Accounts, at first glance, can seem daunting because of the infinite scope of adjustments and questions, but the ISC Board Examinations follow a very typical examination pattern. Once that identified and understood, attempting the paper becomes easier than thought.
This article explores different aspects of the paper with tips on how to attempt them:
SECTION A
PART I
Part 1 consists of 6 theory questions of 2 marks each, amounting to a total of 12 marks. This section, being a part of Section A, will not include any questions on management accounting or company accounts. Being a theory section, the questions asked can be of various types:
1. Pure theory, which involves important definitions, like the legal definition of a Company, a Partnership firm, etc. (mention years and sub sections only if sure about them and do not fill in wrong data); understand the different kinds of share capital (authorised, issued, subscribed and fully paid up, and, subscribed and not fully paid up), the components of various accounting standards (like AS 26 for the adjustment for goodwill), differences between similar terms (like capital reserve vs reserve capital, revaluation account vs realisation account, dissolution of partnership vs dissolution of a partnership firm, firm’s debts vs private debts etc.).
2. Application based theory, which involves applying theoretical knowledge to short problems. This has often involved questions from the Goodwill chapter, or questions involving the transfer of reserves, accumulated losses or goodwill. Another kind of question asked here asks for entries for the reissue and forfeiture of shares (where working notes are essential and imperative). Such questions ask for adjusting entries and closing entries, for 1 mark each. Make sure that you draw the journal format even for such questions, and write narrations as well as working notes for these entries, as maybe the requirement.
3. Numericals, which can involve calculating goodwill amounts (formula should be explicitly written in such questions even if not asked), interest on loans, premium of issue of shares, debentures, etc.
4. Conditions for carrying out certain actions in a company: This portion comes mainly from company accounts, where the conditions for the forfeiture, reissue, redemption should be studied (any numerical conditions as well as approval by management in the Annual General Meeting, etc.).
Where do we study theory from?
Theory in accounts is often sacrificed in the pursuit of more numericals, but these 12 marks can go a long way in boosting your percentage!
Most ISC schools follow the textbook by D K Goel, which has theory interspersed in the chapters as well as in the question answer format at the back of every chapter. On the contrary, the textbook by T S Grewal has theory questions at the back of the chapter as well as a collection of solved theory questions from all chapters (Including the questions from past year papers). Both these books are sufficient for the theory part of the paper and are easy to study from because of their question answer format.
Personally, I would suggest studying theory from the Grewal textbook, for its precise language, wider coverage and consolidated format.
SECTION A- PART 2 and SECTION B
Section A, Part 2 of the paper consists of 12-mark questions from Partnership and Company Accounts (which can be broken into combinations of marks like 4-4-4 or 3-3-6). Section B consists of questions on Accounting Ratios, Cash Flow Statement, Comparative and Common Size Balance Sheets. Section B also includes theory from these chapters (which is not included in Part 1).
Here are a few tips consolidated from experience as well and the Pupil Analysis by the Council for attempting these questions:
1. Working notes:
Working notes set apart an excellent paper. Working notes, for the examinations in particular, serve many purposes. One, they prevent you from making any calculation mistakes. To avoid calculation errors, especially in lengthy questions like those of shares, don’t start off with your entries directly. Draw all your formats and then write your working notes. At the end of it, you’ll have all your data ready which quickens the entries and you finish your question faster!
Working notes, from the examination perspective, also serve the purpose of communicating to the examiner that you know what you are doing and should be written accordingly. For example, if the Balance Sheet in the questions has Rs. 10,000 as Goodwill, we know that it has to be written off. A working note should explain why that entry is being passed.
Mention a working note stating; “Existing Goodwill Rs 10,000 written off as per provisions of Accounting Standard 26.” The same note can be passed when a new partner’s goodwill is passed through the premium for goodwill account and not the goodwill account. State, and tell the examiner, that goodwill can be raised in the books only when a consideration in money or money’s worth is paid for it.
Similar working notes should be passed in all kinds of adjustments related to reserves and other items related to any legal requirement. Another example: During the dissolution of a partnership firm, no entry is passed when a creditor takes over as asset as the payment for his dues. In such a case, let the examiner know why you haven’t passed an entry. Do not fail to mention in your notes: No entry is passed through the Realisation Account for this adjustment as the creditor has taken as asset in payment for his dues
Accurate working notes are necessary to avoid mistakes as well as score well on the paper. While the pupil analysis does not show any of these notes, writing them can boost your score to a great extent.
2. Date of preparation of Balance Sheet
A common mistake spotted by the Pupil Analysis every year is that the date of the Balance Sheet is often wrong. Here’s how you don’t lose marks here!
When the dissolution of partnership takes place at the end of the accounting year i.e. 31st March, the date of the new Balance Sheet is always 1st April. This is because the Balance Sheet is at a point of time, and so 2 Balance Sheets cannot exist on the same day.
When the dissolution of the firm takes place on any day other than the end of the accounting year, there is no balance sheet existing on that day. Thus,
the date of the balance sheet will be the same as the date of dissolution. For example, if a partner is admitted on 1st June, the Balance Sheet will be as at 1st June and not 2nd June.
3. Current Assets in the Company Balance Sheet
In the format of a Balance Sheet, the current assets include the cash that a company has. DO note that the heading is NOT “Cash and Cash Equivalents”. Rather, it is “Cash and Bank Balances”, under which Cash and Cash Equivalents is a compulsory head.
Hardly any textbook recognises this small change, but now you know how to not make such errors!
Here’s how to write this heading in Notes to Accounts:
Cash and Bank Balances
Cash and Cash Equivalents
Cash in hand 10,000
Cash at Bank 2,50,000
These are just small errors that in no way take away from your knowledge of accounts. However, board examinations do require a little more than that.
Extra books to refer to:
Every student of accounts has his/her copy of Grewal or Goel (or any other book suggested by their schools). Here is another book the author of this article followed. The book is written by a Calcutta based teacher, Mr. Sandeep Dutta. The author can be contacted through Facebook. His books for Accountancy as well as Commerce are up to date and very helpful.
Please note that this forum does not officially endorse any author or book and the suggestions are merely from the experience of the writer.
We hope that these tips help in enhancing your answers and scoring better in your examinations. In case of any queries, suggestions and feedback, feel free to get in touch with us in the comments!
Happy Studying and All the Best!
Here is an infographic that can help you keep the key points of this article in mind.
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