ISC Class 12 Accounts Syllabus 2026-27

ISC Class 12 Accountancy (Subject Code 858) is one of the most important Commerce subjects under the CISCE board. The syllabus builds a strong foundation in financial accounting, corporate accounting, and analytical tools. It is directly relevant for students pursuing CA, CS, CMA, B.Com, BBA, or MBA and prepares students for national entrance exams like IPMAT and CUET.

Exam Structure

Unit-Wise Marks Weightage

Unit 1: Accounting for Partnership (34 Marks)

Partnership Accounting carries the highest combined weightage of 34 marks. It is divided into four sub-units: Fundamentals, Goodwill, Reconstitution, and Dissolution.

A. Fundamentals of Partnership (11 Marks)

Covers the definition, features, and legal provisions of the Indian Partnership Act, 1932. In the absence of a partnership deed, these default rules apply:

•        Profits and losses shared equally

•        No interest on capital or salary to any partner

•        Interest on a partner's loan to the firm at 6% per annum

•        No interest charged on drawings

The Profit and Loss Appropriation Account distributes net profit after accounting for salary, commission, interest on capital and drawings, and reserves. Partner's commission is always calculated on trading profit, not divisible profit.

Fixed Capital: all adjustments go to Current Account. Fluctuating Capital: all entries go directly into the Capital Account.

B. Goodwill: Concept and Valuation

Goodwill is the intangible value of a business arising from reputation, customer loyalty, and consistent earning capacity. Three valuation methods are required:

•        Average Profit Method: Goodwill = Average Profit x Years of Purchase

•        Super Profit Method: Super Profit = Average Profit minus Normal Profit;  then x Years of Purchase

•        Capitalisation Method: Capitalise Average Profit or Super Profit at the Normal Rate of Return

Capital Employed = Total Assets (excluding goodwill, non-trade investments, fictitious assets) minus Outside Liabilities. Investments are non-trade unless stated otherwise.

C. Reconstitution of Partnership

Admission of a Partner

Key calculations: New PSR, Sacrificing Ratio (Old PSR minus New PSR), and Gaining Ratio (New PSR minus Old PSR). Goodwill is adjusted under AS-26 based on five scenarios: premium paid in full, premium withdrawn, no cash brought (adjusted via Current Account), hidden goodwill, and existing goodwill in Balance Sheet.

Balance Sheet during admission must be in Horizontal format only. Memorandum Revaluation Account, Joint Life Policy, and admission during accounting year are excluded.

Retirement and Death of a Partner

Accounting covers goodwill adjustment, revaluation of assets, share of profit up to retirement date (time or turnover basis), and final settlement. Unpaid amounts go to a Loan Account bearing interest until paid. On death, balance goes to the Executor's Account.

D. Dissolution of a Firm (8 Marks)

Key accounts: Realisation Account, Partners' Capital Accounts, and Cash/Bank Account. Default rules when the question is silent:

•        Liability not mentioned: pay in full

•        Tangible asset realisation not given: book value

•        Intangible asset realisation not given: nil

•        Bank overdraft: Cash/Bank Account, NOT Realisation Account

Excluded: Admission cum retirement, amalgamation, conversion to a company, piecemeal distribution, and insolvency of a partner.

Unit 2: Accounting for Companies (23 Marks)

A. Issue of Shares (12 Marks)

The highest-weight single topic in company accounts. Master the full share lifecycle from issue to reissue.

•        Issue at par and premium under Companies Act, 2013

•        Issue for consideration other than cash: promoters, underwriters, vendors

•        Calls in Arrears (5% p.a.) and Calls in Advance (12% p.a.)

•        Oversubscription: pro-rata allotment; excess application money adjusted first to share capital, then Securities Premium

•        Forfeiture and reissue of forfeited shares at par, premium, or discount

Excluded: Bonus shares, rights shares, private placement, sweat equity, ESOP, and minimum tradable lots.

B. Issue of Debentures (4 Marks)

Covers issue at par, premium, and discount; collateral security; issue for non-cash consideration; and interest with TDS treatment. All capital losses are written off in the year they occur: first from Securities Premium, then from Statement of Profit and Loss.

C. Final Accounts of Companies (7 Marks)

Prepare the Balance Sheet as per Schedule III Part I with Notes to Accounts. Statement of Profit and Loss (Part II) is NOT required for final accounts.

•        AS-4: Proposed dividend is not a short-term provision; disclose under Contingent Liabilities

•        'Fixed Assets' replaced with 'Property, Plant and Equipment and Intangible Assets'

•        Current maturities of long-term borrowings shown under Current Liabilities

•        'Securities Premium Reserve' is now 'Securities Premium'

Unit 3: Financial Statement Analysis (4 Marks)

Two tools: Comparative Statements and Common Size Statements. Both are prepared from Balance Sheets and P&L without Notes to Accounts.

