2. Framework for Preparation and Presentation of Financial Statements
This chapter tells us about the objective, qualitative characteristics, and
recognition and measurement of elements of financial statements. It
also helps us understand the concepts of capital, capital maintenance
3. Overview of Accounting Standards
This topic tells us the applicability of Accounting Standards over various
kinds of entities, as well as an understanding of AS – 1, 2, 3, 10, 11, 12,
13 and 16. It contains practical as well as theoretical examples which are
relevant to these topics.
4. Financial Statement of Companies
The chapter talks about Schedule III to The Companies Act, 2013. It
explains the calculation of managerial remuneration and the meaning of
the term – divisible profits and dividends. Further, it elaborates on the
preparation of Income Statement and Balance Sheet of a company
including Notes to Accounts. It also explains the concept of Cash Flow
Statement in detail.
5. Profit or Loss Pre and Post Incorporation
It tells us the meaning, accounting, and method of computing profit of
loss prior to incorporation. Basically, it deals with the profit of loss
arising during the period when the take over of a company is announced
until it gets incorporated.
6. Accounting for Bonus Issue and Right Issue
Entailing the provisions relating to issue of bonus and right shares, this
chapter helps us understand how companies account for bonus and
rights issue. It explains the concept of renunciation of right. It teaches us
the calculation of value of rights and the difference between ex-right
value and cum-right value of shares.
7. Redemption of Preference Shares
It comprises of the provisions of The Companies Act, 2013 regarding the
redemption of preference shares, its meaning and purpose. It tells us
about the various methods of redemption such as fresh issue of shares,
capitalization of divisible profits or both. It explains the concept of
Capital Redemption Reserve (CRR).
8. Redemption of Debentures
It consists of requirement of creation of Debenture Redemption Reserve
(DRR), understanding the methods and accounting treatment of
redemption of debentures. Provisions relating to redemption of
debentures as contained in The Companies Act, 2013 are also covered in
9. Investment Accounts
It covers computation of cost of investments, classification of
investments, profit/ loss on disposal, carrying amount of investments,
and determination of transfer value on reclassification of investments.
10. Insurance Claims for Loss of Stock and Loss of Profit
The core of this chapter consists of calculation of insurance claim for loss
of stock or loss of profit and its significance. Standing charges, increased
cost of working and other such terms are also covered in this chapter.
11. Hire Purchase and Instalment Sale Transactions
Various methods of accounting for hire purchase transactions, journal
entries for such transactions, accounting for repossessed goods, profit/
loss on sale of repossessed goods, and difference between instalment
system and hire purchase system are the main components of this
12. Departmental Accounts
It tells us the allocation of common expenditures among various
departments, and deal with inter-departmental transfers and their
accounting treatment. It also deals with unrealized profit on unsold
inter-departmental stock-in-hand at the end of the year.
13. Accounting for Branches including Foreign Branches
It comprehends the concept of branches and their classification,
accounting treatment of dependent and independent branches,
methods of charging goods to branches, problems containing wholesale
price, preparation of reconciliation statement of branch and head office
transactions, difference between integral and non-integral foreign
branches, and techniques of foreign currency translation in foreign
14. Accounts from Incomplete Records
It covers the concept of single - entry system, and preparation of trading
and profit and loss account and balance sheet from incomplete records.