenceD-32, University Campus,Sector-14, ChandigarhDr. H.V. JhambReaderDeptt. of CommerceKhalsa CollegeDelhiDr. Jagmohan GuptaReaderDeptt. of Commerce,Moti Lal Nehru CollegeNew Delhi - 21Ms. Meena GoelPrincipalNavhind Girls Sr. Sec. SchoolNew Rohtak RoadNew Delhi - 05Sh. S.K. BansalLecturer (Retd.)Commercial Sr. Sec. SchoolDaryaganjNew DelhiDr. Piyush PrasadAcademic Officer(Accountancy)NIOS, NOIDA (UP)COURSE WRITERS/REVIEWERSSh. S.K. BansalLecturer (Retd.)Commercial SeniorSecondary School,Daryaganj, New DelhiSmt. Siba S.PGT CommerceEast Point SchoolDelhiDr. A.K. YadavHOD CommerceKMPG, BadalpurDr. Shipra VaidyaProfessor, Department ofSocial Sciences & HumanitiesNCERT, New Delhi 16Dr. Piyush PrasadAcademic Officer(Accountancy)NIOS, NOIDA (UP)Dr. Neha AgarwalFinancial ExpertGAIL Town ShipPata, UPSh. Sanjeev KumarVice PrincipalGovt. Co-edu. SchoolPreet Vihar, DelhiSmt. Alka RaniPGT, CommerceJP International SchoolMeerutDr. Amit AgarwalLecturerGovt. Inter CollegeChampwat, UKDr. Neha AgarwalFinancial ExpertGAIL Town ShipPata, UPSmt. Alka RaniPGT, CommerceJP International SchoolMeerutCONTENT EDITORDr. Piyush PrasadAcademic Officer(Accountancy)NIOS, NOIDA (UP)Sh. S.S. SeharawatFormer D. CKVS, DelhiSh. Sanjeev KumarVice PrincipalGovt. Co-edu. SchoolPreet Vihar, DelhiGRAPHIC ILLUSTRATORM.K. ComputersShop No. 19, DDA MarketBhera Enclave, N. Delhi - 87

Chairman’s MessageDear learnersAs the needs of the society in general, and some groups in particular, keep onchanging with time, the methods and techniques required for fulfilling thoseaspirations also have to be modified accordingly. Education is an instrument ofchange. The right type of education at right time can bring about positivity in theoutlook of society, attitudinal changes to face the new/fresh challenges and thecourage to face difficult situations.This can be very effectively achieved by the curriculum renewal at regular intervalsof time. A static curriculum does not serve any purpose, as it does not cater to thecurrent needs and aspirations of the individual and society.For this purpose only, educationists from all over the country come together atregular intervals to deliberate on the issues of changes needed and required. As anoutcome of such deliberations, the National Curriculum Framework (NCF 2005)came out, which spells out in detail the type of education desirable/needed at variouslevels of education – primary, elementary, secondary or senior secondary.Keeping this framework and other national and societal concerns in mind, we havecurrently revised the curricula of Accountancy course at Senior Secondary Level, asper the Common Core Curriculum developed by COBSE (Council of Boards of SchoolEducation) and NCERT (National Council for Educational Research and Training)making it current and need based. Textual material production is an integral andessential part of all NIOS programmes offered through open and distance learningsystem. Therefore, we have taken special care to make the learning material userfriendly, interesting and attractive for you.I would like to thank all the eminent persons involved in making this materialinteresting and relevant to your needs. I hope you find it appealing and absorbing.On behalf of National Institute of Open Schooling, I wish you all a bright andsuccessful future.Prof. C.B. SharmaChairmanNIOS

A Note From the DirectorDear Learner,The Academic Department at the National Institute of Open Schooling tries to bringyou new programmes every now and then in accordance with your needs andrequirements.The Accountancy course at Senior secondary level has now been revised as per theCommon Core Curriculum developed by COBSE (Council of Boards of SchoolEducation) and NCERT (National Council for Educational Research and Training)making it current and need based.The National Curriculum Framework developed by the National Council forEducational Research and Training was kept as a reference point. Leading expertsin the subject of the country were involved and with their active involvement, studymaterials based on the new curriculum have been updated. Old, outdatedinformation has been removed and new, relevant things have been added.I am happy to place this new revised study material in Accountancy in your hands. Ihope you will find the new material that is now in your hands interesting and exciting.Any suggestions for further improvement are welcome.Let me wish you all a happy and successful future.(Dr. Kuldeep Agarwal)Director (Academic)National Institute of Open Schooling

