Bihar PGT Commerce Syllabus

• Accounting- concept, 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)

• 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: Applicability in IndAS
• Goods and Services Tax (GST): Characteristics and Objective.

• 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 cashbook
• Purchases book
• Sales book
• Purchases return book
• Sales return book Note: Including trade discount, freight and cartage expenses for simple GST calculation.
• Ledger: Format, Posting from journal and subsidiary books, Balancing of accounts

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

• Depreciation: Concept, Features, Causes, factors
• Other similar terms: Depletion and Amortisation
• Methods of Depreciation:
  i. Straight Line Method (SLM)
  ii. 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

• 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.

• Meaning, objectives and importance; Revenue and Capital Receipts; Revenue and Capital Expenditure;
• Deferred Revenue expenditure.
• 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.

• 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.

• 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.

• 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.

• 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.

• 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 and his executor’s account.
• Dissolution of a partnership firm: meaning of dissolution of partnership and 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 partnerc (s).

• Share and share capital: nature and types.
• Accounting for share capital: issue and allotment of equity and preferences shares. 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 reissue of shares.
• Disclosure of share capital in the Balance Sheet of a company.

• 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. Writing off discount/loss on issue of debentures.Note: Discount or loss on issue of debentures to be written off in the year debentures are allotted from Security Premium Reserve (if it exists) and then from Statement of Profit and Loss as Financial Cost (AS 16).
• Redemption of debentures-Methods: Lump sum, draw of lots.
• Creation of Debenture Redemption Reserve. Note: Related sections of the Companies Act, 2013 will apply.

• Statement of Profit and Loss and Balance Sheet in 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.

• Objectives, importance and limitations.
• Tools for Financial Statement Analysis: Comparative statements, common size statements, cash flow analysis, ratio analysis.
• Accounting Ratios: Meaning, 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, TradePayables Turnover Ratio and Working Capital Turnover Ratio.
• Profitability Ratios: Gross Profit Ratio, Operating Ratio, Operating Profit Ratio, Net Profit Ratio and Return on Investment.

• Meaning, objectives and preparation (as per AS 3 (Revised) (Indirect Method only)

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

• 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.

• 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.

• Concept and Features of DBMS.
• DBMS in Business Application.
• Generating Accounting Information – Payroll