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Class 12th Accountancy Notes

Dear 10+2 (Commerce) Students,

We are happy to publish the accountancy notes for your class. Class 12th or 10+2
(Commerce) Class's examination is taken by your board. If you are doing the 12th
Class from state board, state board is responsible for taking examination. If your
school is affiliated with CBSE, then CBSE is responsible for taking examination.
Whether it is state board or CBSE, both will take the accountancy examination, if
you are doing 10+2 in commerce. Syllabus is almost same. They want to check your
capability of basic book keeping and accountancy. All major courses in the field of
accounting will start after 12th class or grade examination. So, good merit in it is

For your success in 12th Class Accountancy, we are providing following notes. In the
link of title of the topic, we have given simple explanation. Check the link of topic
and study the answer. I think, you all my students and it is my duty to guide you in
very simple words. Following notes has been written in very simple language and
useful to cover the syllabus of 12th Class Accountancy.

Divisions of Share Capital of

It is true that no business can operate without fund and fund can be received only by capital or
loan . If company or corporate wants to get capital , it should make some division for this
purpose. After this shares can be issued first time to public . For company accountant , its
knowledge is must .

We can explain main divisions of share capital of company with following way :-

1st - Registered or authorised or nominal capital

That part of total capital with whom company wants to register , that part is called authorised
capital . This the maximum amount that can any company issue to public for getting capital fund
. Still there is not quantity limit for authorised capital determination under Indian Company Act
1956 .

2nd Issued Capital

It is that part of authorised capital which is offered to public to acquire , that part is called issued
capital .

3rd Subscribed Capital

It is that part of issued capital which is accepted by public. Subscribed capital can not more than
issued capital . If it happen than it will be over subscription and it will be rejected or accepted
under pro-rata basis for providing proper accounting treatment .

4th Called up Capital

It is that part of issued capital which is to be paid by shareholders . Company has demanded
money of this part . If shareholder does not pay called up capital , then this part becomes call
in arrears .

5th Paid Up capital

It is that part of called up capital which is paid by shareholders and after this they can become
real owner of company.

6th Reserve capital

One company can determine with special resolution that some part of total subscribed capital
will not demanded from shareholder and it is not demand up to the winding up of company .
That part of capital is called reserve capital . It can not be changed in general capital with the
permission of Court . Board of directors also can not change it in normal capital . It is most
benefited for company's creditors . because , this amount can be utilized for payment to
creditors at the time of liquidation of company.

There is no need to do any accounting treatment for reserve capital but a small note is written in
balance sheet in which company mentions the amount of reserve capital and other interested
parties can focus on this note .

For instance

A company has Rs. 20000000 as its authorised capital divide into 1000000 equity shares of Rs.
10 each and 200000 pref. shares of Rs. 50 each. Company issued 800000 equity shares and
100000 preference shares . The public subscribed for 600000 equity shares and 100000 pref.
shares . All shareholders paid the amount with the exceptionof 50000 equity shares @ Rs. 5 per
share . Calculate the amount of various types of share capital .

Authorised capital

1000000 equity shares of Rs. 10 each Rs. 10000000

200000 pref. shares of Rs. 50 each Rs. 10000000

---------------------------------------> Rs. 20000000


Issued Capital

800000 Equity shares of Rs. 10 each Rs. 8000000

100000 pref. share of Rs. 50 each Rs. 5000000
----------------------------------------> Rs. 13000000

Subscribed capital

600000 equity shares of Rs . 10 each Rs. 6000000

100000 pref. share of Rs. 50 each Rs. 5000000
---------------------------------------> Rs. 11000000

Called up capital

600000 equity shares of Rs. 10 each

Called up only Rs. 8 per share Rs 4800000
100000 pref. shares called up @ Rs. 40 each Rs. 4000000
------------------------------------------------> Rs. 8800000

Paid up capital

Called up equity capital less calls in arears

of Rs. 5 each -------------------------------- Rs. 4550000
paid up capital of pref. shares --------------- Rs. 4000000
----------------------------------------------> Rs. 8550000

Financial Statements of Not-for-
Profit Organizations
Financial statements of not-for-profit organizations mean that financial statements which
are made by organizations whose aim is not to earn and distribute the profit. It means, these
organizations do not involve in business activities but these organisations use all the surplus
from their activities in achieving their Goal. Because, these organisations operate with the
money of donation or sponsorship, so they have to keep accounts and show their financial
results in the form of financial statements.

