Accountancy Formula Sheet — Class 12
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Accountancy Formula Sheet
30 formulas across 6 chapters — with variables explained and exam tips where needed.
Ch 1Accounting for Partnership(5 formulas)
Interest on Capital
= Capital × Rate/100 × Time
Interest on Drawings (if due dates not given)
= Total drawings × Rate/100 × 6/12
Use 6 months as average time for drawings spread evenly throughout year
Profit sharing ratio — New partner
New ratio = Old ratio − Sacrifice ratio
Sacrifice Ratio
Sacrificing Ratio = Old Ratio − New Ratio
Gaining Ratio
Gaining Ratio = New Ratio − Old Ratio
Ch 2Goodwill(4 formulas)
Average Profit method
Goodwill = Average Profit × Number of years purchased
Super Profit method
Goodwill = Super Profit × Number of years purchased | Super Profit = Average Profit − Normal Profit
Capitalisation method
Goodwill = Total capitalised value − Net assets | Total capitalised value = Average profit × 100/Normal rate of return
Annuity method
Goodwill = Super profit × Present value annuity factor
Ch 4Retirement / Death of Partner(2 formulas)
Deceased partner's share of profit (death)
Profit = (Profit for the year × deceased partner's share) × (months/12)
Amount due to retiring partner
Capital + Reserves share + Goodwill share + Profit share − Drawings − Losses
Ch 5Company Accounts(4 formulas)
Calls-in-arrears
= Called up capital − Paid up capital
Paid up capital
= Called up capital − Calls in arrears + Calls in advance
Discount on issue of shares
= Issue price < Face value (debit to statement of P&L or securities premium)
Shares cannot be issued at discount below face value under Companies Act 2013
Securities Premium Reserve usage
Can be used to: issue bonus shares, write off preliminary expenses, write off discount on debentures/shares
Ch 7Accounting Ratios(13 formulas)
Current Ratio
Current Assets / Current Liabilities
Ideal: 2:1. Measures short-term liquidity
Quick Ratio (Acid-test / Liquid Ratio)
(Current Assets − Inventories − Prepaid Expenses) / Current Liabilities
Ideal: 1:1. Stricter liquidity test excluding slow-moving assets
Debt-Equity Ratio
Long-term Debt / Shareholders' Funds
Lower = safer; shows proportion of borrowed funds vs. owner's funds
Total Assets to Debt Ratio
Total Assets / Long-term Debt
Higher = better; measures asset coverage of long-term debt
Proprietary Ratio
Shareholders' Funds / Total Assets
Higher = more stable financing; proportion of assets owned by proprietors
Inventory Turnover Ratio
Cost of Revenue from Operations / Average Inventories
Average Inventories = (Opening + Closing)/2; higher = faster stock movement
Trade Receivables Turnover Ratio
Net Credit Revenue from Operations / Average Trade Receivables
Higher = faster collection from debtors (customers)
Trade Payables Turnover Ratio
Net Credit Purchases / Average Trade Payables
Higher = faster payment to creditors (suppliers)
Working Capital Turnover Ratio
Net Revenue from Operations / Net Working Capital
Net Working Capital = Current Assets − Current Liabilities
Gross Profit Ratio
%(Gross Profit / Net Revenue from Operations) × 100
Net Profit Ratio
%(Net Profit after Tax / Net Revenue from Operations) × 100
Operating Ratio
%(Cost of Revenue from Operations + Operating Expenses) / Net Revenue from Operations × 100
Operating Ratio + Operating Profit Ratio = 100%
Return on Investment (ROCE)
%(Net Profit Before Interest and Tax / Capital Employed) × 100
Capital Employed = Shareholders' Funds + Long-term Debt
Ch 8Cash Flow Statement(2 formulas)
Cash from Operations (Indirect)
Net Profit + Non-cash charges (depreciation etc.) ± Changes in working capital
Net Change in Cash
Cash from Operating + Investing + Financing activities