12th Commerce

ACCOUNTANCY

Important One Liner [Useful for MCQ, True/False, Matching Pair] 

Partnership Firm

1. If the partnership deed provides, the partners may be allowed a special salary or commission as appropriation of profit and these are to be tread as charge against profits if they are paid for any professional services.
2. What about interest on capital when deed is silent ==> Not allowed
3. PBIT = Profit before interest and tax
4. PAT = Profit after tax
5. Goodwill is one type of invisible power of the business.
6. Self Generated Goodwill is not recorded in the books because no payment has been made for it.

Share Capital

1. Company is a corporate and legal personality distinct and separate from its members.
2. IPO - Initial Public Offering
3. FPO - Follow-on Public Offer
4. OPC - One Person Company
5. Share Premium - Share issued at higher price than the face value

Accounting Ratio and Analysis

• Ratio analysis is a financial analysis technique that involves the calculation and interpretation of various financial ratios. These ratios are used to evaluate the performance and financial health of a company by comparing different financial metrics.

• The most commonly used financial ratios include profitability ratios, liquidity ratios, leverage ratios, and efficiency ratios. Profitability ratios measure a company's ability to generate profits, while liquidity ratios measure its ability to meet short-term obligations. Leverage ratios measure a company's level of debt and its ability to pay it off, while efficiency ratios measure its operational efficiency.

• Ratio analysis is a valuable tool for investors, lenders, and other stakeholders who want to assess a company's financial health and performance. By analyzing a company's financial ratios over time and comparing them to industry benchmarks, stakeholders can gain valuable insights into a company's strengths, weaknesses, and overall financial position.

Cash Flow Statement

1. Cash = Cash means cash on hand, bank balance
2. Cash Equivalent = Highly liquid short term investments
3. Cash Flow = Movement of Cash
4. Cash Flow Statement = (1) Operating Activity (2) Investing Activity (3) Financing Activity
5. As per accounting standard - 3 disclosure of cash flow statement is mandatory from 1-4-2004.
6. Non-cash transactions are not considered as cash flow.
7. Increase in current assets => Cash outflow
   
8. Decrease in current assets => Cash Inflow
9. Increase in current liabilities => Cash Inflow
   
10. Decrease in current liabilities => Cash Outflow

BUSINESS STUDIES

Process of Planning

The planning process is a systematic approach used to establish objectives, define strategies, and outline the steps required to achieve a specific goal. It involves a series of steps that begin with identifying a problem or opportunity and end with the development of an action plan to achieve the desired outcome.

The following are the typical steps involved in the planning process:

1.     Defining the goal or objective: The first step in the planning process is to define the goal or objective that needs to be achieved.

2.     Conducting a situational analysis: A situational analysis involves analyzing the internal and external factors that could affect the attainment of the goal. This includes conducting a SWOT analysis (strengths, weaknesses, opportunities, and threats) to identify factors that could help or hinder the achievement of the goal.

3.    Identifying alternative courses of action: After conducting a situational analysis, the next step is to identify alternative courses of action that could be taken to achieve the goal.

4.     Evaluating alternatives: The identified alternatives are evaluated against the goal and the situational analysis to determine the most feasible and effective option.

5.  Developing an action plan: An action plan is developed to outline the steps required to achieve the chosen alternative. This includes defining tasks, setting timelines, and identifying the resources required to achieve the goal.

6.     Implementation: The action plan is then implemented, and progress is monitored to ensure that the plan is being executed as intended.

7. Reviewing and revising the plan: The final step in the planning process is to review the progress made towards achieving the goal and to revise the plan as necessary to ensure that the goal is achieved.

Process of Controlling

The controlling process is a management function that involves monitoring performance and taking corrective action to ensure that objectives are achieved. 

1. Establishing standards: The first step in the controlling process is to establish performance standards. Performance standards are the criteria against which actual performance will be measured. 
2. Monitoring performance: Once the standards have been established, the next step is to monitor actual performance. This involves collecting data on actual performance and comparing it to the established standards.
3. Analyzing performance: After monitoring performance, the next step is to analyze the data collected. This involves identifying any deviations from the established standards and determining the cause of the deviations.
4. Taking corrective action: Once deviations from the standards have been identified and the cause of the deviations has been determined, the next step is to take corrective action. Corrective action may involve adjusting processes, reassigning tasks, or providing additional training.
5. Evaluating results: The final step in the controlling process is to evaluate the results of the corrective action taken. This involves monitoring performance after corrective action has been taken to ensure that the objective is achieved.

The controlling process is an ongoing process that requires continuous monitoring and evaluation to ensure that objectives are achieved. By monitoring performance and taking corrective action as necessary, managers can ensure that their organizations are operating effectively and efficiently.