Class 12 Accountancy Theory Notes Pdf [best] Jun 2026

Class 12 Accountancy – Theory Notes (PDF Format) Part A: Accounting for Partnership Firms & Companies 1. Partnership: Basic Concepts

Definition: Partnership is a relation between two or more persons who agree to share the profits of a business carried on by all or any of them acting for all. Features: Agreement (express or implied), lawful business, profit sharing, unlimited liability (general partnership), mutual agency. Partnership Deed: Written agreement containing terms of partnership. If silent, provisions of Indian Partnership Act, 1932 apply (e.g., no interest on capital, 6% p.a. interest on drawings, no salary to partners).

2. Accounting for Partnership Firms – Fundamentals

Profit Sharing Ratio (PSR): Default is equal. Can be changed with mutual consent. Interest on Capital: Allowed only if provided in deed. Calculated on opening capital for the period capital was used. Interest on Drawings: Calculated using product method or average period method. class 12 accountancy theory notes pdf

Average Period = (Months left after first drawing + Months left after last drawing)/2

Partner’s Salary/Commission: Allowed if provided in deed. Commission may be on net profit before/after such commission.

3. Reconstitution of Partnership (Change in PSR, Admission, Retirement, Death) Class 12 Accountancy – Theory Notes (PDF Format)

Change in PSR: Calculate sacrificing/gaining ratio.

Sacrificing Ratio = Old Ratio – New Ratio Gaining Ratio = New Ratio – Old Ratio

Treatment of Reserves/Accumulated Profits: Transferred to old partners’ capital accounts in old ratio. Revaluation Account: For recording change in value of assets/liabilities at the time of reconstitution. Reconstitution of Partnership (Change in PSR

4. Admission of a Partner

New PSR given or implied. Sacrificing Ratio = Old – New. Goodwill: Incoming partner brings share of goodwill (premium) in cash. Distributed to sacrificing partners in sacrificing ratio.