I am also operating many not-for-profit organisations whose aim is to do social welfare activities.
Recently, I got some donation from my UK and Indian donors. So, I maintain my all Not-for-profit
organizations' account. I also make financial statements of my Not-for-profit organisations
because any donor can check the uses of their money and my financial statements can clear his
all doubts. If any Not-for-Profit Organization do not make financial statements, it means,
its activists are cheating with donors' donations and use donation money for personal benefits. If
you are donor, then before donation, please check the financial statements of Not-for-profit
Organisation from expert accountant. Only expert accountant or auditor can audit the financial
statements and can bring many unknown loopholes.

Here, I am analysis to Big Not-for Profit Organisation's financial Statement

Financial Statements 2010 of Wikipedia

1st Balance Sheet of Wikimedia Foundation, Inc.

Above is simple balance sheet of this organisation in which it shows its total assets and
liabilities. But some items are very interesting to know.

(A) Contribution Receivable

As per per the balance sheet of this NPO, major part of total assets is current assets. One of its
current asset is contribution receivable. In 2009, there were 1.3 M $ as contribution receivables
and now are 0.5 M $. Actually, some of Wikipedia's contributors are its huge fan and send some
money gift for its promotion. Because they are providing these gifts from many years.
So, Wikipedia's accountants know from whom we got gift and from whom we did not get gift at
the end of year. Now, that contribution which is receivable is outstanding income
of Wikipedia and Wikipedia has shown it as current asset. If we study its statement of activity
deeply, we found that same contribution receivables are included in its contribution.

By what it has decreased from 2009. Answer is simple, some contributors have paid their
contribution dues to Wikipedia. Now, how is Wikimedia calculating two years ago pending
contribution. Answer is its Wikipedia is the sea of knowledge and every second something is
updating whose knowledge is to its management. Wikimedia is adopting present value rule for
showing this current asset. As per the US Treasury rate, fair value of contribution of receivable
has been calculated.

(B) Account Receivables

This NPO has also shown account receivables $ 0.35 M on June 2010. It means Wikimedia
has some of advance users who have power to get live feed of its websites. Just like, you can
see my website's live feed right side for RSS icon. But Wikimedia gets fees for this. Some of
users, organisation has to get fees, so, this is the asset of this organisation. But due to
organisation is NOP, so it can not charge interest on it otherwise, due amount and interest will
both be the asset of any company.

(C) Deferred Revenue

Deferred revenue are $ 0.13 M. These are the advance fees which Wikimedia corporation got
from users for showing live feed for its websites. Because it does not provide services and got
money, so it has been shown in liability side.

(D) Net Assets

For its balance sheet, we come to know that it has divided its net assets into two part.

i) Unrestricted Assets

It means, maximum donation and other assets which has received in cash or in-kind, are
unrestricted. Organization can use any part of its mission.

(F) Temporary Restricted Assets

Money and current assets can be used on some restriction. It means specific cash can be used
for specific part of mission of organisation.

2nd Statement of Activities

Statement of activities is just like income and expenditure statement of Wikimedia. Everything in
it is simple to understand. But as user of Wikipedia, I am interested to know the total operating
cost for operating Wikipedia website. $10.2 millions are its total expenditures and its total
revenue is $ 17.9 million. It means net surplus of $ 7.7 million which is still very very low from
for-profit organisation like Google other. So, we have to come forward to donate to this great
and educational not-for-profit organisation.

3rd Cash Flow Statement

For calculating cash from operation, organisation has adjusted donation of common stock and
donation of equipment because both are non cash revenue part of organisation. For knowing
net cash flow from operation, we need to adjust non-cash operating items. When it has made its
statement of activities, all outstanding expenses are added in expenses, it means surplus on
accrual basis. Now as per cash basis, it has deducted from net surplus. When it has made its
statement of activities, all advance but cash expenses are deducted and now we will deduct all
these advance expenses. Like this some advance and outstanding incomes have been
adjusted. All other things of cash flow of this organisation is easy to understand.