•        Comparative Statements: show absolute change and percentage change between two periods

•        Common Size Balance Sheet: all items as a percentage of Total Assets

•        Common Size P&L: all items as a percentage of Revenue from Operations

Unit 4: Cash Flow Statement (8 Marks)

Applicable only to Manufacturing Companies. Based on AS-3 (Revised). Only the Indirect Method is used for Operating Activities. Net Profit before Tax must be shown as a Working Note.

•        Operating Activities: Net Profit before Tax adjusted for non-cash items and working capital changes

•        Investing Activities: purchase/sale of fixed assets and investments, loans given/repaid, interest and dividends received

•        Financing Activities: issue/redemption of shares and debentures, borrowings, interest paid, dividends paid

Excluded: Extraordinary items, refund of tax, and Capital Reserve transactions.

Unit 5: Ratio Analysis (8 Marks)

Eleven ratios across four categories are prescribed. Know the exact numerator and denominator for each.

A. Liquidity Ratios

•        Current Ratio = Current Assets / Current Liabilities

•        Quick Ratio = (Current Assets minus Inventories minus Prepaid Expenses) / Current Liabilities

B. Solvency Ratios

•        Debt to Equity = Long-term Debt / Shareholders' Funds

•        Proprietary Ratio = Shareholders' Funds / Total Assets

•        Debt to Total Assets = Debt / Total Assets

•        Interest Coverage = Net Profit before Interest and Tax / Fixed Interest Charges

C. Activity Ratios

•        Trade Receivables Turnover = Credit Revenue from Operations / Average Trade Receivables

•        Trade Payables Turnover = Net Credit Purchases / Average Trade Payables

•        Inventory Turnover = Cost of Revenue from Operations / Average Inventory

•        Working Capital Turnover = Revenue from Operations / Working Capital

D. Profitability Ratios

•        Gross Profit Ratio = (Gross Profit / Revenue from Operations) x 100

•        Net Profit Ratio = (Net Profit after Tax / Revenue from Operations) x 100

•        Operating Ratio = (Cost of Revenue + Operating Expenses) / Revenue from Operations x 100

•        Operating Profit Ratio = (Net Operating Profit / Revenue from Operations) x 100

•        EPS = Net Profit after Tax and Preference Dividend / Number of Equity Shares

•        Price Earning Ratio = Market Value per Share / EPS

•        Return on Investment = (Net Profit before Interest and Tax / Capital Employed) x 100

Effect of transactions on ratios is tested only for Current Ratio, Quick Ratio, and Debt-Equity Ratio.

Unit 6: Application of Electronic Spreadsheet (3 Marks)

A straightforward unit. Students can score full marks with basic preparation.

•        Meaning, features, merits and demerits of electronic spreadsheets

•        Creating worksheets and applying basic formulas in Excel

•        Creating Bar Charts and Pie Charts from accounting data

Paper II: Project Work (20 Marks)

Two projects must be completed from any theory topic. Each project is worth 10 marks.

Viva-voce is conducted only by the Visiting Examiner, based on the project content only. No question paper is set by CISCE for Project Work.

Suggested Project Topics

•        Accounting for a Partnership Firm (journal, ledger, trial balance, financial statements, ratio analysis)

•        Cash Flow Statement (two consecutive years, minimum five supplementary data points)

•        Comparative and Common Size Statements (two consecutive periods, with graphical representation)

•        Ratio Analysis (minimum five ratios, with calculations, interpretation, and visual aids)

•        Admission of a New Partner (Revaluation Account, Capital Accounts, revised Balance Sheet)

•        Share Allotment in Oversubscribed Scenarios (pro-rata allotment, Board Meeting procedure, regulatory filings)

•        Financial Statement of a Company (Balance Sheet with Notes to Accounts and contingent liabilities)

•        Dissolution of a Firm (Realisation Account, Capital Accounts, all relevant ledger accounts)

•        Issue of Debentures (types, terms, redemption, interest calculation, journal entries)

Key Exclusions: What Will NOT Be Tested

Frequently Asked Questions

Q1. Is the Statement of Profit and Loss needed for Final Accounts?

No. Schedule III Part II (P&L) is not required for final accounts. However, the P&L format is needed for Comparative and Common Size Statements in Unit 3.

Q2. Which method is used for Cash Flow Operating Activities?

Only the Indirect Method is prescribed.

Q3. On which profit is Partner's commission calculated?

On the correct trading profit, NOT on the divisible profit. This is a common exam error.

Q4. What is the Balance Sheet format for partnership reconstitution?

Horizontal format only, for both admission and retirement/death of a partner.

Q5. What is the treatment of proposed dividend?

As per AS-4, proposed dividend is not a short-term provision. It is disclosed under Contingent Liabilities in Notes to Accounts.

Q6. How is Capital Employed calculated for Return on Investment?

Capital Employed = Shareholders' Funds + Non-current Liabilities minus Non-trade Investments. All investments are non-trade unless specifically stated.

Source Reference

Based on the official CISCE ISC Accountancy (858) Syllabus issued by RDCD, CISCE. Verify at cisce.org before the examination.