Amazon.in Widgets
This section consist four chapters ( Accounting for Not for profit organisations, Accounting for share capital, Issue of debentures and redemption of debentures) carrying 25 marks as per CBSE blue print. Lets recall the important points/ entries/ items from this section as a part of your quick revision strategy to give your preparation a final touch.
Not for Profit organisations :
- Receipt and Payment Account is prepared to find out the receipts and payments of an NPO during a year.
- Cash basis of accounting is followed while preparing Receipt and Payment Account.
- In the absence of any specific information Legacy is treated as capital receipt hence recorded as liability.
- Any capital nature receipt or receipt for specific purpose is treated as liability.
- Income and Expenditure Account is prepared to know the income position of an NPO.
- Accrual basis of accounting is followed while preparing Income and Expenditure Account.
- Opening Balance Sheet is prepared to find out opening capital.
- In the absence of any specific information donation is treated as Income and donation for specific purpose as Liability.
- Creditors Account is prepared to find out Net credit purchases.
- Hidden depreciation need to be calculated when opening and closing balance of an asset has given.
- Hidden investment is calculated when Interest on investment is given but Investment is missing from question.
Share Capital:
- Minimum Subscription = 90% of the issued shares.
- Discount on reissue of forfeited shares can't be more than the forfeited amount.
- While making forfeiture entry Security Premium Reserve is debited with the amount unpaid for Premium. If premium is received no need to debit.
- While making entry for issue of shares other than cash, if number of shares comes in decimals ( Eg. 199.33 shares) take it as as 199 shares and settle the balance by cash.
- No need to show receipt entries if cash book has to be prepared.
- While making a journal entry for forfeiture of shares share capital is always debited with called money out of face value of shares.
- No need to show calls in arrear and calls in advance account until and unless it is instructed in question.
Issue and Redemption of Debentures :
- DRR- 25% of face value on outstanding balances of debentures.
- DRI- 15% of face value of redeemed value of debentures.
- Exception of DRR and DRI- Banking company, Financial Company, Housing company, Fully convertible debentures.
- Create a DRR of 100% if company is having sufficient profit.
- Interest on debentures and interest on DRI is not shown until clearly instructed.
- DRI is made on 30th April prior to the year of redemption, if not specified in question.
- Loss on issue of debentures are written off from books utilising Security premium reserve balance and then profit.
- Loss on issue of debentures are written off from books in the ratio of outstanding balances in debentures account at the end of year.
(Copyright@vedantaclasses.in)
For quick revision points in partnership just go through the following link: Partneship quick revision points