A Word With YouDear Learner,I welcome you to this course in Accountancy for the Senior Secondary level.We all know the importance of business in our everyday life. It not only fulfills our basic needs of recordingtransactions but also provides accounting information to users for carrer decision making. It is a dynamicprocess that keeps on changing as per the requirements and demands of the society. The procedure andpractices of business in the past are completely different from modern days. It is more informative thanwhat it was in past. The use of modern technology, government’s policies and the awareness amongcommon masses have made it user friendly. Therefore, a systematic effort is required to understand, analyseand respond to the changes that affect the functioning of accounting in the present day society.Keeping in mind the above, the curriculum in the subject of Accountancy at Senior Secondary level hasbeen designed. The whole learning material of the subject has been published in the form of three volumesfor your convience. The first book has two modules. Learning experiences considered essential forAccountancy are described in the first two modules. The module on Basic Accounting consist lessons onhow to record transaction in books of Accounts while the second module of Trial Balance & Computersexplain about the pre work done for perfect financial statement with the use of computers in Accounting,and these two modules are Tutor Marked Assignment Based modules.The second volume which contains three modules are the core modules. The third module is FinancialStatements of Profit & Not for Profit Organisations explains as how the financial statements are preparedby various organisations. The fourth module is Partnership Accounts explains how various types ofaccounts are maintained by Partnership firm under different situations. The fifth module is Accounting forShares & Debentures, which contains lessons on different situations in raising capital by way of issue ofShares & Debentures by companies.The third volume, which is a optional volume consist of two modules i.e., Analysis of Financial Statementand Application of Computer in Financial Accounting. Learners has to opt any one module out of the two.Analysis of Financial Statement consist four lessons as how to analyse the results of Business to takecorrective measures & take future decisions while the again consist of four lessons as how to to doaccounting with help of computers.For your practice, a sample question paper along with the question paper design and marking scheme isprovided at the end of the second book.To make your learning process interesting and useful we have changed the layout of the pages. You willalso find some attractive icons in the lesson symbolising the content of different sections. The details aregiven separately under the heading ‘How to study your lessons’.I am sure that you will find the lessons and their approach interesting and would be able to apply yourknowledge in the real life situations. So read and practice all the lessons of this course carefully and beprepared for the examination with confidence. If you face any difficulty in your studies, please feel freeto write to me. Your suggestions are valuable for us.Good luck and happy learning.Dr. Piyush PrasadAcademic Officer

How To Study Your LessonsCongratulation! You have accepted the challenge to be a self-learner. It means, you have to organiseyour study, learn regularly, keep up your motivation and achieve your goal. Here it is solely you, whois responsible for your learning. NIOS is with you at every step. It has developed the material inAccountancy. A format supporting independent learning has been followed. You can take the bestout of this material if you follow the instructions given below.Title: The title of the lesson will give a clear indication of the contents within. Do read it.Introduction: This will introduce you to the lesson and also link it to previous one.Objectives: These are statements of outcomes of learning expected from you after studyingthe lesson. You are expected to achieve them. Do read them and check if you have achievedthe same.Content: Total content has been divided into sections and sub-sections. A section leadsyou from one content element to another and sub-section helps you in comprehension ofthe concepts in the content element. The text in bold, Italics or boxes is important and mustbe given attention.Intext Questions: Objective types, self-check questions are asked after every section,the answers to which are given at the end of the lesson. These will help you to check yourprogress. Do solve them. Successful completion will allow you to decide whether to proceedfurther or go back and learn the unit again.Notes: Each page carries empty space on the outer margins for you to write importantpoints or make notes.What You Have Learnt : It is the summary of the main points of the lesson. It will help inrecapitulation and revision. You are welcome to add your own points to it also.Terminal Questions : These are very short, short and long answer type questions thatprovide you an opportunity to practice for better understanding of the whole topic.Answers to Intext Questions: These will help you to know, how correctly you haveanswered the Intext questions.Activity : Activities, if done by you, will help you to understand the concept clearly.

CONTENTSModule/ Name of the LessonPage No.Module 3 : Financial Statements14.Depreciation .315.Provision and Reserves .3316.Financial Statements : An Introduction .4517.Financial Statements - I .7318.Financial Statements - II .9619.Not for Profit Organisation : An Introduction . 13620.Financial Statements (Not for Profit Organisations) . 15121.Accounts From Incomplete Records . 172Module 4 : Partnership Accounts22.Partnership : An Introduction . 20123.Admission of a Partner . 24324.Retirement and Death of a Partner . 31025.Dissolution of a Partnership Firm . 345Module 5 : Company Accounts26.Company : An Introductrion . 36727.Issue of Shares . 39128.Foreiture of Shares . 42529.Reissue of Forfeited Shares . 44430.Issue of Debentures . 458